3563 |
||||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(IRS Employer Identification Number) |
David Izett Enerflex Ltd. Suite 904, 1331 Macleod Trail S.E. Calgary, Alberta, Canada, T2G 0K3 (403) 387-6377 |
Brian Fenske Norton Rose Fulbright US LLP 1301 McKinney Street, Ste. 5100 Houston, Texas 77010 (713) 651-5151 |
Kelly M. Battle Exterran Corporation 11000 Equity Drive Houston, Texas 77041 (281) 836-7000 |
Keith Townsend Robert J. Leclerc King & Spalding LLP 1180 Peachtree St. NE Atlanta, GA 30309 (404) 572-4600 |
U.S. Exchange Act Rule 13e-4(i) ( Cross-Border Issuer Tender Offer |
☐ | |
U.S. Exchange Act Rule 14d-1(d) ( Cross-Border Third Party Tender Offer |
☐ |
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
PROXY STATEMENT OF EXTERRAN CORPORATION |
PROSPECTUS OF ENERFLEX LTD. |
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Sincerely, |
Andrew J. Way |
President and Chief Executive Officer |
Exterran Corporation |
Exterran Corporation 11000 Equity Drive Houston, Texas 77041 Attention: Corporate Secretary Telephone: (281) 836-7000 |
Enerflex Ltd. Suite 904, 1331 Macleod Trail S.E. Calgary, Alberta, Canada, T2G 0K3 Attention: Office of the Corporate Secretary and Associate General Counsel, Corporate Telephone: (403) 387-6377 |
Period End |
Average |
Low |
High |
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Year ended (C$ per US$) |
||||||||||||||||
2021 (1) |
1.2740 | 1.2535 | 1.2040 | 1.2933 | ||||||||||||
2020 (2) |
1.2732 | 1.3415 | 1.2718 | 1.4496 | ||||||||||||
2019 (3) |
1.2988 | 1.3269 | 1.2988 | 1.36 | ||||||||||||
2018 (4) |
1.3642 | 1.2957 | 1.2288 | 1.3642 | ||||||||||||
2017 (5) |
1.2545 | 1.2986 | 1.2128 | 1.3743 | ||||||||||||
2016 (6) |
1.3427 | 1.3248 | 1.2544 | 1.4589 | ||||||||||||
Month ended (C$ per US$) |
||||||||||||||||
January 2022 |
1.2719 | 1.2616 | 1.2474 | 1.2772 | ||||||||||||
February 2022 |
1.2698 | 1.2716 | 1.2677 | 1.2832 |
(1) | From January 2, 2021 through December 31, 2021 |
(2) | From January 2, 2020 through December 31, 2020 |
(3) | From January 2, 2019 through December 31, 2019 |
(4) | From January 2, 2018 through December 31, 2018 |
(5) | From January 3, 2017 through December 29, 2017 |
(6) | From January 4, 2016 through December 30, 2016 |
• | to consider and vote on a proposal (which we refer to as the “Exterran merger proposal”) to adopt the Agreement and Plan of Merger, dated as of January 24, 2022 (which, as it may be amended from time to time, we refer to as the “Merger Agreement”), by and among Enerflex Ltd. (which we refer to as “Enerflex”), Enerflex US Holdings Inc., a Delaware corporation and direct wholly owned subsidiary of Enerflex (which we refer to as “merger sub”), and Exterran; |
• | to consider and vote on a proposal (which we refer to as the “Exterran compensation proposal”) to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Exterran’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Merger Agreement; and |
• | to consider and vote on a proposal (which we refer to as the “Exterran adjournment proposal”) to approve the adjournment of the Exterran special meeting from time to time to solicit additional proxies in favor of the Exterran merger proposal if there are insufficient votes at the time of such adjournment to approve the Exterran merger proposal, to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to Exterran stockholders or if otherwise determined by the chairperson of the meeting to be necessary or appropriate. |
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F-1 | ||||
F-1 | ||||
ANNEX A Agreement and Plan of Merger |
A-1 | |||
B-1 | ||||
C-1 | ||||
D-1 |
• | “Absolute EBIT” means EBIT expressed as a dollar value. |
• | “affiliate” refers, with respect to any person, any other person that, directly or indirectly, controls, or is controlled by, or is under common control with, such person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. |
• | “alternative proposal” refers to any written inquiry, proposal, offer or indication of interest made by any third party relating to or concerning (i) a plan of arrangement, amalgamation, merger, reorganization, share exchange, consolidation, business combination, recapitalization, tender offer, exchange offer, or similar transaction involving Enerflex or Exterran, as applicable, in each case, as a result of which the shareholders or stockholders of Enerflex or Exterran, as applicable, immediately prior to such transaction would cease to own at least 80% of the total voting power of Enerflex or Exterran, as applicable, or the surviving entity (or any direct or indirect parent company thereof), as applicable, immediately following such transaction, (ii) the acquisition by any third party of more than 20% of the net revenues, net income or total assets of Enerflex or Exterran, as applicable, and its subsidiaries, on a consolidated basis, or (iii) the direct or indirect acquisition by any third party of more than 20% of the outstanding Enerflex common shares or shares of Exterran common stock, as applicable. |
• | “antitrust authorities” refers to the relevant competition authorities in the jurisdictions listed as set forth in the Merger Agreement. |
• | “asset-based facility” refers to a credit facility of up to $52.5 million U.S. dollars secured by certain assets of a subsidiary of Enerflex. |
• | “AST” means American Stock Transfer and Trust Company, LLC, the registrar and transfer agent of the shares of Exterran common stock. |
• | “bank facility” refers to the syndicated revolving credit facilities entered into pursuant to a credit agreement made as of June 1, 2011, amended and restated as of June 30, 2014, and further amended and restated as of May 2, 2019, as amended by the first amending agreement made as of July 16, 2021, among Enerflex, Enerflex Australasia Holdings Pty Ltd., the Toronto Dominion Bank, the Bank of Nova Scotia, and certain other lenders. |
• | “business day” refers to any day other than a Saturday, Sunday or a day on which the banks in New York, New York or Calgary, Alberta, Canada, are authorized by law or executive order to be closed. |
• | “Canadian Securities Administrators” means the Alberta Securities Commission and any other applicable securities commission or securities regulatory authority of a province or territory of Canada. |
• | “Canadian tax act” refers to the Income Tax Act |
• | “capital employed” means debt plus equity less cash. |
• | “CBCA” refers to the Canada Business Corporations Act, R.S.C., 1985, c. C-44, as amended. |
• | “closing” refers to the closing of the transaction. |
• | “closing date” refers to the date on which the closing of the transaction actually occurs. |
• | “Code” refers to the U.S. Internal Revenue Code of 1986, as amended. |
• | “combined company” refers to Enerflex, as combined with Exterran, after the closing of the merger. |
• | “compliant” means, with respect to the required financing information, that: (a) the required financing information does not contain any untrue statement of a material fact regarding Exterran or any of its subsidiaries or omit to state any material fact regarding Exterran or any of its subsidiaries necessary in order to make the required financing information not misleading, in light of the circumstances under which the statements contained in the required financing information are made; (b) the financial statements described in clause (a) of the definition of “required financing information” are compliant in all material respects with all requirements of Regulation S-X promulgated by the SEC applicable to offerings of debt securities on a registration statement on Form S-1 that are applicable to such financial statements (other than such provisions for which compliance is not customary in a Rule 144A offering of high yield debt securities); (c) Exterran’s independent auditors will not have withdrawn, or advised Exterran that they intend to withdraw, any audit opinion with respect to any audited financial statements contained in the required financing information, in which case such financial information will not be deemed to be compliant pursuant to this clause (c) (unless and until a new unqualified audit opinion has been received in respect thereof from such auditors or another nationally recognized independent registered accounting firm of national standing); (d) in connection with any debt financing involving the offering of debt securities, Exterran’s independent registered public accounting firm will have consented to the use of its audit opinions with respect to any required financing information audited by such firm and will have confirmed that they are prepared to issue customary comfort letters, including customary negative assurance, upon the “pricing” of such debt securities and throughout the period ending on the last day of the marketing period (subject to the completion by such accountants of customary procedures relating thereto); and (e) Exterran will have not been informed by such independent registered public accounting firm of Exterran that it is required to restate, and Exterran has not restated (or is not actively considering any such restatement; provided, that such required financing information shall be deemed to be compliant pursuant to this clause (e) when Exterran informs Enerflex in writing that it has concluded that no restatement is required in accordance with GAAP) any financial statements contained in the required financing information; provided, further, that if any such restatement occurs, the required financing information will be deemed to be compliant pursuant to this clause (e) if and when such restatement has been completed and the relevant financial statements have been amended and delivered to Enerflex. |
• | “credit facility” refers to the second amended and restated credit agreement, dated as of October 9, 2018, by and among Exterran, Exterran Energy Solutions, L.P., the guarantors party thereto, Wells Fargo Securities, as administrative agent, and the other parties thereto (as the same may be amended, restated or otherwise modified from time to time). |
• | “debt commitment letters” refers to the debt commitment letter delivered at signing of the Merger Agreement and all exhibits, schedules, term sheets, annexes, supplements, amendments and other permitted modifications thereto and any fee letter(s) with respect thereto (in each case together with joinders to add additional financing parties). |
• | “debt financing” refers to the debt financing contemplated in the debt commitment letters, together with any replacement debt financing permitted under the Merger Agreement, including any bank financing or debt securities issued in lieu thereof. |
• | “DGCL” refers to the General Corporation Law of the State of Delaware. |
• | “DSU” means deferred share units—a notional unit with a value equal to an Enerflex share that can only be redeemed when the individual leaves Enerflex. |
• | “DSU plan” means the Enerflex deferred share unit plan, as amended from time to time. |
• | “EBIT” means earnings before interest and taxes for the trailing 12-month period. |
• | “EBIT %” means EBIT expressed as a percent of revenue. |
• | “effective time” refers to such time as the certificate of merger is duly filed with the secretary of state of the state of Delaware, or at such later time as may be agreed by Exterran and merger sub in writing and specified in the certificate of merger in accordance with the DGCL. |
• | “EMT” means the executive management team of Enerflex, and includes the NEOs. |
• | “end date” refers to October 24, 2022; provided, that to the extent the debt financing has not been obtained or the condition to obtain the antitrust authorizations required to be obtained with respect to the transactions contemplated by the Merger Agreement has not been satisfied on or prior to October 24, 2022, the end date will be automatically extended for 30 days; provided, further, that if the marketing period has started within 15 days of the end date but has not ended or will not end on or prior to the end date, the end date will be automatically extended to the next business day after the last scheduled day of such marketing period. |
• | “Enerflex” refers to Enerflex Ltd., a corporation formed under the CBCA. |
• | “Enerflex board” refers to the board of directors of Enerflex. |
• | “Enerflex common shares” refers to common shares in the capital of Enerflex. |
• | “Enerflex disclosure schedules” refers to the disclosure schedules to the Merger Agreement provided by Enerflex. |
• | “Enerflex shareholder approval” refers to the affirmative vote of a majority of the votes cast by the holders of outstanding Enerflex common shares represented in person or by proxy and entitled to vote on such matter in favor of the approval of the issuance of Enerflex common shares at the Enerflex special meeting, or any adjournment or postponement thereof, in accordance with the rules and policies of the CBCA and the TSX. |
• | “Enerflex shareholders” refers to the holders of Enerflex common shares. |
• | “Enerflex special meeting” refers to the special meeting of Enerflex shareholders to be held on [ ], 2022 and any adjournments or postponements thereof. |
• | “ESPP” means the Enerflex employee share purchase plan. |
• | “excepted stockholder” refers to an Exterran stockholder who would be treated as a “five-percent transferee shareholder” of Enerflex within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii) following the transaction who does not enter into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8. |
• | “exchange agent” refers to the transfer agent or bank or trust company designated by Enerflex and merger sub to serve as exchange agent under the Merger Agreement and approved in advance by Exterran in writing (which approval will not be unreasonably withheld, conditioned or delayed). |
• | “exchange ratio” means 1.021. |
• | “Exterran” refers to Exterran Corporation, a Delaware corporation. |
• | “Exterran adjournment proposal” refers to the proposal to approve the adjournment of the Exterran special meeting from time to time to solicit additional proxies in favor of the Exterran merger proposal if there are insufficient votes at the time of such adjournment to approve the Exterran merger proposal, to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to Exterran stockholders or if otherwise determined by the chairperson of the meeting to be necessary or appropriate. |
• | “Exterran board” refers to the board of directors of Exterran. |
• | “Exterran common stockholders” refers to the Exterran stockholders. |
• | “Exterran compensation proposal” refers to the proposal that Exterran stockholders will vote on at the Exterran special meeting to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Exterran’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Merger Agreement. |
• | “Exterran equity awards” collectively refers to the Exterran restricted share awards, Exterran RSU awards, and Exterran performance share awards. |
• | “Exterran intellectual property” refers to all the intellectual property that Exterran and its subsidiaries own or have a written, valid and enforceable right and license to use, which intellectual property is necessary for the operation of their respective businesses conducted as of the date of the Merger Agreement. |
• | “Exterran merger proposal” refers to the proposal to adopt the Merger Agreement that Exterran stockholders will vote on at the Exterran special meeting. |
• | “Exterran performance share award” refers to an award of restricted stock units in respect of shares of Exterran common stock granted subject to performance targets. |
• | “Exterran proposals” collectively refers to the Exterran merger proposal, the Exterran compensation proposal and the Exterran adjournment proposal. |
• | “Exterran recommendation” refers to Exterran board’s recommendation to the Exterran stockholders to adopt the Merger Agreement and the transactions contemplated by the Merger Agreement. |
• | “Exterran restricted share award” refers to an award of shares of Exterran common stock granted subject to any vesting, forfeiture or other lapse restrictions. |
• | “Exterran RSU award” refers to an award of restricted stock units (excluding any Exterran performance share award) in respect of shares of Exterran common stock. |
• | “Exterran special meeting” refers to the special meeting of Exterran stockholders to be held on [ ], 2022, and including any adjournment or postponement thereof, for the purpose of obtaining the Exterran stockholders approval of the Exterran proposals in respect of the transaction. |
• | “Exterran stockholder approval” refers to the affirmative vote of the holders of a majority of the outstanding shares of Exterran common stock in favor of the adoption of the Merger Agreement. |
• | “Exterran stockholders” collectively refers to the holders of Exterran common stock. |
• | “financing amounts” refers, collectively, to the obligations of Enerflex and its affiliates that are required to be satisfied on the closing date pursuant to the Merger Agreement and the initial debt commitment letter, including the payment of any fees, expenses and other amounts of, or payable by, Enerflex or merger sub or Enerflex’s other affiliates on the closing date in connection with the merger and the debt financing contemplated by the initial debt commitment letter and for any repayment or refinancing of the outstanding indebtedness of Exterran, Enerflex and/or their respective subsidiaries in accordance with the Merger Agreement. |
• | “financing parties” refers to each person (including each agent, arranger, lender, underwriter, investor or other entity that has committed to provide or arrange or otherwise entered into agreements in connection with any part of the debt financing or any other financing in connection with the transactions contemplated by the Merger Agreement) that at the applicable time has committed, or proposes, to provide or arrange any part of the debt financing or such other financing (including, for greater certainty, any alternative financing in accordance with the Merger Agreement) to Enerflex or any of its subsidiaries pursuant to a debt commitment letter, a definitive agreement or other agreement in connection with the transactions contemplated by the Merger Agreement, as applicable, and their respective representatives, affiliates and their, and their respective, affiliates’ officers, directors, |
employees, controlling persons, agents and representatives and their respective successors and assigns; provided, that neither Enerflex nor any of its affiliates will be a financing party. |
• | “Form F-4” refers to the registration statement on Form F-4 pursuant to which the offer and sale of Enerflex common shares in connection with the merger will be registered pursuant to the U.S. Securities Act and in which this proxy statement/prospectus is included, together with any supplements thereto. |
• | “GAAP” refers to generally accepted accounting practices in the U.S. |
• | “gEPS” means growth in earnings per Enerflex share. |
• | “governmental entity” refers to any United States or foreign, state, provincial, territorial or local governmental or regulatory agency, commission, court, arbitrator, body, entity or authority. |
• | “HRC committee” means the human resources and compensation committee of the Enerflex board. |
• | “IFRS” refers to the international financial reporting standards as issued by the International Accounting Standards Board. |
• | “indebtedness” means, with respect to either Enerflex or Exterran, all borrowings (or funded indebtedness), whether by loans of cash or issuance and sale of debt securities. |
• | “initial debt commitment letter” refers to the fully executed debt commitment letter, dated as of the date of the Merger Agreement, by and among Enerflex and the financing parties specified therein. |
• | “IRS” refers to the U.S. Internal Revenue Service. |
• | “lien” means a lien, mortgage, pledge, security interest, charge, title defect, adverse claims and interests, option to purchase or other encumbrance of any kind or nature whatsoever, but excluding any license of intellectual property or any transfer restrictions of general applicability as may be provided under the U.S. Securities Act, the “blue sky” laws of the various states of the United States or similar law of other applicable jurisdictions. |
• | “management information circular” refers to the management information circular relating to the Enerflex special meeting (together with any amendments or supplements thereto). |
• | “marketing period” refers to the first period of fifteen (15) consecutive calendar days after the date of the Merger Agreement (a) commencing on the date that is three (3) calendar days after the date on which Enerflex will have received the required financing information from Exterran and (b) throughout such period the required financing information will remain compliant; provided that if the required financing information fails to be compliant at any time during the marketing period, then the marketing period will not be deemed to have commenced and the marketing period will only commence when the required financing information is again compliant; provided, further that such fifteen (15) consecutive calendar day period will either be completed on or prior to August 19, 2022, or commence no earlier than September 6, 2022, and will not include, for purposes of determining the number of consecutive calendar days, July 1, 2022 through July 4, 2022. If Exterran in good faith reasonably believes that it has delivered the required financing information, it may deliver to Enerflex written notice to that effect, stating when it believes it completed the applicable delivery, in which case the required financing information will be deemed to have been delivered, subject to the provisos in the first sentence of this definition, on the date of the delivery of the applicable notice to Enerflex (and, if the requirements set forth above as to being compliant are satisfied, the marketing period will be deemed to have commenced on such date), in each case, unless Enerflex in good faith reasonably believes that Exterran has not completed delivery of the required financing information and within two (2) business days after receipt of such notice, Enerflex specifies in writing to Exterran, in reasonable detail, what required financing information was not delivered. |
• | “material adverse effect” refers to, under the Merger Agreement and with respect to Exterran or Enerflex, as applicable, an event, change, circumstance, fact, condition, occurrence, effect or |
development that has, or would reasonably be expected to have, a material adverse effect on (x) the business, operations or condition (financial or otherwise) of Exterran or Enerflex, and their respective subsidiaries, as applicable, taken as a whole, or (y) would or may reasonably be expected to, prevent, materially delay or materially impair the ability of Exterran or Enerflex, as applicable to consummate the transaction (including the merger), but, in the case of each of clauses (x) and (y), will not include events, changes, occurrences, effects or developments relating to (a) changes in general economic or political conditions or the securities, equity, credit or financial markets in general, or changes in or affecting domestic or foreign interest or exchange rates, (b) any decline in the market price or trading volume of the respective party’s common stock or common shares, as applicable, or any change in the credit rating of such party or any of its securities (provided, that the facts and circumstances underlying any such decline or change may be taken into account in determining whether a material adverse effect has occurred to the extent not otherwise excluded by the definition thereof), (c) changes or developments in the industries in which Exterran or Enerflex, as applicable, or their respective subsidiaries operate, (d) changes in law or interpretations thereof or enforcement thereof after the date of the Merger Agreement, (e) the execution, delivery or performance of the Merger Agreement or the public announcement or pendency or consummation of the merger or other transactions contemplated by the merger agreement, including the impact thereof on the relationships of Exterran or Enerflex, as applicable, or any of their respective subsidiaries with employees, partnerships, customers, suppliers, or governmental entities, (f) compliance with the terms of, or the taking or omission of any action required by, the Merger Agreement or consented to (after disclosure to the respective party of all material and relevant facts and information) or requested by such party in writing, (g) any act of civil unrest, civil disobedience, war, terrorism, cyberterrorism, military activity, sabotage or cybercrime, including an outbreak or escalation of hostilities involving Canada or the United States, as applicable, or any other governmental entity or the declaration by Canada or the United States, as applicable, or any other governmental entity of a national emergency or war, or any worsening or escalation of any such conditions threatened or existing on the date of the Merger Agreement, (h) any hurricane, tornado, flood, earthquake, natural disasters, acts of God or other comparable events, (i) any pandemic, epidemic or disease outbreak (including COVID-19) or other comparable events, (j) changes in International Financial Reporting Standards or GAAP or the interpretation or enforcement after the date of the Merger Agreement, (k) any litigation relating to or resulting from the Merger Agreement or the transactions contemplated hereby; or (l) any failure to meet internal or published projections, forecasts, guidance or revenue or earning predictions; (provided, that the facts and circumstances underlying any such failure may be taken into account in determining whether a material adverse effect has occurred to the extent not otherwise excluded by the definition thereof); except, with respect to clauses (a), (c), (g), (h), (i) and (j), if the impact thereof is materially and disproportionately adverse to Exterran or Enerflex, as applicable, and their respective subsidiaries, taken as a whole, relative to the impact thereof on the operations in the industry that Exterran or Enerflex, as applicable, and other participants conduct business, the incremental material disproportionate impact may be taken into account in determining whether there has been a material adverse effect. |
• | “merger” refers to the merger of merger sub with and into Exterran. |
• | “Merger Agreement” means the Agreement and Plan of Merger, dated as of January 24, 2022, by and among Enerflex, merger sub, and Exterran, as it may be amended from time to time. |
• | “merger sub” refers to Enerflex US Holdings Inc., a Delaware corporation and a direct wholly-owned subsidiary of Enerflex. |
• | “Nasdaq” means Nasdaq, Inc. |
• | “NCG Committee” means the nominating and corporate governance committee of the Enerflex board. |
• | “NEO” means named executive officer. |
• | “non-qualified deferred compensation plan” refers to Exterran’s non-qualified deferred compensation plan that will be terminated no later than the day immediately prior to the closing date, in accordance with the terms of the Merger Agreement. |
• | “note purchase agreement” refers to any one of note purchase agreements among Enerflex and a series of private placement lenders dated June 22, 2011 and dated December 15, 2017 with respect to the senior notes. |
• | “NYSE” refers to the New York Stock Exchange. |
• | “option plan” means the Enerflex amended and restated 2013 stock option plan, as approved by Enerflex shareholders on April 16, 2014, amended and restated by the Enerflex board effective December 6, 2017, and further amended and restated by the Enerflex board on February 21, 2020, with the amendment to increase the total number of Enerflex common shares reserved for issuance under the option plan approved by the Enerflex shareholders on May 8, 2020. |
• | “Options” means the options to purchase Enerflex common shares granted under the option plan. |
• | “ordinary course of business” means, with respect to an action taken by any person, that such action is in the ordinary course of business of such person, acting in its own interest as an independent enterprise, consistent with past custom and practice, taking into account any changes to such practices as may have occurred as a result of the outbreak of COVID- 19, including compliance with any COVID-19 measures, and any actions reasonably taken or not taken in response to exigent circumstances. |
• | “organizational documents” means (a) with respect to any person that is a corporation, its articles or certificate of incorporation, memorandum and articles of association, as applicable, and bylaws, or comparable documents, (b) with respect to any person that is a partnership, its certificate of partnership and partnership agreement, or comparable documents, (c) with respect to any person that is a limited liability company, its certificate of formation and limited liability company or operating agreement, or comparable documents, (d) with respect to any person that is a trust or other entity, its declaration or agreement of trust or other constituent document or comparable documents and (e) with respect to any other person that is not an individual, its comparable organizational documents. |
• | “permitted lien” means (a) any lien for taxes or governmental assessments, charges or claims of payment not yet due or payable, being contested in good faith or for which accruals or reserves have been established in accordance with GAAP or IFRS, as applicable, (b) any lien that is a carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar lien arising in the ordinary course of business for amounts that are not yet due or that do not materially detract from the value of or materially interfere with the use of any of the assets, (c) zoning, entitlement, building, and other land use regulations imposed by governmental entities having jurisdiction over such person’s owned or leased real property, which are not violated by the current use and operation of such real property, (d) covenants, conditions, restrictions, easements, and other similar non-monetary matters of record affecting title to such person’s owned or leased real property, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such person’s businesses or that are listed on the applicable title documentation that was delivered to parent at least five (5) business days prior to closing, (e) liens the existence of which are disclosed in the notes to the most recent consolidated balance sheet of Exterran or Enerflex, as applicable, or the notes thereto (or securing liabilities reflected on such balance sheet), (f) any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such person’s businesses, and (g) liens arising under workers’ compensation, unemployment insurance, social security, retirement, and similar legislation. |
• | “PSEs” means the phantom share entitlements issued under the PSE plan—a notional unit with a value equal to the fair market value of an Enerflex share. PSEs represent the right only to receive a cash payment in accordance with the terms and conditions of the PSE plan. |
• | “PSE plan ” |
• | “PSUs” means the Enerflex performance share units issued under the PSU plan—a notional unit with a value equal to the fair market value of an Enerflex share. The value received is contingent upon meeting predetermined performance targets and the fair market value at the time of payout. |
• | “PSU plan” means the performance share unit plan of Enerflex, as amended from time to time. |
• | “RBC” refers to RBC Dominion Securities, Inc., a financial advisor to Enerflex in connection with the transaction. |
• | “record date” refers to [ ], 2022. |
• | “representatives” refers to the officers, employees, accountants, consultants, legal counsel, financial advisors and agents and other representatives of a given party. |
• | “required financing information” refers to (a) the financial statements of Exterran required by the initial debt commitment letter as of the closing date, (b) all other financial statements and operating, business and other financial data solely regarding Exterran and its subsidiaries of the type and form that are customarily included in an offering memorandum to consummate a Rule 144A-for-life non-convertible, high yield debt securities under Rule 144A promulgated under the 1933 Act (which information is understood not to include (i) financial statements, information and other disclosures required by Rules 3-05, 3-09, 3-10 or 3-16 of Regulation S-X, the Compensation Discussion and Analysis or other information required by Item 402 of Regulation S-K or the executive compensation and related person disclosure rules related to SEC Release Nos. 33-8732A, 34-54302A and IC-27444A, (ii) financial statements or other financial data (including selected financial data) for any period earlier than December 31, 2019, and (iii) other information or financial data customarily excluded from a Rule 144A offering memorandum; provided that Exterran will have no obligation to provide (A) any financial information concerning Exterran that Exterran does not maintain in the ordinary course of business, (B) any other information with respect to Exterran not reasonably available to Exterran under its current reporting systems or (C) trade secrets or information to the extent that the provision thereof would violate any law or obligation of confidentiality binding upon, or waive any privilege that may be asserted by, Exterran or any of Exterran’s affiliates unless any such information referred to in clause (A), (B) or (C), (1) is financial information contemplated by the foregoing clause (a) or (2) is required to ensure that the offering memorandum would not contain any untrue statement of a material fact or omit a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading), (c) if the marketing period commences prior to the filing date of an annual report on Form 10-K or a quarterly report on Form 10-Q of Exterran but after the end of its corresponding fiscal year or quarter, as applicable, customary “flash” or “recent developments” data, and (d) such other pertinent and customary information regarding Exterran and its subsidiaries as may be reasonably requested by Enerflex or any of its subsidiaries to the extent necessary to receive from Exterran’s independent accountants customary “comfort” (including “negative assurance” comfort), together with drafts of customary comfort letters that such independent accountants are prepared to deliver upon the “pricing” of any securities, and the closing of the offering thereof with respect to the historical financial information to be included in such offering memorandum. |
• | “ROCE” means a ratio used to measure operating performance and the efficiency of Enerflex’s capital allocation process. The ratio is calculated by taking EBIT for the 12-month trailing period divided by average capital employed for the trailing four quarters. |
• | “RSUs” means the restricted share units issued under the RSU plan—a notional unit with a value equal to the fair market value of an Enerflex share. The value received is contingent upon meeting vesting requirements and the fair market value at the time of payout. |
• | “RSU plan” means the restricted share unit plan of Enerflex, as amended from time to time. |
• | “SEC” refers to the U.S. Securities and Exchange Commission. |
• | “SEC’s website” refers to www.sec.gov . |
• | “SEDAR” refers to the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators. |
• | “SEDAR’s website” refers to www.sedar.com. |
• | “senior notes” refers collectively to the US$105.0 million and C$15.0 million seven-year notes maturing on December 15, 2024 issued by Enerflex under the note purchase agreement dated December 15, 2017; and the US$70.0 million and C$30.0 million ten-year notes maturing on December 15, 2027 issued by Enerflex under the note purchase agreement dated December 15, 2017. |
• | “special meeting website” refers to the website located at www.proxydocs.com/EXTN, where Exterran stockholders will be able to attend the Exterran special meeting online and vote their Exterran shares of common stock electronically. |
• | “STI plan” or “STIP” means the short-term incentive plan pursuant to which Enerflex may grant short-term variable pay to its executives. |
• | “subsidiaries” means, with respect to any person, any corporation, limited liability company, partnership or other organization, whether incorporated or unincorporated or person which (a) such first person directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions or (b) such first person directly or indirectly has the power to appoint a general partner, manager or managing member or others performing similar functions, or otherwise has the power to direct the policies, management and affairs of such other person. |
• | “superior proposal” refers to an unsolicited, bona fide written alternative proposal, substituting in the definition of alternative proposal “20%” for “80%” and “80%” for “20%” in each place each such phrase appears, made after January 24, 2022, that the applicable party’s board of directors determines in good faith, after consultation with the applicable party’s outside legal and financial advisors, and considering all legal, financial, financing and regulatory aspects of the proposal, the identity of the person(s) making the proposal, the conditions to the closing and the timing and likelihood of the proposal being consummated in accordance with its terms, would, if consummated, result in a transaction (A) that is more favorable to such party’s shareholders or stockholders, as applicable, from a financial point of view than the transactions contemplated by the Merger Agreement and (B) that is reasonably likely to be completed, taking into account any regulatory, financing or approval requirements and any other aspects considered relevant by such party’s board of directors. |
• | “surviving corporation” refers to Exterran as the company that, under the Merger Agreement, survives the merger under Delaware law as a wholly owned subsidiary of Enerflex at the effective time. |
• | “takeover statute” refers to any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other form of anti-takeover statute or regulation that is applicable to the Merger Agreement or the other transactions contemplated by the Merger Agreement. |
• | “total purchase consideration” collectively refers to the merger consideration, and other amounts as defined as consideration by the acquisition method of accounting. |
• | “transaction” refers to the merger as contemplated under the Merger Agreement. |
• | “Treasury Regulations” refers to U.S. Treasury regulations promulgated under the Code. |
• | “TRIR” means the total recordable injury rate calculated by multiplying the number of recordable injuries in a calendar year by 200,000 (100 employees working 2,000 hours per year) and dividing the value by the total hours worked in the year. |
• | “TSR” means total shareholder return. |
• | “TSX” refers to the Toronto Stock Exchange. |
• | “U.S.” refers to the United States of America. |
• | “U.S. Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended. |
• | “U.S. Securities Act” refers to the U.S. Securities Act of 1933, as amended. |
• | “Wells Fargo Securities” refers to Wells Fargo Securities, LLC, financial advisor to Exterran in connection with the transaction. |
Q: |
Why am I receiving this proxy statement/prospectus? |
A: | You are receiving this proxy statement/prospectus because Exterran has agreed to be acquired by Enerflex through a merger of merger sub with and into Exterran, with Exterran surviving as a wholly owned subsidiary of Enerflex. The Merger Agreement, which governs the terms and conditions of the transaction, is attached to this proxy statement/prospectus as Annex A. |
Q: |
What matters am I being asked to vote on? |
A: | In order to complete the transaction, among other things, Exterran stockholders must approve the proposal to adopt the Merger Agreement in accordance with the DGCL. |
• | a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Exterran’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Merger Agreement; and |
• | a proposal to approve the adjournment of the Exterran special meeting from time to time to solicit additional proxies in favor of the Exterran merger proposal if there are insufficient votes at the time of such adjournment to approve the Exterran merger proposal, to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to Exterran stockholders or if otherwise determined by the chairperson of the meeting to be necessary or appropriate. |
Q: |
When and where will the Exterran special meeting take place? |
A: | The Exterran special meeting will be held virtually via the internet on [ ], 2022, beginning at [ ] [am/pm], Central Time. The Exterran special meeting will be held solely via live audio webcast and there will not be a physical meeting location. Exterran stockholders will be able to attend the Exterran special meeting online and vote their shares electronically during the meeting by visiting |
www.proxydocs.com/EXTN. If you choose to attend the Exterran special meeting and vote your shares during the Exterran special meeting, you will need the control number located on your proxy card as described in the section entitled “ The Exterran Special Meeting— Date, Time and Place of the Exterran Special Meeting |
Q: |
Does my vote matter? |
A: | Yes, your vote is very important, regardless of the number of shares that you own. The transaction cannot be completed unless, among other things, the Exterran merger proposal is approved by Exterran stockholders. |
Q: |
What will Exterran stockholders receive for their Exterran common stock if the transaction is completed? |
A: | Under the Merger Agreement, at the effective time, each share of common stock of Exterran, par value $0.01 per share, issued and outstanding immediately prior to the effective time of the merger (other than certain excluded shares as described in the Merger Agreement) will be converted into the right to receive the “exchange ratio” of 1.021 validly issued, fully paid and non-assessable Enerflex common shares. Each holder of Exterran common stock will receive cash (without interest and less any applicable withholding taxes) in lieu of any fractional Enerflex common shares that such stockholder would otherwise receive as merger consideration in the transaction. Any cash amounts to be received by Exterran stockholders in lieu of any fractional Enerflex common shares will be rounded to the nearest cent. |
Q: |
How does the Exterran board recommend that I vote at the Exterran special meeting? |
A: | The Exterran board unanimously recommends that you vote “ FOR FOR FOR |
Q: |
Have any of Exterran’s stockholders already agreed to approve the proposal to adopt the Merger Agreement? |
A: | Yes, pursuant to voting agreements entered into with certain stockholders, all of the funds managed by Chai Trust Company, LLC that own Exterran common stock (which we refer to as “Exterran supporting stockholders”) and all of the directors and officers of Exterran have agreed, subject to the terms and conditions of the voting agreements, to vote the shares beneficially owned by them, specifically, an aggregate of 8,157,415 shares of Exterran common stock (or [24.57]% of the outstanding shares as of [ ], 2022) in the case of the Exterran supporting stockholders, and an aggregate of 1,218,412 shares of Exterran common stock (or [3.67]% of the outstanding shares as of [ ], 2022 and together with |
the Exterran supporting stockholders, [28.24]% of the outstanding shares as of [ ], 2022), in the case of the directors and officers of Exterran, in favor of the adoption of the Merger Agreement and the approval of the transaction. The Exterran supporting stockholders and directors and officers also agreed to certain restrictions on the transfer of the shares beneficially owned by that stockholder at such time (which we refer to as the “covered shares”), as well as restrictions on transfer of voting rights with respect to the covered shares. For additional information, see the section entitled “ The Voting Agreements |
Q: |
If my Exterran stock is represented by physical stock certificates, should I send my stock certificates now? |
A: | No. After the transaction is completed, you will receive a transmittal form from the exchange agent with instructions for the surrender of your Exterran stock certificates. Please do not send your stock certificates with your proxy card. |
Q: |
Who may vote at the Exterran special meeting? |
A: | All holders of record of shares of Exterran common stock who held shares at the close of business on [ ] are entitled to receive notice of, and to vote at, the Exterran special meeting. Each such holder of Exterran common stock is entitled to cast one vote on each matter properly brought before the Exterran special meeting for each share of Exterran common stock that such holder owned of record as of the record date. Attendance at the Exterran special meeting is not required to vote. See below and the section entitled “ The Exterran Special Meeting—Voting by Proxy or in Person |
Q: |
What is a proxy? |
A: | A proxy is a stockholder’s legal designation of another person to vote shares owned by such stockholder on their behalf. The document used to designate a proxy to vote your shares of Exterran common stock is referred to as a “proxy card.” |
Q: |
How many votes does each share of Exterran common stock have? |
A: | Each Exterran stockholder is entitled to one vote for each share of Exterran common stock held of record as of the record date. As of the record date, there were [ ] outstanding shares of Exterran common stock. |
Q: |
How many votes must be present to hold the Exterran special meeting? |
A: | A quorum is the minimum number of shares required to be represented, either by the appearance of the stockholder in person (including virtually) or through representation by proxy, to hold a valid meeting. |
Q: |
Where will the Enerflex common shares that I receive in the transaction be publicly traded? |
A: | Enerflex intends to apply to list the common shares of Enerflex received by Exterran stockholders in the merger on the NYSE or Nasdaq under the symbol “[ ].” The Enerflex common shares are currently |
listed on the TSX under the symbol “EFX”. Conditional listing approval of the Enerflex common shares on the NYSE or Nasdaq, as the case may be, and the conditional listing approval by the TSX of the Enerflex common shares to be issued to Exterran stockholders pursuant to the Merger Agreement is a condition to the closing of the Merger Agreement. [The TSX has conditionally approved the listing of the Enerflex common shares to be issued to Exterran stockholders pursuant to the Merger Agreement], which Enerflex common shares will be registered in the U.S. pursuant to this proxy statement/prospectus. Listing of such Enerflex common shares is subject to Enerflex fulfilling all of the requirements of the TSX on or before the business day following the closing date. Enerflex is required under the terms of the Merger Agreement to apply to the NYSE or Nasdaq to list the Enerflex common shares to be issued to Exterran stockholders pursuant to the Merger Agreement on the NYSE or Nasdaq, which Enerflex common shares will be registered in the U.S. pursuant to this proxy statement/prospectus. Listing will be subject to Enerflex fulfilling all the listing requirements of the NYSE or Nasdaq. There can be no assurance that the Enerflex common shares will be accepted for listing on either the NYSE or Nasdaq and the TSX. |
Q: |
What happens if the transaction is not completed? |
A: | If the Exterran merger proposal is not approved by Exterran stockholders, or if the transaction is not completed for any other reason, Exterran stockholders will not receive the merger consideration or any other consideration in connection with the transaction, and their Exterran common stock will remain outstanding. |
Q: |
What is a “broker non-vote”? |
A: | Under the NYSE rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. All of the Exterran proposals are “non-routine” matters under NYSE rules. |
Q: |
What stockholder vote is required for the approval of each Exterran proposal at the Exterran special meeting? What will happen if I fail to vote or abstain from voting on each Exterran proposal at the Exterran special meeting? |
A: | Proposal 1: Exterran Merger Proposal |
outstanding shares of Exterran common stock entitled to vote on the Exterran merger proposal. Accordingly, an Exterran stockholder’s abstention from voting or the failure of any Exterran stockholder to vote (including the failure of an Exterran stockholder who holds their shares in “street name” through a bank, broker or other nominee to give voting instructions to such bank, broker or other nominee with respect to the Exterran merger proposal) will have the same effect as a vote “ AGAINST |
Q: |
Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, the compensation that may be paid or become payable to Exterran’s named executive officers (i.e ., the Exterran compensation proposal)? |
A: | Under SEC rules, Exterran is required to seek a non-binding, advisory vote of its stockholders with respect to the compensation that may be paid or become payable to Exterran’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Merger Agreement. |
Q: |
What happens if Exterran stockholders do not approve, by non-binding, advisory vote, the compensation that may be paid or become payable to Exterran’s named executive officers (i.e., the Exterran compensation proposal)? |
A: | Because the vote to approve the Exterran compensation proposal is advisory in nature, the outcome of the vote will not be binding upon Exterran or the combined company, and the completion of the transaction is not conditioned or dependent upon the approval of the Exterran compensation proposal. Accordingly, the compensation that is subject to the vote, which is described in the section entitled “ The Exterran Merger Proposal—Interests of Exterran’s Directors and Executive Officers in the Transaction |
Q: |
How can I vote my shares at the Exterran special meeting? |
A: | Shares held directly in your name as the stockholder of record of Exterran may be voted during the Exterran special meeting via the special meeting website. If you choose to vote your shares during the virtual |
meeting, you will need the control number included on your proxy card in order to access the special meeting website and to vote as described in the section entitled “ The Exterran Special Meeting—Voting by Proxy or in Person |
Q: |
How can I vote my shares without attending the Exterran special meeting? |
A: | Stockholders of record of Exterran may direct their vote by proxy without attending the Exterran special meeting. If you are a stockholder of record, you can vote by proxy over the internet, or by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee. Additional information on voting procedures can be found under the section entitled “ The Exterran Special Meeting |
Q: |
What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in “street name?” |
A: | If your shares of Exterran common stock are registered directly in your name with AST, the transfer agent for Exterran, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote your shares directly at the Exterran special meeting. You may also grant a proxy for your vote directly to Exterran or to a third party to vote your shares at the Exterran special meeting. |
Q: |
If my shares of Exterran common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me? |
A: | No. Your bank, broker or other nominee will only be permitted to vote your shares of Exterran common stock if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares. Under NYSE rules, banks, brokers and other nominees who hold shares of Exterran common stock in “street name” for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are prohibited from exercising their voting discretion with respect to non-routine matters, which include all the Exterran proposals. As a result, absent specific instructions from the beneficial owner of such shares, banks, brokers and other nominees are not empowered to vote such shares. |
Q: |
What should I do if I receive more than one set of voting materials for the Exterran special meeting? |
A: | If you hold shares of Exterran common stock in “street name” and also directly in your name as a stockholder of record or otherwise, or if you hold shares of Exterran common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the Exterran special meeting. |
Q: |
If a stockholder gives a proxy, how are the shares of Exterran common stock voted? |
A: | Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Exterran common stock in the way that you indicate. For each item before the Exterran special meeting, you may specify whether your shares of Exterran common stock should be voted for or against, or should abstain from voting. |
Q: |
How will my shares of Exterran common stock be voted if I return a blank proxy? |
A: | If you sign, date and return your proxy and do not indicate how you want your shares of Exterran common stock to be voted, then your shares of Exterran common stock will be voted in accordance with the recommendations of the Exterran board: “ FOR FOR FOR |
Q: |
Can I change my vote after I have submitted my proxy? |
A: | Any Exterran stockholder giving a proxy has the right to revoke the proxy and change their vote before the proxy is voted at the Exterran special meeting by doing any of the following: |
• | by voting again by internet or telephone as instructed on your proxy card before the closing of the voting facilities at [ ], Central Time, on [ ]; |
• | by delivering a signed written notice of revocation to Exterran’s Corporate Secretary, provided such statement is received no later than [ ]; |
• | by submitting a properly signed and dated proxy card with a later date that is received by Exterran no later than the close of business on [ ]; or |
• | by voting at the Exterran special meeting via the special meeting website. |
Q: |
If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker or other nominee? |
A: | If your shares are held in the name of a bank, broker or other nominee and you previously provided voting instructions to your bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee to revoke or change your voting instructions. |
Q: |
Where can I find the voting results of the Exterran special meeting? |
A: | The preliminary voting results for the Exterran special meeting are expected to be announced at the Exterran special meeting. In addition, within four business days following the special meeting, Exterran will file the final voting results of the Exterran special meeting (or, if the final voting results have not yet been certified, the preliminary results) with the SEC on a Current Report on Form 8-K. |
Q: |
Do Exterran stockholders have dissenters’ or appraisal rights? |
A: | No. Because Exterran common stock will be listed on the NYSE as of the record date for the Exterran special meeting and Exterran stockholders are solely receiving Enerflex common shares (and such shares must be listed on NYSE or Nasdaq as a condition to the merger) and cash in lieu of fractions thereof as merger consideration in exchange for their Exterran common stock, no appraisal rights are available under Section 262 of the DGCL with respect to the merger or the other transactions contemplated by the Merger Agreement. |
Q: |
Are there any risks that I should consider in deciding whether to vote for the approval of the Exterran merger proposal? |
A: | Yes. You should read and carefully consider the risk factors set forth in the section entitled “ Risk Factors |
Enerflex that are contained in the documents that are incorporated by reference into this proxy statement/prospectus. |
Q: |
What happens if I sell my shares of Exterran common stock after the record date but before the Exterran special meeting? |
A: | The record date is earlier than the date of the Exterran special meeting. If you sell or otherwise transfer your shares of Exterran common stock after the record date but before the Exterran special meeting, you will, unless special arrangements are made, retain your right to vote at the Exterran special meeting. |
Q: |
Who is paying for the Exterran special meeting and this proxy solicitation? |
A: | Exterran has engaged Innisfree M&A Incorporated (which we refer to as “Innisfree”) to assist in the solicitation of proxies for the Exterran special meeting. Exterran estimates that it will pay Innisfree a fee of approximately $20,000, plus reimbursement for certain out-of-pocket |
Q: |
When is Enerflex’s acquisition of Exterran expected to be completed? |
A: | Subject to the satisfaction or waiver of the closing conditions described under the section entitled “ The Merger Agreement—Conditions that Must Be Satisfied or Waived for the Transaction to Occur 30-day extension to obtain antitrust approvals and financing. |
Q: |
What equity stake will Exterran stockholders hold in Enerflex immediately following the transaction? |
A: | Based on the number of Enerflex common shares and shares of Exterran common stock outstanding on [ ], 2022, at the effective time, former Exterran stockholders are expected to own approximately 27.5% of the outstanding Enerflex common shares, and persons who were Enerflex shareholders immediately prior to the transaction are expected to own approximately 72.5% of the outstanding Enerflex common shares. The relative ownership interests of Enerflex shareholders and former Exterran stockholders in Enerflex immediately following the transaction will depend on the number of Enerflex common shares and shares of Exterran common stock issued and outstanding immediately prior to the transaction. |
Q: |
If I am a holder of Exterran common stock, how will I receive the merger consideration to which I am entitled? |
A: | If you hold your shares of Exterran common stock in book-entry form, whether through The Depository Trust or otherwise, you will not be required to take any specific actions to exchange your shares for Enerflex common shares. Your shares of Exterran common stock will, at the effective time, be automatically |
exchanged for the Enerflex common shares and any cash in lieu of fractional Enerflex common shares to which you are entitled. If you instead hold your shares of Exterran common stock in certificated form, then, after receiving the proper and completed documentation from you following the completion of the transaction, [ ] or a bank or trust company or similar institution selected by Enerflex with Exterran’s prior approval will deliver to you the Enerflex common shares and any cash in lieu of any fractional Enerflex common shares to which you are entitled as merger consideration. More information may be found in the sections entitled “ The Merger Agreement—Merger Consideration The Merger Agreement—No Fractional Shares |
Q: |
Will the Enerflex common shares to be issued to Exterran stockholders at the effective time be traded on an exchange? |
A: | Yes. It is a condition to the completion of the transaction that the Enerflex common shares to be issued in connection with the merger be approved for listing on the NYSE or Nasdaq, subject to official notice of issuance, and the TSX, subject to customary listing conditions. Enerflex intends to apply to list the Enerflex common shares received by Exterran stockholders in the merger, on the NYSE or Nasdaq under the symbol “[ ]” and the TSX under the symbol “EFX.” |
Q: |
What are the material U.S. federal income tax consequences of the transaction? |
A: | Enerflex and Exterran intend that the transaction will qualify as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”) and that Section 367(a)(1) of the Code will not apply to cause the transaction to result in gain recognition by U.S. Exterran stockholders that exchange their shares of Exterran common stock for the merger consideration (other than any such holder of Exterran common stock who would be treated as a “five-percent transferee shareholder” (within the meaning of Section 1.367(a)-3(c)(5)(ii) of the U.S. Treasury regulations promulgated under the Code, which we refer to as the “Treasury Regulations”) of Enerflex following the transaction who does not enter into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 or does not comply with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain, which we refer to as an “excepted shareholder”). However, neither Enerflex nor Exterran intend to seek or obtain a ruling from the U.S. Internal Revenue Service (which we refer to as the “IRS”) regarding the U.S. federal income tax treatment of the transaction. In addition, neither the obligation of Enerflex nor of Exterran to complete the transaction is conditioned upon the receipt of an opinion from counsel to the effect that the transaction will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that the transaction will not result in gain recognition under Section 367(a)(1) of the Code by Exterran stockholders (other than any excepted stockholder). |
Q: |
What are the material Canadian federal income tax consequences of the transaction? |
A: | A Canadian resident holder (as defined in the section entitled “ The Exterran Merger Proposal—Certain Canadian Federal Income Tax Consequences |
Q: |
Is the exchange ratio subject to adjustment based on changes in the prices of Exterran common stock or Enerflex common shares? Can it be adjusted for any other reason? |
A: | For the merger consideration, for each share of Exterran common stock, you will receive a fixed number of Enerflex common shares equal to the exchange ratio of 1.021, not a number of shares that will be determined based on a fixed market value. The market value of Enerflex common shares and the market value of Exterran common stock at the effective time may vary significantly from their respective values on the date that the Merger Agreement was executed or at other dates, such as the date of this proxy statement/prospectus or the date of the Exterran special meeting. Stock price changes may result from a variety of factors, including changes in Enerflex’s or Exterran’s respective businesses, operations or prospects, regulatory considerations, and general business, market, industry or economic conditions. The exchange ratio will not be adjusted to reflect any changes in the market value of Enerflex common shares or the market value of Exterran common stock. Therefore, the aggregate market value of the Enerflex common shares that you are entitled to receive at the effective time could vary significantly from the value of such |
shares on the date of this proxy statement/prospectus or the date of the Exterran special meeting. See the risk factor entitled “ Because the exchange ratio is fixed and the market price of shares of Enerflex common shares has fluctuated and will continue to fluctuate, Exterran stockholders cannot be sure of the value of the merger consideration they will receive in the transaction prior to the closing of the transaction |
Q: |
What should I do now? |
A: | You should read this proxy statement/prospectus carefully and in its entirety, including the annexes, and return your completed, signed and dated proxy card(s) by mail in the enclosed postage-paid envelope or submit your voting instructions by telephone or over the internet as soon as possible so that your shares will be voted in accordance with your instructions. |
Q: |
How can I find more information about Exterran or Enerflex? |
A: | You can find more information about Exterran or Enerflex from various sources described in the section entitled “ Where You Can Find Additional Information |
Q: |
Whom do I call if I have questions about the Exterran special meeting or the transaction? |
A: | If you have questions about the Exterran special meeting or the transaction, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact: |
• | Because the exchange ratio is fixed and the market price of Enerflex common shares has fluctuated and will continue to fluctuate, Exterran stockholders cannot be sure of the value of the merger consideration they will receive in the transaction prior to the closing of the transaction. |
• | The Enerflex common shares to be received by Exterran stockholders at the effective time will have different rights from shares of Exterran common stock. |
• | In order to complete the transaction, Enerflex and Exterran must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions that become applicable to the parties, completion of the transaction may be delayed, jeopardized or prevented and the anticipated benefits of the transaction could be reduced. |
• | The Merger Agreement contains provisions that make it more difficult for Enerflex and Exterran to pursue alternatives to the transaction and may discourage other companies from trying to acquire Exterran for greater consideration than what Enerflex has agreed to pay. |
• | Directors and executive officers of Exterran have interests in the transaction that may differ from the interests of Exterran stockholders generally, including, if the transaction is completed, the receipt of financial and other benefits. |
• | Except in specified circumstances, if the effective time has not occurred by the end date, either Exterran or Enerflex may choose not to proceed with the transaction. |
• | Current Enerflex shareholders and Exterran stockholders will have a reduced ownership and voting interest after the transaction and will have less input into the management of the combined company. |
• | Exterran and Enerflex may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the transaction from being completed. |
• | If the transaction is not treated as a “reorganization” for U.S. federal income tax purposes, or if the requirements for exception to Section 367(a) of the Code are not met, Exterran stockholders may be required to recognize gain for U.S. federal income tax purposes upon their exchange shares of Exterran common stock for the merger consideration. |
• | Enerflex and Exterran may have difficulty attracting, motivating and retaining executives and other key employees in light of the combination of Enerflex and Exterran. |
• | If an alternative proposal to acquire Exterran is made, consummation of the transaction may be delayed or impeded. |
• | The financial forecasts are based on various assumptions that may not be realized. |
• | After Enerflex’s combination with Exterran, Enerflex may fail to realize projected benefits and cost savings of the combination, which could adversely affect the value of Enerflex common shares. |
• | Resale of Enerflex common shares following the transaction may cause the market value of Enerflex common shares to decline. |
• | The unaudited pro forma condensed consolidated financial information of Exterran and Enerflex is presented for illustrative purposes only and may not be indicative of the results of operations or financial condition of the combined company following the combination of Enerflex and Exterran. |
• | The additional indebtedness that Enerflex will incur in connection with the transaction could adversely affect Enerflex’s financial position, including by decreasing its business flexibility, ability to satisfy its debt obligations or achieve its desired credit rating. |
• | Enerflex or Exterran may waive one or more of the closing conditions without re-soliciting Enerflex shareholder approval or Exterran stockholder approval, respectively. |
• | There may be less publicly available information concerning Enerflex than there is for issuers that are not foreign private issuers because, as a foreign private issuer, Enerflex is exempt from a number of rules under the U.S. Exchange Act and is permitted to file less information with the SEC than issuers that are not foreign private issuers and Enerflex, as a foreign private issuer, is permitted to and intends to follow home country practice in lieu of the listing requirements of the NYSE, subject to certain exceptions. |
• | As a foreign private issuer, Enerflex will not be subject to the provisions of Regulation FD or U.S. proxy rules and will be exempt from filing certain U.S. Exchange Act reports, which could result in the Enerflex common shares being less attractive to investors. |
• | Enerflex has not yet completed its determination regarding whether its existing internal controls over financial reporting are compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. |
• | Enerflex is organized under the laws of Canada and a substantial portion of its assets are, and many of its directors and officers reside, outside of the U.S. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the U.S. against Enerflex, its officers, or members of the Enerflex board. |
• | Exchange rate fluctuations may adversely affect the foreign currency value of Enerflex common shares and any dividends. |
• | Energy prices, industry conditions, and the cyclical nature of the energy industry could adversely impact Enerflex’s business and financial operations. |
• | Enerflex’s failure to execute on its projects in a timely and cost-effective manner could have a material adverse effect on Enerflex. |
• | The effects of climate change in the markets Enerflex operates in could result in increased costs, damage to assets and supply chain disruptions, among other impacts, which would adversely impact Enerflex’s business and financial operations. |
• | Technological advances related to alternative energy sources may reduce demand for Enerflex’s products and services. |
• | Investor sentiment regarding the oil and gas industry may impact Enerflex’s access to capital while evolving environmental, social and governance disclosure standards are attracting increased scrutiny from stakeholders and could lead to more costly policies and practices being implemented to the detriment of Enerflex. |
• | Enerflex’s rental contracts vary in duration and Enerflex’s inability to extend or renew rental contracts with customers could adversely impact Enerflex’s business. |
• | Contracted revenue may be adversely impacted as the result of customer cash flow and access to capital constraints. |
• | Enerflex is subject to evolving Health, Safety and Environment (which we refer to as “HSE”) laws and regulations which are becoming increasingly stringent and may have adverse impacts on Enerflex’s financial results and operations. |
• | Enerflex is exposed to various risks associated with conducting its operations internationally. |
• | Enerflex relies on suppliers to source raw materials, component parts and finished products and any loss of relationship with such suppliers could negatively impact Enerflex’s results or operations and customer relationships. |
• | Enerflex is subject to risks inherent in the oil and natural gas services industry which could expose it to substantial liability. To the extent a significant event falls outside the scope of Enerflex’s insurance policies, Enerflex’s results could be materially impacted. |
• | The Enerflex common shares have no trading history in the United States. |
• | The Enerflex common shares will be traded on more than one market and this may result in price variations. |
Date |
Enerflex common shares TSX(1) |
Exterran common stock NYSE(1) |
Equivalent value of merger consideration per share of Exterran stock based on price of Enerflex common shares on TSX |
|||||||||
(C$) |
(US$) |
(C$) |
||||||||||
January 21, 2022 |
7.90 | 3.00 | 8.07 | |||||||||
[ ], 2022 |
(1) | Share prices are based on closing prices. |
• | the affirmative vote of the holders of a majority of the outstanding shares of Exterran common stock in favor of the adoption of the Merger Agreement by Exterran stockholders; |
• | the affirmative vote of a majority of the votes cast by the holders of outstanding Enerflex common shares represented in person or by proxy at the Enerflex special meeting and entitled to vote on the Enerflex share issuance resolution in connection with the transaction by Enerflex shareholders; |
• | the Form F-4 (of which this proxy statement/prospectus forms a part) having become effective in accordance with the provisions of the U.S. Securities Act and no stop order suspending the effectiveness of the Form F-4 having been issued and remaining in effect and no proceeding to that effect having been commenced, unless subsequently withdrawn; |
• | no governmental entity of competent jurisdiction having enacted, issued or promulgated any law that remains in effect that prohibits or makes illegal the consummation of the transaction; |
• | the approvals by the antitrust authorities having been obtained from the antitrust authorities with respect to the transactions contemplated by the Merger Agreement, or deemed obtained as a result of the expiration of all statutory waiting periods, as required; and |
• | Enerflex common shares to be issued to Exterran stockholders pursuant to the Merger Agreement having been conditionally approved for listing on the NYSE or Nasdaq, subject to official notice of issuance, and the TSX, subject to customary listing requirements. |
• | certain representations and warranties of Enerflex and merger sub in the Merger Agreement relating to the absence of certain changes or events that would have a material adverse effect of Enerflex being true and correct in all respects, as of the date of the Merger Agreement and as of the closing date as though made as of such date; |
• | certain representations and warranties of Enerflex and merger sub in the Merger Agreement relating to the capitalization of Enerflex being true and correct in all respects, each as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except for de minimis |
• | certain representations and warranties of Enerflex in the Merger Agreement relating to the qualification, organization, existence and good standing of Enerflex and merger sub, the requisite power and authority of Enerflex and merger sub to enter into the Merger Agreement, the proper authorization by the board of Enerflex and the board and the sole stockholder of merger sub to approve the Merger Agreement and related matters and resolving to recommend that Enerflex shareholders adopt the Merger Agreement, the merger and other transactions contemplated do not conflict with Enerflex’s organizational documents, and no finders or brokers being true and correct in all material respects, each as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date); |
• | all other representations and warranties of Enerflex and merger sub in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of |
such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except where the failure of such representations and warranties to be true or correct would not have or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Enerflex, provided that for the purposes of this section, all representations and warranties will be read without giving effect to any limitation indicated by the words material adverse effect or any general materiality qualifier; |
• | Enerflex and merger sub having performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by the Merger Agreement to be performed or complied with by them prior to the closing of the transaction; |
• | no event, change, occurrence, effect or development having occurred since January 24, 2022, that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Enerflex; and |
• | Exterran’s receipt of a certificate, dated as of the closing date and executed by the chief executive officer or another senior officer of Enerflex, certifying that the conditions set forth in the bullets directly above have been satisfied. |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the absence of certain changes or events that would have a material adverse effect being true and correct in all respects, as of the date of the Merger Agreement and as of the closing date as though made as of such date; |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the capitalization of Exterran being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except for de minimis |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the qualification, organization, existence and good standing of Exterran, the proper issuance under applicable securities laws for the outstanding capital stock of Exterran, the requisite power and authority of Exterran to enter into the Merger Agreement, the proper authorization by the board of Exterran to approve the Merger Agreement and related matters and resolving to recommend that Exterran stockholders adopt the Merger Agreement, the merger and other transactions contemplated do not conflict with Exterran’s organizational documents, and no finders or brokers being true and correct in all material respects, each as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date); |
• | all other representations and warranties of Exterran in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be true or correct, individually or in the aggregate, would not have or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Exterran, provided that for the purposes of this section, all representations and warranties will be read without giving effect to any limitation indicated by the words material adverse effect or any general materiality qualifier; |
• | Exterran having performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by the Merger Agreement to be performed or complied with by it prior to the closing of the transaction; |
• | no event, change, occurrence, effect or development having occurred since January 24, 2022, that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Exterran; and |
• | Enerflex’s receipt of a certificate, dated as of the closing date and executed by the chief executive officer or another senior officer of Exterran, certifying that the conditions set forth in the bullets directly above have been satisfied. |
• | solicit, initiate or knowingly encourage or knowingly facilitate any inquiry regarding, or the making or submission of any proposal, offer or indication of interest that constitutes, or would reasonably be expected to lead to, or result in, an alternative proposal; |
• | engage in, knowingly encourage, continue or otherwise participate in any discussions or negotiations with any person regarding an alternative proposal or any communications regarding or any inquiry, proposal or offer that would reasonably be expected to lead to, or result in, an alternative proposal (except to notify such person that the provisions of the Merger Agreement prohibit any such discussions or negotiations); |
• | furnish any nonpublic information relating to such party or its subsidiaries in connection with or for the purpose of facilitating an alternative proposal or any inquiry, proposal, offer or indication of interest that would reasonably be expected to lead to, or result in, an alternative proposal and request the prompt return or destruction of any confidential information provided to any third party in connection with an alternative proposal; |
• | recommend or enter into any other letter of intent, memorandum of understandings, agreement in principle, option agreement, acquisition agreement, Merger Agreement, joint venture agreement, partnership agreement or other similar agreement with respect to an alternative proposal (except for permitted confidentiality agreements as discussed below); |
• | approve any transaction under, or any third party becoming an “interested stockholder” under Section 203 of the DGCL (or similar takeover statute applicable to Enerflex under Canadian law); or |
• | adopt, approve, endorse, authorize, agree or publicly propose to adopt, approve, endorse or authorize to do any of the foregoing or otherwise knowingly facilitate any effort or attempt to make an alternative proposal. |
• | such party may furnish non-public information to the third party making such alternative proposal (including its representatives, including its equity and debt financing sources) in response to a request for such non-public information, if, and only if, (A) prior to furnishing such information, Exterran or Enerflex, as applicable, receives from the third party making such alternative proposal, an executed confidentiality agreement with confidentiality and use provisions that, in each case, are not less restrictive to such third party than the terms in the Confidentiality Agreement, dated as of October 3, 2021, between Exterran and Enerflex are to the other party (it being understood that such confidentiality agreement does not need to include any “standstill” or similar provisions or otherwise prohibit the making or amendment of any alternative proposal, but such confidentiality agreement will not grant such third party the exclusive right to negotiate with Exterran or Enerflex, as applicable); and (B) such party also provides to the other party, prior to or substantially concurrently with the time such non-public information is provided or made available to such third party, any non-public information furnished to such third party that was not previously furnished to the other party to the Merger Agreement; provided, however, that if the third party making such alternative proposal is a known competitor of Exterran or Enerflex, such party will not provide any commercially sensitive non-public information to such third party other than in accordance with customary “clean room” or other similar procedures designed to limit the disclosure of competitively sensitive information; and |
• | such party may engage in discussions or negotiations with the third party (including its representatives) with respect to the alternative proposal. |
• | by mutual written consent of Exterran and Enerflex; |
• | by either Exterran or Enerflex, if: |
• | the effective time has not occurred on or before the end date; however, if the conditions in the Merger Agreement have not been satisfied or the debt financing has not been obtained on prior to the end date, then the end date will be automatically extended for thirty (30) days. Further, if the marketing period has started within fifteen (15) calendar days of the end date but has not ended or will not end on or prior to the end date, the end date will be automatically extended to the next business date after the last scheduled day of such marketing period. The right to terminate the Merger Agreement pursuant to this prong is not available to the party if the failure of closing to occur by the end date is due to such party’s failure to perform its obligations, covenants or agreement set forth in the Merger Agreement; |
• | any court or other governmental entity of competent jurisdiction that must grant a required antitrust approval has denied approval of the merger and such denial has become final and nonappealable, or any governmental entity of competent jurisdiction has issued a final and nonappealable order permanently enjoining or otherwise prohibiting or making illegal the consummation of the transaction; unless the failure to obtain a required antitrust approval is due to the failure of the party seeking termination to perform or observe its obligations, covenants or agreement set forth in the Merger Agreement; |
• | Exterran stockholder approval is not obtained at Exterran special meeting or at any adjournment or postponement thereof; or |
• | Enerflex shareholder approval is not obtained at Enerflex special meeting or at any adjournment or postponement thereof; or |
• | by Exterran: |
• | if there has been a breach or failure to perform in any material respect by Enerflex or merger sub of any representation, warranty, covenant or agreement set forth in the Merger Agreement and such breach or failure would result in a failure of certain conditions to closing and such breach or failure is not curable prior to the end date, or if curable prior to the end date, has not been cured within 20 business days after the giving of notice thereof by Exterran; however, the right to terminate the Merger Agreement due to such a breach or failure will not be available to Exterran if Exterran is in material breach of any representation, warranty, agreement or covenant contained in the Merger Agreement; |
• | prior to receipt of Exterran stockholder approval, in order to enter into a definitive agreement providing for a superior proposal in respect of Exterran to the extent permitted and subject to compliance with the terms of the Merger Agreement; however, immediately prior to or contemporaneously with the termination of the Merger Agreement, Exterran will pay to Enerflex the Exterran termination fee; |
• | prior to receipt of Enerflex shareholder approval, if Enerflex board has effected a change of recommendation or Enerflex materially breaches its non-solicitation obligations under the Merger Agreement; or |
• | if all the conditions to the merger under the Merger Agreement have been satisfied (other than conditions which by their nature cannot be satisfied until closing), Enerflex and merger sub fail to consummate the closing on the anticipated closing date due to failure of all or a portion of the debt financing to be funded at closing for any reason, and Exterran has delivered to Enerflex written notice confirming that the conditions to merger have been satisfied or waived, as applicable, and Exterran is ready to close but Enerflex and merger sub fail to consummate the closing within five business days following the later of the date the closing should have occurred and receipt of the written notice by Exterran; or |
• | by Enerflex: |
• | if there has been a breach or failure to perform in any material respect by Exterran of any representation, warranty, covenant or agreement set forth in the Merger Agreement and such breach or failure would result in a failure of certain conditions to closing and such breach or failure is not curable prior to the end date, or if curable prior to the end date, has not been cured within 20 business days after the giving of notice thereof by Enerflex; however, the right to terminate the Merger Agreement due to such a breach or failure will not be available to Enerflex if Enerflex or merger sub is in material breach of any representation, warranty, agreement or covenant contained in the Merger Agreement; |
• | prior to the receipt of Enerflex shareholder approval, in order to enter into an agreement providing for an Enerflex superior proposal in accordance with the terms of the Merger Agreement; however, immediately prior to or contemporaneously with the termination of the Merger Agreement, Enerflex pays to Exterran the Enerflex termination fee; or |
• | prior to receipt of Exterran stockholder approval, if Exterran board has effected a change of recommendation, or Exterran materially breaches its non-solicitation obligations under the Merger Agreement. |
• | Exterran may experience negative reactions from the financial markets, including negative impacts on trading prices of Exterran common stock, and from Exterran’s employees, suppliers, vendors, regulators or customers; |
• | Exterran will be required to pay Enerflex a termination payment of $10.0 million, in consideration for the disposition by Enerflex of its contractual rights under the Merger Agreement, if the Merger Agreement is terminated in certain circumstances, including because the Exterran board has changed its recommendation in favor of the transaction or in certain circumstances where, after the date of the Merger Agreement, Exterran enters into an agreement providing for an alternative proposal (for these purposes, substituting in the definition of alternative proposal “50%” for “20%” and for “80%” in each place each such phrase appears, and we refer to such proposal, as a “qualifying transaction”) in respect of Exterran that is publicly proposed or publicly disclosed prior to, and not publicly withdrawn at least two business days prior to, the Exterran special meeting following termination of the Merger Agreement; |
• | the Merger Agreement places certain restrictions on the conduct of Exterran’s business, and such restrictions, the waiver of which is subject to the consent of Enerflex, may prevent Exterran from making certain material acquisitions, entering into or amending certain contracts, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the transaction or, with respect to certain actions, prior to the control date, that Exterran would have made, taken or pursued if these restrictions were not in place; and |
• | matters relating to the transaction (including integration planning) will require substantial commitments of time and resources by Exterran’s management and the expenditure of significant funds in the form of fees and expenses, which would otherwise have been devoted to day-to-day operations |
• | reduced global economic activity and a corresponding decrease in demand for oil and natural gas, which could result in producers being forced to shut-in production and serve to lower demand for Enerflex’s products and services; |
• | impaired supply chain as a result of mass quarantines, lockdowns, or border closures, thereby limiting the supply and increasing the cost of goods and services used in Enerflex’s operations; and |
• | restricted workforce as a result of quarantines and health impacts, rendering employees unable to work or travel. |
• | changes in political and economic conditions, including general political unrest and the imposition of sanctions on countries in which we operate or on customers which we service; |
• | adverse fines or sanctions from regulatory bodies, legal judgments or settlements; |
• | changes in foreign government policies, laws, regulations, and regulatory requirements, or the interpretation, application and/or enforcement thereof; |
• | tax increases or changes in tax laws or in the interpretation, application and/or enforcement thereof; |
• | difficulties in staffing and managing foreign operations including logistical, safety, security, and communication challenges; |
• | difficulties, delays, and expenses that may be experienced or incurred in connection with the movement and clearance of personnel and goods through the customs and immigration authorities of multiple jurisdictions; |
• | recessions and other economic crises that may impact Enerflex’s cost of conducting business in those countries; |
• | the adoption of new, or the expansion of existing, trade restrictions, or embargoes; |
• | limitations on Enerflex’s ability to repatriate cash, funds, or capital invested or held in jurisdictions outside Canada; |
• | difficulty or expense of enforcing contractual rights due to the lack of a developed legal system or otherwise; |
• | confiscation, expropriation, or nationalization of property without fair compensation; |
• | difficulties in engaging third-party agents to interface with clients or otherwise act on Enerflex’s behalf in certain jurisdictions; and |
• | failure to comply with applicable anti-corruption, anti-bribery, sanctions, and trade laws. |
• | Making it more difficult to satisfy contractual obligations; |
• | Increasing vulnerability to general adverse economic conditions and industry conditions; |
• | Limiting the ability to fund future working capital, capital expenditures or acquisitions; |
• | Limiting the ability to refinance debt in the future or borrow additional funds to fund ongoing operations; and |
• | Paying future dividends to shareholders. |
Enerflex Common Shares TSX |
Exterran Common Stock NYSE |
|||||||||||||||
High |
Low |
High |
Low |
|||||||||||||
(in C$) |
(in US$) |
|||||||||||||||
Annual information for the past five calendar years |
||||||||||||||||
2021 |
11.02 | 6.51 | 5.70 | 2.84 | ||||||||||||
2020 |
12.22 | 4.52 | 8.69 | 3.35 | ||||||||||||
2019 |
20.00 | 10.30 | 19.70 | 5.20 | ||||||||||||
2018 |
18.39 | 13.69 | 33.10 | 17.00 | ||||||||||||
2017 |
20.34 | 14.56 | 33.89 | 23.51 | ||||||||||||
Quarterly information for the past two years 2021 |
||||||||||||||||
Fourth Quarter |
11.02 | 7.16 | 5.19 | 2.84 | ||||||||||||
Third Quarter |
9.43 | 6.77 | 4.94 | 3.47 | ||||||||||||
Second Quarter |
8.94 | 7.51 | 5.45 | 2.87 | ||||||||||||
First Quarter |
9.58 | 6.51 | 5.70 | 3.36 | ||||||||||||
2020 |
||||||||||||||||
Fourth Quarter |
7.57 | 4.67 | 5.13 | 3.35 | ||||||||||||
Third Quarter |
6.31 | 4.62 | 5.94 | 4.03 | ||||||||||||
Second Quarter |
6.84 | 4.52 | 8.69 | 3.52 | ||||||||||||
First Quarter |
12.22 | 4.81 | 8.50 | 4.60 |
Date |
Enerflex common shares TSX |
Exterran common stock NYSE |
Equivalent value of merger consideration per share of Exterran stock based on price of Enerflex common shares on TSX |
|||||||||
(C$) |
(US$) |
(C$) |
||||||||||
January 21, 2022 |
7.90 | 3.00 | 8.07 | |||||||||
[ ], 2022 |
[ | ] | [ | ] | [ | ] |
Enerflex |
Enerflex |
|||||||
(C$) |
(US$)* |
|||||||
Year Ended December 31, |
||||||||
2021 |
.085 | .067 | ||||||
2020 |
.175 | .137 | ||||||
2019 |
.430 | .331 | ||||||
2018 |
.390 | .286 | ||||||
2017 |
.350 | .279 |
* | Based on Enerflex annual dividend converted to US$ at the Canadian dollar/U.S. dollar annual exchange rate, as reported by the Bank of Canada. |
• | Proposal 1 Adoption of the Merger Agreement |
• | Proposal 2 Approval, on an Advisory (Non-Binding) Basis, of Certain Merger-Related Compensatory Arrangements with Exterran’s Named Executive Officers |
• | Proposal 3 Adjournment of the Exterran Special Meeting |
• | Proposal 1: FOR |
• | Proposal 2: FOR |
• | Proposal 3: FOR |
Proposal |
Required Vote |
Effect of Certain Actions | ||
Proposal 1 Exterran Merger Proposal |
Under Delaware law, approval requires the affirmative vote of at least a majority of the shares of Exterran common stock outstanding as of the record date and entitled to vote on the Exterran merger proposal (assuming a quorum is present). | Shares of Exterran common stock not present at the Exterran special meeting, shares that are present and not voted on the Exterran merger proposal, including due to the failure of any Exterran stockholder who holds their shares in “street name” through a bank, broker or other nominee to give voting instructions to such bank, broker or other nominee with respect to the Exterran merger proposal, and abstentions will have the same effect as a vote “ AGAINST | ||
Proposal 2 Exterran Compensation Proposal |
Pursuant to Exterran’s bylaws, approval requires the affirmative vote of at least a majority of the votes cast affirmatively or negatively on the Exterran compensation proposal. | Assuming a quorum is present, the failure to return or submit your proxy or to attend the Exterran special meeting will have no effect on the Exterran compensation proposal. The failure of any shares present or represented by proxy at the Exterran special meeting to vote affirmatively or negatively on the Exterran compensation proposal will have no effect on such proposal. | ||
Proposal 3 Exterran Adjournment Proposal |
Pursuant to Exterran’s bylaws, assuming a quorum is present at the Exterran special meeting, approval of the Exterran adjournment proposal requires the affirmative vote of at least a majority of the votes cast affirmatively or negatively on the Exterran adjournment proposal. If a quorum is not present, the Exterran adjournment proposal requires the approval of the stockholders present at the Exterran special meeting, by the |
Whether or not a quorum is present, the failure to return or submit your proxy or to attend the Exterran special meeting will have no effect on the Exterran adjournment proposal. Assuming a quorum is present, the failure of any shares present or represented by proxy at the Exterran special meeting to vote affirmatively or negatively on the Exterran adjournment proposal will have no effect on such proposal. |
Proposal |
Required Vote |
Effect of Certain Actions | ||
affirmative vote of the holders of a majority in voting power thereof; provided that the chairperson of the Exterran special meeting may also adjourn such meeting in accordance with Exterran’s bylaws. | Assuming a quorum is not present, the failure of any shares present or represented by proxy at the Exterran special meeting to vote affirmatively on the Exterran adjournment proposal will be treated as a vote “ AGAINST |
• | By Internet |
• | By Telephone |
• | By Mail |
• | Via the Special Meeting Website |
• | by voting again by internet or telephone as instructed on your proxy card before the closing of the voting facilities at [ ] [am/pm], Central Time, on [ ]; |
• | by delivering a signed written notice of revocation to Exterran’s Corporate Secretary, provided such statement is received no later than [ ]; |
• | by submitting a properly signed and dated proxy card with a later date that is received by Exterran no later than the close of business on [ ]; or |
• | by voting at the Exterran special meeting via the special meeting website. |
• | The current, historical and projected financial condition and results of operations of Exterran on a standalone basis, including the risk-adjusted probabilities associated with achieving Exterran’s long-term strategic plan as a standalone company amid greater industry volatility as compared to the opportunity afforded to the Exterran stockholders via the merger consideration. |
• | The Exterran board’s analysis of other potential strategic alternatives for Exterran, including continuing on as an independent company, monetizing Exterran’s water business, and the potential to acquire, be acquired or combine with other third parties. |
• | The oral opinion of Wells Fargo Securities, Exterran’s financial advisor, delivered to the Exterran board, which was confirmed by delivery of a written opinion, dated as of January 23, 2022, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Wells Fargo Securities in preparing its opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the Exterran stockholders, as more fully described below under the section entitled “ Opinion of the Financial Advisor to Exterran — Opinion of Wells Fargo Securities, LLC |
• | The fact that Wells Fargo Securities and King & Spalding were involved throughout the negotiations and updated the Exterran board directly and regularly, which provided the Exterran board with perspectives on the negotiation in addition to those of management. |
• | The Exterran board’s expectation that the combined company will have the ability to leverage the increased scale of the resulting entity to make additional investments in innovation and technology to address competition and disruption in the oilfield and energy services industries and enhance customer offerings on a global basis. |
• | The fact that Enerflex obtained committed financing to refinance or repay Exterran’s existing indebtedness and pay other expenses in connection with the transaction. |
• | The Exterran board’s belief that Enerflex’s earnings and prospects, and the synergies potentially available in the proposed merger, which are estimated to be up to at least $40.0 million of annual run-rate synergies within 12 to 18 months following the Closing, would create the opportunity for the combined company to have superior future earnings and prospects compared to Exterran’s earnings and prospects on a standalone basis. |
• | The Exterran board’s belief that the pro forma profile of the combined company is expected to have sufficient liquidity and financial flexibility to execute on its strategy, and return capital to shareholders. |
• | The Exterran board’s belief that the combined company will generate significant free cash flow, allowing the return of cash to the combined investor base through dividends, share repurchases and similar actions. |
• | The Exterran board’s belief that the merger will combine complementary product lines, global presence and technology, create a premier integrated global provider of energy infrastructure with the ability to serve customers through strong positions in key business lines and have a fully integrated product and services platform. |
• | The Exterran board’s belief that the merger will result in operational improvements, including margin improvement, personnel reorganization, real estate, corporate costs, research and development optimization and other administrative and organizational efficiencies. |
• | The fact that Exterran stockholders as of immediately prior to the completion of the merger are expected to own approximately twenty-seven and one half percent (27.5%) of the fully diluted shares of the combined company immediately following the completion of the merger, and will have the opportunity to share in the future growth and expected synergies of the combined company while retaining the flexibility of selling all or a portion of those shares. |
• | The historical and current market prices of Exterran common stock and Enerflex common shares. |
• | The value to be received by the Exterran stockholders in the merger, including the fact that, as of January 21, 2022, the transaction value represented a premium of 18% to Exterran’s enterprise value. |
• | The fact that the value to be received by the Exterran stockholders in the merger represented a premium of approximately 115% to the closing market price of Exterran on January 21, 2022 based on Enerflex’s closing market price on the same day, up from a premium of approximately 45% to the closing market price of Exterran on August 31, 2021 based on Enerflex’s closing market price on the same day. |
• | The recommendation of Exterran management in favor of the transaction. |
• | The fact that the exchange ratio is fixed, which the Exterran board believes is consistent with market practice for transactions of this type and with the strategic purpose of the transaction, and which also allows for the Exterran stockholders to potentially benefit from any increase in the trading price of Enerflex common shares between the announcement and completion of the merger. |
• | The customary nature of the representations, warranties and covenants of Exterran and Enerflex in the Merger Agreement. |
• | The flexibility permitted under the interim operating covenants which restrict the conduct of Exterran’s business prior to closing of the merger, and the fact that Enerflex is subject to certain restrictions on the conduct of its business prior to the closing of the merger. |
• | The Exterran board’s belief that the terms of the Merger Agreement, taken as a whole, increase the degree of certainty that the merger will be completed, including the fact that: |
• | There are limited circumstances in which the Enerflex board may terminate the Merger Agreement or change its recommendation that its shareholders approve the issuance of Enerflex common shares in connection with the merger; |
• | Enerflex is required to use reasonable best efforts to obtain regulatory approvals, including agreeing to divestitures and remedies, unless (1) such divestiture or remedy would, in the good |
faith reasonable judgment of Enerflex, be reasonably expected to materially impair or diminish the benefits or advantages it expects to receive from the merger and the transactions contemplated by the Merger Agreement, or (2) such divestiture or remedy would have a material adverse effect on the business of (x) Enerflex and the Enerflex subsidiaries, taken as a whole, or (y) Exterran and the Exterran subsidiaries, taken as a whole; |
• | Enerflex has agreed to pay a termination fee of $20.0 million to Exterran less any amounts required to be withheld or deducted on account of taxes, if Exterran terminates the Merger Agreement due to the Enerflex board making a change of recommendation or if Enerflex terminates the Merger Agreement to enter into a definitive agreement providing for a superior proposal; |
• | Enerflex has agreed to pay a termination fee of $30.0 million to Exterran less any amounts required to be withheld or deducted on account of taxes, if Exterran terminates the Merger Agreement in connection with Enerflex’s failure to secure all, or any portion of, the debt financing to be funded at closing for any reason; and |
• | The Merger Agreement contains no financing condition. |
• | The corporate governance provisions of the Merger Agreement, including the provisions providing that the Enerflex board would include the representation of one Exterran designee, selected by Enerflex, and that Enerflex will take all actions necessary to cause the Exterran director to be renominated for election so that such director has the opportunity to remain on Enerflex’s board for at least one (1) year following the effective time. |
• | The review of the Exterran board, with the assistance of Exterran’s advisors, of the terms and conditions of other recent comparable transactions, including the governance terms, premiums relative to share prices, consideration mix, credit ratings and leverage targets, and announced synergy targets, and its overall belief that the terms of the Merger Agreement were consistent with market practice and in the best interest of Exterran and the Exterran stockholders. |
• | The fact that the Exterran board, subject to certain conditions and the potential payment of a termination fee of $10.0 million, less any amounts required to be withheld or deducted on account of taxes, has the right to change its recommendation in support of the merger in response to an intervening event, even if there is no competing or superior proposal, if the Exterran board determines that the failure to take such action would likely be inconsistent with its fiduciary duties. |
• | The fact that the Exterran board has the right to terminate the Merger Agreement to enter into a definitive agreement related to a superior proposal, subject to giving Enerflex notice and an opportunity to propose changes to the Merger Agreement, and the payment of a termination fee of $10.0 million, less any amounts required to be withheld or deducted on account of taxes, in the event of actual termination. The fact that the Exterran board, after discussing this termination fee with its advisors, believed that such fee was consistent with market practice and would not preclude or deter a willing and financially capable third party, were one to exist, from making a superior proposal following the announcement of a transaction with Enerflex. |
• | The expected qualification of the merger as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. |
• | Exterran’s ability to specifically enforce Enerflex’s obligations under the Merger Agreement, including Enerflex’s obligations to complete the merger. |
• | The risks and costs to Exterran if the merger is not completed, including the diversion of management attention, potential employee attrition and the potential effect on Exterran’s business and relations with customers, suppliers and vendors. |
• | The transaction costs to be incurred in connection with the merger. |
• | The restrictions on the conduct of Exterran’s business prior to completion of the merger, which could delay or prevent Exterran from undertaking material strategic opportunities that might arise pending completion of the merger to the detriment of the Exterran stockholders. |
• | The risk of not realizing all of the anticipated strategic and other benefits between Exterran and Enerflex, including, without limitation, the challenges of combining the businesses, operations and workforces of Exterran and Enerflex, the risk that expected operating efficiencies and cost savings may not be realized or will cost more to achieve than anticipated, and the risk that agreed upon divestitures or remedies required by antitrust authorities may decrease the anticipated strategic and other benefits of the merger to the combined company. |
• | The fact that the merger consideration is all share consideration at a fixed number of Enerflex common shares, which could result in the Exterran stockholders being adversely affected by a decrease in the trading price of Enerflex common shares after the date of execution of the Merger Agreement. |
• | The fact that, under the DGCL, because the merger consideration is in the form of a stock for stock exchange, no appraisal rights are available to the Exterran stockholders with respect to the merger or the other transactions contemplated by the Merger Agreement. |
• | The fact that the Exterran directors and executive officers may have interests in the merger that are different from, or in addition to, those of the Exterran stockholders generally, including certain interests arising from the employment and compensation arrangements of Exterran’s executive officers, and the manner in which they would be affected by the merger. |
• | The risk factors of the type and nature described under the sections entitled “ Risk Factors Cautionary Statement Regarding Forward-Looking Statements |
• | Creates a premier integrated global provider of energy infrastructure: |
• | Highly complementary product lines, geographies, and asset bases provide enhanced scale, efficiencies, and expanded offerings for customers. |
• | The pro forma geographic exposure will be well-balanced with approximately 25-35% of revenues from each of North America, the Middle East, and Latin America. |
• | Accelerates Growth of Gross Margin from Recurring Segments: |
• | Combination significantly accelerates the generation of predictable, recurring gross margin from energy infrastructure and after-market services platforms. |
• | Over 70% of the combined entity’s gross margin will derive from recurring sources, strengthening its margin profile and reducing market cyclicality. |
• | Offers Improved Operational Efficiencies: |
• | Expect to realize at least US$40 million of annual run-rate synergies within 12 to 18 months after closing through overhead savings and operating efficiencies. |
• | Accretive to Shareholders: |
• | Expected to approximately double Adjusted EBITDA and be over 50% accretive to cash flow per share and approximately 50% accretive to earnings per share (subject to purchase price allocation to be determined upon closing), for Enerflex shareholders. |
• | Enhanced scale with pro forma 2023 Adjusted EBITDA of US$360 million to US$400 million, inclusive of synergies. |
• | Meaningful excess free cash flow beginning in 2023 that supports debt reduction, shareholder returns, and continued growth. |
• | After closing, Enerflex expects to maintain its quarterly dividend of C$0.025 per common share. |
• | Transaction Benefits From a Long-Term, Stable Capital Structure: |
• | The combined entity will benefit from a capital structure that provides ample liquidity. |
• | In conjunction with the transaction, Enerflex has entered into a binding agreement with the Royal Bank of Canada to provide Enerflex with a fully committed financing consisting of a US$700 million 3-year revolving credit facility and a US$925 million 5-year bridge loan facility. The bridge loan will provide financing to backstop an anticipated issuance of new debt securities prior to closing of the transaction. The committed financing is sufficient to fully repay existing Enerflex and Exterran notes and revolving credit facilities and support putting in place a new capital structure, provide for capital expenditures and other ordinary course capital needs, and provide significant liquidity for the pro forma business. |
• | The new revolving credit facility will be subject to a bank-adjusted total net debt to EBITDA covenant of 4.5x, stepping down to 4.0x by the fourth quarter of 2023. |
• | Enerflex targets a bank-adjusted net debt to EBITDA ratio of 2.5x—3.0x within 12 to 18 months after closing. |
• | Following capital project commitments in 2022, the combined entity’s capital allocation in 2023 onwards will prioritize: (i) balance sheet strength; (ii) sustainable shareholder returns; and (iii) disciplined growth focused on full-cycle earnings. |
• | Commitment to Sustainability: |
• | Aligns strong cultures emphasizing the health and safety of our global workforce and corporate citizenship. |
• | Global coverage enhances the ability to deliver sustainable natural gas, water, and energy transition solutions, including carbon capture utilization and sequestration, biofuels (including renewable natural gas), produced water reuse and recycling, and electrification. |
• | The fact that the Exterran has agreed to pay a termination fee of $10.0 million to Enerflex less any amounts required to be withheld or deducted on account of taxes, if Enerflex terminates the Merger Agreement due to the Exterran board making a change of recommendation or if Exterran terminates the Merger Agreement to enter into a definitive agreement providing for a superior proposal. |
• | The fact that the Enerflex board has the right to terminate the Merger Agreement to enter into a definitive agreement related to a superior proposal, subject to giving Exterran notice and an opportunity to propose changes to the Merger Agreement, and the payment of a termination fee of $20.0 million, less any amounts required to be withheld or deducted on account of taxes, in the event of actual termination. |
• | The fact that the Enerflex board, subject to certain conditions and the potential payment of a termination fee of $20.0 million, less any amounts required to be withheld or deducted on account of taxes, has the right to change its recommendation in support of the merger in response to an intervening event, even if there is no competing or superior proposal, if the Enerflex board determines that the failure to take such action would likely be inconsistent with its fiduciary duties. |
• | reviewed a draft, dated January 21, 2022, of the Merger Agreement; |
• | reviewed certain publicly available business and financial information relating to Exterran and Enerflex and the industries in which they operate; |
• | compared the financial and operating performance of Exterran and Enerflex with publicly available information concerning certain other companies Wells Fargo Securities deemed relevant, and compared current and historic market prices of Exterran common stock and the Enerflex common shares with similar data for such other companies; |
• | compared the proposed financial terms of the proposed merger with the publicly available financial terms of certain other business combinations that Wells Fargo Securities deemed relevant; |
• | reviewed certain prospective financial information, prepared by the managements of Exterran and Enerflex, respectively; |
• | reviewed certain estimates prepared by the management of Exterran and Enerflex as to the potential cost savings and synergies expected by such management to be achieved as a result of the proposed merger (the “Synergies”); |
• | discussed with the managements of Exterran and Enerflex certain aspects of the proposed merger, the business, financial condition and prospects of Exterran and Enerflex, respectively, the effect of the proposed merger on the business, financial condition and prospects of Exterran and Enerflex, respectively, and certain other matters that Wells Fargo Securities deemed relevant; and |
• | considered such other financial analyses and investigations and such other information that Wells Fargo Securities deemed relevant. |
Implied per Share Equity Value |
||||||||
Low |
High |
|||||||
TEV / 2022E EBITDA |
$ | 4.08 | $ | 9.49 |
Announce Date |
Target |
Acquiror | ||
December 18, 2017 | Chicago Bridge & Iron Company N.V. | McDermott International | ||
June 1, 2014 | Axip Energy Services, LP (contact compression and processing business and after-market services business) | Enerflex Ltd. |
Implied per Share Equity Value |
||||||||
Low |
High |
|||||||
Enterprise Value / LTM Adjusted EBITDA |
$ | 9.58 | $ | 16.38 |
Implied per Share Equity Value |
||||||||
Low |
High |
|||||||
Discounted Cash Flow Analysis |
$ | 7.23 | $ | 9.94 |
Implied per Share Equity Value |
||||||||
Low |
High |
|||||||
TEV / 2022E EBITDA |
$ | 3.47 | $ | 5.83 |
Implied per Share Equity Value |
||||||||
Low |
High |
|||||||
Discounted Cash Flow Analysis |
$ | 7.64 | $ | 10.38 |
Implied Exchange Ratios |
||||||||
Low |
High |
|||||||
TEV / 2022E EBITDA |
0.700x | 2.737x | ||||||
Discounted Cash Flow |
0.696x | 1.301x |
Q4 2021E |
2022E |
2023E |
2024E |
2025E |
||||||||||||||||
Revenue |
$ | 209 | $ | 890 | $ | 891 | $ | 951 | $ | 1,045 | ||||||||||
EBITDA (1) |
$ | 46 | $ | 185 | $ | 212 | $ | 233 | $ | 259 | ||||||||||
Unlevered Free Cash Flow (2) |
$ | 18 | $ | (173 | ) | $ | 122 | $ | 161 | $ | 164 | |||||||||
Capital Expenditures |
$ | 17 | $ | 180 | $ | 60 | $ | 70 | $ | 75 |
(1) | EBITDA means earnings before interest, taxes, depreciation and amortization. |
(2) | Unlevered Free Cash Flow means EBITDA minus cash taxes, capital expenditures and changes in working capital. |
Q4 2021E |
2022E |
2023E |
2024E |
2025E |
||||||||||||||||
Revenue |
$ | 295 | $ | 1,160 | $ | 1,148 | $ | 1,242 | $ | 1,314 | ||||||||||
EBITDA (1) |
$ | 26 | $ | 149 | $ | 184 | $ | 238 | $ | 275 | ||||||||||
Unlevered Free Cash Flow (2) |
$ | (5 | ) | $ | (33 | ) | $ | (13 | ) | $ | 58 | $ | 132 | |||||||
Capital Expenditures |
$ | 33 | $ | 200 | $ | 188 | $ | 132 | $ | 95 |
(1) | EBITDA means earnings before interest, taxes, depreciation and amortization. |
(2) | Unlevered Free Cash Flow means EBITDA minus cash taxes, capital expenditures and changes in working capital. |
* | Assumes C$ to US$ exchange rate of 0.80. |
Cash ($) (1) |
Equity ($) (2) |
Perquisites/ Benefits ($) (3) |
Total ($) | |||||||||||||
Andrew James Way |
5,795,625 | 7,927,095 | 40,420 | 13,763,140 | ||||||||||||
David Alan Barta |
1,743,750 | 1,423,545 | 21,686 | 3,188,981 | ||||||||||||
Roger George |
1,627,550 | 1,292,998 | 34,346 | 2,954,845 |
(1) | Cash. |
(2) | Equity per-share closing price of Enerflex over the first five business days following January 24, 2022, determined pursuant to Item 402(t) of Regulation S-K) and a conversion of the underlying shares of Exterran to Enerflex common shares based on the exchange ratio of 1.021. All equity held by Exterran’s named executive officers was granted in connection with its regular executive officer new hire or annual compensation practices, including the grant of 2022 Exterran RSU awards, and Exterran has not provided any special grants or bonuses to any of the named executive officers. All equity awards will be settled in cash and not stock. |
Named Executive Officer | Company RSUs (#) |
Value of Company RSUs ($) |
Company PSUs (at target) (#) |
Value of Company PSUs ($) |
Total Value of Exterran Equity Awards ($) |
|||||||||||||||
Andrew James Way |
964,592 | 5,154,185 | 493,625 | 2,772,910 | 7,927,095 | |||||||||||||||
David Alan Barta |
222,185 | 1,187,219 | 89,655 | 236,326 | 1,423,545 | |||||||||||||||
Roger George |
169,906 | 907,871 | 68,559 | 385,127 | 1,292,998 |
(3) | Perquisites/ Benefits |
(i) | one or any combination of (a) the non-Canadian resident holder, (b) persons with whom the non-Canadian resident holder does not deal at arm’s length, and (c) partnerships in which the non-Canadian resident holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships, owned 25% or more of the issued shares of any class or series of the capital stock of Exterran or Enerflex, as the case may be, and |
(ii) | more than 50% of the fair market value of Exterran common stock or Enerflex common shares, as the case may be, was derived directly or indirectly from one or any combination of: (A) real or immovable properties situated in Canada, (B) “Canadian resource properties” (as defined in the Canadian tax act), (C) “timber resource properties” (as defined in the Canadian tax act), and (D) options in respect of, or interests in, any of the foregoing property whether or not the property exists. |
• | the affirmative vote of the holders of a majority of the outstanding shares of Exterran voting stock in favor of the adoption of the Merger Agreement by Exterran stockholders; |
• | the affirmative vote of a majority of the votes cast by the holders of outstanding Enerflex common shares represented in person or by proxy at the Enerflex special meeting and entitled to vote on such matter in favor of issuance of Enerflex common shares in connection with the transaction by Enerflex shareholders; |
• | the Form F-4 (of which this proxy statement/prospectus forms a part) having become effective in accordance with the provisions of the U.S. Securities Act and no stop order suspending the effectiveness of the Form F-4 having been issued and remaining in effect and no proceeding to that effect having been commenced, unless subsequently withdrawn; |
• | no governmental entity of competent jurisdiction having enacted, issued or promulgated any law that remains in effect that prohibits or makes illegal the consummation of the transaction; |
• | the approvals by the antitrust authorities having been obtained from the antitrust authorities with respect to the transactions contemplated by the Merger Agreement, or deemed obtained as a result of the expiration of all statutory waiting periods, as required; and |
• | Enerflex common shares to be issued to Exterran stockholders pursuant to the Merger Agreement having been conditionally approved for listing on the NYSE or Nasdaq, subject to official notice of issuance, and the TSX, subject to customary listing requirements. |
• | certain representations and warranties of Enerflex and merger sub in the Merger Agreement relating to the absence of certain changes or events that would have a material adverse effect of Enerflex being true and correct in all respects, as of the date of the Merger Agreement and as of the closing date as though made as of such date; |
• | certain representations and warranties of Enerflex and merger sub in the Merger Agreement relating to the capitalization of Enerflex being true and correct in all respects, each as of the date of the Merger |
Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except for de minimis |
• | certain representations and warranties of Enerflex in the Merger Agreement relating to the qualification, organization, existence and good standing of Enerflex and merger sub, the requisite power and authority of Enerflex and merger sub to enter into the Merger Agreement, the proper authorization by the board of Enerflex and the board and the sole stockholder of merger sub to approve the Merger Agreement and related matters and resolving to recommend that Enerflex shareholders adopt the Merger Agreement, the merger and other transactions contemplated do not conflict with Enerflex’s organizational documents, and no finders or brokers being true and correct in all material respects, each as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date); |
• | all other representations and warranties of Enerflex and merger sub in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except where the failure of such representations and warranties to be true or correct, individually or in the aggregate, would not have or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Enerflex, provided that for the purposes of this section, all representations and warranties will be read without giving effect to any limitation indicated by the words material adverse effect or any general materiality qualifier; |
• | Enerflex and merger sub having performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by the Merger Agreement to be performed or complied with by them prior to the closing of the transaction; |
• | no event, change, occurrence, effect or development having occurred since January 24, 2022, that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Enerflex; and |
• | Exterran’s receipt of a certificate, dated as of the closing date and executed by the chief executive officer or another senior officer of Enerflex, certifying that the conditions set forth in the bullets directly above have been satisfied. |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the absence of certain changes or events that would have a material adverse effect being true and correct in all respects, as of the date of the Merger Agreement and as of the closing date as though made as of such date; |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the capitalization of Exterran being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except for de minimis |
• | certain representations and warranties of Exterran in the Merger Agreement relating to the qualification, organization, existence and good standing of Exterran, the proper issuance under applicable securities laws for the outstanding capital stock of Exterran, the requisite power and authority of Exterran to enter into the Merger Agreement, the proper authorization by the board of Exterran to approve the Merger Agreement and related matters and resolving to recommend that Exterran stockholders adopt the Merger Agreement, the merger and other transactions contemplated do not conflict with Exterran’s organizational documents, and no finders or brokers being true and correct |
in all material respects, each as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date); |
• | all other representations and warranties of Exterran in the Merger Agreement being true and correct as of the date of the Merger Agreement and as of the closing date as though made as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be true or correct would not have or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Exterran, provided that for the purposes of this section, all representations and warranties will be read without giving effect to any limitation indicated by the words material adverse effect or any general materiality qualifier; |
• | Exterran having performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by the Merger Agreement to be performed or complied with by it prior to the closing of the transaction; |
• | no event, change, occurrence, effect or development having occurred since January 24, 2022, that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Exterran; and |
• | Enerflex’s receipt of a certificate, dated as of the closing date and executed by the chief executive officer or another senior officer of Exterran, certifying that the conditions set forth in the bullets directly above have been satisfied. |
• | due organization, valid existence, good standing, corporate power and authority, qualification to do business, organizational documents and with respect to Exterran and Enerflex, ownership of their respective subsidiaries; |
• | capital structure, including in particular the number of shares of equity-based awards issued and outstanding and the absence of certain outstanding debt and securities; |
• | corporate power and authority to enter into the Merger Agreement and to complete the transactions contemplated by the Merger Agreement, board recommendations, requisite stockholder/shareholder approvals and the enforceability of the Merger Agreement; |
• | absence of any consents and approvals relating to the execution, delivery and performance of the Merger Agreement, other than certain listed required filings with, and the consents and approvals of, government entities in connection with the transactions contemplated by the Merger Agreement; |
• | absence of conflicts with or breaches of its or its subsidiaries’ governing documents, certain contracts or applicable laws as a result of the execution, delivery and performance of the Merger Agreement and the completion of the transactions contemplated by the Merger Agreement; |
• | timely and materially compliant historical filings with the SEC pursuant to the U.S. Exchange Act or U.S. Securities Act with respect to Exterran and with applicable Canadian Securities Administrators with respect to Enerflex; |
• | compliance with the applicable listing and corporate governance rules and regulations of the NYSE with respect to Exterran and the TSX with respect to Enerflex; |
• | disclosure controls and procedures and internal controls over financial reporting; |
• | preparation of financial statements in compliance with U.S. GAAP or IFRS, as applicable; |
• | fair presentation of consolidated financial position in financial statements; |
• | no undisclosed liabilities; |
• | compliance with laws since December 31, 2018, and possession of requisite permits; |
• | compliance with anti-corruption, anti-bribery and anti-money-laundering laws and export and sanctions regulations in the past five years and institution of compliance policies since December 31, 2018; |
• | environmental matters; |
• | matters related to employee benefit plans, and labor and employment; |
• | the absence of any event, change, occurrence or development that has had or would reasonably be expected to have a material adverse effect, individually or in the aggregate, on Exterran or Enerflex, as applicable, since December 31, 2020; |
• | the absence of certain investigations, litigation, orders and injunctions; |
• | accuracy of the information supplied for inclusion in this proxy statement/prospectus and in the management information circular; |
• | tax matters; |
• | receipt of fairness opinions of financial advisors; |
• | required stockholder/shareholder approvals; |
• | lack of related party transactions; |
• | no brokers’ fees in connection with the transactions contemplated by the Merger Agreement except as enumerated; |
• | matters with respect to certain suppliers and customers; and |
• | no representations or warranties other than set forth in the Merger Agreement and no reliance on forward-looking information. |
• | intellectual property, IT assets and data privacy matters; |
• | valid title to or leasehold interests in assets and properties (including real property); |
• | sufficient inventory of parts and materials to meet unsatisfied performance obligations backlog; |
• | no undisclosed material contracts; |
• | sufficiency and effect of insurance policies; |
• | the aggregate value of assets and revenues in Canada is under certain threshold required under the Competition Act (Canada) and related regulations; |
• | inapplicability of any anti-takeover statutes or regulations or anti-takeover provisions in Exterran’s organizational documents; and |
• | customary nature of Exterran’s warranties; quality and workmanship of its products; no undisclosed product liability claims or non-standard product warranties or indemnities. |
• | capitalization of merger sub; |
• | the Enerflex common shares to be issued as merger consideration pursuant to the Merger Agreement; |
• | absence of ownership by Enerflex and merger sub, and their respective subsidiaries or affiliates, of Exterran common stock; |
• | debt financing matters; and |
• | solvency. |
• | changes in general economic or political conditions or the securities, equity, credit or financial markets in general, or changes in or affecting domestic or foreign interest or exchange rates; |
• | any decline in the market price or trading volume of such party’s shares, or any change in the credit rating of such party or any of its securities (provided, that the facts and circumstances underlying such decline or change may be taken into account in determining whether a material adverse effect in respect of such part has occurred to the extent not otherwise excluded by the definition thereof); |
• | changes or developments in the industries in which such party or its subsidiaries operate; |
• | changes in law or the interpretation or enforcement thereof after the date of the Merger Agreement; |
• | the execution, delivery or performance of the Merger Agreement or the public announcement or pendency or consummation of the transactions contemplated thereby, including the impact thereof on the relationships of such party or any of its subsidiaries with employees, partnerships, customers or suppliers or governmental entities; |
• | compliance with the terms of, or the taking or omission of any action required by, the Merger Agreement or consented to (after disclosure to the other party of all material and relevant facts and information) or requested by such party in writing; |
• | any act of civil unrest, civil disobedience, war, terrorism, cyberterrorism, military activity, sabotage or cybercrime, including an outbreak or escalation of hostilities involving any governmental entity or the declaration by any governmental entity of a national emergency or war, or any worsening or escalation of any such conditions threatened or existing on the date of the Merger Agreement; |
• | any hurricane, tornado, flood, earthquake, natural disaster, acts of God or other comparable events; |
• | any pandemic, epidemic or disease outbreak (including COVID-19) or other comparable events; |
• | changes in the generally accepted accounting principles in the U.S. or the enforcement thereof (in the case of Exterran) or changes in the international financial reporting standards or the interpretation or enforcement thereof (in the case of Enerflex) after the date of the Merger Agreement; |
• | any litigation relating to or resulting from the Merger Agreement or the transactions contemplated thereby; or |
• | any failure of such party to meet internal or published projections, forecasts, guidance or revenue or earning predictions (provided, that the facts and circumstances underlying any such failure may be taken into account in determining whether a material adverse effect in respect of such party has occurred to the extent not otherwise excluded by the definition thereof); except, with respect to the first, third, fourth, seventh, eighth, ninth, and tenth bullets above, if the impact thereof is materially and disproportionately adverse to such party and its subsidiaries, taken as a whole, relative to the impact thereof on the operations in the industry that such party and other participants conduct business, the incremental material disproportionate impact may be taken into account in determining whether there has been a material adverse effect in respect of such party. |
• | will not, and will not permit any of its subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (other than dividends, distributions, payments or return of capital made to Exterran or a wholly owned subsidiary by any of its subsidiaries) or other equity interests (whether in cash, assets, shares, property or other securities or any combination); |
• | will not, and will not permit any of its subsidiaries to, split, combine, redeem or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly owned subsidiary of Exterran that remains a wholly owned subsidiary after consummation of such transaction; |
• | will not, and will not permit any of its subsidiaries to (A) except in the ordinary course of business, (1) hire any employee or engage any independent contractor who is a natural person, in each case with annual base salary, base wages or base compensation in excess of US$100,000 (except where such employment is terminable on no more than 30 days’ prior notice without material cost or penalty) or (2) terminate the employment of any employee of Exterran or any of its subsidiaries at the vice president-level (or its equivalent) or above, (B)(1) increase the compensation or other benefits, or accelerate the vesting or payment of any compensation or other benefits, payable or provided, to Exterran’s or any of its subsidiaries’ directors or officers or (2) increase the compensation or other benefits, or accelerate the vesting or payment of any compensation or other benefits, payable or provided, to Exterran’s or any of its subsidiaries’ employees, which increases do not exceed (I) 10% of the aggregate annualized compensation paid to an employee during calendar year 2021 (any such increases over 6% to be limited to non-union employees) and, (II) in the aggregate, 4.5% of total compensation for all employees (except as required pursuant to the terms of any new or amended union contract), or (C) except as required pursuant to the terms of any Exterran benefit plan in effect as of the date of the Merger Agreement, (1) grant any transaction or retention bonuses, (2) grant any Exterran equity awards or other equity or long-term incentive compensation awards, or (3) enter into any employment, change of control, severance or retention agreement with any employee of Exterran or any of its subsidiaries; |
• | will not, and will not permit any of its subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by applicable law, GAAP or SEC rule or policy; |
• | will not adopt any amendments, modifications, waivers, rescissions or otherwise make changes to the organizational documents of Exterran or any of its subsidiaries; |
• | will not, and will not permit any of its subsidiaries to, issue, deliver, grant, sell, pledge, transfer, dispose, or otherwise encumber, or authorize or approve or agree to issue, grant, sell, pledge or otherwise encumber any shares of Exterran common stock or other securities of Exterran or any of its subsidiaries, or securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, shares of Exterran common stock or other securities of Exterran or any of its subsidiaries including but not limited to the issue or award of any Exterran equity awards or any rights, warrants or options to acquire any such shares, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units, except vesting in the ordinary course of business pursuant to awards under Exterran benefit plans in effect as of the date of the Merger Agreement or as disclosed on the Exterran disclosure schedules; |
• | will not, and will not permit any of its subsidiaries to, redeem, terminate early, unwind, repurchase, prepay, defease, create, suffer to exist, incur, enter into, assume, endorse, guarantee, or otherwise become liable for or modify or amend (including seeking or obtaining a waiver) in any material respects the terms of, any indebtedness for borrowed money, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities, any indebtedness or assume, guarantee, endorse or otherwise become liable or responsible for such obligations or the obligations of any other person, or make any loans or advances, except for (A) intercompany loans or advances among Exterran and its subsidiaries or among Exterran’s wholly owned subsidiaries in the ordinary course of business and (B) incremental borrowings under Exterran’s existing credit facility contemplated by the budget set forth in the Exterran disclosure schedules which do not require any amendments or waivers to such credit facility; |
• | will not, and will not permit any of its subsidiaries to make any loans, advances, guarantees or capital contributions to or investments in any person, except for (A) loans solely between or among Exterran or any of its wholly-owned subsidiaries, on the one hand, and any of Exterran’s wholly-owned subsidiaries, on the other hand, and (B) advances for reimbursable employee expenses in the ordinary course of business; |
• | will not, and will not permit any of its subsidiaries to, sell, lease, license, transfer, exchange or swap, or subject to any lien (other than permitted liens), or otherwise dispose of, any of its businesses, material properties or assets, whether voluntarily or by the failure to exercise a right or make a payment, except (A) dispositions of obsolete or worthless equipment, in the ordinary course of business, (B) non-exclusive licenses or other non-exclusive grants of rights in, to or under Exterran intellectual property entered in the ordinary course of business with customers of Exterran or any of its subsidiaries (C) sales of products or services in the ordinary course of business that do not require the incurrence of indebtedness in breach of the Merger Agreement or the extension of capital in breach of the Merger Agreement and (D) for transactions solely among Exterran and its wholly-owned subsidiaries or solely among Exterran’s wholly-owned subsidiaries; |
• | will not, and will not permit any of its subsidiaries to (i) enter into any contract that would have been an Exterran material contract under the Merger Agreement if it been entered into prior to the Merger Agreement, or amend or modify any contract in a manner that would make it an Exterran material contract under the Merger Agreement, (ii) enter into any other contract that would require aggregate expenditures by Exterran or any Exterran subsidiary in excess of the budget set forth in the Exterran disclosure schedules, (iii) materially modify, materially amend, extend, accelerate, terminate, cancel, exercise or fail to exercise an expiring renewal option or terminate any Exterran material contract (in each case, in a manner adverse to Exterran or its subsidiaries and not including terminations or expirations due to the natural expiration or termination of such agreements) or (iv) waive, release or assign any material rights or claims thereunder (other than in the ordinary course of business or as would not result in a breach of the Merger Agreement); |
• | will not, and will not permit any of its subsidiaries to, acquire (including by merger, consolidation or acquisition of stock or assets or any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, directly or indirectly, any equity interests in or assets (including intangible assets) of any person or any business, division, securities, properties or interests thereof, or otherwise engage in any mergers, consolidations or business combinations (other than pursuant to any capital expenditures permitted under the Merger Agreement) from any other person, other than (A) transactions solely between Exterran and a wholly-owned Exterran subsidiary or solely between wholly-owned Exterran subsidiaries or acquisitions of supplies or equipment in the ordinary course of business and (B) acquisitions of properties, assets, equipment or inventory in the ordinary course of business and consistent with the budget set forth in the Exterran disclosure schedules; |
• | will not, and will not permit any of its subsidiaries to, settle, pay, discharge or satisfy any action, other than any action that involves only the payment of monetary damages not in excess of US$250,000 individually or US$1,000,000 in the aggregate over the amount reflected or reserved against in the September 30, 2021 consolidated balance sheet of Exterran for such specific actions and would not result in (A) the imposition of any order that would restrict the future activity or conduct of Exterran or any of its subsidiaries (excluding, for the avoidance of doubt, releases of claims, confidentiality and other de minimis |
• | will not, and will not permit any of its subsidiaries to incur or commit to capital expenditures or development expenses or expenses relating to integration of its accounting or ERP systems, in each case, in excess of the amounts set forth in the budget set forth in the Exterran disclosure schedules; |
• | will not, and will not permit any of its subsidiaries to, terminate or permit any material Exterran permit to lapse, other than in accordance with the terms and regular expiration thereof, or fail to apply on a timely basis for any renewal of any renewable material Exterran permit (excluding, in each case, any Exterran permit that Exterran, in its reasonable judgment, no longer believes to be material or necessary to the conduct of the business); |
• | will not, and will not permit any of its subsidiaries to, adopt any plan of merger, consolidation, reorganization, liquidation or dissolution, adopt resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, file a petition in bankruptcy under any provisions of federal or state bankruptcy applicable law on behalf of Exterran or any of its subsidiaries or consent to the filing of any bankruptcy petition against Exterran or any of its subsidiaries under applicable law; |
• | will not, and will not permit any of its subsidiaries to, enter into any new line of business that is not reasonably related to the existing business lines of Exterran and its subsidiaries, or abandon or discontinue any existing line of business of Exterran or its subsidiaries; |
• | except as required by applicable law, will not (A) make (other than in the ordinary course of business), change or revoke any material tax election, (B) change any material method of tax accounting or tax accounting period, (C) file any amended tax return with respect to any material tax, (D) settle or compromise any material tax proceeding, (E) surrender any right to claim a material tax refund, or (F) agree to an extension or waiver of the statute of limitations with respect to the assessment of any material tax; |
• | will not, and will not permit any of its subsidiaries to become a party to, establish, adopt, materially amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization; |
• | will not, and will not permit any of its subsidiaries to enter into any consent decree or similar agreement that, individually or in the aggregate, is material to Exterran and its subsidiaries, taken as a whole; |
• | will not, and will not permit any of its subsidiaries to terminate or fail to exercise renewal rights with respect to any insurance policies of Exterran and its subsidiaries in a manner that would (after taking into account any replacement insurance policies) materially and adversely affect the insurance coverage of Exterran and its subsidiaries; |
• | will not, and will not permit any of its subsidiaries to, sell, transfer, lease, license, mortgage, pledge, surrender, encumber, divest, or otherwise dispose of any material Exterran intellectual property (other than permitted liens), except for non-exclusive licenses of Exterran intellectual property granted in the ordinary course of business; |
• | will not, and will not permit any of its subsidiaries to abandon or otherwise allow to lapse or expire any registered Exterran intellectual property, other than lapses or expirations of any registered Exterran intellectual property that is at the end of its maximum statutory term (with renewals); |
• | will not, and will not permit any of its subsidiaries to engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of Exterran or other person that would be required to be disclosed pursuant to Item 404 of Regulation S-K; |
• | will not convene any special meeting (or any adjournment or postponement thereof) of the stockholders of Exterran; |
• | will not, and will not permit any of its subsidiaries to modify, amend or replace that certain lease contract listed in the Exterran disclosure schedules; and |
• | will not, and will not permit any of its subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions. |
• | will not, and will not permit any of its subsidiaries that is not wholly owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares (whether in cash, assets, shares or other securities of Enerflex or its subsidiaries), except (A) regular quarterly cash dividends paid on the Enerflex common shares in the ordinary course of business, appropriately adjusted to reflect any stock dividends, subdivisions, splits, combinations or other similar events relating to the Enerflex common shares, and (B) dividends and distributions paid by subsidiaries of Enerflex to Enerflex or to any of Enerflex’s other wholly owned subsidiaries; |
• | will not, and will not permit any of its subsidiaries to, split, combine or reclassify any of its capital or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for its shares, except for any such transaction by a wholly owned subsidiary of Enerflex that remains a wholly owned subsidiary after consummation of such transaction; |
• | will not, and will not permit any of its subsidiaries to, issue, deliver, grant, sell, transfer, dispose, or otherwise encumber, or authorize or approve or agree to issue, grant, sell, pledge or otherwise encumber any Enerflex common shares or other equity securities of Enerflex, or securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Enerflex common shares or other equity securities of Enerflex, including but not limited to the issue or award of any Enerflex options or any rights, warrants or options to acquire any such shares, voting equity securities or equity interest or share based performance units, except (A) in the ordinary course of business pursuant to awards under Enerflex benefit plans in effect as of the date of the Merger Agreement or as disclosed in the Enerflex disclosure schedules or (B) pledges or encumbrances required in connection with the debt financing (including for the repayment or refinancing of the “Refinanced Indebtedness” (as defined in the debt commitment letter) or any other repayment or refinancing contemplated thereby); |
• | will not, and will not permit any of its subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by IFRS or rule or policy of the Canadian Securities Administrators; |
• | will not, and will not permit any of its subsidiaries to, redeem, terminate early, unwind, repurchase, prepay, defease, create, suffer to exist, incur, enter into, assume, endorse, guarantee or otherwise become liable for or modify in any material respects the terms of any indebtedness for borrowed money, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for (A) any indebtedness solely among Enerflex and its wholly-owned subsidiaries or solely among wholly-owned Enerflex subsidiaries, (B) incremental borrowings under Enerflex’s existing credit facilities if either (1) contemplated by the budget set forth in the Enerflex disclosure schedules or (2) not in excess of US$25.0 million greater than the amount set forth in the budget set forth in the Enerflex disclosure schedules, (C) any repayment of borrowings under Enerflex’s existing revolving credit facilities to the extent that the aggregate amount available to Enerflex and the Enerflex’s subsidiaries for borrowings does not decrease or (D) the debt financing (including the guarantees to be provided for the debt financing) and other actions taken in furtherance of the debt financing (including for the repayment or refinancing of the “Refinanced Indebtedness” as defined in the debt commitment letter) or any other repayment or refinancing contemplated thereby; |
• | will not adopt any amendments to the organizational documents of Enerflex; |
• | will not, and will not permit any of its subsidiaries to, acquire (including by merger, consolidation or acquisition of stock or assets or any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, directly or indirectly, any equity interests in or |
assets (including intangible assets) of any person or any business, division, securities, properties or interests, or otherwise engage in any mergers, consolidations or business combinations from any other person, other than (A) transactions solely between and among wholly-owned subsidiaries, (B) acquisitions of supplies, properties, assets, equipment or inventory in the ordinary course of business and (C) transactions that would not reasonably be expected to have a material adverse effect on Enerflex’s ability to complete the merger or the financing; and |
• | will not, and will not permit any of its subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions. |
• | solicit, initiate or knowingly encourage or knowingly facilitate any inquiry regarding, or the making or submission of any proposal, offer or indication of interest that constitutes, or would reasonably be expected to lead to, or result in, an alternative proposal; |
• | engage in, knowingly encourage, continue or otherwise participate in any discussions or negotiations with any person regarding an alternative proposal or any communications regarding or any inquiry, proposal or offer that would reasonably be expected to lead to, or result in, an alternative proposal (except to notify such person that the provisions of the Merger Agreement prohibit any such discussions or negotiations); |
• | furnish any nonpublic information relating to such party or its subsidiaries in connection with or for the purpose of facilitating an alternative proposal or any inquiry, proposal, offer or indication of interest that would reasonably be expected to lead to, or result in, an alternative proposal and request the prompt return or destruction of any confidential information provided to any third party in connection with an alternative proposal; |
• | recommend or enter into any other letter of intent, memorandum of understandings, agreement in principle, option agreement, acquisition agreement, Merger Agreement, joint venture agreement, partnership agreement or other similar agreement with respect to an alternative proposal (except for permitted confidentiality agreements as discussed below); |
• | approve any transaction under, or any third party becoming an “interested stockholder” under Section 203 of the DGCL (or similar takeover statute applicable to Enerflex under Canadian law); or |
• | adopt, approve, endorse, authorize, agree or publicly propose to adopt, approve, endorse or authorize to do any of the foregoing or otherwise knowingly facilitate any effort or attempt to make an alternative proposal. |
• | such party may furnish non-public information to the third party making such alternative proposal (including its representatives, including its equity and debt financing sources) in response to a request for such non-public information, if, and only if, (A) prior to furnishing such information, Exterran or Enerflex, as applicable, receives from the third party making such alternative proposal, an executed confidentiality agreement with confidentiality and use provisions that, in each case, are not less restrictive to such third party than the terms in the Confidentiality Agreement, dated as of October 3, 2021, between Exterran and Enerflex are to the other party (it being understood that such confidentiality agreement does not need to include any “standstill” or similar provisions or otherwise prohibit the making or amendment of any alternative proposal, but such confidentiality agreement will not grant such third party the exclusive right to negotiate with Exterran or Enerflex, as applicable); and (B) such party also provides to the other party, prior to or substantially concurrently with the time such non-public information is provided or made available to such third party, any non-public information furnished to such third party that was not previously furnished to the other party to the Merger Agreement; provided, however, that if the third party making such alternative proposal is a known competitor of Exterran or Enerflex, such party will not provide any commercially sensitive non-public information to such third party other than in accordance with customary “clean room” or other similar procedures designed to limit the disclosure of competitively sensitive information; and |
• | such party may engage in discussions or negotiations with the third party (including its representatives) with respect to the alternative proposal. |
• | withdraw, withhold, qualify or modify, or propose publicly to withdraw, withhold, qualify or modify: (i) in the case of the Exterran board, its recommendation to the Exterran stockholders to adopt the Merger Agreement and the transactions contemplated by the Merger Agreement (which we refer to as the “Exterran recommendation”); and (ii) in the case of the Enerflex board, the recommendation to the Enerflex shareholders to approve the Enerflex common share issuance in connection with the merger (which we refer to as the “Enerflex recommendation”); |
• | fail to include (i) in the case of Exterran, the Exterran recommendation in this proxy statement/prospectus or (ii) in the case of Enerflex, the Enerflex recommendation in the management information circular; |
• | if any alternative proposal that is structured as a tender offer or exchange offer for the outstanding Enerflex common shares or shares of Exterran common stock, as applicable, is commenced (other than by the other party or an affiliate of the other party), fail to recommend and publicly announce, within ten (10) business days after its commencement, against acceptance of such tender offer or exchange offer by its shareholders or stockholders, as applicable; |
• | approve, adopt, recommend, or declare advisable any alternative proposal or publicly propose to approve, adopt or recommend or declare advisable any alternative proposal; |
• | fail to publicly reaffirm the recommendation to Exterran stockholders or Enerflex shareholders, as applicable, within ten (10) business days after an alternative proposal (or material modification thereto) is first publicly announced by such party or the person making such alternative proposal (or, with respect to any material amendments, revisions or changes to the terms of any such previously publicly disclosed alternative proposal that are publicly disclosed within the last five (5) business days prior to the effective time, fail to take these affirming actions, with references to the applicable ten (10) business day period being replaced with three (3) business days); |
• | approve, adopt or recommend, or declare advisable or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, Merger Agreement, option agreement, joint venture agreement, partnership agreement or other agreement (other than a confidentiality agreement referred to and entered into in compliance with the section of the Merger Agreement described above under the subsection entitled “ No Solicitation |
• | exempt any person other than the other party to the Merger Agreement (or in Exterran’s case, Enerflex or merger sub) from any takeover statute or approve or authorize, or cause or permit the other party or any of its subsidiaries to enter into, an acquisition agreement in connection with an alternative proposal; or |
• | resolve or publicly propose to take any action described in the foregoing of this section. |
• | In response to a superior proposal, effect a change of recommendation and/or, cause Exterran or Enerflex to terminate the Merger Agreement to enter into a definitive agreement providing for a superior proposal, if the respective board determines in good faith after consultation with the outside legal counsel and financial advisors, that such proposal is a superior proposal, but only if the Exterran board, or Enerflex board, as applicable, has determined in good faith after consultation with the outside legal counsel, that the failure to make such change of recommendation and/or terminate the Merger Agreement to enter into such acquisition agreement providing for such superior proposal would breach or reasonably be expected to breach the respective boards’ fiduciary duty to the shareholders or stockholders, respectively, under applicable law; |
and if: (i) Exterran or Enerflex, as applicable, has given the other party written notice of its intent to take such action at least five (5) business days in advance, setting forth a description of the terms and conditions of the superior proposal that is the basis for such action (and including the identity of the person making the superior proposal and a copy of the proposed definitive agreement for such superior proposal, if any); (ii) Exterran or Enerflex, as applicable, negotiates in good faith during such five-business-day period with the other party and its representatives (to the extent such other party wishes to negotiate) to enable such other party to make such amendments to the terms of the Merger Agreement as would permit the Exterran board or the Enerflex board, as applicable, not to effect a change of recommendation in connection with such superior proposal or not to cause the party to terminate the Merger Agreement in connection with the entry into a definitive agreement providing for a superior proposal; and (iii) at the end of such five-business-day period, prior to taking action to effect a change of recommendation or, terminating the Merger Agreement, the Exterran board or the Enerflex board, as applicable, makes the fiduciary determination as set forth under the Merger Agreement again, and concludes that the superior proposal would continue to constitute a superior proposal if such amendments were to be given effect. For purposes of the aforementioned negotiation period, any material modification to the terms of the superior proposal (including any change in the amount or, if applicable, form of consideration) will be deemed to be a new alternative proposal, except that references to five business days will be deemed to be references to three business days. |
• | In response to an intervening event, effect a change of recommendation, if the Exterran board or the Enerflex board, as applicable, determines in good faith, after consultation with the applicable party’s outside legal counsel, that the failure of the Exterran board or the Enerflex board, as applicable, to take such action would breach or would reasonably be expected to breach fiduciary duties of Exterran’s or Enerflex’s board, as applicable, under applicable law provided, that the Exterran board or the Enerflex board, as applicable, will not be entitled to make such a change in recommendation unless: (i) Exterran or Enerflex, as applicable, has given the other party written notice of its intent to take such action at least ten (10) business days in advance, setting forth in reasonable detail, the reasons for effecting a change of recommendation; (ii) Exterran or Enerflex, as applicable, will cause their respective representatives (including executive officers) to be available to negotiate in good faith during such ten-business-day ten-business-day ten-business-day |
• | as promptly as reasonably practical, furnish Enerflex, merger sub and the financing parties (and their respective representatives, as applicable) with the required financing information and such further information as may be reasonably necessary for the required financing information to remain compliant and such other customary financial and other information regarding Exterran and its subsidiaries as may be reasonably requested by, and is necessary for, Enerflex or merger sub to fulfill its conditions and obligations under the debt commitment letters; |
• | provide reasonable and customary assistance to Enerflex, merger sub and the financing parties (and their respective representatives, agents and advisors, as applicable) in their preparation of (A) offering documents, offering memoranda, offering circulars, private placement memoranda, registration statements, prospectuses, syndication documents and other syndication materials, including information memoranda, lender and investor presentations, bank books and other marketing documents, and similar documents to be used in connection with any portion of the debt financing and (B) materials for rating agency presentations, including (but subject to the limitation set forth below) by providing any financial information and other data required to prepare any pro forma financial statements that are required under applicable securities laws to be included in, or as may otherwise be reasonably required for and are customarily included in the foregoing financing materials; |
• | make senior management of Exterran available, at reasonable times and locations and upon reasonable prior notice, to participate in meetings, drafting sessions, presentations, road shows, rating agency presentations and due diligence sessions and other customary syndication activities; |
• | cause Exterran’s independent registered accounting firm to provide customary assistance, including by using reasonable best efforts to cause Exterran’s independent registered accounting firm (A) to provide customary comfort letters (including “negative assurance” comfort) in connection with any capital markets transaction comprising a part of the debt financing to the applicable financing parties, (B) to provide any necessary consent to the inclusion of its audit report in respect of any financial statements of Exterran included or incorporated in any of the applicable financing materials, and (C) to participate in a reasonable number of due diligence sessions at reasonable times and locations and upon reasonable prior notice; |
• | provide customary authorization letters authorizing the distribution of Exterran’s information to prospective lenders in connection with a syndicated bank financing; |
• | assist Enerflex, merger sub and the financing parties in obtaining or updating corporate, facility and issue credit ratings; |
• | assist in the negotiation, preparation and (contingent upon the closing) execution and delivery of any credit agreement, indenture, note, debenture or other debt security, purchase, underwriting, or agency agreement, guarantees, security documents, including any required information schedules or disclosures thereto, cash management agreements, hedging agreements, other supporting documents and customary closing certificates, and any other definitive and ancillary documentation for the debt financing as may be reasonably requested by Enerflex, in each case as contemplated in connection with the debt financing; |
• | make introductions of Enerflex to Exterran’s existing lenders and facilitate relevant coordination between Enerflex and such lenders; |
• | cooperate with the due diligence of the financing parties and their representatives in connection with the debt financing, to the extent customary and reasonable, including the provision of all such information requested with respect to the property and assets of Exterran and its subsidiaries and by providing to internal and external counsel of Enerflex, merger sub and the financing parties, as applicable, customary back-up certificates and factual information to support any legal opinion that such counsel may be required to deliver in connection with the debt financing; provided, that, Exterran and its affiliates will not be required to deliver or cause the delivery of any legal opinions related to the debt financing; |
• | deliver, at least seven business days prior to closing of the transaction, to the extent reasonably requested in writing at least ten business days prior to closing, all documentation and other information regarding Exterran and its subsidiaries that any financing party reasonably determines is required by domestic and foreign regulatory authorities under applicable “know your customer” and domestic and foreign anti-money-laundering rules and regulations and, to the extent required by any financing party, beneficial ownership certificates; |
• | cooperate with and use reasonable best efforts to provide all reasonable assistance to Enerflex in connection with any steps Enerflex may determine are necessary or desirable to take to prepay some or all amounts outstanding under Exterran existing credit facility, including (A) prepare and submit customary notices in respect of any such prepayment; provided that such prepayment will be contingent upon the occurrence of the closing unless otherwise agreed in writing by Exterran; (B) obtain from the agent a customary payoff letter in respect of Enerflex’s existing credit facility; and (C) cooperate in the discharge and release of liens securing indebtedness referenced in this section, including obtaining customary lien termination and other instruments of discharge, in each case in a form reasonably acceptable to Enerflex; |
• | to the extent requested by Enerflex, provide guarantees and facilitate the pledging of collateral and granting of security interests in connection with the debt financing (which discharges, releases, guarantees and security interests will not be required to take effect before the closing); |
• | as soon as reasonably practical following the receipt of written request of Enerflex, (A) commence one or more consent solicitations to the holders of the Exterran’s senior notes, to waive, amend or remove any applicable change of control provisions, defaults or other covenants that would apply in connection with, or otherwise restrict the ability of the parties to consummate, the merger or the debt financing as contemplated in the Merger Agreement or the debt commitment letters, as applicable, (B) commence one or more offers to purchase Exterran’s senior notes, (C) issue a notice of optional redemption to redeem Exterran’s senior notes pursuant to the terms, or (D) take such other actions as may be permitted or required by the terms of Exterran’s senior notes to satisfy and discharge, or defease any or all obligations under Exterran’s senior notes, in each case on the terms and conditions specified by Enerflex; provided that Exterran will not be required to commence any debt transaction until Enerflex has provided the necessary consent solicitation statement, offer to purchase, related letter of transmittal, supplemental indenture, redemption notice and other related documents; Enerflex will also consult with Exterran regarding the timing of any debt transaction in light of the regular financial reporting schedule of Exterran and the requirements of applicable law; and |
• | consent to the use of Exterran’s and its subsidiaries’ trademarks, trade names and logos in connection with the debt financing; provided that such trademarks, trade names and logos are used solely in a manner that is not intended to, nor reasonably likely to, harm or disparage Exterran or its subsidiaries or their respective reputation or goodwill. |
• | make an appropriate and complete filing of a notification and report form pursuant to the HSR Act with respect to the merger within ten (10) business days of the date of the Merger Agreement; |
• | make all other filings that are required to be made in order to consummate the merger with the antitrust authorities; |
• | not extend any waiting period under the HSR Act or the applicable laws of other applicable non-U.S. jurisdictions of the antitrust authorities, if required to have a waiting period, or enter into any agreement with the antitrust authorities or any other governmental entity not to consummate the merger, without consulting with the other party in good faith; and |
• | supply as promptly as practicable any additional information or documentation that may be requested by the antitrust authorities and use their respective reasonable best efforts to take all other actions necessary, proper or advisable to obtain the required antitrust approvals or to cause the expiration or termination of the applicable waiting periods under the HSR Act and any other antitrust law as soon as practicable (including complying with any “second request” for information or similar request from a governmental entity pursuant to other regulatory laws). |
• | cooperate in all respects with each other in connection with any material communication, filing or submission and in connection with any investigation or other inquiry, including any action initiated by a private party; |
• | keep the other party and its counsel promptly informed of any material communication received by such party from, or given by such party to, the antitrust authorities or other governmental entity and of any material communication received or given in connection with any action by a private party, in each case regarding the merger; |
• | consult with each other in advance of any meeting or conference with the antitrust authorities or any other governmental entity or, in connection with any action by a private party, with any other person, and to the extent permitted by the antitrust authorities or such other governmental entity or other person, give the other party or its counsel the opportunity to attend and participate in such meetings and conferences; and |
• | permit the other party and its counsel to review in advance any submission, filing or material communication (and documents submitted therewith) intended to be given by it to the antitrust authorities or any other governmental entity; provided that materials may be redacted to remove business secrets and other confidential material so long as the disclosing party acts reasonably in identifying such material for redaction. Enerflex and Exterran may, as each deems advisable and necessary, reasonably designate any competitively sensitive material to be provided to the other party as “Antitrust Counsel Only Material.” Such materials and the information contained therein will be given only to the outside antitrust counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials (Enerflex or Exterran, as the case may be) or its legal counsel. |
• | propose, negotiate or offer to effect, or consent or commit to, any sale, leasing, licensing, transfer, disposal, divestiture or other encumbrance, or holding separate, of any assets, licenses, operations, rights, product lines, businesses or interest therein (which we refer to as a “divestiture”); and |
• | take or agree to take any other action, agree or consent to, make any concession in respect of, or permit or suffer to exist any condition or requirement setting forth, any limitations or restrictions on freedom of actions with respect to, or its ability to retain, or make changes in, any assets, licenses, operations, rights, product lines, businesses or interest therein (which we refer to as a “remedy”). |
• | each party providing the other party with reasonable access, subject to compliance with applicable laws, to such party’s businesses, properties, personnel, agents, contracts, commitments, books and records and other reasonably requested information during the period prior to the effective time; |
• | cooperation between Enerflex and Exterran in the preparation and filing of this proxy statement/prospectus and the management information circular and coordination of the Exterran special meeting and Enerflex special meeting, including commercially reasonable efforts to cause the respective record dates and dates and times of the two meetings to occur on the same calendar day (and in any event as close in time as possible); |
• | each party taking such actions as are necessary to complete the transactions contemplated by the Merger Agreement if any takeover statute is or may become applicable to the transactions contemplated by the Merger Agreement; |
• | cooperation between Exterran, Enerflex and merger sub in connection with public announcements regarding the transactions contemplated by the Merger Agreement; |
• | cooperation with Enerflex and the use of reasonable best efforts by Exterran to delist Exterran common stock from the NYSE and deregister Exterran common stock under the U.S. Exchange Act as promptly as practicable after the effective time; |
• | the use of reasonable best efforts by Enerflex to cause the Enerflex common shares that are to be issued in the merger to be listed on the NYSE or Nasdaq, subject to official notice of issuance, and the TSX, subject to customary listing conditions, prior to the effective time; |
• | each party taking reasonably necessary or advisable steps to cause any dispositions of Exterran equity securities and any acquisitions of Enerflex equity securities, pursuant to the transactions contemplated |
by the Merger Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the U.S. Exchange Act to be exempt under Rule 16b-3 promulgated under the U.S. Exchange Act; |
• | Exterran giving Enerflex the reasonable opportunity to participate in the defense or settlement of any stockholder litigation brought against Exterran or the Exterran board relating to the transactions contemplated by the Merger Agreement and Exterran refraining from compromising or settling, or agreeing to compromise or settle, any such stockholder litigation without the prior written consent of Enerflex (which will not be unreasonably withheld, conditioned or delayed); |
• | certain tax matters; |
• | coordination between the parties of the declaration, setting of record dates and payment dates of dividends on Exterran common stock; and |
• | Enerflex executing and delivering written stockholder consent of merger sub adopting and approving the Merger Agreement. |
• | by mutual written consent of Exterran and Enerflex; |
• | by either Exterran or Enerflex, if: |
• | the effective time has not occurred on or before the end date; however, if the conditions in the Merger Agreement have not been satisfied or the debt financing has not been obtained on or prior to the end date, then the end date will be automatically extended for thirty (30) days. Further, if the marketing period has started within fifteen (15) calendar days of the end date but has not ended or will not end on or prior to the end date, the end date will be automatically extended to the next business date after the last scheduled day of such marketing period. The right to terminate the Merger Agreement pursuant to this prong is not available to the party if the failure of closing to occur by the end date is due to such party’s failure to perform its obligations, covenants or agreement set forth in the Merger Agreement; |
• | any court or other governmental entity of competent jurisdiction that must grant a required antitrust approval has denied approval of the merger and such denial has become final and nonappealable, or any governmental entity of competent jurisdiction has issued a final and nonappealable order permanently enjoining or otherwise prohibiting or making illegal the consummation of the transaction; unless the failure to obtain a required antitrust approval is due to the failure of the party seeking termination to perform or observe its obligations, covenants or agreement set forth in the Merger Agreement; |
• | Exterran stockholder approval is not obtained at Exterran special meeting or at any adjournment or postponement thereof; or |
• | Enerflex shareholder approval is not obtained at Enerflex special meeting or at any adjournment or postponement thereof; or |
• | by Exterran: |
• | if there has been a breach or failure to perform in any material respect by Enerflex or merger sub of any representation, warranty, covenant or agreement set forth in the Merger Agreement and such breach or failure (A) would result in a failure of certain conditions to closing and (B) is not curable prior to the end date, or if curable prior to the end date, has not been cured within 20 |
business days after the giving of notice thereof by Exterran; however, the right to terminate the Merger Agreement due to such a breach or failure will not be available to Exterran if Exterran is in material breach of any representation, warranty, agreement or covenant contained in the Merger Agreement; |
• | prior to receipt of Exterran stockholder approval, in order to enter into a definitive agreement providing for a superior proposal in respect of Exterran to the extent permitted and subject to compliance with the terms of the Merger Agreement; however, immediately prior to or contemporaneously with the termination of the Merger Agreement, Exterran will pay to Enerflex the Exterran termination fee; |
• | prior to receipt of Enerflex shareholder approval, if Enerflex board has effected a change of recommendation or Enerflex materially breaches its non-solicitation obligations under the Merger Agreement; or |
• | if all the conditions to the merger under the Merger Agreement have been satisfied (other than conditions which by their nature cannot be satisfied until closing), Enerflex and merger sub fail to consummate the closing on the anticipated closing date due to failure of all or a portion of the debt financing to be funded at closing for any reason, and Exterran has delivered to Enerflex written notice confirming that the conditions to merger have been satisfied or waived, as applicable, and Exterran is ready to close but Enerflex and merger sub fail to consummate the closing within five business days following the later of the date the closing should have occurred and receipt of the written notice by Exterran; or |
• | by Enerflex: |
• | if there has been a breach or failure to perform in any material respect by Exterran of any representation, warranty, covenant or agreement set forth in the Merger Agreement and such breach or failure (A) would result in a failure of certain conditions to closing and (B) is not curable prior to the end date, or if curable prior to the end date, has not been cured within 20 business days after the giving of notice thereof by Enerflex; however, the right to terminate the Merger Agreement due to such a breach or failure will not be available to Enerflex if Enerflex or merger sub is in material breach of any representation, warranty, agreement or covenant contained in the Merger Agreement; |
• | prior to the receipt of Enerflex shareholder approval, in order to enter into an agreement providing for an Enerflex superior proposal in accordance with the terms of the Merger Agreement; however, immediately prior to or contemporaneously with the termination of the Merger Agreement, Enerflex pays to Exterran the Enerflex termination fee; or |
• | prior to receipt of Exterran stockholder approval, if Exterran board has effected a change of recommendation, or Exterran materially breaches its non-solicitation obligations under the Merger Agreement. |
• | the Merger Agreement is terminated by Exterran prior to receipt of Exterran stockholder approval, in order to enter into a definitive agreement providing for a superior proposal in respect of Exterran; |
• | the Merger Agreement is terminated by Enerflex because, prior to receipt of Exterran stockholder approval, Exterran board has effected a change of recommendation; or |
• | after the date of the Merger Agreement, a qualifying transaction in respect of Exterran is publicly proposed or publicly disclosed prior to, and not publicly withdrawn at least two business days prior to, the Exterran special meeting; (ii) the Merger Agreement is terminated by (A) either party as a result of the occurrence of the end date prior to receipt of Exterran stockholder approval or due to the failure to obtain Exterran stockholder approval or (B) Enerflex for Exterran having breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreement contained in the Merger Agreement (as described above); and (iii) concurrently with or within 12 months after such termination Exterran consummates a qualifying transaction or enters into a definitive agreement providing for a qualifying transaction and later consummates such transaction. |
• | the Merger Agreement is terminated by Enerflex prior to receipt of the Enerflex Shareholder Approval, in order to enter into a definitive agreement providing for a superior proposal in respect of Enerflex; |
• | the Merger Agreement is terminated by Exterran prior to receipt of Enerflex shareholder approval because the Enerflex board has effected a change of recommendation; or |
• | after the date of the Merger Agreement, a qualifying transaction in respect of Enerflex is publicly proposed or publicly disclosed prior to, and not publicly withdrawn at least two business days prior to, the Enerflex special meeting; (ii) the Merger Agreement is terminated by (A) either party for the effective time not occurring on or before the end date prior to the receipt of the Enerflex shareholder approval or due to the failure to obtain the Enerflex shareholder approval or (B) Exterran for Enerflex or merger sub having breached or failed to perform in any material respect any of their representations, warranties, covenants or other agreements contained in the Merger Agreement (as described above); and (iii) concurrently with or within 12 months after such termination Enerflex consummates a qualifying transaction or enters into a definitive agreement providing for a qualifying transaction and later consummates such transaction. |
• | in favor of (i) the proposal to adopt the Merger Agreement and (ii) the proposal to adjourn or postpone such meeting if necessary or appropriate; and |
• | against (i) any action, proposal, transaction or agreement that could reasonably be expected to result in a breach of any covenant, representation or warranty, or any other obligation or agreement of Exterran under the Merger Agreement or of such stockholder under the voting agreements, (ii) any Exterran acquisition proposal, or any of the other transactions contemplated thereby other than the Merger Agreement and (iii) any other action, proposal, transaction, agreement which could reasonably be expected to delay, postpone or adversely affect the timely consummation of the merger or the fulfillment of Exterran’s, Enerflex’s, or merger sub’s conditions under the Merger Agreement or change in any manner the voting rights of any class of shares of Exterran (including any amendments to Exterran’s certificate of incorporation and bylaws). |
• | the effective time of the merger; |
• | the termination of the Merger Agreement in accordance with its terms; |
• | the termination of the voting agreements by mutual written consent of the parties; |
• | December 23, 2022; and |
• | with respect to each stockholder, the election of such stockholder in its sole discretion to terminate the applicable voting agreement promptly following any amendment of any term of the Merger Agreement that reduces or changes the form of consideration payable pursuant to the Merger Agreement. |
• | an estimated purchase price of $284.0 million comprised of the non-cash estimated share value of share conversion of $266.6 million based on 33,198,627 outstanding Exterran common stock and Enerflex’s closing share price of $8.03 on March 1, 2022, the non-cash estimated share value of the share-based awards of $11.8 million and the estimated fractional share amount of approximately $5.6 million in cash as merger consideration; |
• | the use of proceeds of $1,129.0 million (USD $890.5 million) from the bridge loan and existing cash in Exterran and Enerflex of $69.8 million to fund a portion of the merger consideration as above, to repay existing indebtedness of Exterran of $729.0 million (USD $575.0 million) and existing indebtedness of Enerflex of $334.8 million and to pay related fees and expenses, including changes in interest expense and amortization of estimated debt issuance costs; |
• | the payment of financing costs of approximately $69.6 million related to cancellation, make-whole, bridge financing and debt costs, $9.7 million of financing costs capitalized as part of the issuance of the new financing facilities, $8.0 million related to the settlement of share based compensation awards liabilities, $19.4 million in post-combination expenses such as severances and $22.6 million in advisory, legal fees and other transaction costs; |
• | adjustments to convert the audited historical financial statements of Exterran prepared in accordance with GAAP to IFRS and to conform to the accounting policies used by Enerflex; |
• | adjustments to translate the Exterran audited consolidated balance sheet as at December 31, 2021 and the Exterran audited consolidated statement of operations for the year ended December 31, 2021 into Canadian dollars at a rate of USD$1.00 = CAD$1.27 and USD$1.00 = CAD$1.25, respectively; and |
• | changes in the carrying values of certain assets and liabilities of Exterran to reflect their preliminary, estimated fair values at the date of closing of the transaction, as well as values assigned to previously unrecognized intangible assets and related changes in amortization expenses. |
Historical | Transaction Accounting Adjustments |
|||||||||||||||||||||||||||||||
CAD Enerflex (IFRS) |
USD Exterran (US GAAP) |
CAD Exterran (US GAAP) |
Presentation- conforming adjustments |
Notes | Pro forma adjustments |
Notes | Pro forma consolidated (IFRS) |
|||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 172,758 | $ | 56,255 | $ | 71,320 | $ | — | $ | (69,835 | ) | 5a | $ | 174,243 | ||||||||||||||||||
Restricted cash |
— | 5,796 | 7,348 | — | — | 7,348 | ||||||||||||||||||||||||||
Accounts receivable |
212,206 | 179,844 | 228,006 | — | — | 440,212 | ||||||||||||||||||||||||||
Contract assets |
82,760 | 25,554 | 32,398 | 344 | 3c | — | 115,502 | |||||||||||||||||||||||||
Inventories |
172,687 | 102,494 | 129,943 | 18,830 | 3c | 10,443 | 5b | 331,903 | ||||||||||||||||||||||||
Work-in-progress |
36,169 | — | — | — | — | 36,169 | ||||||||||||||||||||||||||
Current portion of finance leases receivable |
15,248 | — | — | — | — | 15,248 | ||||||||||||||||||||||||||
Income taxes receivable |
3,732 | — | — | — | — | 3,732 | ||||||||||||||||||||||||||
Derivative financial instruments |
294 | — | — | — | — | 294 | ||||||||||||||||||||||||||
Other current assets |
13,853 | 22,897 | 29,029 | — | — | 42,882 | ||||||||||||||||||||||||||
Current assets associated with discontinued operations |
— | 15,558 | 19,724 | (19,174 | ) | 3c | (550 | ) | 5e | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total current assets |
709,707 | 408,398 | 517,768 | — | (59,942 | ) | 1,167,533 | |||||||||||||||||||||||||
Property, plant and equipment |
96,414 | 604,957 | 766,964 | (20,483 | ) | 3b | — | 842,895 | ||||||||||||||||||||||||
Rental equipment |
610,328 | — | — | — | — | 610,328 | ||||||||||||||||||||||||||
Lease right-of-use |
49,887 | 21,654 | 27,453 | — | 12,736 | 5c | 90,076 | |||||||||||||||||||||||||
Finance leases receivable |
88,110 | — | — | — | — | 88,110 | ||||||||||||||||||||||||||
Deferred tax assets |
9,293 | 7,671 | 9,725 | 19,419 | 3d | — | 38,437 | |||||||||||||||||||||||||
Other assets |
51,315 | 67,006 | 84,950 | 85,985 | 3d | (3,906 | ) | 5f | 218,344 | |||||||||||||||||||||||
Long-term contract assets |
— | 67,822 | 85,985 | (85,985 | ) | 3d | — | — | ||||||||||||||||||||||||
Intangible assets |
10,118 | — | — | 20,483 | 3b | 19,907 | 5d | 50,508 | ||||||||||||||||||||||||
Goodwill |
566,270 | — | — | — | 9,760 | 4 | 576,030 | |||||||||||||||||||||||||
Long-term assets associated with discontinued operations |
— | 1,689 | 2,141 | — | (2,141 | ) | 5e | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 2,191,442 | $ | 1,179,197 | $ | 1,494,986 | $ | 19,419 | $ | (23,586 | ) | $ | 3,682,261 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Historical | Transaction Accounting Adjustments |
|||||||||||||||||||||||||||||||
CAD Enerflex (IFRS) |
USD Exterran (US GAAP) |
CAD Exterran (US GAAP) |
Presentation- conforming adjustments |
Notes | Pro forma adjustments |
Notes | Pro forma consolidated (IFRS) |
|||||||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 240,747 | $ | 208,607 | $ | 264,471 | $ | 591 | 3c | $ | (4,992 | ) | $ | 500,817 | ||||||||||||||||||
Warranty provision |
6,636 | — | — | — | 3d | — | 6,636 | |||||||||||||||||||||||||
Income taxes payable |
9,318 | — | — | 19,419 | 3c | — | 28,737 | |||||||||||||||||||||||||
Deferred revenues |
84,614 | 74,206 | 94,078 | 28 | (1,696 | ) | 5g | 177,024 | ||||||||||||||||||||||||
Current portion of lease liabilities |
13,906 | 4,977 | 6,310 | — | — | 20,216 | ||||||||||||||||||||||||||
Derivative financial instruments |
180 | — | — | — | — | 180 | ||||||||||||||||||||||||||
Current liabilities associated with discontinued operations |
— | 2,299 | 2,915 | (619 | ) | 3c | — | 2,296 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total current liabilities |
355,401 | 290,089 | 367,774 | 19,419 | (6,688 | ) | 735,906 | |||||||||||||||||||||||||
Long-term debt |
331,422 | 571,788 | 724,913 | — | 62,877 | 5e | 1,119,212 | |||||||||||||||||||||||||
Lease liabilities |
43,108 | 26,723 | 33,879 | — | — | 76,987 | ||||||||||||||||||||||||||
Deferred tax liabilities |
91,972 | 921 | 1,168 | — | 10,772 | 5h | 103,912 | |||||||||||||||||||||||||
Other liabilities |
15,785 | 44,410 | 56,303 | 77,311 | 3c, d | (1,385 | ) | 5g | 148,014 | |||||||||||||||||||||||
Long-term contract liabilities |
— | 60,608 | 76,839 | (76,839 | ) | 3d | — | — | ||||||||||||||||||||||||
Long-term liabilities associated with discontinued operations |
— | 1,066 | 1,351 | (472 | ) | 3c | — | 879 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities |
837,688 | 995,605 | 1,262,227 | 19,419 | 65,576 | 2,184,910 | ||||||||||||||||||||||||||
Shareholders’ equity: |
||||||||||||||||||||||||||||||||
Share capital |
375,524 | 381 | 483 | — | 266,102 | 5i | 642,109 | |||||||||||||||||||||||||
Contributed surplus |
658,615 | 753,046 | 954,712 | — | (954,712 | ) | 5i | 658,615 | ||||||||||||||||||||||||
Retained earnings |
274,962 | (531,237 | ) | (673,502 | ) | — | 550,514 | 5i | 151,974 | |||||||||||||||||||||||
Accumulated other comprehensive income |
44,653 | 19,144 | 24,271 | — | (24,271 | ) | 5i | 44,653 | ||||||||||||||||||||||||
Treasury stock |
— | (57,742 | ) | (73,205 | ) | — | 73,205 | 5i | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total shareholders’ equity |
1,353,754 | 183,592 | 232,759 | — | (89,162 | ) | 1,497,351 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 2,191,442 | $ | 1,179,197 | $ | 1,494,986 | $ | 19,419 | $ | (23,586 | ) | $ | 3,682,261 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Historical | Transaction Accounting Adjustments |
|||||||||||||||||||||||||||||||
CAD Enerflex (IFRS) |
USD Exterran (US GAAP) |
CAD Exterran (US GAAP) |
Presentation- conforming adjustments |
Notes | Pro forma adjustments |
Notes | Pro forma consolidated (IFRS) |
|||||||||||||||||||||||||
Revenue |
$ | 960,156 | $ | 630,245 | $ | 790,012 | $ | 7,705 | 3c | $ | (2,262 | ) | 6b | $ | 1,755,611 | |||||||||||||||||
Cost of goods sold |
740,602 | 353,779 | 443,462 | 233,498 | 3c, e, g | (7,260 | ) | 1,410,302 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Gross margin |
219,554 | 276,466 | 346,550 | (225,793 | ) | 4,998 | 345,309 | |||||||||||||||||||||||||
Selling and administrative expenses |
165,263 | 132,510 | 166,101 | (3,759 | ) | 3e, g | 772 | 6c | 328,377 | |||||||||||||||||||||||
Depreciation and amortization |
— | 175,063 | 219,441 | (219,441 | ) | 3e | — | — | ||||||||||||||||||||||||
Impairment |
— | 7,959 | 9,977 | — | (9,977 | ) | 6d | — | ||||||||||||||||||||||||
Restructuring and other charges |
— | 1,338 | 1,677 | (1,677 | ) | 3f | — | — | ||||||||||||||||||||||||
Interest expense |
— | 41,574 | 52,113 | (52,113 | ) | 3h | ||||||||||||||||||||||||||
Transaction related costs |
— | — | — | 1,677 | 3f | 111,634 | 6e | 113,311 | ||||||||||||||||||||||||
Other (income) expense, net |
— | (1,292 | ) | (1,620 | ) | (74 | ) | 3c | — | (1,694 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Operating income (loss) |
54,291 | (80,686 | ) | (101,139 | ) | 49,594 | (97,431 | ) | (94,685 | ) | ||||||||||||||||||||||
Gain (loss) on disposal of property, plant and equipment |
135 | — | — | — | — | 135 | ||||||||||||||||||||||||||
Equity earnings from associate and joint venture |
671 | — | — | — | — | 671 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
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Earnings (loss) before finance costs and income taxes |
55,097 | (80,686 | ) | (101,139 | ) | 49,594 | (97,431 | ) | (93,879 | ) | ||||||||||||||||||||||
Net finance costs |
16,995 | 52,113 | 3h | 26,601 | 6f | 95,709 | ||||||||||||||||||||||||||
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|
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Earnings (loss) before income taxes |
38,102 | (80,686 | ) | (101,139 | ) | (2,519 | ) | (124,032 | ) | (189,588 | ) | |||||||||||||||||||||
Income taxes |
56,557 | 30,238 | 37,903 | — | — | 6g | (94,460 | ) | ||||||||||||||||||||||||
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Net earnings (loss) from continuing operations |
(18,455 | ) | (110,924 | ) | (139,042 | ) | (2,519 | ) | (124,032 | ) | (284,048 | ) | ||||||||||||||||||||
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Gain (loss) from discontinued operations |
$ | — | $ | (1,784 | ) | $ | (2,236 | ) | $ | 2,519 | 3c | $ | — | $ | 283 | |||||||||||||||||
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Net income (loss) |
$ | (18,455 | ) | $ | (112,708 | ) | $ | (141,278 | ) | $ | — | $ | (124,032 | ) | $ | (283,765 | ) | |||||||||||||||
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Earnings (loss) per share: |
||||||||||||||||||||||||||||||||
Basic |
$ | (0.21 | ) | $ | (3.41 | ) | $ | — | $ | — | $ | — | $ | (2.31 | ) | |||||||||||||||||
Diluted |
(0.21 | ) | (3.41 | ) | — | — | — | (2.31 | ) | |||||||||||||||||||||||
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Weighted average number of shares: |
||||||||||||||||||||||||||||||||
Basic |
89,678,845 | 33,041,000 | 6h | 122,877,472 | ||||||||||||||||||||||||||||
Diluted |
89,678,845 | 33,041,000 | 6h | 122,877,472 |
1. |
Description of the Transaction |
2. |
Basis of presentation |
i. | Enerflex audited consolidated statement of financial position as at December 31, 2021 and the Enerflex audited consolidated statement of earnings for the year ended December 31, 2021 (collectively referred to as the ‘‘Enerflex historical consolidated financial statements”); and |
ii. | Exterran audited consolidated balance sheet as at December 31, 2021 and the Exterran consolidated statement of operations for the year ended December 31, 2021 (collectively referred to as the ‘‘Exterran historical consolidated financial statements’’). |
3. |
Reconciliation from US GAAP to IFRS and conforming adjustments |
(a) | The Exterran audited consolidated balance sheet as at December 31, 2021 was translated from USD to CAD using the period end exchange rate of $1.27 whereas the Exterran audited consolidated statement of operations for the year ended December 31, 2021 was translated from USD to CAD using the average exchange rate of $1.25. |
(b) | Reflects a reclassification of computer software from property, plant and equipment to intangible assets as required under IAS 38, Intangible Assets |
(c) | Reflects a reclassification of certain discontinued operations in the Exterran historical audited consolidated financial statements related to the U.S. compression fabrication business that is core to the |
overall business of Enerflex and will no longer be considered discontinued operations upon completion of the merger. Approximately $19.2 million in assets have been reclassified into inventory and contract assets and approximately $1.1 million in liabilities have been reclassified to accounts payables and accrued liabilities, deferred revenues and other liabilities in the unaudited pro forma consolidated financial position as at December 31, 2021. Approximately $2.5 million in income from discontinued operations has also been reclassified to operating income and expenses in the unaudited pro forma consolidated statement of earnings for the year ended December 31, 2021. The remaining assets and liabilities have been adjusted to fair value in the preliminary purchase price allocation as described in note 5(e). |
(d) | Reflects presentation conforming adjustments to reclassify and combine certain asset and liability balances presented separately on the face of the Exterran audited consolidated balance sheet as at December 31, 2021 that are presented as a single line-item in the Enerflex audited consolidated financial position as at December 31, 2021. |
(e) | Reflects a presentation conforming adjustment to reclassify depreciation and amortization expense presented separately on the face of the Exterran audited consolidated statement of operations for the year ended December 31, 2021 into both cost of goods sold and selling and administrative expenses consistent with the Enerflex audited consolidated statement of earnings for the year ended December 31, 2021. |
(f) | Reflects a presentation conforming adjustment to reclassify legal fees incurred related to the merger recorded in restructuring and other related charges in the Exterran audited consolidated statement of operations for the year ended December 31, 2021 into merger expenses consistent with the Enerflex audited consolidated statement of earnings for the year ended December 31, 2021. |
(g) | Reflects a presentation conforming adjustment to reclassify sales taxes recorded in selling and administrative expenses in the Exterran audited consolidated statement of operations for the year ended December 31, 2021 into cost of goods sold consistent with the Enerflex audited consolidated statement of earnings for the year ended December 31, 2021. |
(h) | Reflects a presentation confirming adjustment to reclassify interest expense recorded in interest expense in the Exterran audited consolidated statement of operations for the year ended December 31, 2021 into net finance costs consistent with the Enerflex audited consolidated statement of earnings for the year ended December 31, 2021. |
4. |
Estimated preliminary purchase price allocation |
Purchase Price |
||||
Non-cash estimated fair value of share conversion |
266.6 | |||
Estimated fractional share amount cash consideration |
5.6 | |||
Non-cash estimated fair value of vested share-based awards |
11.8 | |||
|
|
|||
Total merger consideration |
$ | 284.0 | ||
Recognized amounts of identifiable assets acquired and liabilities assumed 1 |
||||
Net book value of assets acquired as at December 31, 2021 |
232.8 | |||
Adjustments to fair value: |
||||
Increase in inventories |
10.4 | |||
Increase in right-of-use |
12.7 | |||
Derecognize existing intangible assets |
(3.7 | ) | ||
Identifiable intangible assets |
23.6 | |||
Increase in deferred tax liabilities |
(10.8 | ) | ||
Decrease of assets associated with discontinued operations |
(2.7 | ) | ||
Decrease of share-based compensation awards liability |
8.8 | |||
Decrease in deferred revenue and other liabilities |
3.1 | |||
|
|
|||
Total goodwill |
$ | 9.8 |
1 |
Represents USD converted to CAD at a rate of $1.27 to reflect the merger in the presentation currency of Enerflex. |
5. |
Pro forma adjustments to the consolidated statement of financial position of Enerflex |
(a) |
Cash and cash equivalents |
Sources of Funds |
||||
New Bank Facility (i) |
— | |||
Bridge loan (ii) |
1,129.0 | |||
Existing cash (iii) |
69.8 | |||
|
|
|||
Total sources |
$ | 1,198.8 | ||
Uses of Funds |
||||
Estimated cash consideration of the Merger Consideration (iv) |
5.6 | |||
Repayment Exterran debt (v) |
729.0 | |||
Repayment of Enerflex debt (vi) |
334.8 | |||
Transaction related costs (including financing fees) (vii) |
129.4 | |||
|
|
|||
Total uses |
$ | 1,198.8 |
i. | Concurrently with the closing of the merger, Enerflex will enter into the New Bank Facility with expected borrowing capacity of USD $700.0 million. The table above assumes that the New Bank Facility will be undrawn, although available, at the close of the merger. |
ii. | Concurrently with the closing of the merger, for the purposes of this pro forma financial information, Enerflex has assumed that we will draw from the bridge loan to fund the merger, repay all the outstanding debt of both Enerflex and Exterran and certain transaction fees and expenses. A total amount of $1,129.0 million (USD $890.5 million) is expected to be drawn from the total bridge loan of $1,156.3 million (USD $925.0 million) upon the closing date. |
iii. | A total amount of $69.8 million of existing cash in Exterran and Enerflex is expected to be utilized for the merger. |
iv. | Represents the estimated cash consideration payable on the closing date of the merger related to the fractional share amounts. |
v. | Represents approximately $285.3 million (USD $225.0 million) aggregate principal amount of Exterran’s revolving credit facility due October 2023 and approximately $443.7 million (USD $350.0 million) of 8.125% senior notes due May 2025 expected to be repaid in connection with the transaction. |
vi. | Represents approximately $30.5 million aggregate principal amount of Enerflex’s revolving credit facility, approximately $37.4 million of the U.S. asset-based credit facility, approximately $148.2 million of senior notes due December 2024 and approximately $118.7 million of senior notes due December 2027, expected to be repaid in connection with the transaction. |
vii. | Represents the estimated fees and expenses associated with the transaction including financing costs of approximately $69.6 million related to cancellation, make-whole, bridge financing and debt costs, $9.7 million of financing costs capitalized as part of the issuance of the new financing facilities, $8.0 million related to the settlement of share-based compensation awards liabilities, $19.4 million in post-combination expenses such as severances and $22.6 million in advisory, legal fees and other transaction costs. |
(b) |
Inventories |
(c) |
Right-of-Use |
(d) |
Intangible assets |
(e) |
Assets and liabilities associated with discontinued operations |
(f) |
Debt |
i. | an increase of $1,129.0 million aggregate principal amount of debt relating to the bridge loan; |
ii. | a decrease of $1,056.3 million net book value of debt expected to be repaid in the transaction consisting of $331.4 million of Enerflex’s debt and $724.9 million of Exterran’s debt, which includes the elimination of $11.4 million of historical debt issuance costs of Enerflex and Exterran as of December 31, 2021; and |
iii. | a decrease of $9.8 million relating to the incurrence of new debt issuance costs for the bridge loan, which are capitalized against the debt and recognized as non-cash interest expense periodically over the estimated life of the related debt obligations. |
(g) |
Deferred revenue and other liabilities |
(h) |
Deferred tax liability |
(i) |
Total equity |
i. | a net decrease $306.0 million to reflect the elimination of Exterran historical common stock, additional paid-in capital, accumulated deficit and accumulated other comprehensive income; |
ii. | an increase of $73.2 million to reflect the elimination of 4,740,398 common shares held as treasury stock that is cancelled as part of the merger; |
iii. | an increase of $266.6 million to reflect the non-cash estimated fair value of share conversion; and |
iv. | a decrease of $123.0 million in retained earnings to reflect the costs incurred related to the transaction and the refinancing. |
6. |
Pro forma adjustments to the consolidated statement of earnings of Enerflex |
(a) |
Revenue |
(b) |
Cost of goods sold |
i. | An increase $2.2 million in amortization expense resulting from the adjustment of the identifiable intangible assets to fair value in connection with purchase accounting as described in note 5(d). The preliminary amortization expense was calculated on a straight-line basis over the respective estimated weighted-average lives of all intangible assets. For a 10% change in the valuation of the definite-lived intangible assets, assuming a weighted average useful life of 10 years, amortization expense would increase or decrease by $0.2 million; |
ii. | A decrease of $1.7 million in amortization expense to eliminate the historical amortization of intangible assets; |
iii. | A net decrease in compensation expense of $8.7 million resulting from the difference between Exterran’s historical share-based compensation expense and the estimated share-based compensation expense related to replacement awards issued to continuing employees as part of the Merger Agreement. The fair value of the replacement awards including restricted stock units and performance units will be recognized ratably over the post-combination service weighted average vesting period of 1 year; and |
iv. | An estimated prorated increase of $0.9 million in amortization resulting from the adjustment to the right-of-use |
(c) |
Selling and administrative expenses |
i. | An increase of $0.1 million in amortization expense resulting from the adjustment of the identifiable intangible assets to fair value in connection with purchase accounting as described in note 5(d). The preliminary amortization expense was calculated on a straight-line basis over the respective estimated weighted-average lives of all intangible assets; |
ii. | A decrease of $0.1 million in amortization expense to eliminate the historical amortization of intangible assets; and |
iii. | An estimated prorated increase of $0.7 million in amortization resulting from the adjustment to the right-of-use |
(d) |
Nonrecurring item |
(e) |
Transaction related costs (including financing fees) |
(f) |
Interest expenses |
(g) |
Income tax expenses |
(h) |
Pro forma earnings per share |
• | The Engineered Systems product line consists of custom and standard compression packages for reciprocating and screw compressor applications from Enerflex’s manufacturing facility located in |
Houston, Texas. In addition, the Company engineers, designs, manufactures, constructs, and installs modular natural gas processing equipment, energy transition solutions, refrigeration systems, and electric power solutions. Retrofit provides re-engineering, re-configuration, and re-packaging of compressors for various field applications. |
• | The Service product line provides mechanical services and parts, as well as maintenance solutions to the oil and natural gas industry in the USA. The Company packages CAT engines and is also a Platinum Tier Gas Compression Solution Provider of INNIO Waukesha, providing worldwide access to parts and service for both products. Enerflex’s USA service branches are located in Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, West Virginia, and Wyoming. |
• | The Energy Infrastructure product line provides natural gas compression equipment rentals to oil and natural gas customers in the USA under its Contract Compression operations, primarily operating in the Permian and SCOOP/STACK formations utilizing a fleet of low- to high-horsepower packages. These compressor packages are typically used in wellhead, gas-lift and natural gas gathering systems, and other applications primarily in connection with natural gas and oil production. In addition, power generation rental solutions are also available in the USA region. The Energy Infrastructure product line in the USA operates out of the Houston, Texas head office facility along with branches in West Texas, New Mexico and Oklahoma. |
• | The Rest of World segment deploys products typically fabricated by Enerflex’s Engineered Systems division in Houston, Texas. |
• | The Latin America region, with locations in Argentina, Bolivia, Brazil, Colombia, and Mexico, provides Engineered Systems products, including integrated turnkey natural gas compression, processing, and electric power solutions, with local construction and installation capabilities. The Service product line in the region focuses on after-market services, parts, and components, as well as operations, maintenance, and overhaul services. The Energy Infrastructure product line provides natural gas compression and processing equipment for rent to oil and gas customers in the region. Enerflex has several operating Build-Own-Operate-Maintain (“BOOM”) facilities of varying size and scope in this region, providing customers with alternate solutions to meet their natural gas compression, processing, and electric power needs. These BOOM facilities can be treated as either operating or finance leases. |
• | The Middle East/Africa (“MEA”) region, through its operations in Bahrain, Oman, Kuwait, and the UAE, provides engineering, design, procurement, project management, and construction services for compression, process, and power generation equipment, as well as rentals, after-market service, parts, and operations and maintenance services for gas compression, power generation, and processing facilities in the region. The Energy Infrastructure product line provides natural gas compression, power generation, and processing equipment for rent to oil and gas customers in the region. Enerflex has several BOOM facilities of varying size and scope in this region providing customers with alternate solutions to meet their natural gas compression, processing, and electric power needs. These BOOM facilities can be treated as either operating or finance leases. |
• | The Australia region is headquartered in Brisbane, Queensland with additional locations in Queensland, Western Australia, and New Zealand providing after-market services, equipment supply, parts supply, and general asset management. The Brisbane facility also packages power generation equipment for use across the region. |
• | The Asia region, with locations and operations in Indonesia, Malaysia, and Thailand, provides Engineered Systems, as well as after-market services and parts through the Company’s local operations. |
• | Through its location in the United Kingdom, the Company provides customized compression, processing, and high-end refrigeration solutions in the Europe region. |
• | As a Platinum Tier Gas Compression Solution Provider of INNIO Waukesha engines, the Company provides factory-direct access to Waukesha engines and parts in its Rest of World regions. This region also packages CAT engines and parts. |
• | The Engineered Systems product line is comprised of compression, process, energy transition, and electric power solutions. Enerflex provides custom and standard compression packages for reciprocating and screw compressor applications. It also engineers, designs, manufactures, constructs, and installs modular processing equipment and waste gas systems for natural gas facilities. Enerflex provides integrated turnkey (“ITK”) power generation, gas compression, and processing facilities. Retrofit solutions provide re-engineering, re-configuration, and re-packaging of compressors for various field applications. Enerflex has a manufacturing facility in Calgary, Alberta and retrofit facilities in Calgary, Grand Prairie, and Red Deer, Alberta. |
• | The Service product line provides after-market mechanical service and parts distribution. As a Platinum Tier Gas Compression Solution Provider of INNIO Waukesha, the Company has worldwide factory-direct access to Waukesha engines and parts. In addition, Enerflex is also the authorized distributor and service provider of INNIO’s Jenbacher gas engines and parts in Canada. The Company also packages CAT and MAN engines and parts. The Service product line operates out of service branches located in Alberta, British Columbia, Ontario, and Quebec. |
• | The Energy Infrastructure product line provides reciprocating and rotary screw natural gas compression packages ranging from 50 horsepower to 2,000 horsepower, as well as electric power equipment for rent to customers. |
Twelve months ended December 31, | ||||||||||||
($ Canadian thousands, except percentages) |
2021 |
2020 | 2019 | |||||||||
Revenue |
$ |
960,156 |
$ | 1,217,052 | $ | 2,045,422 | ||||||
Gross margin |
219,554 |
298,179 | 429,085 | |||||||||
Selling and administrative expenses |
165,263 |
182,167 | 197,177 | |||||||||
|
|
|
|
|
|
|||||||
Operating income |
54,291 |
116,012 | 231,908 | |||||||||
Earnings before finance costs and income taxes (“EBIT”) |
55,097 |
118,052 | 232,902 | |||||||||
Net earnings (loss) |
$ |
(18,455) |
$ | 88,257 | $ | 152,128 | ||||||
Key Financial Performance Indicators 1 |
||||||||||||
Engineered Systems bookings |
$ |
768,703 |
$ | 273,782 | $ | 508,916 | ||||||
Engineered Systems backlog |
557,549 |
142,973 | 467,757 | |||||||||
Recurring revenue growth 2 |
(2.0)% |
3.6% | 14.5% | |||||||||
Gross margin as a percentage of revenue |
22.9% |
24.5% | 21.0% | |||||||||
EBIT as a percentage of revenue |
5.7% |
9.7% | 11.4% | |||||||||
Earnings before finance costs, income taxes, depreciation and amortization (“EBITDA”) |
$ |
142,719 |
$ | 203,317 | $ | 320,461 | ||||||
Return on capital employed (“ROCE”) |
3.5% |
6.6% | 15.8% | |||||||||
Rental horsepower |
800,271 |
713,929 | 674,153 |
1 |
These key financial performance indicators are Non-IFRS measures. Further detail is provided in the Non-IFRS Measures section. |
2 |
Recurring revenue is comprised of revenue from the Service and Energy Infrastructure product lines, which are typically contracted and extend into the future. While the contracts are subject to cancellation or have varying lengths, the Company does not believe these characteristics preclude them from being considered recurring in nature. Growth in recurring revenue is calculated on a period-over-period basis. |
• | Engineered Systems bookings totaled $768.7 million, up from $273.8 million in the same period last year reflecting improving conditions for customers and renewed optimism in the oil and gas sector. The movement in foreign exchange rates resulted in an increase of $5.7 million on foreign currency denominated backlog during the twelve months of 2021, compared to $7.5 million in the comparable period. |
• | Operating income was lower than the prior year, primarily due to reduced Engineered Systems revenue on lower opening backlog, the recognition of large finance leases in the prior year, significantly higher share-based compensation costs, reduced contribution from certain large, high margin Engineered Systems projects that were largely completed by the third quarter of 2020 and lower government grants received. These impacts were partially offset by improved Service revenues, increased contribution from higher margin recurring revenue product offerings, and lower SG&A due to the bad debt expense in the prior year. |
• | During the fourth quarter of 2021, the Company negotiated an extension of an existing contract on a significant BOOM asset. The extension is accounted for as a finance lease and is similar to the extensions that were signed in the fourth quarter of 2020 but has a lower impact in the current year and is the primary driver in the decrease in recurring revenues for the year. |
• | Engineered Systems backlog at December 31, 2021 is $557.5 million, an increase of $414.5 million, compared to the backlog of $143.0 million on December 31, 2020 due to Engineered Systems bookings outpacing revenue recognized in the period, and favourable foreign exchange impacts of $5.7 million. |
• | SG&A costs of $165.3 million in the twelve months of 2021 were down from $182.2 million in the same period last year. This favourable variance was the result of lower bad debt provisions, decreased compensation expense on reduced average headcount, and decreased profit share on lower operational results, partially offset by higher share-based compensation, and lower cost recoveries from government subsidies. The movement in share price resulted in $12.9 million of share-based compensation expense, compared to $1.8 million in the twelve months ended 2020 – a net increase of $11.1 million period-over-period. |
• | The Company derecognized $44.7 million of deferred tax assets. This non-cash event related to unused tax losses and other deductible temporary differences in Canada. The derecognized tax assets have a finite life and the continued challenging market conditions create uncertainty whether sufficient taxable income will be available to offset these unused tax losses prior to expiry. |
• | Inventory levels decreased $39.6 million when compared to December 31, 2020 as the Company continued to realize major equipment inventory into Engineered Systems projects and new contract compression units throughout 2021. |
• | The Company invested $52.2 million in rental assets; the majority of which was used to fund the organic expansion of the USA contract compression fleet. |
• | At December 31, 2021, the USA contract compression fleet totaled approximately 400,000 horsepower with an average fleet utilization of 86 percent for the twelve months ended December 31, 2021. |
• | The Company has also invested $36.2 million towards construction of natural gas infrastructure assets, which will be accounted for as a finance lease. |
• | During the third quarter of 2021, the Company extended $660.0 million of its Bank Facility to June 30, 2025, under substantially the same terms and conditions. |
• | The Company maintained balance sheet strength by managing working capital, reducing debt, and continuing to exercise capital discipline. We exited the quarter financially strong, with a bank-adjusted net debt to EBITDA ratio of 1.0:1, compared to a maximum ratio of 3:1. This leverage ratio excludes the non-recourse debt. Enerflex has substantial undrawn credit capacity and cash on hand. |
• | Subsequent to December 31, 2021, the Company’s Board of Directors approved its quarterly dividend of $0.025 per share, payable on April 7, 2022, to shareholders of record on March 10, 2022. The Board will continue to evaluate dividend payments on a quarterly basis, based on the availability of cash flow and anticipated market conditions. |
• | On January 24, 2022, Enerflex and Exterran Corporation (NYSE: EXTN) announced they have entered into a definitive agreement to combine the companies in an all-share transaction to create a premier integrated global provider of energy infrastructure. Upon completion of the transaction, which will require shareholder and regulatory approval, the combined entity will operate as Enerflex Ltd. Subject to all approvals, the transaction is expected to close in the second or third quarter of 2022. |
• | Engineered Systems booking activity was lower in the twelve months of 2020 versus the comparative period due to restrained spending within the oil and gas industry. Bookings totaled $273.8 million, down from $508.9 million in the comparative period. During the year we recognized $19.8 million of previous bookings in the Canada segment that were de-booked. The de-booking largely related to a project initially recorded in a prior year that the customer deferred. The initial deposit was allocated to other projects that the Company had been awarded with the same customer. The movement in exchange rates resulted in an increase of $7.5 million on foreign currency denominated backlog during the twelve months of 2020, compared to a $35.0 million decrease in the comparable period – a $42.5 million period-over-period increase. |
• | Operating income decreased over the comparative period, due largely to lower Engineered Systems revenue and increased bad debt provisions in the USA and ROW segments, partially offset by the impact of the finance lease transaction, as described below, as well as improved gross margin percentage and lower overall SG&A costs. Both the current period and the comparative period also include the impact of higher estimated costs to complete certain projects; however, the effect on the current year was lower than the comparative period. In addition, the comparative period also includes a write-down of equipment. Gross margin percentage is higher as a result of increased contributions from recurring revenue product lines and the proportionately higher contribution of the previously mentioned high margin Engineered Systems projects that were largely completed by the third quarter of 2020. |
• | At December 31, 2020, the Company finalized the extension of two contracts with a customer, which were previously recognized as BOOM projects, for an additional 10 years. These contracts were previously scheduled to end in 2021 and 2024. Under the new agreements, the Company will continue providing, operating, and maintaining the existing equipment for approximately 10 years, after which ownership of the equipment will transfer to the customer. Upon commencement of the new leases, the Company recognized Energy Infrastructure revenue, based on the fair value of the underlying assets, and the associated cost of goods sold, determined to be the net book value of those assets, in the consolidated statements of earnings. The amount of this revenue reflects the amount that the Company would otherwise recognize on a sale of those assets. |
• | SG&A costs of $182.2 million in the twelve months of 2020 were down from $197.2 million in the same period of 2019. The decrease in SG&A is driven by lower compensation expense on lower headcount and profit share, as well as mark-to-market |
• | Engineered Systems backlog at December 31, 2020 decreased compared to December 31, 2019 due to Engineered Systems revenue recognized in the period outpacing bookings, partially offset by favourable foreign exchange impacts. |
• | The Company invested $123.9 million in rental assets to fund both the organic expansion of the USA contract compression fleet and continued construction of a previously announced BOOM project in MEA. At December 31, 2020, the USA contract compression fleet totaled over 350,000 horsepower with an average fleet utilization of 83 percent for the twelve months ended December 31, 2020. |
Twelve months ended December 31, 2021 |
||||||||||||||||
($ Canadian thousands) |
Total |
USA |
ROW |
Canada |
||||||||||||
Reported EBIT |
$ |
55,097 |
$ |
14,442 |
$ |
36,385 |
$ |
4,270 |
||||||||
Severance costs in COGS and SG&A |
749 |
112 |
202 |
435 |
||||||||||||
Government grants in COGS and SG&A |
(16,361 |
) |
(1,645 |
) |
(10 |
) |
(14,706 |
) | ||||||||
Share-based compensation |
12,937 |
5,540 |
4,942 |
2,455 |
||||||||||||
Depreciation and amortization |
87,622 |
42,702 |
37,293 |
7,627 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ |
140,044 |
$ |
61,151 |
$ |
78,812 |
$ |
81 |
||||||||
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2020 | ||||||||||||||||
($ Canadian thousands) |
Total | USA | ROW | Canada | ||||||||||||
Reported EBIT |
$ | 118,052 | $ | 56,496 | $ | 40,542 | $ | 21,014 | ||||||||
Severance costs in COGS and SG&A |
5,718 | 1,437 | 725 | 3,556 | ||||||||||||
Government grants in COGS and SG&A |
(19,569 | ) | — | (2,246 | ) | (17,323 | ) | |||||||||
Share-based compensation |
1,816 | 1,035 | 727 | 54 | ||||||||||||
Depreciation and amortization |
85,265 | 41,312 | 35,107 | 8,846 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 191,282 | $ | 100,280 | $ | 74,855 | $ | 16,147 | ||||||||
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2019 | ||||||||||||||||
($ Canadian thousands) |
Total | USA | ROW | Canada | ||||||||||||
Reported EBIT |
$ | 233,902 | $ | 193,825 | $ | 537 | $ | 39,540 | ||||||||
Write-off of rental equipment in COGS |
14,489 | — | 14,489 | — | ||||||||||||
Write-off of facility and equipment in COGS |
2,654 | — | 2,654 | — | ||||||||||||
Restructuring costs in COGS and SG&A |
869 | — | — | 869 | ||||||||||||
Gain on disposal of idle facilities |
(434 | ) | — | — | (434 | ) | ||||||||||
Share-based compensation |
7,749 | 3,838 | 1,888 | 2,023 | ||||||||||||
Depreciation and amortization |
86,559 | 33,381 | 42,846 | 10,332 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 345,788 | $ | 231,044 | $ | 62,414 | $ | 52,330 | ||||||||
|
|
|
|
|
|
|
|
Twelve months ended December 31, |
||||||||
($ Canadian thousands) |
2021 |
2020 | ||||||
Bookings |
||||||||
USA |
$ |
404,717 |
$ | 146,902 | ||||
Rest of World |
185,979 |
47,720 | ||||||
Canada |
178,007 |
79,160 | ||||||
|
|
|
|
|||||
Total bookings |
$ |
768,703 |
$ | 273,782 | ||||
|
|
|
|
($ Canadian thousands) |
December 31, 2021 |
December 31, 2020 |
||||||
Backlog |
||||||||
USA |
$ |
262,937 |
$ | 76,778 | ||||
Rest of World |
179,655 |
16,176 | ||||||
Canada |
114,957 |
50,019 | ||||||
|
|
|
|
|||||
Total backlog |
$ |
557,549 |
$ | 142,973 | ||||
|
|
|
|
• | USA generates revenue from manufacturing natural gas compression, processing, refrigeration, energy transition, and electric power equipment, including custom and standard compression packages and modular natural gas processing equipment and refrigeration systems, in addition to generating revenue from mechanical services, parts, and maintenance solutions, and contract compression rentals; |
• | Rest of World generates revenue from manufacturing (focusing on large-scale process equipment), after-market services, including parts and components, as well as operations, maintenance, and overhaul services, and rentals of compression and processing equipment. The Rest of World segment has been successful in securing BOOM, ITK, and other long-term finance leases; and |
• | Canada generates revenue from manufacturing both custom and standard natural gas compression, processing, energy transition, and electric power equipment, as well as providing after-market mechanical service, parts, and compression and power generation rentals. |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Engineered Systems bookings |
$ |
404,717 |
$ | 146,902 | $ | 340,552 | ||||||
Engineered Systems backlog |
262,937 |
76,778 | 320,054 | |||||||||
|
|
|
|
|
|
|||||||
Segment revenue |
$ |
497,630 |
$ | 649,133 | $ | 1,243,760 | ||||||
Intersegment revenue |
(27,247 |
) |
(16,847 | ) | (48,091 | ) | ||||||
|
|
|
|
|
|
|||||||
Revenue |
$ |
470,383 |
$ | 632,286 | $ | 1,195,669 | ||||||
|
|
|
|
|
|
|||||||
Revenue – Engineered Systems |
$ |
218,558 |
$ | 390,178 | $ | 947,451 | ||||||
Revenue – Service |
$ |
153,722 |
$ | 150,939 | $ | 172,130 | ||||||
Revenue – Energy Infrastructure |
$ |
98,103 |
$ | 91,169 | $ | 76,088 | ||||||
Operating income |
$ |
14,442 |
$ | 56,504 | $ | 194,010 | ||||||
EBIT |
$ |
14,442 |
$ | 56,496 | $ | 193,825 | ||||||
EBITDA |
$ |
57,144 |
$ | 97,808 | $ | 227,206 | ||||||
Segment revenue as a % of total revenue |
49.0 |
% |
52.0 | % | 58.5 | % | ||||||
Recurring revenue growth |
4.0 |
% |
(2.5 | )% | 25.7 | % | ||||||
Operating income as a % of segment revenue |
3.1 |
% |
8.9 | % | 16.2 | % | ||||||
EBIT as a % of segment revenue |
3.1 |
% |
8.9 | % | 16.2 | % | ||||||
EBITDA as a % of segment revenue |
12.1 |
% |
15.5 | % | 19.0 | % |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Engineered Systems bookings |
$ |
185,979 |
$ | 47,720 | $ | 20,179 | ||||||
Engineered Systems backlog |
179,655 |
16,176 | 8,941 | |||||||||
|
|
|
|
|
|
|||||||
Segment revenue |
$ |
309,695 |
$ | 353,210 | $ | 354,680 | ||||||
Intersegment revenue |
(138 |
) |
(199 | ) | (7,846 | ) | ||||||
|
|
|
|
|
|
|||||||
Revenue |
$ |
309,557 |
$ | 353,011 | $ | 346,834 | ||||||
|
|
|
|
|
|
|||||||
Revenue – Engineered Systems |
$ |
22,500 |
$ | 40,485 | $ | 76,813 | ||||||
Revenue – Service 1 |
$ |
111,500 |
$ | 96,092 | $ | 111,357 | ||||||
Revenue – Energy Infrastructure 1 |
$ |
175,557 |
$ | 216,434 | $ | 158,664 | ||||||
Operating income |
$ |
36,250 |
$ | 40,488 | $ | 511 | ||||||
EBIT |
$ |
36,385 |
$ | 40,542 | $ | 537 | ||||||
EBITDA |
$ |
73,678 |
$ | 75,649 | $ | 43,383 | ||||||
Segment revenue as a % of total revenue |
32.2 |
% |
29.0 | % | 17.0 | % | ||||||
Recurring revenue growth 2 |
(8.1 |
)% |
15.7 | % | 6.5 | % | ||||||
Operating income as a % of segment revenue |
11.7 |
% |
11.5 | % | 0.1 | % | ||||||
EBIT as a % of segment revenue |
11.8 |
% |
11.5 | % | 0.2 | % | ||||||
EBITDA as a % of segment revenue |
23.8 |
% |
21.4 | % | 12.5 | % |
1 |
Revenues from the operation and maintenance of BOOM contracts have been reclassified from the Service to Energy Infrastructure product line including $11,717 previously disclosed during the first quarter of 2020. For the twelve months ended December 31, 2019, $43,594 have been reclassified. Please refer to Note 23 of the audited consolidated financial statements for further details. |
2 |
Recurring revenue growth includes revenue recognized on the commencement of two finance leases in the fourth quarter of 2020. The amount of this revenue reflects the amount that the Company would otherwise recognize on a sale of those assets. Without the effect of this transaction, recurring revenue in the Rest of World segment would have decreased by 7.9% for the year ended December 31, 2020. |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Engineered Systems bookings |
$ |
178,007 |
$ | 79,160 | $ | 148,185 | ||||||
Engineered Systems backlog |
114,957 |
50,019 | 138,762 | |||||||||
|
|
|
|
|
|
|||||||
Segment revenue |
$ |
194,439 |
$ | 247,390 | $ | 518,042 | ||||||
Intersegment revenue |
(14,223 |
) |
(15,635 | ) | (15,123 | ) | ||||||
|
|
|
|
|
|
|||||||
Revenue |
$ |
180,216 |
$ | 231,755 | $ | 502,919 | ||||||
|
|
|
|
|
|
|||||||
Revenue – Engineered Systems |
$ |
113,069 |
$ | 167,903 | $ | 424,239 | ||||||
Revenue – Service |
$ |
62,154 |
$ | 56,238 | $ | 67,505 | ||||||
Revenue – Energy Infrastructure |
$ |
4,993 |
$ | 7,614 | $ | 11,175 | ||||||
Operating income |
$ |
3,599 |
$ | 19,020 | $ | 37,387 | ||||||
EBIT |
$ |
4,270 |
$ | 21,014 | $ | 39,540 | ||||||
EBITDA |
$ |
11,897 |
$ | 29,860 | $ | 49,872 | ||||||
Segment revenue as a % of total revenue |
18.8 |
% |
19.0 | % | 24.6 | % | ||||||
Recurring revenue growth |
5.2 |
% |
(18.8 | )% | 12.0 | % | ||||||
Operating income as a % of segment revenue |
2.0 |
% |
8.2 | % | 7.4 | % | ||||||
EBIT as a % of segment revenue |
2.4 |
% |
9.1 | % | 7.9 | % | ||||||
EBITDA as a % of segment revenue |
6.6 |
% |
12.9 | % | 9.9 | % |
Twelve months ended December 31, 2021 | ||||||||||||||||
($ Canadian thousands) |
Total |
Engineered Systems |
Service |
Energy Infrastructure |
||||||||||||
Revenue |
$ |
960,156 |
$ |
354,127 |
$ |
327,376 |
$ |
278,653 |
||||||||
Cost of goods sold: |
||||||||||||||||
Operating expenses |
671,003 |
308,784 |
254,288 |
107,931 |
||||||||||||
Depreciation and amortization |
69,599 |
9,923 |
5,595 |
54,081 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
$ |
219,554 |
$ |
35,420 |
$ |
67,493 |
$ |
116,641 |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin % |
22.9 |
% |
10.0 |
% |
20.6 |
% |
41.9 |
% | ||||||||
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2020 | ||||||||||||||||
($ Canadian thousands) |
Total | Engineered Systems |
Service | Energy Infrastructure |
||||||||||||
Revenue |
$ | 1,217,052 | $ | 598,566 | $ | 303,269 | $ | 315,217 | ||||||||
Cost of goods sold: |
||||||||||||||||
Operating expenses |
852,524 | 477,282 | 234,666 | 140,576 | ||||||||||||
Depreciation and amortization |
66,349 | 8,469 | 4,016 | 53,864 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
$ | 298,179 | $ | 112,815 | $ | 64,587 | $ | 120,777 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin % |
24.5 | % | 18.8 | % | 21.2 | % | 38.3 | % | ||||||||
|
|
|
|
|
|
|
|
Twelve months ended December 31, 2019 | ||||||||||||||||
($ Canadian thousands) |
Total | Engineered Systems |
Service | Energy Infrastructure |
||||||||||||
Revenue |
$ | 2,045,422 | $ | 1,448,503 | $ | 350,992 | $ | 245,927 | ||||||||
Cost of goods sold: |
||||||||||||||||
Operating expenses |
1,550,036 | 1,159,712 | 269,994 | 120,330 | ||||||||||||
Depreciation and amortization |
66,301 | 6,681 | 3,453 | 56,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
$ | 429,085 | $ | 282,110 | $ | 77,545 | $ | 69,430 | 1 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin % |
21.0 | % | 19.5 | % | 22.1 | % | 28.2 | % | ||||||||
|
|
|
|
|
|
|
|
1 |
In the twelve months of 2019, Enerflex recognized $26.4 million of write-offs and impairment charges on rental equipment. Of the total value recognized, $14.5 million relates to the write-off of specialized rental assets acquired as part of a business combination in 2014 that we have now determined cannot be redeployed and have never been utilized or generated revenue for Enerflex. |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
EBITDA |
||||||||||||
EBIT |
$ |
55,097 |
$ | 118,052 | $ | 233,902 | ||||||
Depreciation and amortization |
87,622 |
85,265 | 86,559 | |||||||||
|
|
|
|
|
|
|||||||
EBITDA |
$ |
142,719 |
$ | 203,317 | $ | 320,461 | ||||||
Recurring Revenue |
||||||||||||
Service 1 |
$ |
327,376 |
$ | 303,269 | $ | 350,992 | ||||||
Energy Infrastructure 1 |
278,653 |
315,217 | 245,927 | |||||||||
|
|
|
|
|
|
|||||||
Total Recurring Revenue |
$ |
606,029 |
$ | 618,486 | $ | 596,919 | ||||||
ROCE |
||||||||||||
Trailing 12-month EBIT |
$ |
55,097 |
$ | 118,052 | $ | 233,902 | ||||||
Capital Employed – beginning of period |
||||||||||||
Net debt 2 |
$ |
294,036 |
$ | 334,232 | $ | 117,848 | ||||||
Shareholders’ equity |
1,396,695 |
1,342,787 | 1,282,519 | |||||||||
|
|
|
|
|
|
|||||||
$ |
1,690,731 |
$ | 1,677,019 | $ | 1,400,367 | |||||||
Capital Employed – end of period |
||||||||||||
Net debt 2 |
$ |
158,664 |
$ | 294,036 | $ | 334,232 | ||||||
Shareholders’ equity |
1,353,754 |
1,396,695 | 1,342,787 | |||||||||
|
|
|
|
|
|
|||||||
$ |
1,512,418 |
$ | 1,690,731 | $ | 1,677,019 | |||||||
Average Capital Employed 3 |
$ |
1,595,281 |
$ | 1,777,890 | $ | 1,483,919 | ||||||
Return on Capital Employed |
3.5 |
% |
6.6 | % | 15.8 | % |
1 |
Revenues from the operation and maintenance of BOOM contracts have been reclassified from the Service to Energy Infrastructure product line including $11,717 previously disclosed during the first quarter of 2020. For the twelve months ended December 31, 2019, $43,594 have been reclassified. Please refer to Note 23 of the audited consolidated financial statements for further details. |
2 |
Net debt is defined as short- and long-term debt less cash and cash equivalents. |
3 |
Based on a trailing four-quarter average. |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Cash provided by operating activities |
$ |
225,155 |
$ | 220,248 | $ | 54,169 | ||||||
Net change in non-cash working capital and other |
100,435 |
32,776 | (221,749 | ) | ||||||||
|
|
|
|
|
|
|||||||
$ |
124,720 |
$ | 187,472 | $ | 275,918 | |||||||
|
|
|
|
|
|
|||||||
Add-back: |
||||||||||||
Net finance costs |
16,995 |
22,493 | 18,578 | |||||||||
Current income tax expense (recovery) |
13,135 |
(6,872 | ) | 31,720 | ||||||||
Proceeds on the disposal of property, plant and equipment |
220 |
115 | 9,205 | |||||||||
Proceeds on the disposal of rental equipment |
3,692 |
3,121 | 4,454 | |||||||||
Deduct: |
||||||||||||
Net interest paid |
(19,890 |
) |
(22,374 | ) | (18,398 | ) | ||||||
Net cash taxes received (paid) |
9,412 |
(13,259 | ) | (29,434 | ) | |||||||
Expenditure related to finance leases |
(36,169 |
) |
— | — | ||||||||
Additions to property, plant and equipment |
(5,154 |
) |
(9,874 | ) | (46,322 | ) | ||||||
Additions to rental equipment: |
||||||||||||
Growth |
(40,242 |
) |
(110,820 | ) | (208,978 | ) | ||||||
Maintenance |
(11,945 |
) |
(13,059 | ) | (8,090 | ) | ||||||
Dividends paid |
(7,171 |
) |
(24,212 | ) | (37,548 | ) | ||||||
|
|
|
|
|
|
|||||||
Free cash flow |
$ |
47,603 |
$ | 12,731 | $ | (8,895 | ) | |||||
|
|
|
|
|
|
($ Canadian millions) |
Increase (Decrease) |
Explanation | ||||
Current assets | $ | 85.4 | The increase in current assets is primarily due to higher cash and contract assets due to increased activity, and work-in-progress | |||
Rental equipment | $ | (27.5 | ) | The decrease is largely due to the extension of a previous BOOM contract in ROW being treated as a sale of the rental equipment under finance lease accounting. Rental equipment also decreased due to higher depreciation compared to last year. This decrease was partially offset by additions during the year, primarily for the contract compression fleet in the USA and a BOOM project in ROW. | ||
Finance leases receivable | $ | 26.9 | The increase in finance leases receivable is due to the recognition of the above noted finance lease transaction that occurred in the fourth quarter of 2021. | |||
Deferred tax assets | $ | (38.9 | ) | The decrease in deferred tax assets is due to the derecognition of $44.7 million of unused tax losses and other deductible temporary differences in Canada. It is unlikely that sufficient taxable income will be available to offset these unused tax losses prior to expiry, nor will we have any available offsets to use against the deductible temporary differences. | ||
Current liabilities | $ | 67.8 | The increase in current liabilities is due to higher accounts payable, accrued liabilities, and deferred revenues on higher activity levels, and an increase in income taxes payable. These increases are partially offset by the repayment of the $40.0 million debt that had been classified as current at December 31, 2020, and lower warranty provisions. | |||
Long-term debt | $ | (18.3 | ) | The decrease in long-term debt is due to repayments made on the Bank Facility, partially offset by drawings on the Asset-Based Facility. | ||
Shareholders’ equity | $ | (42.9 | ) | Shareholders’ equity decreased primarily due to $18.5 million net loss and $18.6 million impact on unrealized loss on translation of foreign operations and foreign denominated debt, and dividends of $7.6 million. This was partially offset by $1.8 million of stock options. |
Twelve months ended December 31, |
||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Cash, beginning of period |
$ |
95,676 |
$ | 96,255 | $ | 326,864 | ||||||
Cash provided by (used in): |
||||||||||||
Operating activities |
225,155 |
220,248 | 54,169 | |||||||||
Investing activities |
(63,530 |
) |
(137,759 | ) | (222,820 | ) | ||||||
Financing activities |
(83,891 |
) |
(82,050 | ) | (60,980 | ) | ||||||
Exchange rate changes on foreign currency cash |
(652 |
) |
(1,018 | ) | (978 | ) | ||||||
|
|
|
|
|
|
|||||||
Cash, end of period |
$ |
172,758 |
$ | 95,676 | $ | 96,255 | ||||||
|
|
|
|
|
|
($ Canadian thousands, except per share amounts) |
Revenue |
Net earnings |
Earnings per share – basic |
Earnings per share – diluted |
||||||||||||
December 31, 2021 |
$ |
321,347 |
$ |
(32,707 |
) |
$ |
(0.36 |
) |
$ |
(0.36 |
) | |||||
September 30, 2021 |
231,097 | 6,958 | 0.08 | 0.08 | ||||||||||||
June 30, 2021 |
204,507 | 4,291 | 0.05 | 0.05 | ||||||||||||
March 31, 2021 |
203,205 | 3,003 | 0.03 | 0.03 | ||||||||||||
December 31, 2020 |
298,837 | 32,668 | 0.36 | 0.36 | ||||||||||||
September 30, 2020 |
265,037 | 10,736 | 0.12 | 0.12 | ||||||||||||
June 30, 2020 |
287,438 | 7,415 | 0.08 | 0.08 | ||||||||||||
March 31, 2020 |
365,740 | 37,438 | 0.42 | 0.42 | ||||||||||||
December 31, 2019 |
474,362 | 31,436 | 0.35 | 0.35 | ||||||||||||
September 30, 2019 |
544,284 | 63,074 | 0.71 | 0.70 | ||||||||||||
June 30, 2019 |
541,874 | 40,649 | 0.45 | 0.45 | ||||||||||||
March 31, 2019 |
484,902 | 16,969 | 0.19 | 0.19 |
($ Canadian thousands, except per share amounts) |
Total Assets |
Total Non-Current Financial Liabilities |
Cash Dividends Declared Per Share |
|||||||||
December 31, 2021 |
$ |
2,191,442 |
$ |
331,422 |
$ |
0.085 |
||||||
December 31, 2020 |
2,179,576 | 349,712 | 0.175 | |||||||||
December 31, 2019 |
2,381,008 | 430,487 | 0.430 |
• | reduced global economic activity and a corresponding decrease in demand for oil and natural gas, which could result in producers being forced to shut-in production and serve to lower demand for the Company’s products and services; |
• | impaired supply chain as a result of mass quarantines, lockdowns, or border closures, thereby limiting the supply and increasing the cost of goods and services used in Enerflex’s operations; and |
• | restricted workforce as a result of quarantines and health impacts, rendering employees unable to work or travel. |
($ Canadian thousands) |
December 31, 2021 |
December 31, 2020 |
||||||
Drawings on Bank Facility |
$ |
30,522 |
$ | 84,369 | ||||
Drawings on Asset-Based Facility |
37,411 |
— | ||||||
Notes due June 22, 2021 |
— |
40,000 | ||||||
Notes due December 15, 2024 |
148,119 |
148,686 | ||||||
Notes due December 15, 2027 |
118,746 |
119,124 | ||||||
Deferred transaction costs |
(3,376 |
) |
(2,467 | ) | ||||
|
|
|
|
|||||
$ |
331,422 |
$ | 389,712 | |||||
Current portion of long-term debt |
$ |
— |
$ | 40,000 | ||||
Non-current portion of long-term debt |
331,422 |
349,712 | ||||||
|
|
|
|
|||||
$ |
331,422 |
$ | 389,712 | |||||
|
|
|
|
($ Canadian thousands) |
Leases |
Purchase Obligations |
Total |
|||||||||
2022 |
$ | 15,448 | $ | 243,737 | $ | 259,185 | ||||||
2023 |
11,167 | 2,904 | 14,071 | |||||||||
2024 |
8,192 | 125 | 8,317 | |||||||||
2025 |
6,313 | — | 6,313 | |||||||||
2026 |
4,561 | — | 4,561 | |||||||||
Thereafter |
22,817 | — | 22,817 | |||||||||
|
|
|
|
|
|
|||||||
Total contractual obligations |
$ |
68,498 |
$ |
246,766 |
$ |
315,264 |
||||||
|
|
|
|
|
|
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Associate – Roska DBO |
||||||||||||
Revenue |
$ |
352 |
$ | 558 | $ | 509 | ||||||
Purchases |
— |
— | — | |||||||||
Accounts receivable |
128 |
1 | 4 | |||||||||
Accounts payable |
— |
56 | — | |||||||||
Joint Operation – Geogas |
||||||||||||
Revenue |
$ |
— |
$ | — | $ | 62 | ||||||
Purchases |
— |
— | 74 | |||||||||
Accounts receivable |
— |
— | 19 | |||||||||
Accounts payable |
— |
— | — |
• | Engineering, design, and fabrication of hydrocarbon production and processing facilities, natural gas compression equipment, energy transition solutions, and electric power facilities; |
• | Rental of natural gas compression, processing, and electric power equipment; |
• | After-market service, operations and maintenance, and parts distribution, for compression, process, refrigeration, and power generation equipment, as well as retrofit solutions for compression and power generation equipment; and |
• | ITK systems and BOOM solutions for natural gas compression, processing, and power generation. Certain BOOM contracts are accounted for as finance leases. |
• | The engineered systems product line consists of custom and standard compression packages for reciprocating and screw compressor applications from Enerflex’s manufacturing facility located in Houston, Texas. In addition, Enerflex engineers, designs, manufactures, constructs, and installs modular natural gas processing equipment, energy transition solutions, refrigeration systems, and electric power solutions. Retrofit provides re-engineering, re-configuration, and re-packaging of compressors for various field applications. |
• | The service product line provides mechanical services and parts, as well as maintenance solutions to the oil and natural gas industry in the U.S. Enerflex is a platinum tier gas compression solution provider of INNIO Waukesha, providing worldwide factory-direct access to Waukesha engines and parts. In addition, Enerflex packages CAT engines and parts. Enerflex’s U.S. service branches are located in Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, West Virginia, and Wyoming. |
• | The energy infrastructure product line provides natural gas compression equipment rentals to oil and natural gas customers in the U.S. (under its contract compression operations), primarily operating in the Permian and SCOOP/STACK formations utilizing a fleet of low- to high-horsepower packages. These compressor packages are typically used in wellhead, gas-lift and natural gas gathering systems, and other applications primarily in connection with natural gas and oil production. In addition, power generation rental solutions are also available in the U.S. region. The energy infrastructure product line in the U.S. operates out of Enerflex’s Houston, Texas facility. |
• | The Rest of World segment deploys products typically fabricated by Enerflex’s engineered systems division in Houston, Texas. |
• | The Latin America region, with locations in Argentina, Bolivia, Brazil, Colombia, and Mexico provides engineered systems products, including integrated turnkey natural gas compression, processing, low-carbon, and electric power solutions, with local construction and installation capabilities. The service product line in the region focuses on after-market services, parts, and components, as well as operations, maintenance, and overhaul services. Enerflex’s energy infrastructure product line provides natural gas compression and processing equipment for rent to oil and gas customers in the region. Enerflex has a number of BOOM facilities of varying size and scope in this region providing customers with alternate solutions to meet their natural gas compression, processing, and electric power needs. |
• | The Middle East/Africa (which we refer to as the “MEA”) region, through its operations in Bahrain, Oman, Kuwait, and the UAE, provides engineering, design, procurement, and construction services for compression, process, low-carbon, and power generation equipment, as well as rentals, after-market service, parts, and operations and maintenance services for gas compression and processing facilities in the region. The energy infrastructure product line provides natural gas compression and processing equipment for rent to oil and gas customers in the region. Enerflex has a number of BOOM facilities of varying size and scope in this region providing customers with alternate solutions to meet their natural gas compression, processing, and electric power needs. |
• | The Australia region is headquartered in Brisbane, Queensland with additional locations in Queensland, Western Australia, and New Zealand providing after-market services, equipment and parts supply, and general asset management. |
• | The Asia region, with locations and operations in Indonesia, Malaysia, and Thailand, provides engineered systems, as well as after-market services and parts through Enerflex’s local operations. |
• | Through its location in the United Kingdom, Enerflex provides customized compression, processing, and high-end refrigeration solutions in the Europe region. |
• | As a platinum tier gas compression solution provider of INNIO Waukesha engines, Enerflex provides factory-direct access to Waukesha engines and parts in its Rest of World regions. This region also packages CAT engines and parts. |
• | The engineered systems product line is comprised of compression, process, low-carbon, and electric power solutions. Enerflex provides custom and standard compression packages for reciprocating and screw |
compressor applications. It also engineers, designs, manufactures, constructs, and installs modular processing equipment and waste gas systems for natural gas facilities. Enerflex provides integrated turnkey power generation solutions and gas compression and processing facilities. Retrofit solutions provide re-engineering, re-configuration, and re-packaging of compressors for various field applications. Enerflex has a manufacturing facility in Calgary, Alberta and retrofit facilities in Calgary, Grand Prairie, and Red Deer, Alberta. |
• | The service product line provides after-market mechanical service and parts distribution. As a platinum tier gas compression solution provider of INNIO Waukesha, Enerflex has worldwide factory-direct access to Waukesha engines and parts. In addition, Enerflex is also the authorized distributor and service provider of INNIO’s Jenbacher gas engines and parts in Canada. Enerflex also packages CAT and MAN engines and parts. The service product line operates out of service branches located in Alberta, British Columbia, Ontario, and Quebec. |
• | The energy infrastructure product line provides reciprocating and rotary screw natural gas compression packages ranging from 50 HP to 2,000 HP, as well as electric power equipment for rent to customers. |
$ Thousands (unaudited) as at December 31, |
2021 Revenue $000 |
% |
2020 Revenue $000 |
% |
||||||||||||
Business Segment |
||||||||||||||||
U.S. |
470,383 |
49 |
632,286 |
52 |
||||||||||||
Rest of World |
309,557 |
32 |
353,011 |
29 |
||||||||||||
Canada |
180,216 |
19 |
231,755 |
19 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ |
960,156 |
100 |
% |
$ |
1,217,052 |
100 |
% | ||||||||
Product Line |
||||||||||||||||
Engineered Systems |
354,127 |
37 |
598,566 |
49 |
||||||||||||
Service |
327,376 |
34 |
303,269 |
25 |
||||||||||||
Energy Infrastructure |
278,653 |
29 |
315,217 |
26 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ |
960,156 |
100 |
% |
$ |
1,217,052 |
100 |
% | ||||||||
Engineered Systems |
||||||||||||||||
U.S. |
218,558 |
62 |
390,178 |
65 |
||||||||||||
Rest of World |
22,500 |
6 |
40,485 |
7 |
||||||||||||
Canada |
113,069 |
32 |
167,903 |
28 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
354,127 |
100 |
% |
$ |
598,566 |
100 |
% |
$ Thousands (unaudited) as at December 31, |
2021 Revenue $000 |
% |
2020 Revenue $000 |
% |
||||||||||||
Service |
||||||||||||||||
U.S. |
153,722 |
47 |
150,939 |
50 |
||||||||||||
Rest of World |
111,500 |
34 |
96,092 |
32 |
||||||||||||
Canada |
62,154 |
19 |
56,238 |
18 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
327,376 |
100 |
% |
$ |
303,269 |
100 |
% | |||||||||
Energy Infrastructure |
||||||||||||||||
U.S. |
98,103 |
35 |
91,169 |
29 |
||||||||||||
Rest of World |
175,557 |
63 |
216,434 |
69 |
||||||||||||
Canada |
4,993 |
2 |
7,614 |
2 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
278,653 |
100 |
% |
$ |
315,217 |
100 |
% | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ |
960,156 |
100 |
% |
$ |
1,217,052 |
100 |
% |
Name, Municipality, Country of Residence, and Position with Enerflex |
Principal Occupation | |
Stephen J. Savidant (1) Victoria, British Columbia, Canada Director and Chairman |
Independent Businessman and Corporate Director | |
Marc E. Rossiter Calgary, Alberta, Canada Director, President, and Chief Executive Officer |
President and Chief Executive Officer, Enerflex Ltd. | |
Fernando Assing (6) Houston, Texas, USA Director |
President and Chief Executive Officer, Centurion Group Limited | |
Robert S. Boswell (4)(6) Denver, Colorado, USA Director |
Chairman and Chief Executive Officer, Laramie Energy LLC | |
Maureen Cormier Jackson (5) Calgary, Alberta, Canada Director |
Independent Businesswoman and Corporate Director | |
W. Byron Dunn (6)(7) Dallas, Texas, USA Director |
Chief Executive Officer, Tubular Synergy Group, LP | |
Mona Hale Edmonton, Alberta, Canada Director |
Independent Businesswoman and Corporate Director | |
H. Stanley Marshall (3)(7) Paradise, Newfoundland, Canada Director |
Independent Businessman and Corporate Director | |
Kevin Reinhart (2) Calgary, Alberta, Canada Director |
Independent Businessman and Corporate Director | |
Juan Carlos Villegas (6) Vitacura, Región Metropolitana, Chile Director |
Independent Businessman and Corporate Director | |
Michael A. Weill (5) Houston, Texas, USA Director |
Independent Businessman and Corporate Director | |
Helen J. Wesley (5)(7) Tampa, Florida, USA Director |
President, TECO Peoples Gas Systems |
(1) | Chair of the Enerflex board. |
(2) | Chair of the Audit Committee. |
(3) | Chair of the HRC Committee. |
(4) | Chair of the NCG Committee. |
(5) | Member of the Audit Committee. |
(6) | Member of the HRC Committee. |
(7) | Member of the NCG Committee. |
Name, Municipality, and Country of Residence |
Principal Occupation | |
Marc E. Rossiter (1) Calgary, Alberta, Canada |
President and Chief Executive Officer | |
Sanjay Bishnoi Calgary, Alberta, Canada |
Senior Vice President and Chief Financial Officer | |
Helmuth Witulski Calgary, Alberta, Canada |
President, Canada | |
Patricia Martinez Houston, Texas, USA |
President, Latin America and Chief Energy Transition Officer | |
Gregory Stewart Houston, Texas, USA |
President, United States of America | |
Phil Pyle Abu Dhabi, United Arab Emirates |
President, International | |
David H. Izett Calgary, Alberta, Canada |
Senior Vice President, General Counsel |
(1) | For Mr. Rossiter’s Directors |
Audit Committee Member |
Relevant Education and Experience |
Kevin J. Reinhart |
Mr. Reinhart is a former Chief Financial Officer and a former interim President and Chief Executive Officer of Nexen Inc. He holds a Bachelor of Commerce (Hons) from Saint Mary’s University and is a Chartered Professional Accountant. |
Maureen Cormier Jackson |
Ms. Cormier Jackson held numerous roles at Suncor Energy Inc., including Senior Vice President, Chief Process and Information Officer, and Vice President, Corporate Controller. She holds a Bachelor of Commerce from Memorial University and is a Chartered Professional Accountant. She also holds a Directors Designation from the Institute of Corporate Directors. |
Michael A. Weill |
Mr. Weill is the former Chief Executive Officer of Global Deepwater Partners LLC and former President of BHP Billiton Petroleum. Mr. Weill holds a Bachelor of Science in Chemical Engineering from Cornell University. |
Helen J. Wesley |
Ms. Wesley is the President of TECO Peoples Gas Systems in Florida and has over 26 years of experience in the North American and international oil and gas, utilities, and chemicals industries. She holds a Bachelor of Commerce in Marketing from the University of Calgary and a Masters of Business Administration in International Business from Boston’s Bentley College. She earned a Chartered Financial Analyst designation in 1998 and her Institute of Corporate Directors designation in 2015. |
2021 | 2020 | |||||||
Audit Fees (1) |
$ | 1,864,023 | $ | 1,714,000 | ||||
Audit Related Fees (2) |
$ | — | $ | 19,000 | ||||
Tax Fees (3) |
$ | 502,000 | $ | 533,900 | ||||
All other Fees (4) |
$ | — | $ | — |
(1) | “Audit Fees” include fees necessary to perform the annual audit and quarterly reviews of Enerflex’s consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits. |
(2) | “Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation. |
(3) | “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities and guidance to employees transferred internationally. |
(4) | “All Other Fees” include all other non-audit services. |
• | recruit and retain qualified individuals to contribute to Enerflex’s overall success through service as members of the Enerflex board, recognizing the global nature of the company; |
• | align the interests of directors with those of Enerflex shareholders over the long term; and |
• | offer competitive compensation by positioning director compensation at or slightly above the median of director compensation paid by companies in Enerflex’s peer group. |
• | Effective July 1, 2020 through December 31, 2020, the Enerflex board reduced the annual cash retainer component of director compensation by 10%, in light of market conditions and in parallel with the 10% reduction to executive base pay. The reduction was extended in February 2021, effective January 1, 2021, |
to December 31, 2021 subject to continued review. In light of improved market conditions and the global economy, the Enerflex board removed the 10% reduction effective July 1, 2021. |
• | All directors meet or exceed, or are on pace to meet or exceed, the minimum share ownership requirements. |
• | Six of the eleven directors eligible to receive director compensation elected to receive 100% of their compensation in the form of DSUs in 2021. |
Director Remuneration |
Amount |
|||
Annual Equity Retainers (1) |
||||
Chair of the Board |
C$ | 130,000 | ||
Directors |
C$ | 100,000 | ||
Annual Cash Retainers (2, 3) |
||||
Chair of the Board |
US$ | 112,100 | ||
Directors |
US$ | 38,950 | ||
Audit Committee Chair |
US$ | 17,100 | ||
Audit Committee Member |
US$ | 4,750 | ||
HRC Committee Chair |
US$ | 11,400 | ||
HRC Committee Member |
US$ | 4,750 | ||
NCG Committee Chair |
US$ | 9,500 | ||
NCG Committee Member |
US$ | 4,750 | ||
Meeting Fees (per meeting attended) (3, 4) |
||||
Board Meeting |
US$ | 2,000 | ||
Committee Meeting (5) |
US$ | 2,000 |
1. | A non-management director may elect to receive his or her annual equity retainer in DSUs, Enerflex common shares, or a combination of both. For 2021 compensation, all such directors elected to receive 100% of the annual equity retainer component in deferred stock units. |
2. | The annual cash retainer was reduced by 10% in light of market conditions, effective July 1, 2020 through December 31, 2020. In February 2021, due to the ongoing impact of the COVID-19 pandemic, the Enerflex board extended this director compensation reduction, effective January 1, 2021 through June 30, 2021. In light of improving market conditions and the improving global economy, the 10% reduction was removed effective July 1, 2021. |
3. | A non-management director may elect to receive his or her annual cash retainer and meeting fees in cash, DSUs, or a combination of both. For 2021 compensation, Messrs. Savidant, Assing, Dunn, Reinhart, and Villegas, and Ms. Hale elected to receive 100% of their annual cash retainer and meeting fees in the form of DSUs. |
4. | Committee meeting fees are paid only to those non-management directors who are members of the committee. |
5. | In addition to paying standing committee members a fee of USD $2,000 per meeting attended, Enerflex pays each member of the Ad Hoc Risk Committee a fee of USD $2,000 per meeting attended. |
Annual Equity Retainers (1) ($) |
Annual Cash Retainers (1, 2) ($) |
Meeting Fees (1, 2) ($) |
% of Total Comp Paid in Shares or DSUs (3) |
|||||||||||||||||||||||||||||
Director |
Board Chair |
Director |
Board or Committee Chair |
Director |
Committee Member |
Board |
Committee |
|||||||||||||||||||||||||
Mr. Assing |
— | 100,000 | — | 49,088 | 5,986 | 37,933 | 30,086 | 100 | % | |||||||||||||||||||||||
Mr. Boswell (5) |
— | 100,000 | 11,996 | 49,185 | 5,998 | 38,092 | 25,172 | 72 | % | |||||||||||||||||||||||
Ms. Cormier Jackson |
— | 100,000 | — | 49,185 | 5,998 | 38,092 | 22,536 | 73 | % | |||||||||||||||||||||||
Mr. Dunn |
— | 100,000 | — | 49,088 | 11,973 | 37,933 | 25,162 | 100 | % | |||||||||||||||||||||||
Ms. Hale (4) |
— | 20,380 | — | 10,594 | — | 15,214 | — | 100 | % | |||||||||||||||||||||||
Mr. Marshall |
— | 100,000 | 14,424 | 49,282 | 6,010 | 38,252 | 25,183 | 43 | % | |||||||||||||||||||||||
Mr. Reinhart |
— | 100,000 | 21,551 | 49,088 | — | 37,933 | 22,544 | 100 | % | |||||||||||||||||||||||
Mr. Savidant (5) |
130,000 | — | 141,279 | — | — | 37,933 | — | 100 | % | |||||||||||||||||||||||
Mr. Villegas |
— | 100,000 | — | 49,088 | 5,986 | 37,933 | 17,620 | 100 | % | |||||||||||||||||||||||
Mr. Weill |
— | 100,000 | — | 49,282 | 8,630 | 38,252 | 22,528 | 46 | % | |||||||||||||||||||||||
Ms. Wesley (5) |
— | 100,000 | — | 49,282 | 12,020 | 35,673 | 17,648 | 47 | % |
1. | For 2021 compensation, all eligible (non-management) directors elected to receive 100% of their annual equity retainer in the form of DSUs. For 2021 compensation, Messrs. Savidant, Assing, Dunn, Reinhart, and Villegas, and Ms. Hale elected to receive 100% of their annual cash retainer and meeting fees in the form of DSUs. Effective January 1, 2018, all directors receive the annual cash retainers and meeting fees in USD. For the directors who receive 100% of their annual cash retainer and meeting fees in the form of DSUs, the amount shown above converts the USD amounts to CAD on the quarterly DSU payment date at the exchange rates of US$1.0000 = C$1.2575, US$1.0000 = C$1.2394, US$1.0000 = C$1.2741, and US$1.0000 = C$1.2678, respectively. |
2. | For 2021 compensation, Messrs. Marshall and Weill and Ms. Wesley elected to receive 100% their annual cash retainer amounts and meeting fees in the form of cash, and Mr. Boswell and Ms. Cormier Jackson elected to receive 50% in cash and 50% in DSUs. The amount shown above converts the form of cash USD amounts to CAD on the quarterly USD payment date at the exchange rates of US$1.000 = C$1.2581, US$1.000 = C$1.2303, US$1.000 = C$1.2790, and US$1.000 = C$1.2895, respectively. |
3. | The percentage noted in the table reflects the percentage of total compensation paid in DSUs. |
4. | Ms. Hale joined the Enerflex board on October 18, 2021. |
5. | Mr. Boswell, Mr. Savidant, and Ms. Wesley are not standing for re-election at the Meeting. |
Share Ownership Requirement |
Share Ownership Attained |
|||||||||||||||
Director |
($ Annual Cash Retainer (1) + $ Equity Retainer) x 3 |
$ Amount |
$ Amount (2) |
Attained |
||||||||||||
Mr. Assing |
(49,088 + 100,000) x 3 | 447,265 | 311,849 | Yes | (3) | |||||||||||
Mr. Boswell (5) |
(49,185 + 100,000) x 3 | 447,555 | 1,326,624 | Yes | ||||||||||||
Ms. Cormier Jackson |
(49,185 + 100,000) x 3 | 447,555 | 1,028,072 | Yes | ||||||||||||
Mr. Dunn |
(49,088 + 100,000) x 3 | 447,265 | 2,337,187 | Yes | ||||||||||||
Ms. Hale |
(49,088 + 100,000) x 3 | 447,265 | 46,734 | Yes | (4) | |||||||||||
Mr. Marshall |
(141,279 + 100,000) x 3 | 447,846 | 2,762,212 | Yes | ||||||||||||
Mr. Reinhart |
(49,088 + 100,000) x 3 | 447,265 | 1,585,491 | Yes | ||||||||||||
Mr. Savidant (5) |
(141,279 + 130,000) x 3 | 813,836 | 3,407,638 | Yes | ||||||||||||
Mr. Villegas |
(49,088 + 100,000) x 3 | 447,265 | 920,372 | Yes | ||||||||||||
Mr. Weill |
(49,282 + 100,000) x 3 | 447,846 | 1,127,938 | Yes | ||||||||||||
Ms. Wesley (5) |
(49,282 + 100,000) x 3 | 447,846 | 1,561,637 | Yes |
1. | Effective January 1, 2018, all directors receive the annual cash retainers in USD. The annual cash retainer was reduced by 10% in light of market conditions, effective July 1, 2020 and removed effective July 1, 2021. This reduction is reflected in the ownership requirement above. For the directors who elected to receive their annual cash retainer in the form of DSUs, the amount shown above converts the USD amounts to CAD on the quarterly DSU payment date at the exchange rates of US$1.0000 = C$1.2575, US$1.0000 = C$1.2394, US$1.0000 = C$1.2741, and US$1.0000 = C$1.2678, respectively. For the directors who elected to receive their annual cash retainer in the form of cash, the |
amount shown above converts the USD amounts to CAD on the quarterly USD payment date at the exchange rates of US$1.000 = C$1.2581, US$1.000 = C$1.2303, US$1.000 = C$1.2790, and US$1.000 = C$1.2895, respectively. |
2. | The dollar value for ownership is calculated as the greater of the value of the DSU or Enerflex share on the grant or acquisition date, and the closing value of the security as of December 31, 2021 ($7.66). |
3. | As a new appointee to the Enerflex board effective August 6, 2020, Mr. Assing has five years following the date of his appointment to achieve the requisite ownership level, with 20% of such amount to be achieved in each of the five years following his appointment. Thus, he must attain a minimum of $89,453 in each of 2021, 2022, 2023, 2024, and 2025. As of December 31, 2021, Mr. Assing’s ownership level is $311,849. |
4. | As a new appointee to the Enerflex board effective October 18, 2021, Ms. Hale has five years following the date of her appointment to achieve the requisite ownership level, with 20% of such amount to be achieved in each of the five years following her appointment. Thus, she must attain a minimum of $89,453 in each of 2022, 2023, 2024, 2025, and 2026. As of December 31, 2021, Ms. Hale’s ownership level is $46,734. |
5. | Mr. Boswell, Mr. Savidant, and Ms. Wesley are not standing for re-election at the next Enerflex shareholder meeting. |
Director |
Fees Earned (1) ($) |
Share-Based Awards (2) ($) |
Option-Based Awards ($) |
Total Compensation ($) |
||||||||||||
Mr. Assing |
123,093 | 101,154 | — | 224,248 | ||||||||||||
Mr. Boswell (3) |
130,444 | 104,540 | — | 234,984 | ||||||||||||
Ms. Cormier Jackson |
115,811 | 105,827 | — | 221,638 | ||||||||||||
Mr. Dunn |
124,155 | 111,646 | — | 235,801 | ||||||||||||
Ms. Hale |
25,807 | 20,380 | — | 46,188 | ||||||||||||
Mr. Marshall |
133,151 | 109,254 | — | 242,405 | ||||||||||||
Mr. Reinhart |
131,116 | 106,428 | — | 237,544 | ||||||||||||
Mr. Savidant (3) |
179,211 | 148,328 | — | 327,540 | ||||||||||||
Mr. Villegas |
110,627 | 103,852 | — | 214,479 | ||||||||||||
Mr. Weill |
118,691 | 105,861 | — | 224,552 | ||||||||||||
Ms. Wesley (3) |
114,623 | 109,539 | — | 224,162 |
1. | The fees earned under this column are comprised of: |
a. | annual cash retainer fees (excluding the equity retainer, which is shown under the Share-Based Awards column); and |
b. | meeting attendance fees earned in 2021. |
2. | Share-based awards consist of DSUs, which are granted at the end of each quarter. The value shown is the sum of: |
a. | the dollar amount of the annual equity retainer paid to each director; and |
b. | the value of the notional dividends credited based on dividends paid in 2021 (determined by multiplying the number of DSUs granted by the grant date fair value on the dividend payment date). The grant date fair value is calculated as the fair market value as of the dividend payment date. |
3. | Mr. Boswell, Mr. Savidant, and Ms. Wesley are not standing for re-election at the next Enerflex shareholder meeting. |
Option-Based Awards (1) |
Share-Based Awards |
|||||||||||||||||||
Director |
# of Securities Underlying Unexercised Options (#) |
Option Exercise Price (#) |
Option Expiration Date |
Value of Unexercised In-The-Money Options ($) |
Market or Payout Value of Vested Share- Based Awards Not Paid Out or Distributed (2) ($) |
|||||||||||||||
Mr. Assing |
— | — | — | — | 294,366 | |||||||||||||||
Mr. Boswell (3) |
— | — | — | — | 570,891 | |||||||||||||||
Ms. Cormier Jackson |
— | — | — | — | 700,423 | |||||||||||||||
Mr. Dunn |
— | — | — | — | 1,307,008 | |||||||||||||||
Ms. Hale |
— | — | — | — | 46,734 | |||||||||||||||
Mr. Marshall |
— | — | — | — | 974,088 | |||||||||||||||
Mr. Reinhart |
— | — | — | — | 810,681 | |||||||||||||||
Mr. Savidant (3) |
— | — | — | — | 2,024,179 | |||||||||||||||
Mr. Villegas |
— | — | — | — | 544,480 | |||||||||||||||
Mr. Weill |
— | — | — | — | 644,916 | |||||||||||||||
Ms. Wesley (3) |
— | — | — | — | 1,006,557 |
1. | Non-management directors of Enerflex do not receive option grants. |
2. | The amount shown reflects the value of all accumulated DSUs held by Enerflex directors as at December 31, 2021 (including notional dividends awarded). All such DSUs are vested but do not pay out until after the Enerflex director resigns or retires. The DSUs are valued at $7.66 per DSU, the closing price of the Enerflex common shares on the TSX on December 31, 2021. The Enerflex directors do not hold any Enerflex common shares or units of Enerflex common shares that have not vested. |
3. | Mr. Boswell, Mr. Savidant, and Ms. Wesley are not standing for re-election at the next Enerflex shareholder meeting. |
Value Vested During the Year |
||||||||
Director |
Option-Based Awards ($) |
Share-Based Awards (1) ($) |
||||||
Mr. Assing |
— | 224,520 | ||||||
Mr. Boswell (2) |
— | 169,946 | ||||||
Ms. Cormier Jackson |
— | 163,910 | ||||||
Mr. Dunn |
— | 236,317 | ||||||
Ms. Hale |
46,734 | |||||||
Mr. Marshall |
— | 109,577 | ||||||
Mr. Reinhart |
— | 237,954 | ||||||
Mr. Savidant (2) |
— | 328,424 | ||||||
Mr. Villegas |
— | 214,871 | ||||||
Mr. Weill |
— | 106,127 | ||||||
Ms. Wesley (2) |
— | 109,860 |
1. | The value vested during the year reflects the value of DSUs awarded and corresponding dividends credited during the year (all such DSUs are vested but do not pay out until after the Enerflex director resigns or retires). The value of the DSUs is calculated using the closing price of Enerflex common shares on the TSX on the applicable quarterly grant dates (or the nearest preceding trading day) for each quarterly award of DSUs. The notional dividends value is calculated based on the closing price of Enerflex common shares on the applicable dividend payment date. |
2. | Mr. Boswell, Mr. Savidant, and Ms. Wesley are not standing for re-election at the next Enerflex shareholder meeting. |
• | Marc E. Rossiter, President and CEO; |
• | Sanjay Bishnoi, SVP, CFO; |
• | Patricia Martinez, President, Latin America and CETO; |
• | Philip A.J. Pyle, President, International; and |
• | Gregory Stewart, President, U.S. |
• | supporting the achievement of Enerflex’s annual and long-term objectives and the enhancement of Enerflex shareholder value by tying awards to key performance metrics; |
• | delivering a meaningful proportion of total compensation using variable pay vehicles, including long-term incentives vesting over varying performance periods; |
• | providing market-competitive compensation opportunities to facilitate attraction, motivation, and retention of qualified individuals with desired leadership and management skills; |
• | motivating executives to achieve excellence within their respective areas of responsibility and together as a cohesive team; and |
• | applying compensation principles in an equitable manner. |
Shareholder Value |
The HRC committee seeks to focus the executive team on several key financial metrics that it considers to be key drivers of Enerflex shareholder value, such as Earnings Before Interest and Taxes for the trailing 12-month period EBIT %, Absolute EBIT, ROCE, and gEPS. |
Performance-Based |
Individual total compensation varies each year depending on enterprise, regional, and individual performance results, and incentive programs do not pay out when unwarranted by performance. |
Pay at Risk |
Executive compensation includes elements of pay-at-risk: |
Business Growth |
Long-term incentive plans focus on achieving enterprise objectives and strategic plans with a medium- to long-term view. |
Workplace Health, Safety, and Environment |
Safety of Enerflex people is integral to Enerflex. Safety performance, as measured using leading and lagging indicators, is reported on a quarterly basis to the HRC committee and TRIR is an environmental, social and governance metric for Enerflex. |
Incentive Structure |
Specific metrics are primarily quantitative in nature and focus on financial measures that the executives have a reasonable ability to influence. |
Teamwork |
For regionally based executives, portions of their short-term bonus ties to both enterprise and regional performance. |
Risk Mitigation |
Executive compensation includes both fixed and variable pay. Performance metrics align with Enerflex’s business strategy. Maximum payouts under the incentive programs are capped, a clawback policy is in place, and executives are required to meet Enerflex share ownership requirements. |
We Do: |
Pay for Performance |
Effective Oversight |
Risk Mitigation |
Shareholder Alignment |
Attract & Retain |
|||||||||||||||
Maintain a pay-for-performance pre-defined metrics that reflect Enerflex’s strategic priorities. |
✓ | ✓ | ✓ | |||||||||||||||||
Conduct annual risk assessments, reviewing compensation programs to ensure the Enerflex directors do not encourage inappropriate or excessive risk-taking. |
✓ | ✓ | ✓ | |||||||||||||||||
Hold an annual say on pay advisory vote. |
✓ | ✓ | ||||||||||||||||||
Provide total compensation through both fixed and variable pay programs based on short- and long-term performance for all executives, including NEOs: 53% to 83% of total direct compensation is in the form of variable pay. |
✓ | ✓ | ||||||||||||||||||
Annually set targets for the short- and long-term incentive awards, using both qualitative and quantitative measures within Enerflex’s risk profile focusing the Enerflex executives including NEOs’ on achieving corporate objectives. |
✓ | ✓ | ✓ | |||||||||||||||||
Benchmark NEOs’ total compensation relative to a peer group comprised of companies similar to Enerflex, headquartered in either Canada or the U.S., ideally with global operations. |
✓ | ✓ | ✓ | |||||||||||||||||
Base the STI Plan on the achievement of certain financial metrics, including EBIT and ROCE, thereby managing payouts based on profitability and performance thresholds, below which payout is zero. Payouts are capped at 200% to avoid excessive risk-taking. |
✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Maintain consistency and Board oversight year-over-year in any STIP funding calculation adjustments. |
✓ | ✓ | ✓ | |||||||||||||||||
Provide NEOs and certain key employees the option to elect to defer awards under the STIP Plan, in whole or in part, in favor of DSUs which can be used to meet Enerflex share ownership requirements and drives long-term performance. |
✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Have overlapping performance cycles in the PSU plan, which serves to encourage improved performance over time. The PSU plan caps awards to executives at 200% of target. |
✓ | ✓ | ✓ |
We Do: |
Pay for Performance |
Effective Oversight |
Risk Mitigation |
Shareholder Alignment |
Attract & Retain |
|||||||||||||||
Establish share ownership requirements for executives, exposing them to the same long-term stock price volatility that Shareholders experience. |
✓ | ✓ | ✓ | |||||||||||||||||
Prohibit all executives, including NEOs, from hedging against or offsetting declines in the market value of equity securities received as compensation. |
✓ | ✓ | ✓ | |||||||||||||||||
Have a clawback policy applicable to all variable compensation, whereby in the event a restatement of Enerflex’s financial statements is necessary due to an executive’s fraud or intentional misconduct and the incentive compensation would have been lower had the financial statements been properly reported, the executive may be required to pay back the excess incentive compensation received. |
✓ | ✓ | ✓ | |||||||||||||||||
Have a double-trigger change of control provision for executives, including all NEOs. Both a change in control and the termination of employment must occur before long- term incentives are payable. |
✓ | ✓ | ||||||||||||||||||
Have a code of conduct for all employees, officers, and directors to ensure Enerflex’s assets are protected and the company acts ethically and responsibly, upholding Enerflex’s value to “do the right thing.” |
✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Have an insider trading policy and reporting guidelines, restricting insiders and others who have a special relationship with Enerflex from trading Enerflex securities on material undisclosed information or during blackout periods. |
✓ | ✓ | ✓ |
We Do NOT: |
Pay for Performance |
Effective Oversight |
Risk Mitigation |
Shareholder Alignment |
||||||||||||
Pay out incentive programs when unwarranted by performance. |
✓ | ✓ | ✓ | |||||||||||||
Allow repricing of underwater options. |
✓ | ✓ | ✓ | |||||||||||||
Allow hedging or pledging of any Enerflex securities by executive officers or directors. |
✓ | ✓ | ✓ | |||||||||||||
Guarantee bonuses or annual increases to base salary. |
✓ | ✓ | ✓ | |||||||||||||
Provide tax gross ups. |
✓ | |||||||||||||||
Provide excessive perquisites. |
✓ | ✓ | ||||||||||||||
Include PSUs nor unvested or unexercised stock options towards share ownership requirements. |
✓ | ✓ | ||||||||||||||
Grant loans to directors or executives. |
✓ | ✓ | ✓ | |||||||||||||
Grant stock options to independent directors. |
✓ | ✓ | ✓ |
Enerflex board |
• |
Approves all compensation policies and plans, including the share ownership guidelines, option plan, PSU plan, RSU plan, DSU plan, and pension plans. |
• | Approves all executive appointments, compensation, awards, and payments. |
• | Reviews quarterly reports from the HRC committee. |
HRC committee |
• |
Evaluates and manages executive compensation philosophy and programs. Approval of these programs, particularly those related to performance metrics and incentive payments for all executive officers, lies with the HRC committee and the Enerflex board. |
• | Establishes goals and objectives for the chief executive officer based on Enerflex’s business strategy. Oversees the annual review of enterprise and regional performance and objectives applicable to the compensation of executives. |
• | Reviews and recommends Enerflex board approval for executive appointments, and individual compensation decisions, including hire packages for new executive officers. |
• | Assesses EMT diversity. |
• | Assesses executive performance against the following criteria: |
• | Contributions to the development and execution of Enerflex’s business plans and strategies; |
• | Performance of the EMTs’ regional business units/functional areas including the achievement of their 2021 top five priorities; |
• | Tenure in current role; |
• | Demonstrated leadership ability and teamwork; and |
• | Demonstrated commitment to the Enerflex vision and values. |
• | Reviews NEO compensation annually, taking into consideration past performance and expected future contributions, changing responsibilities, external factors, such as inflation and market competitiveness, and the appropriate level of pay differentiation between roles based on position, scope, and level of responsibility. |
• | Oversees cash-based and equity-based compensation plans, programs, and grants, recommending Enerflex board approval for executives. |
• | Reviews, at least annually, the selection of companies in the peer group in order to determine the competitiveness of executive total direct compensation. |
• | Is authorized to retain the services of independent advisors and consultants to assist with the completion of its responsibilities. |
The HRC committee and Enerflex board take into consideration the advice received from these consultants, ultimately making their own decisions about such matters. |
Chief Executive Officer |
• |
The chief executive officer reviews salary, bonuses, and other compensation for executives (excluding himself) and makes recommendations with respect to compensation. |
• | Establishes individual goals with each of his direct reports, which support the business’ annual, mid-, and long-term strategies, and aligns with the chief executive officer’s goals. |
• | Reviews the performance of executives and updates the HRC committee on these assessments, including an analysis of individual performance against his/her goals and objectives based on demonstrated delivery of results, execution of the strategic plan, and alignment to Enerflex’s values. |
• | Reviews market data gathered by the independent consultants along with Enerflex performance when making compensation recommendations to the HRC committee. |
Independent Compensation Consultants |
• |
Since 2010, the HRC committee and management have engaged the services of Mercer (Canada) Limited primarily for advice in respect of Enerflex’s compensation programs. |
• | Since the end of 2016, the HRC committee has retained Hugessen Consulting as its independent advisor on executive compensation matters. Without duplicating Mercer (Canada) Limited’s efforts, Hugessen Consulting oversees the reasonableness and completeness of management’s data and analysis and independently advises the HRC committee. |
• | Helps the HRC committee establish procedures so that the HRC committee is confident that the advice received from the compensation consultants is objective, and not influenced by any relationships with management. |
• | Reviews market trends and issues and prepares market analyses for the HRC committee. |
• | Assists analyzing and evaluating the STI plan and LTIP metrics and target setting. |
• | Reviews and makes recommendations for updates to the peer group. |
• | Assists analyzing and evaluating the executive compensation packages, including the compensation mix (base salary, short-, and long-term pay) for each executive. |
The following table summarizes the fees paid by Enerflex to Mercer (Canada) Limited and Hugessen Consulting for director and executive compensation-related matters and other fees not related to director or executive compensation during the periods indicated. |
Fees Paid In: |
||||||||
2021 |
2020 |
|||||||
Mercer (Canada) Limited |
196,394 |
242,149 |
||||||
Director and Executive Compensation-Related Fees |
86,000 | 90,659 | ||||||
All Other Fees (1) |
110,394 | 151,490 | ||||||
Hugessen Consulting |
37,010 |
43,518 |
||||||
Director and Executive Compensation-Related Fees |
37,010 | 43,518 | ||||||
All Other Fees |
— | — |
(1) | These fees were paid for consulting advice provided by Mercer (Canada) Limited in connection with salary surveys, non-executive regional compensation reviews, and advisory services. Under Enerflex’s policies, the Enerflex board and the HRC committee are not required to pre-approve these additional services provided by Mercer (Canada) Limited. |
• | The peer group should reflect those companies with a potential pool from which Enerflex could draw executive talent. |
• | Peers should be selected from industries that best represent Enerflex’s business, and the labour and capital markets in which Enerflex operates, including oil and gas equipment and services, midstream, contract compression, and energy infrastructure companies that are based in Canada and the U.S., and ideally with global operations. |
• | The inclusion of drilling and engineering, procurement, and construction companies should be restricted or excluded, as their alignment with Enerflex’s business is limited, from an industry and operational standpoint. |
• | Companies should be within approximately one-third to three times Enerflex’s size, measured in terms of revenue, and have reasonably similar assets, market capitalization, and enterprise value. |
Company Name |
Country |
Company Name |
Country | |||
CES Energy Solutions Corp. |
Canada |
Exterran Corporation |
U.S. | |||
Finning International Inc. |
Canada |
Forum Energy Technologies, Inc. |
U.S. | |||
Gibson Energy Inc. |
Canada |
Frank’s International N.V. |
U.S. | |||
Keyera Corp. |
Canada |
Newpark Resources, Inc. |
U.S. | |||
Secure Energy Services Inc. |
Canada |
Oil States International, Inc. |
U.S. | |||
Shawcor Ltd. |
Canada |
Tetra Technologies, Inc. |
U.S. | |||
Archrock, Inc. |
U.S. |
USA Compression, LP |
U.S. | |||
Dril-Quip, Inc. |
U.S. |
Criteria (1) |
Peer Group Median |
Enerflex Results |
Enerflex’s Position Relative to Peer Group (2) |
|||||||||
Enterprise Value (3) |
$ | 850 | $ | 990 | 54 | % | ||||||
Market Capitalization (3) |
$ | 695 | $ | 687 | 50 | % | ||||||
Assets (4) |
$ | 1,440 | $ | 2,143 | 56 | % | ||||||
Revenue (4) |
$ | 888 | $ | 938 | 52 | % |
1. | Peer group data as provided by Mercer (Canada) Limited. All dollar figures are shown in millions of Canadian dollars for 2020 and all USD values converted to CAD at the 2021 average exchange rate (US$1.0000 = C$1.254). |
2. | Percentile ranking within peer group. |
3. | Market capitalization and enterprise value as of December 31, 2021. |
4. | Trailing 12-month revenue and most recently reported total assets. |
12/31/2017 |
12/31/2018 |
12/31/2019 |
12/31/2020 |
12/31/2021 |
||||||||||||||||
Enerflex |
$ | 121 | $ | 129 | $ | 102 | $ | 57 | $ | 65 | ||||||||||
TSX Composite |
$ | 125 | $ | 110 | $ | 131 | $ | 134 | $ | 163 |
• | Each executive’s individual goals and objectives are aligned with the enterprise’s annual, mid-, and long-term strategic plans; |
• | A sizeable portion of each executive’s compensation is variable, based on the individual’s ability to influence business outcomes and financial performance; and |
• | Variable pay is linked to enterprise, individual, and regional performance, and paid only when Enerflex realizes a profit and performance metric thresholds are met or exceeded, at the discretion of the HRC committee and Enerflex board. |
• | The need to balance Enerflex shareholder interests with those of Enerflex, the EMT, the broader employee and stakeholder base, and the communities where Enerflex operates. |
• | Incentives need to link to value creation, foster retention, and the associated metrics need to reflect business strategy. |
• | Transparency and communication are vital. |
• | Caution around setting any unintended precedents. |
• | Peer group data to estimate what Enerflex would have to pay to recruit executive officers with the required qualifications and experience; |
• | Data and recommendations provided by both the compensation consultants and the chief executive officer, including current market trends and business environments; |
• | The position held by each NEO, time in the role, demonstrated level of leadership competence, and oversight of strategic initiatives; and |
• | In July 2021, the Enerflex board removed the 10% reduction originally implemented in 2020 for all impacted employees and executives, including NEOs. In assessing the current market conditions, and in consultation with the compensation consultants, along with the increase in business activity, the growing competition for talent, and the increased rate of voluntary departures, all indicators supported this removal. No other adjustments to compensation where made. |
• | Using a “sum of targets” approach to determine the funding pool available for distribution under the STI plan through a combination of enterprise and regional financial and operational metrics, each metric is individually weighted and has threshold and stretch components. |
• | These performance metrics must meet thresholds in order to contribute to the bonus pool. Payouts are capped at 200% when performance exceeds stretch measures. |
• | Payout occurs only with Enerflex board’s approval and when the organization realizes a profit, regardless of how well Enerflex performs on any of the metrics. |
• | When the overall Enerflex realizes a profit yet does not meet the thresholds on any of the enterprise and/or regional performance metrics, there is an opportunity to provide a partial bonus based solely on individual performance and corresponding payout range. |
• | The HRC committee and the Enerflex board retain the ultimate authority to approve or withhold STIP payments, regardless of targets being achieved. |
• | Each NEO may elect to receive all or a portion of this cash bonus in DSUs, and thus defer payment until departure from Enerflex. |
Position |
STIP Target (1) |
Performance Weighting (2) |
||||||||||||||
Enterprise |
Region |
Individual |
||||||||||||||
President and CEO |
100 | 80 | — | 20 | ||||||||||||
SVP, CFO |
70 | 80 | — | 20 | ||||||||||||
President, Latin America and CETO |
65 | 50 | 30 | 20 | ||||||||||||
President, International |
65 | 50 | 30 | 20 | ||||||||||||
President, U.S. |
65 | 50 | 30 | 20 |
1. | STIP target as a percentage (%) of base salary. |
2. | Performance weighting as a percentage (%) of STIP target. |
Performance Assessed As: |
% of Individual Performance Target Achieved: | |
Not Meeting Expectations |
0 | |
Developing |
Up to 75 | |
Meeting Expectations |
Up to 125 | |
Exceeding Expectations |
Up to 175 |
STIP Target x (Performance Weighting x Enterprise Results) | + | STIP Target x (Performance Weighting x Regional Results) | + | STIP Target x (Performance Weighting x Individual Results) | = | STIP Award |
Executive |
STIP Award Opportunity |
|||||||||||||||
Below Threshold |
Threshold |
Target |
Maximum |
|||||||||||||
Mr. Rossiter |
0 | % | 50 | % | 100 | % | 195 | % | ||||||||
Mr. Bishnoi |
0 | % | 35 | % | 70 | % | 137 | % | ||||||||
Ms. Martinez |
0 | % | 33 | % | 65 | % | 127 | % | ||||||||
Mr. Pyle |
0 | % | 33 | % | 65 | % | 127 | % | ||||||||
Mr. Stewart |
0 | % | 33 | % | 65 | % | 127 | % |
Metric |
Weighting |
Threshold |
Target (1) |
Stretch |
2021 Results |
% of Target Achieved (2) |
Contribution to STIP Pool (2) |
|||||||||||||||||||||
ROCE |
30 | % | 1.91 | % | 3.83 | % | 5.73 | % | 2.76 | % | 72.2 | % | 21.7 | % | ||||||||||||||
Absolute EBIT (3) |
30 | % | 31,815 | 63,631 | 95,446 | 44,425 | 69.8 | % | 20.9 | % | ||||||||||||||||||
EBIT% |
30 | % | 2.89 | % | 5.78 | % | 8.67 | % | 4.63 | % | 80.1 | % | 24.0 | % | ||||||||||||||
TRIR |
10 | % | 0.84 | 0.50 | 0.42 | 0.50 | 100.0 | % | 10. | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total / Payout % |
100 |
% |
50 |
% |
100 |
% |
200 |
% |
76.6 |
% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
1. | The 2021 STIP targets are based on budget. Results have been normalized for unusual items such as gains/losses on the disposal of fixed assets, goodwill impairments, onerous leases, and severance costs related to restructuring. |
2. | Rounded to the nearest integer. |
3. | In thousands. |
Measure |
Canada |
International (1) |
Latin America |
U.S. |
||||||||||||
ROCE |
||||||||||||||||
% of Target Achieved (2) |
0 | % | 102.8 | % | 118.9 | % | 57.8 | % | ||||||||
Contribution (2,3) |
0 | % | 30.9 | % | 35.7 | % | 17.3 | % | ||||||||
Absolute EBIT |
||||||||||||||||
% of Target Achieved (2) |
0 | % | 117.4 | % | 96.7 | % | 58.4 | % | ||||||||
Contribution (2,3) |
0 | % | 35.2 | % | 29.0 | % | 17.5 | % | ||||||||
EBIT% |
||||||||||||||||
% of Target Achieved (2) |
0 | % | 121.9 | % | 100.0 | % | 68.4 | % | ||||||||
Contribution (2,3) |
0 | % | 36.6 | % | 30 | % | 20.5 | % | ||||||||
TRIR |
||||||||||||||||
% of Target Achieved (2) |
50 | % | 200.0 | % | 70.6 | % | 100.0 | % | ||||||||
Contribution (2,3) |
5 | % | 20.0 | % | 7.1 | % | 10.0 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Regional Contribution: |
5 |
% |
122.7 |
% |
101.7 |
% |
65.4 |
% | ||||||||
|
|
|
|
|
|
|
|
1. | International region includes Europe, Middle East and Africa, and Asia Pacific. |
2. | Rounded to the nearest integer. |
3. | Calculated by multiplying the weighting in the previous table by the percentage of target achieved to determine the contribution each metric makes to the regional portion of the STI plan payout. |
Executive |
STIP Target (1) |
Potential Payout Range (1) |
Potential Award Range (2) |
Overall Weighted Score Achieved (3) |
Actual STIP Earned |
|||||||||||||||||||
% (1) |
$ (2) |
|||||||||||||||||||||||
Mr. Rossiter |
100 | % | 0% – 195% | 0 – 1,462,500 | 74 | % | 74 | % | 527,800 | |||||||||||||||
Mr. Bishnoi |
70 | % | 0% – 137% | 0 – 647,420 | 76 | % | 53 | % | 238,900 | |||||||||||||||
Ms. Martinez |
65 | % | 0% – 127% | 0 – 572,143 | 81 | % | 53 | % | 225,541 | |||||||||||||||
Mr. Pyle |
65 | % | 0% – 127% | 0 – 721,276 | 92 | % | 60 | % | 322,076 | |||||||||||||||
Mr. Stewart |
65 | % | 0% – 127% | 0 – 567,296 | 75 | % | 49 | % | 207,237 |
1. | Rounded to the nearest integer and expressed in percent of base salary. |
2. | In dollars. Enerflex used the average rate for 2021 (US$1.0000 = C$1.2537) for calculation purposes. |
3. | As a percentage of STIP target, using the formula outlined under “ Short-Term Incentive Plan Payout Calculation “Executive Compensation” section |
• | NEOs may elect to receive all or part of their STIP payment in the form of DSUs. If so elected, all or part of the annual bonus can be settled with DSUs by dividing the relevant bonus by the fair market value immediately preceding the conversion date. The conversion date is a date after the annual bonus is awarded and at least five trading days after the release of year-end or interim results. Additional DSUs are credited to key employee participants on the regular dividend payment dates as all dividends are assumed to be reinvested. |
• | The Enerflex board has the authority to grant DSUs on a discretionary basis to key employees, including NEOs, in recognition of taking on additional roles or as part of a retention package. Discretionary grants under the DSU Plan are extraordinary awards and are not a primary component of long-term compensation. The Enerflex board did not grant DSUs under this provision in 2021 and has not done so in the last seven years. |
LTI Plan |
Features |
Vesting |
Recipients | |||
Options |
• Granted in August, pending blackout restrictions. • Grant requests are reviewed by the HRC committee and recommended to the Enerflex board for approval. • In determining the number of options to be granted to an individual, the HRC committee considers the person’s level of responsibility and past and expected future contributions to Enerflex. • NEOs receive value only if the Enerflex share price appreciates, as options have value only if the price of the underlying Enerflex common shares is higher at the time of exercise than it was at the time of grant. |
• Vest in equal amounts over 5 years beginning on the date determined by the Enerflex board. Options expire on the 7 th anniversary of the grant.• Pursuant to the option plan, and subject to conditions imposed by the Enerflex board, unvested options held by an EMT member fully vest on the second anniversary of the EMT member’s retirement date and are exercisable within three years of the retirement date. |
• Members of the EMT and other designated participants residing in Canada or the U.S., including NEOs. | |||
PSEs |
• The PSE plan operates in the same fashion as the option plans in terms of grant timing, determination of grant amount, vesting schedules, and approvals required. |
• Same as pursuant to option plans. |
• Members of the EMT and other designated participants residing outside of Canada or the U.S., including NEOs. | |||
PSUs |
• PSUs, and any dividends based thereon, are notional Enerflex common shares, which are used to determine the value of potential future payments. • The final number of PSUs that vest may vary from 0% to 200% of the initial grant (plus any dividends) based on the three-year average of the LTIP performance |
• PSUs cliff vest 3 years after the date of grant. • In accordance with the retirement policy, the Enerflex board has discretion to accelerate vesting of PSUs upon an Enerflex board-approved retirement of an EMT member. |
• Members of the EMT, including all NEOs. |
LTI Plan |
Features |
Vesting |
Recipients | |||
metrics used to determine enterprise performance. • The HRC committee recommends the percent of PSUs to vest for Enerflex board approval. Enerflex, at its sole discretion, may satisfy its cash payment obligation under the PSU plan, in whole or in part, by instructing an independent broker to acquire a number of fully paid Shares in the open market on behalf of the participant. |
||||||
RSUs |
• RSUs, and any dividends based thereon, are notional Enerflex common shares, which are used to determine the value of potential future payments. • The final number of RSUs that vest (plus any dividends) is based on the fair market value of Enerflex common shares at the time of vesting. • Once vested, Enerflex will satisfy its payment obligation under the RSU plan for executives, including all NEOs, in whole, by instructing an independent broker to acquire a number of fully paid Enerflex common shares in the open market on behalf of the participant. For all other participants, Enerflex, at its sole discretion, may satisfy its payment obligation under the RSU plan in either cash or in fully paid Enerflex common shares acquired in the open market. |
• RSUs vest in equal tranches over 3 years after the date of grant. • In accordance with the retirement policy, the Enerflex board has discretion to accelerate vesting of RSUs upon an Enerflex board-approved retirement of an EMT member. |
• Members of the EMT, including all NEOs and other designated participants residing in the International Canadian, and Latin American regions. |
Executive |
Percentage of Base Salary |
|||||||||||||||
LTIP Target |
Provided in PSUs |
Provided in RSUs |
Provided in Options/PSEs |
|||||||||||||
Mr. Rossiter |
375 | % | 187 | % | 94 | % | 94 | % | ||||||||
Mr. Bishnoi |
200 | % | 100 | % | 50 | % | 50 | % | ||||||||
Ms. Martinez |
180 | % | 90 | % | 45 | % | 45 | % | ||||||||
Mr. Pyle |
50 | % | 25 | % | 13 | % | 13 | % | ||||||||
Mr. Stewart |
180 | % | 90 | % | 45 | % | 45 | % |
Executive |
PSUs Granted (1) |
RSUs Granted (1) |
Options Granted (2) |
PSEs Granted (2) |
Total Value of Grants (3) ($) |
|||||||||||||||||||||||||||||||
$ |
# of Units |
$ |
# of Units |
$ |
# of Units |
$ |
# of Units |
|||||||||||||||||||||||||||||
Mr. Rossiter |
1,406,249 | 179,140 | 703,125 | 89,570 | 703,126 | 243,684 | — | — | 2,812,500 | |||||||||||||||||||||||||||
Mr. Bishnoi |
474,297 | 60,420 | 237,149 | 30,210 | 237,151 | 82,190 | — | — | 948,597 | |||||||||||||||||||||||||||
Ms. Martinez |
407,289 | 51,884 | 203,645 | 25,942 | 203,646 | 70,578 | — | — | 814,580 | |||||||||||||||||||||||||||
Mr. Pyle |
142,627 | 18,169 | 71,317 | 9,085 | — | — | 71,313 | 24,715 | 285,257 | |||||||||||||||||||||||||||
Mr. Stewart |
403,843 | 51,445 | 201,918 | 25,722 | 201,920 | 69,980 | — | — | 807,681 |
1. | The fair market value of Enerflex common shares used in the PSU and RSU grants on August 16, 2021 was $7.85. |
2. | Enerflex uses the Black-Scholes method of valuation to derive the fair value for the option and PSE grants. For grants conducted on August 16, 2021, the Black-Scholes Value was $2.89. |
3. | Enerflex used the average rate for 2021 (US$1.0000 = C$1.2537) for calculation purposes. |
PSU Grant Date |
Annual Performance Results |
3 Year Average |
Vesting Year |
|||||||||||||||||||||||||
2018 |
2019 |
2020 |
2021 |
2022 |
||||||||||||||||||||||||
20 Aug 2018 |
149.3 | % | 168.7 | % | 89.8 | % | 135.9 | % | 2021 | |||||||||||||||||||
19 Aug 2019 |
168.7 | % | 89.8 | % | 76.6 | % | 111.7 | % | 2022 |
Executive (1) |
Amount Granted (2) |
Dividends Earned (#) |
Total Accumulated (#) |
Notional Units (3) (#) |
Total Vested (4) (#) |
Payout ($) |
||||||||||||||||||||||
$ |
# |
|||||||||||||||||||||||||||
Mr. Rossiter |
636,919 | 39,511 | 3,221 | 42,732 | 15,352 | 58,084 | 427,498 | |||||||||||||||||||||
Ms. Martinez |
392,087 | 24,323 | 1,982 | 26,305 | 9,451 | 35,756 | 263,164 | |||||||||||||||||||||
Mr. Pyle |
139,534 | 8,656 | 705 | 9,361 | 3,363 | 12,724 | 93,649 | |||||||||||||||||||||
Mr. Stewart |
382,151 | 23,707 | 1,932 | 25,639 | 9,211 | 34,850 | 256,496 |
1. | Mr. Bishnoi joined Enerflex in September 2019 and thus does not hold any 2018 PSUs. |
2. | At the time of the grant, Enerflex used the August 20, 2018 rate (US$1.0000 = C$1.3065). |
3. | Notional units were calculated by multiplying the total accumulated by the performance result in order to calculate the amount payable. No actual additional PSUs were granted/vested. |
4. | The total vested amount includes vested PSUs, notional units, and dividends for the purposes of calculating the payout amount. |
Metric |
Weighting |
Threshold |
Target |
Stretch |
||||||||||||
ROCE |
50 | % | 3.5 | % | 10 | % | 15 | % | ||||||||
gEPS |
50 | % | -10 | % | 8 | % | 40 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total / Contribution |
100 |
% |
25 |
% |
100 |
% |
200 |
% | ||||||||
|
|
|
|
|
|
|
|
Executive |
Amount Granted in 2020 (#) (1) |
Dividends Earned (#) |
Total Accumulated (#) |
Vested to Date (#) |
Units Vesting in 2021 (#) (2) |
Settled in Stock (3) |
||||||||||||||||||||||
# |
$ |
|||||||||||||||||||||||||||
Mr. Rossiter |
127,609 | 1,520 | 129,129 | 0 | 43,043 | 22,382 | 175,699 | |||||||||||||||||||||
Mr. Bishnoi |
43,040 | 513 | 43,553 | 0 | 14,518 | 7,549 | 59,260 | |||||||||||||||||||||
Ms. Martinez |
38,835 | 462 | 39,297 | 0 | 13,099 | 9,975 | 78,304 | |||||||||||||||||||||
Mr. Pyle |
13,599 | 162 | 13,761 | 0 | 4,587 | 4,587 | 36,008 | |||||||||||||||||||||
Mr. Stewart |
38,506 | 459 | 38,965 | 0 | 12,988 | 10,130 | 79,521 |
1. | At the time of the grant, Enerflex used the August 17, 2020 rate (US$1.0000 = C$1.3207). |
2. | The total vested amount includes vested RSUs and dividends earned for the purposes of calculating the payout amount. |
3. | The total settled in stock reflects the number of Enerflex common shares purchased on the open market on behalf of the NEO by an independent broker using after-tax values. |
• | Pension plans through a defined contribution pension plan for Canada employees in Canada and a 401(k)-matched savings plan in the U.S. (collectively, what we refer to as “DCP”), open to eligible employees of Enerflex and certain of its subsidiaries; and |
• | The supplemental employee retirement plans in Canada and the U.S., offered to key employees, including NEOs. |
Executive |
Accumulated Value at the Start of the Year (1) ($) |
Compensatory (2) ($) |
Accumulated Value at the End of the Year (3) ($) |
|||||||||
Mr. Rossiter |
1,745,271 | 193,469 | 2,040,635 | |||||||||
Mr. Bishnoi |
106,386 | 68,281 | 194,335 | |||||||||
Ms. Martinez |
1,052,873 | 97,315 | 1,285,321 | |||||||||
Mr. Pyle (4) |
510,581 | 79,798 | 590,378 | |||||||||
Mr. Stewart |
868,790 | 97,858 | 1,030,216 |
1. | Accumulated value of defined contribution pension plan for Canada employees or 401(k) (employer and employee contributions) plus supplemental employee retirement plans balance (including interest) at the start of 2020. The accumulated value at the start of the year uses the 2021-year end rate (US$1.000 = C$1.2732). |
2. | 2021 DCPP, 401(k), and supplemental employee retirement plans employer contributions plus interest. All contributions use the 2021 average rate (US$1.0000 = C$1.2537). |
3. | Includes investment gains and losses. The accumulated value at the end of the year uses the 2021-year end rate (US$1.0000 = C$1.2678). |
4. | Mr. Pyle’s accumulated values reflect DSU grants in lieu of his participation in the supplemental employee retirement plans. As an Australian citizen on an expatriate assignment in the U.A.E. where a pension plan arrangement does not exist, 9.25% of actual 2021 salary plus STIP is reflective of superannuation were Mr. Pyle’s employment located in Australia. |
Executive |
Share Ownership Requirement |
Total Ownership Attained (1) ($) |
Requirement Achieved (2) |
|||||||||||||
Multiple of Base Pay |
$ Amount |
|||||||||||||||
Mr. Rossiter |
5 x | 3,750,000 | 4.40 | Yes | (4) | |||||||||||
Mr. Bishnoi |
3 x | 1,422,900 | 1.66 | Yes | (4) | |||||||||||
Ms. Martinez |
2 x | 902,789 | 3.13 | Yes | ||||||||||||
Mr. Pyle |
2 x | 1,138,109 | 2.76 | Yes | ||||||||||||
Mr. Stewart |
2 x | 895,142 | 3.15 | Yes |
1. | The value of a Share, RSU, or DSU held by a NEO is calculated as the greater of the value of the security on the grant or acquisition date, and the closing price of the security as of December 31, 2021 ($7.66). |
2. | Pursuant to the share ownership guidelines, executives must accumulate Enerflex common shares with a value equivalent to the Enerflex share ownership requirement within five years of his/her date of appointment to the executive position. When Enerflex share ownership requirements are increased either due to a promotion and/or policy change, the executive has up to three years to meet the new guideline. |
3. | Pursuant to the share ownership guidelines, Mr. Rossiter and Mr. Bishnoi have until August 4, 2027 to achieve their respective ownership requirements. Both NEOs are on track to meet these requirements. |
• | Enerflex has materially restated the financial information; |
• | the Enerflex board has granted incentive compensation based on the achievement of results in the financial information originally filed; |
• | the executive engaged in fraud or intentional misconduct that caused or substantially contributed to such restatement; and |
• | the Enerflex board has determined that it is in the best interests of Enerflex to require the executive to reimburse or forfeit incentive compensation received; then the Enerflex board shall seek reimbursement or forfeiture of the excess incentive compensation paid during the three-year period preceding the date on which the restatement is filed. Incentive compensation under the policy includes any short- or long-term incentive and retention-based compensation, including bonuses, options, PSEs, RSUs, and PSUs approved, awarded, or granted to the executive, the amount, payment and/or vesting of which was based wholly or in part on the achievement of results set forth in the financial statements. |
Executive / Year (1) |
Salary ($) |
Share- Based Option Awards (2) ($) |
Option- Based Awards (3) ($) |
Annual Incentive Plans (4) ($) |
Long Term Incentive Plans ($) |
Pension Value ($) |
All Other Compensation (5) ($) |
Total Compensation ($) |
||||||||||||||||||||||||
Marc E. Rossiter, President and Chief Executive Officer |
| |||||||||||||||||||||||||||||||
2021 |
712,500 | 2,169,763 | 703,126 | 527,800 | — | 193,469 | 59,072 | 4,365,730 | ||||||||||||||||||||||||
2020 |
712,500 | 2,197,441 | 703,125 | 711,300 | — | 178,486 | 258,382 | 4,761,234 | ||||||||||||||||||||||||
2019 (6) |
589,199 | 2,361,593 | 595,605 | 979,319 | — | 147,239 | 237,749 | 4,910,703 | ||||||||||||||||||||||||
Sanjay Bishnoi, Senior Vice President, Chief Financial Officer |
| |||||||||||||||||||||||||||||||
2021 (7) |
450,585 | 726,861 | 237,151 | 288,900 | — | 68,281 | 64,264 | 1,836,042 | ||||||||||||||||||||||||
2020 |
450,585 | 724,536 | 237,149 | 332,010 | — | 71,291 | 362,385 | 2,177,956 | ||||||||||||||||||||||||
2019 (8) |
143,959 | 477,822 | 452,173 | 156,150 | — | 12,519 | 38,986 | 1,281,608 | ||||||||||||||||||||||||
Patricia Martinez, President, Latin America and Chief Energy Transition Officer |
| |||||||||||||||||||||||||||||||
2021 (9) |
428,825 | 630,702 | 203,646 | 225,541 | — | 97,315 | 65,045 | 1,651,074 | ||||||||||||||||||||||||
2020 (10) |
458,754 | 685,816 | 213,983 | 386,869 | — | 90,683 | 77,143 | 1,913,248 | ||||||||||||||||||||||||
2019 (6) |
468,360 | 486,183 | 422,095 | 431,210 | — | 95,274 | 68,904 | 1,972,026 | ||||||||||||||||||||||||
Phil Pyle, President, International |
| |||||||||||||||||||||||||||||||
2021 (9) |
540,602 | 222,803 | 71,313 | 322,076 | — | 79,798 | 347,831 | 1,584,422 | ||||||||||||||||||||||||
2020 (10) |
578,332 | 241,539 | 74,934 | 295,254 | — | 80,807 | 407,223 | 1,678,089 | ||||||||||||||||||||||||
2019 (6) |
590,426 | 168,705 | 147,807 | 475,525 | — | 90,111 | 285,575 | 1,758,150 | ||||||||||||||||||||||||
Gregory Stewart, President, U.S. |
| |||||||||||||||||||||||||||||||
2021 (9) |
426,738 | 623,457 | 201,920 | 207,237 | — | 97,858 | 89,590 | 1,646,800 | ||||||||||||||||||||||||
2020 (10) |
454,868 | 666,151 | 212,171 | 309,348 | — | 95,161 | 164,550 | 1,902,248 | ||||||||||||||||||||||||
2019 (6) |
464,380 | 454,226 | 418,508 | 518,314 | — | 89,819 | 118,541 | 2,063,788 |
1. | Enerflex is required to report all amounts in CAD which is the same currency used for financial reporting purposes. Unless otherwise stated, USD compensation for Messrs. Rossiter, Pyle, and Stewart, and Ms. Martinez, has been converted to CAD. |
2. | This column aggregates the theoretical expected value of PSUs, DSUs, and RSUs and notional dividends earned thereon. The value of the PSU, DSU, and RSU awards is calculated as the sum of the applicable grant date fair value of each share-based award plus notional dividends earned thereon. The determination of fair value for share-based awards in this column is consistent with the accounting treatment of share-based awards. This column does not include STI Plan DSU elections (these are set out under the column “Annual Incentive Plans”); however, it does include dividends earned on STI Plan DSU elections. The fair value is calculated by multiplying the number of share-based awards by the fair market value as of the grant date and by multiplying the number of notional dividends by the fair market value as of the dividend payment date. |
3. | Enerflex uses the Black-Scholes method of valuation to derive the grant date fair value for the option grants: |
Option Grant |
Exercise Price ($) |
BSV ($) |
Expected Life (Years) |
Volatility (%) |
Dividend Yield (%) |
Risk Free Rate (%) |
Forfeiture Rate (%) |
|||||||||||||||||||||
2021 |
7.85 | 2.89 | 5.26 | 44.4 | 1.0 | 1.1 | 3.9 | |||||||||||||||||||||
2020 |
5.51 | 2.15 | 5.34 | 43.6 | 1.4 | 0.5 | 3.6 | |||||||||||||||||||||
2019 |
13.38 | 2.87 | 5.28 | 33.9 | 3.2 | 1.2 | 4.1 |
4. | Amounts shown were made pursuant to the STI plan for all NEOs. STIP is earned in each respective fiscal year but paid in the following year. Certain NEOs elected to receive their 2018, 2019, and 2020 STIP awards, in whole or in part, in the form of DSUs as outlined below. Due to certain NEOs’ elections to receive their STIP in the form of DSUs, the actual amounts noted in the Summary Compensation Table may not have been paid out in cash. |
Executive |
Percentage of STIP to be Paid in DSUs |
|||||||||||
2019 |
2020 |
2021 |
||||||||||
Mr. Rossiter |
50 | % | 0 | % | 0 | % |
5. | “All Other Compensation” for 2021 reflects perquisites that in aggregate are worth $50,000 or more or are worth 10% or more of an NEO’s salary for the year. The perquisites paid to the NEOs in 2021 include but are not limited to the following: |
a. | Mr. Rossiter: $16,200 automobile allowance, $15,000 medical allowance, $10,000 financial planning allowance, $7,930 legal allowance, $5,534 memberships, and $4,409 for relocation costs. |
b. | Mr. Bishnoi: $16,200 automobile allowance, $16,000 medical allowance, $15,000 memberships, $5,644 financial allowance and $11,420 for relocation-related expenses. |
c. | Ms. Martinez: $20,310 automobile allowance, $12,705 medical allowance, $12,537 financial planning allowance, and $19,493 memberships. |
d. | Mr. Pyle: $48,323 vehicle allowance, $16,990 medical allowance, $12,532 financial planning allowance, $22,814 memberships, $247,172 location-related allowances (due to his expatriate assignment). |
e. | Mr. Stewart: $20,310 automobile allowance, $15,421 medical allowance, and $53,859 relocation-related expenses (due to his change in role and subsequent relocation). |
f. | For salary, pension, benefits, and perquisites, STIP, and LTIP the average rate for 2019 was used (US$1.0000 = C$1.3268). |
g. | Included in this amount is a one-time discretionary bonus totaling $50,000 CAD Mr. Bishnoi received for the work he led on the agreement to combine with Exterran. |
h. | Mr. Bishnoi joined Enerflex in September 2019. |
6. | For salary, pension, benefits, and perquisites, STIP, LTIP, and all other compensation including expenses, the average rate for 2021 was used (US$1.0000 = C$1.2537). Additionally, Mr. Pyle’s expenses were converted using the 2021 average rate (AED $1.0000 = C$0.3412) as applicable. |
7. | For salary, pension (including SERP contributions), benefits and perquisites, STIP, and LTIP, the average rate for 2020 was used (US$1.0000 = C$1.3412). Additionally, Mr. Pyle’s expenses were converted using the 2020 average rate (AED $1.0000 = C$0.3650) as applicable. |
Executive / Grant Date |
Option-Based Awards |
Share-Based Awards |
||||||||||||||||||||||||||
# of Securities (1,2) |
Exercise Price (3) |
Expiration Date |
Value of In-The-Money Options (4) |
# of Unvested Units (5) |
Market / Payout Value of: |
|||||||||||||||||||||||
Unvested Awards (6) |
Vested Awards Not Paid Out (7) |
|||||||||||||||||||||||||||
Marc Rossiter |
||||||||||||||||||||||||||||
16-Aug-21 |
243,684 | 7.85 | 15-Aug-28 |
$ | 703,125 | 793,790 | $ | 4,244,886 | $ | 691,361 | ||||||||||||||||||
17-Aug-20 |
327,035 | 5.51 | 15-Aug-27 |
|||||||||||||||||||||||||
19-Aug-19 |
205,381 | 13.74 | 15-Aug-26 |
|||||||||||||||||||||||||
20-Aug-18 |
159,606 | 16.12 | 9-Aug-25 |
|||||||||||||||||||||||||
21-Aug-17 |
108,072 | 15.75 | 9-Aug-24 |
|||||||||||||||||||||||||
12-Aug-16 |
79,906 | 13.27 | 9-Aug-23 |
|||||||||||||||||||||||||
17-Aug-15 |
99,174 | 11.69 | 9-Aug-22 |
|||||||||||||||||||||||||
Sanjay Bishnoi |
||||||||||||||||||||||||||||
16-Aug-21 |
82,190 | 7.85 | 15-Aug-28 |
$ | 237,149 | 247,629 | $ | 1,431,713 | $ | 0 | ||||||||||||||||||
17-Aug-20 |
110,302 | 5.51 | 15-Aug-27 |
|||||||||||||||||||||||||
9-Sept-19 |
160,345 | 12.40 | 15-Aug-26 |
|||||||||||||||||||||||||
Patricia Martinez |
||||||||||||||||||||||||||||
16-Aug-21 |
70,578 | 7.85 | 15-Aug-28 |
$ | 213,983 | 215,525 | $ | 1,264,302 | $ | 442,403 | ||||||||||||||||||
17-Aug-20 |
99,527 | 5.51 | 15-Aug-27 |
|||||||||||||||||||||||||
19-Aug-19 |
145,550 | 13.74 | 15-Aug-26 |
|||||||||||||||||||||||||
20-Aug-18 |
98,254 | 16.12 | 9-Aug-25 |
|||||||||||||||||||||||||
21-Aug-17 |
76,852 | 15.75 | 9-Aug-24 |
|||||||||||||||||||||||||
12-Aug-16 |
41,095 | 13.27 | 9-Aug-23 |
|||||||||||||||||||||||||
17-Aug-15 |
34,003 | 11.69 | 9-Aug-22 |
|||||||||||||||||||||||||
Phil Pyle |
||||||||||||||||||||||||||||
16-Aug-21 |
24,715 | 7.85 | 15-Aug-28 |
$ | 74,934 | 75,473 | $ | 442,744 | $ | 357,102 | ||||||||||||||||||
17-Aug-20 |
34,853 | 5.51 | 15-Aug-27 |
|||||||||||||||||||||||||
19-Aug-19 |
50,968 | 13.74 | 15-Aug-26 |
|||||||||||||||||||||||||
20-Aug-18 |
34,996 | 16.12 | 9-Aug-25 |
|||||||||||||||||||||||||
21-Aug-17 |
27,352 | 15.75 | 9-Aug-24 |
|||||||||||||||||||||||||
12-Aug-16 |
27,397 | 13.27 | 9-Aug-23 |
|||||||||||||||||||||||||
17-Aug-15 |
22,669 | 11.69 | 9-Aug-22 |
|||||||||||||||||||||||||
Gregory Stewart |
||||||||||||||||||||||||||||
16-Aug-21 |
69,980 | 7.85 | 15-Aug-28 |
$ | 212,171 | 213,701 | $ | 1,253,594 | $ | 259,873 | ||||||||||||||||||
17-Aug-20 |
98,684 | 5.51 | 15-Aug-27 |
|||||||||||||||||||||||||
19-Aug-19 |
114,313 | 13.74 | 15-Aug-26 |
|||||||||||||||||||||||||
20-Aug-18 |
95,764 | 16.12 | 9-Aug-25 |
|||||||||||||||||||||||||
21-Aug-17 |
54,377 | 15.75 | 9-Aug-24 |
|||||||||||||||||||||||||
12-Aug-16 |
47,703 | 13.27 | 9-Aug-23 |
|||||||||||||||||||||||||
17-Aug-15 |
64,935 | 11.69 | 9-Aug-22 |
1. | This column includes the number of securities underlying unexercised options or PSEs. The PSE award being applicable to Mr. Pyle only. |
2. | No vested options or PSEs were exercised in 2021. All options vesting in 2021 were underwater with the exception of the August 17, 2020 grant. |
3. | For option or PSE grants the exercise price is the fair market value immediately preceding the date of grant. |
4. | The in-the-money |
5. | This column includes the number of Enerflex share-based unvested awards. The number shown reflects all awarded PSUs and RSUs held by NEOs (including notional dividends paid) as of December 31, 2021. Such PSUs do not vest until 2022, 2023, or 2024 as applicable. The RSUs granted in 2020 vest in three equal tranches on the anniversary of the grant date. |
6. | For PSUs granted in 2019, 2020, and 2021, and for the RSUs granted in 2021, the values were calculated using the closing market price at December 31, 2021 ($7.66 CAD). PSUs granted in 2021 were assumed to be at target performance for 2022 and 2023; those granted 2020 were assumed to be at target performance for 2022. For PSUs granted in 2019, the values reflect a 117.7% PSU scorecard result: the average performance for 2019, 2020, and 2021. |
7. | This column includes the number of Share-based vested awards that are not paid out or distributed. The amounts shown reflect the value of all accumulated DSUs and notional dividends credited as of December 31, 2021. |
Executive |
Value Vested During the Year |
|||||||||||
Option-Based Awards (1) ($) |
Share-Based Awards (2) ($) |
Non-Equity Incentive Plan Compensation (3) ($) |
||||||||||
Mr. Rossiter |
151,744 | 772,667 | 527,800 | |||||||||
Mr. Bishnoi |
51,179 | 113,966 | 288,900 | (4) | ||||||||
Ms. Martinez |
46,180 | 370,658 | 225,541 | |||||||||
Mr. Pyle |
16,173 | 218,634 | 322,076 | |||||||||
Mr. Stewart |
45,790 | 361,192 | 207,237 |
1. | The value vested during the year is calculated on the assumption that all options and PSEs that vested in 2021 were exercised on their respective vesting dates. If the vesting date was a holiday, the closing price of Enerflex common shares on the nearest preceding trading day was used. The closing price for options that vested on August 9, 2021 was $7.63 and on August 15, 2021 was $7.83. All options vesting in 2021 were underwater except for the August 17, 2020 grant. |
2. | The value shown reflects the value of vested PSU and RSU awards. The RSUs were settled in Enerflex common shares purchased on the open market. It also includes any DSU awards, and notional dividends accumulated in 2021, based on the closing price of Enerflex common shares on the TSX on the vesting date. The closing price on the TSX on date DSUs were awarded to Mr. Pyle was $9.47. For the notional dividends accumulated, the closing price on the applicable dividend payment date was used. |
3. | Non-equity incentive plan compensation refers to awards earned under the STI plan in 2021. The award is paid in 2022. The dollar amount noted does not consider the effect of any elections to have all or a portion of the STIP paid in the form of DSUs. |
4. | Included in this amount is a one-time discretionary bonus totaling $50,000 CAD Mr. Bishnoi received for the work he led on the agreement to combine with Exterran. |
Resignation, Termination without Cause |
Termination with Cause |
Retirement |
Death | |||
Base Salary | ||||||
Ends as of the resignation date. | Ends as of the termination date. | Ends as of the retirement date. | Ends as of the date of death. | |||
Benefits | ||||||
Pending local legislation, ends as of the resignation date. | Ends as of the termination date. | Ends as of the retirement date. | Ends as of the date of death. Certain benefits may be extended to eligible dependents in accordance with plan provisions. | |||
Perquisites | ||||||
Ends as of the resignation date. | Ends as of the termination date. | Ends as of the retirement date. | Ends as of the date of death. | |||
STI Plan | ||||||
Ends as of the resignation date and no payment is made. | Ends as of the termination date and no payment is made. | Ends as of the retirement date and no payment is made, but the Board has discretion to approve a retirement bonus in lieu of any current year STIP entitlements, in accordance with the retirement policy. | Estate receives pro-rated amount based on proportion of the fiscal year completed as of the date of death. | |||
Option Plan | ||||||
Unvested options are forfeited as of the resignation date. Vested options are exercisable any time within 90 days of the resignation or termination date. |
All vested and unvested options terminate immediately. | Unvested options are forfeited and vested options are exercisable any time within 90 days of the retirement date. For EMT participants, subject to conditions imposed by the Enerflex board, unvested options fully vest on the second anniversary of the | Unvested options fully vest and are exercisable at any time within 120 days of the date of death. |
Resignation, Termination without Cause |
Termination with Cause |
Retirement |
Death | |||
retirement date and are exercisable within three years of the retirement date. | ||||||
DSU Plan | ||||||
DSUs are paid out within 60 days of the resignation or termination date. | DSUs are paid out within 60 days of the termination date. | DSUs are paid out not later than the last day of the calendar year following the year of retirement. | DSUs are paid out within 60 days of death. | |||
PSU plan | ||||||
Subject to Enerflex board discretion, all unvested PSUs are forfeited, provided that in the case of termination without cause, any PSUs that would have vested within 60 days of such termination are deemed to be vested. Vested PSUs are paid out within 60 days of resignation/termination. | Subject to Enerflex board discretion, all unvested PSUs are forfeited. Vested PSUs are paid out within 60 days of the termination date. | All unvested PSUs are forfeited, unless the Enerflex board approves any accelerated vesting in accordance with the retirement policy. Vested PSUs are paid out within 60 days of the retirement date. | All unvested PSUs vest are payable based on average performance measures for the period that has elapsed between the award date and the date of death. | |||
RSU Plan | ||||||
Subject to Enerflex board discretion, all unvested RSUs are forfeited, provided that in the case of termination without cause, any RSUs that would have vested within 60 days of such termination are deemed to be vested. Vested RSUs are paid out within 60 days of the resignation/termination. | Subject to Enerflex board discretion, all unvested RSUs are forfeited. Vested RSUs are paid out within 60 days of the termination date. | All unvested RSUs are forfeited, but the Enerflex board has discretion to approve a retirement bonus up to the value of the forfeited RSUs, in accordance with the retirement policy. Vested RSUs are paid out within 60 days of the termination date. | Unvested RSUs fully vest and are paid out within 60 days of the date of death. | |||
PSE Plan | ||||||
Unvested PSEs are forfeited as of the resignation date. Vested PSEs are exercisable any time within 90 days of the resignation or termination date. | All vested and unvested PSEs terminate immediately. | Unvested PSEs are forfeited as of the retirement date and vested PSEs are exercisable any time within 90 days of the retirement date. EMT participants, subject to conditions imposed by the Enerflex board, unvested PSEs fully vest | Unvested PSEs fully vest and are exercisable at any time within 120 days of the date of death. |
Resignation, Termination without Cause |
Termination with Cause |
Retirement |
Death | |||
on the second anniversary of the retirement date and are exercisable within three years of the retirement date. | ||||||
Pension Plan | ||||||
In the U.S., the employee receives all employee contributions and any Enerflex contributions made after January 1, 2019. Otherwise if Enerflex contributions made before January 1, 2019 have not vested, these Enerflex contributions are forfeited. In Canada, the employee receives all employee and Enerflex contributions. | In the U.S., the employee receives his/her contributions any Enerflex contributions made after January 1, 2019. Otherwise if Enerflex contributions made before January 1, 2019 have not vested, these Enerflex contributions are forfeited. In Canada, the employee receives all employee and Enerflex contributions. | Upon retirement, the employee is entitled to receive a pension consisting of the employee and Enerflex contributions as defined in the DCP. | In the U.S., the employee receives his/her contributions any Enerflex contributions made after January 1, 2019. Otherwise if Enerflex contributions made before January 1, 2019 have not vested, these Enerflex contributions are forfeited. In Canada, the employee receives all employee and Enerflex contributions. |
(i) | an individual or group acquires securities of Enerflex or associated rights that attach voting rights sufficient to cast more than 35% of the votes to elect directors of Enerflex; |
(ii) | incumbent directors cease to constitute a majority of the Enerflex board; |
(iii) | approval by Enerflex shareholders of a transaction pursuant to which the Enerflex shareholders immediately prior to the transaction do not immediately after completion of the transaction hold Enerflex common shares entitling them to cast more than 50% of the votes attached to Enerflex common shares in the capital of the continuing corporation to elect directors of that corporation; or |
(iv) | a liquidation, dissolution, or winding up of Enerflex, or sale, lease, or other disposition of all or substantially all the assets of Enerflex (other than to a subsidiary or which does not result in a change in the ultimate Enerflex shareholders of Enerflex or such subsidiary). |
• | “just cause” for dismissal will arise in the event of willful failure to perform duties, willfully engaging in any act, which is injurious to Enerflex, or willfully engaging in certain illegal acts. |
• | “good reason” will arise if Enerflex or its subsidiaries: |
(i) | materially reduces or modifies the executive’s position, responsibilities, or authority, or the executive is effectively prevented from carrying out duties; |
(ii) | reduces any form of remuneration of the executive, adversely changes the basis upon which such remuneration is determined or fails to increase remuneration in a manner consistent with policies prior to a control change; |
(iii) | fails to continue in effect any benefits, bonus, compensation plan, stock option plan or other purchase plan, life insurance, disability plan, pension plan, or retirement plan which the executive is participating in or entitled to participate in prior to the control change, or fails to take action or takes action which adversely affects these rights; |
(iv) | relocates the executive from the location of employment prior to the control change; |
(v) | takes action to deprive the executive of any material fringe or other benefit or entitlement enjoyed before the control change; or |
(vi) | breaches the change of control agreements. |
• | “disability” means an executive’s failure to perform substantially his duties for Enerflex on a full-time basis for a period of six months out of any 18-month period where such inability is a result of a physical or mental illness or disability. |
• | “retirement” means retirement by an executive the date on which he/she turns 65 years of age. |
• | “change of control period” means the three-year period following a control change. |
• | A “trigger event” occurs where the executive’s employment is terminated: |
(i) | subsequent to a control change during the change of control period; or |
(ii) | prior to the date on which a control change occurs; and |
(iii) | it is reasonably demonstrated that such termination was at the request of a third party who has taken steps reasonably calculated to effect a control change or otherwise arose in connection with or anticipation of a control change. |
(i) | the portion of the annual salary earned by or payable to the executive and other amounts that the executive is entitled to receive as of the date of termination; |
(ii) | two times the sum of the annual base salary (the “two-year salary”); |
(iii) | an amount equal to 15% of the two-year salary, as compensation for the loss of benefits; |
(iv) | an amount equal to two times the average annual bonus over the previous 24 months; |
(v) | equity security treatment in accordance with the applicable equity policies or plans of Enerflex as of the date of termination; and |
(vi) | an amount on account of pension benefits to which he/she otherwise would have been entitled plus any pension benefits to which the executive would be entitled had his/her employment continued until the earlier of his/her normal retirement, death, or two years following the date of termination of employment. |
Executive |
Change of Control and Termination |
Termination with Cause |
Termination without Cause (1) |
Retirement |
||||||||||||
Marc E. Rossiter |
| |||||||||||||||
Severance (2,3) |
1,425,000 | (4 |
) |
(4 |
) |
— | ||||||||||
Bonus (5) |
1,239,100 | — | — | — | ||||||||||||
Benefits and Pension (6) |
600,688 | — | — | — | ||||||||||||
Option-Based Awards (unvested and accelerated) (7) |
562,500 | — | — | — | ||||||||||||
Share-Based Awards (unvested and accelerated) (8) |
6,080,431 | — | — | — | ||||||||||||
Total Payment |
9,907,720 |
— |
— |
— |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sanjay Bishnoi |
| |||||||||||||||
Severance (2,3) |
901,170 | (4 |
) |
(4 |
) |
— | ||||||||||
Bonus (5) |
477,800 | — | — | — | ||||||||||||
Benefits and Pension (6) |
271,737 | — | — | — | ||||||||||||
Option-Based Awards (unvested and accelerated) (7) |
189,720 | — | — | — | ||||||||||||
Share-Based Awards (unvested and accelerated) (8) |
1,896,838 | — | — | — | ||||||||||||
Total Payment |
3,737,265 |
— |
— |
— |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Patricia Martinez (9) |
| |||||||||||||||
Severance (2,3) |
857,650 | (4 |
) |
(4 |
) |
— | ||||||||||
Bonus (5) |
587,170 | — | — | — | ||||||||||||
Benefits and Pension (6) |
323,278 | — | — | — | ||||||||||||
Option-Based Awards (unvested and accelerated) (7) |
171,187 | — | — | — | ||||||||||||
Share-Based Awards (unvested and accelerated) (8) |
1,650,922 | — | — | — | ||||||||||||
Total Payment |
3,590,207 |
— |
— |
— |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Philip A.J. Pyle (9) |
| |||||||||||||||
Severance (2,3) |
1,081,203 | (4 |
) |
(4 |
) |
— | ||||||||||
Bonus (5) |
598,068 | — | — | — | ||||||||||||
Benefits and Pension (6) |
321,776 | — | — | — | ||||||||||||
Option-Based Awards (unvested and accelerated) (7) |
59,946 | — | — | — | ||||||||||||
Share-Based Awards (unvested and accelerated) (8) |
578,123 | — | — | — | ||||||||||||
Total Payment |
2,639,116 |
— |
— |
— |
||||||||||||
|
|
|
|
|
|
|
|
Executive |
Change of Control and Termination |
Termination with Cause |
Termination without Cause (1) |
Retirement |
||||||||||||
Gregory Stewart (9) |
| |||||||||||||||
Severance (2,3) |
853,476 | (4 |
) |
(4 |
) |
— | ||||||||||
Bonus (5) |
496,403 | — | — | 6,269 | (10) | |||||||||||
Benefits and Pension (6) |
323,738 | — | — | (11) | ||||||||||||
Option-Based Awards (unvested and accelerated) (7) |
169,736 | — | — | (12) | ||||||||||||
Share-Based Awards (unvested and accelerated) (8) |
1,636,950 | — | — | 545,650 | (13) | |||||||||||
Total Payment |
3,480,303 |
— |
— |
551,918 |
||||||||||||
|
|
|
|
|
|
|
|
1. | “termination without cause” includes termination without cause by Enerflex and resignation by the NEO but does not include any retirement that qualifies as normal or early retirement under the retirement policy. |
2. | Enerflex has a change of control agreement with each NEO but does not have employment agreements with any of its NEOs. |
3. | The amount shown is equal to two times the annual base salary pursuant to the NEO’s change of control agreement. |
4. | Any severance amount would be as determined under applicable law. |
5. | The amount shown is an amount equal to two times the average annual bonus earned in the 24 months preceding the date of termination, pursuant to the NEO’s change of control agreement. |
6. | The amount shown is equal to 15% of two times the annual base salary as compensation for the loss of benefits plus the equivalent of any pension benefits to which the NEO would have been entitled had the NEO’s employment continued for two years following the date of termination, pursuant to the NEO’s change of control agreement. |
7. | Value shown includes the incremental value of “in-the-money” in-the-money |
8. | Value shown includes the incremental value of all unvested PSU and RSU awards calculated by using the closing market price of an Enerflex share on December 31, 2021 in accordance with the applicable plan provisions. |
9. | Messrs. Pyle and Stewart, and Ms. Martinez’s USD compensation has been converted to CAD using the average rate for 2021 (US$1.0000 = C$1.2537). |
10. | The amount shown reflects the retirement bonus based on years of service pursuant to the terms of the retirement policy in effect as of December 31, 2021. The amount of any retirement bonus for an executive officer is subject to Enerflex board discretion. Mr. Stewart is the only NEO whose retirement effective December 31, 2021 would qualify as an early retirement under the retirement policy. If Messrs. Rossiter, Bishnoi, Pyle, or Ms. Martinez retired effective December 31, 2021, their retirement would be treated as a resignation. |
11. | In the absence of a retiree benefit program and under special circumstances, the Enerflex board has discretion to provide up to 15% of the annual base salary as compensation for the loss of benefits. |
12. | No options would be early vested as of the retirement date. Pursuant to the terms of the option plan, all unvested options continue to vest during the two-year period following the retirement date; on the second anniversary of the retirement date any unvested options immediately vest; and the NEO has three years from the retirement date to exercise any vested options. |
13. | Value shown reflects the value of 1/3 unvested PSUs and RSUs held by Mr. Stewart, which would be early vested in accordance with the provisions of the retirement policy, subject to Enerflex board |
discretion to vest all outstanding PSUs and RSUs. Mr. Stewart had no vested PSU or RSU awards at December 31, 2021. |
Plan Category |
# of Securities to be issued Upon Exercise of Outstanding Options |
Weighted Average Exercise Price of Outstanding Options ($) |
# of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (1) |
|||||||||
Equity Compensation Plans Approved by Security Holders |
4,456,444 | $ | 11.66 | 4,342,732 | (2) | |||||||
Equity Compensation Plans Not Approved by Security Holders |
Nil | Nil | Nil | |||||||||
|
|
|
|
|
|
|||||||
Total |
4,456,444 |
$ |
11.66 |
4,342,732 |
(2) | |||||||
|
|
|
|
|
|
1. | Excluding securities reflected in column (a). |
2. | Representing 4.84% of the issued and outstanding Shares as of December 31, 2021. |
Security-Based Compensation Arrangement |
2021 |
2020 |
2019 |
|||||||||
Option Plan |
0.730 | % | 0.936 | % | 0.995 | % |
Provision |
Option Plan | |
Administration | The Enerflex board administers the option plan. | |
Eligible Participants | Officers and other key full-time employees. Non-employee directors are not eligible to participate. | |
Exercise Price | The exercise price is fixed by the Enerflex board at the time a grant of options is approved and shall be equal to the fair market value as of the date determined by the Enerflex board. | |
Vesting | Vesting provisions are as determined by the Enerflex board. | |
Granting and Exercising During a Blackout | If an expiry date of any option falls within any blackout period, then the expiry date of such option is extended to the ten business days after the date that any blackout period ends. |
Provision |
Option Plan | |
Change of Control | The unexercised options will become vested in circumstances where the participant’s employment is terminated in connection with a control change (as defined in the option plan). | |
Assignment | Options may not be assigned but may be exercised by the legal representative or estate of the recipient. | |
Termination Provisions | When a participant ceases to be a director, officer, or full-time employee of Enerflex, that participant ceases to be entitled to receive options and may only exercise vested options within the time limits specified in the option plan. | |
Expiry | Options must be exercised no later than seven years from the date of the grant. | |
Recoupment | All grants of options are subject to the Enerflex clawback policy. | |
Option Plan Limits | There is a fixed maximum of 8,799,176 Enerflex common shares reserved for issuance under the option plan, representing 9.81% of the Enerflex common shares as at December 31, 2021. As of December 31, 2021, Enerflex has 4,342,732 options available for future grant, representing 4.84% of the Enerflex common shares. No one person is entitled to receive options representing more than 5% of the currently outstanding Enerflex common shares. The aggregate number of Enerflex common shares issued to insiders within a one-year period or issuable to insiders at any time shall not exceed 10% of the issued and outstanding Enerflex common shares (insider participation limit). | |
Amendment Provisions | Shareholder approval is required for the following amendments: (i) any amendment to the amending provision; (ii) any increase in the maximum number of Enerflex common shares issuable under the plan; (iii) any reduction in the option price or extension in the period during which an option may be exercised (including a cancellation and re-grant of an option to achieve the foregoing, and a substitution of an option with cash or other award the terms of which are more favorable to the recipient); (iv) any amendment to the definition of participant; (v) any amendment to the assignability of options provision; and (vi) any amendment to remove or exceed the insider participation limit.Subject to the above amendments that require Enerflex shareholder approval, the Enerflex board may amend the option plan or any option granted thereunder for any other purpose (provided that any material, adverse amendment to an outstanding option requires the consent of the holder), including for example: (i) to ensure compliance with applicable laws; (ii) amendments of a housekeeping nature; (iii) changing vesting provisions of the option plan or of any option; (iv) changing the termination provisions of the option plan or any option provided such amendment does not entail an extension beyond the originally scheduled expiry date; and (v) adding a cashless exercise feature. | |
History and Amendments | The option plan was approved by the Enerflex shareholders on April 16, 2014. On December 6, 2017, the Enerflex board amended and restated the option plan to clarify the treatment of options in the event that an EMT participant retires as a “good leaver.” The good leaver provision provides that if, before the expiry of an option in accordance with the terms thereof, an EMT participant retires with Enerflex board approval in accordance with the retirement policy, unvested options will fully vest by the second anniversary of the retirement date, subject to any conditions imposed by the Enerflex board in connection with the retirement, and are exercisable until the third anniversary of the retirement date, subject to any conditions imposed by the Enerflex board in connection with the retirement. On February 21, 2020, the Enerflex board further amended and restated the option plan to: (a) remove the 1% annual cap on option grants; (b) make housekeeping changes to remove references to the legacy 2011 |
Provision |
Option Plan | |
option plan (as there are no further options outstanding under that plan) and to clarify the wording of the eligibility and amendment provisions (without amending the substance of those provisions); and (c) replenish and increase the fixed maximum number of Enerflex common shares available for options granted under the option plan (which increase was approved by the Enerflex shareholders on May 8, 2020). |
Beneficial Owners |
Common Stock (1) |
Percent of Class (1) |
||||||
Chai Trust Co LLC (2) |
8,157,415 | 24.57 | % | |||||
Dimensional Fund Advisors LP (3) |
1,640,092 | 5.1 | % | |||||
Goodyear, William |
177,591 | * | ||||||
Gouin, James |
54,865 | * | ||||||
Ryan, John |
127,514 | * | ||||||
Soliman, Hatem |
45,680 | * | ||||||
Seaver, Christopher |
131,542 | * | ||||||
Sotir, Mark |
139,165 | * | ||||||
Ieda, Yell |
75,387 | * |
Executive Officers |
Common Stock (1) |
Percent of Class (1) |
||||||
Barta, David |
86,489 | * | ||||||
Battle, Kelly |
20,550 | * | ||||||
George, Roger |
45,905 | * | ||||||
Peyton, Kerric |
0 | * | ||||||
Way, Andrew |
448,496 | * | ||||||
Wineinger, Tara |
26,092 | * |
Executive Officers |
Common Stock (1) |
Percent of Class (1) |
||||||
All Directors and Executive Officers as a Group (13 Persons) |
1,379,276 | 4.2 | % |
* | Less than 1% of the outstanding shares. |
(1) | This column includes Exterran common stock, including restricted shares and deferred director shares, beneficially owned by officers, directors, nominees for director and beneficial owners of more than 5% of Exterran common stock. In accordance with SEC rules, this column also includes shares that may be acquired upon the exercise of options or other convertible securities that are exercisable or convertible on the record date, or will become exercisable or convertible within 60 days of that date, which are considered beneficially owned. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options or other convertible securities held by that person that are exercisable or convertible on the record date, or exercisable or convertible within 60 days of the record date, are deemed outstanding. These shares are not, however, deemed outstanding for the purpose of computing the percentage ownership of any other person. In addition, under applicable law, shares that are held indirectly are considered beneficially owned. Directors, nominees for director and executive officers may also be deemed to own, beneficially, shares included in the amounts shown above which are held in other capacities. The holders may disclaim beneficial ownership of shares included under certain circumstances. A list of Exterran executive officers is included in Exterran’s Annual Report on Form 10-K for the year ended December 31, 2021. See page [ ] of this proxy statement/prospectus for instructions on how to obtain copies of the Form 10-K or Form 10-Q. |
(2) | As of January 24, 2022. |
(3) | As of December 31, 2021. |
Beneficial Owners |
Common Shares |
Percent of Class |
||||||
Robert S. Boswell |
44,441 | — | ||||||
Maureen Cormier Jackson |
5,000 | * | ||||||
W. Byron Dunn (1) |
30,000 | — | ||||||
H. Stanley Marshall |
99,000 | — | ||||||
Kevin J. Reinhart |
41,250 | — | ||||||
Marc E. Rossiter (2) |
103,151 | — | ||||||
Stephen J. Savidant |
25,000 | * | ||||||
Juan Carlos Villegas |
28,800 | — | ||||||
Michael A. Weill (3) |
14,000 | — | ||||||
Sanjay Bishnoi |
25,000 | — | ||||||
David Izett |
10,597 | * | ||||||
Patricia Martinez |
19,402 | * | ||||||
Phil Pyle (4) |
74,266 | * | ||||||
Greg Stewart |
47,303 | * | ||||||
* | ||||||||
Directors and officers as a group |
569,915 | 0.636 | % | |||||
* |
* | Represents less than 1% of the outstanding common shares. |
(1) | Mr. Dunn holds [ ] of common shares directly and [ ] of common shares through [ ], which he has control over the voting power and the disposition of the common shares. |
(2) | Mr. Rossiter holds [ ] of common shares directly and [ ] of common shares through [ ], which he has control over the voting power and the disposition of the common shares. |
(3) | Mr. Weill is the [trustee] of [ ], which holds the 14,000 common shares and he controls the voting power and the disposition of the common shares. |
(4) | Mr. Pyle is the [trustee] of [ ], which holds the 14,000 common shares and he controls the voting power and the disposition of the common shares. |
Provision |
Enerflex |
Exterran | ||
Authorized Share Capital |
Enerflex is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. Holders of Enerflex common shares and preferred shares are entitled to all of the applicable rights and obligations provided under the CBCA, Enerflex’s articles and Enerflex’s by-laws. |
The aggregate number of shares of stock that Exterran has the authority to issue is 300 million, consisting of 250 million shares of Exterran common stock, par value one cent ($0.01) per share, and 50 million shares of Exterran preferred stock, par value one cent ($0.01) per share. | ||
Preferred Shares |
The preferred shares may at any time or from time to time each be issued in one or more series. The Enerflex board may by resolution of the directors (and without further resolution of shareholders) fix from time to time before the issue thereof the number of shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the shares of, each series of preferred shares. Holders of preferred shares will not be entitled to receive notice of or to attend any Enerflex shareholder meetings and will not be entitled to vote at such meetings, except as required by law. In addition to the rights attaching to any series of preferred shares, holders of |
The Exterran board is authorized (without further resolution of stockholders) to issue up to 50 million shares of preferred stock in one or more series and to fix and determine the number of shares of preferred stock of any series, to determine the designation of any such series, and to determine the rights, preferences, privileges and restrictions granted to or imposed upon any such series. As of the date of this proxy statement, there are currently no shares of preferred stock outstanding. |
Provision |
Enerflex |
Exterran | ||
Enerflex’s preferred shares are entitled to all of the applicable rights and obligations provided under the CBCA and Enerflex’s articles and Enerflex’s by-laws. |
||||
Variation of Rights Attaching to a Class or Series of Shares |
Under the CBCA, the rights attaching to Enerflex common shares and preferred shares may be varied only through an amendment of Enerflex’s articles authorized by special resolution of Enerflex’s shareholders, including, if applicable, a separate special resolution of the holders of the affected class or series of shares in accordance with the provisions of the CBCA. For purposes of the CBCA, a “special resolution” is generally a resolution passed by a majority of not less than two-thirds (2/3) of the votes cast by the shareholders entitled to vote in respect of that resolution.Under the Enerflex articles, in addition to the above requirements of the CBCA, the rights attaching to the Enerflex preferred shares may be varied only with the prior approval of the holders of not less than two-thirds (2/3) of the preferred shares then outstanding at a meeting called in accordance with the provisions of the Enerflex articles. |
Under the DGCL, the rights attaching to Exterran common stock may be varied only through an approved amendment of Exterran’s certificate of incorporation. The process for amending Exterran’s certificate of incorporation is summarized below. | ||
Consolidation and Division; Subdivision |
Under the CBCA, the issued shares of a class or series of Enerflex common shares may be changed into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series through an amendment to its articles authorized by special resolution of Enerflex shareholders, including, if applicable, a separate special resolution of the holders of the affected class or series of shares in accordance with the provisions of the CBCA. |
Under the DGCL, the issued shares of Exterran common stock may be reclassified, including by being combined into a smaller number of shares or split into a greater number of shares through an amendment to Exterran’s certificate of incorporation. | ||
Reduction of Share Capital |
Under the CBCA, Enerflex may, by a special resolution of Enerflex shareholders, reduce its stated capital for a class or series of shares for any reason, provided there are no reasonable grounds for believing that (i) Enerflex is, or after the proposed reduction of its stated capital would be, | Under the DGCL, Exterran, by resolution of the Exterran board, may reduce its capital by (i) reducing or eliminating the capital associated with shares of capital stock that have been retired, (ii) applying to an otherwise authorized purchase, redemption, |
Provision |
Enerflex |
Exterran | ||
unable to pay its liabilities as they become due, or (ii) after the proposed reduction of its stated capital, the realizable value of Enerflex’s assets would be less than the aggregate of its liabilities and stated capital of all classes of Enerflex’s shares. | conversion or exchange of outstanding shares of its capital stock some or all of the capital represented by the shares being purchased, redeemed, converted or exchanged, or any capital that has not been allocated to any particular class of its capital stock (in the case of a conversion or exchange, to the extent that such capital in the aggregate exceeds the total aggregate par value of the stated capital of any previously unissued shares issuable upon such conversion or exchange) or (iii) transferring to surplus some or all of the capital not represented by any particular class of its capital stock or some or all of the capital represented by certain shares of its stock. No reduction of capital may be made unless the assets of Exterran remaining after the reduction are sufficient to pay any debts for which payment has not otherwise been provided. | |||
Distributions and Dividends; Repurchases and Redemptions |
Distributions/Dividends Under the CBCA, Enerflex shareholders are entitled to receive dividends if, as and when declared by the directors of Enerflex, subject to prior satisfaction of preferential dividends applicable to any preferred shares. Under the CBCA, the Enerflex board may declare and pay dividends to the holders of Enerflex common shares or Enerflex preferred shares provided there are no reasonable grounds for believing that: (i) Enerflex is, or would after the payment be, unable to pay its liabilities as they become due; and (ii) the realizable value of Enerflex’s assets would as a result of the payment be less than the aggregate of Enerflex’s liabilities and the stated capital of all classes of Enerflex’s shares. Under Enerflex’s articles, subject to the rights of the holders of any other class of shares of Enerflex entitled to receive dividends in priority to or ratably with the holders of Enerflex common shares, the |
Distributions/Dividends Under the DGCL, Exterran stockholders are entitled to receive dividends if, as and when declared by the Exterran board. The Exterran board may declare and pay a dividend to Exterran stockholders (i) out of surplus or, (ii) if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or the immediately preceding fiscal year except when the capital is diminished to an amount less than the aggregate amount of capital represented by issued and outstanding stock having a preference on the distribution of assets. A dividend may be paid in cash, in shares of stock or in other property. Repurchases/Redemptions Under the DGCL, Exterran may redeem or repurchase shares of its own common stock, except that generally it may not redeem or repurchase those shares if the capital of Exterran is impaired at the |
Provision |
Enerflex |
Exterran | ||
Enerflex board may in its sole discretion declare dividends on the Enerflex common shares to the exclusion of any other class of shares of Enerflex. With respect to the payment of dividends and the distribution of assets of Enerflex in the event of any liquidation, dissolution or winding up of Enerflex or the other distribution of the assets of Enerflex among its shareholders for the purpose of winding up its affairs, the preferred shares of each series are entitled to preference over Enerflex common shares to the extent of the amount paid up on the preferred shares together with an amount equal to the accrued and unpaid dividends thereon and no more. The preferred shares of each series may also be given such other preferences over the common shares as may be determined as to the respective series authorized to be issued. The preferred shares of each series will rank on parity with the preferred shares of each other series with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of Enerflex. No dividends (other than stock dividends in shares of Enerflex ranking junior to the preferred shares) shall be declared or paid on or set apart for payment on the common shares or any shares ranking junior to the preferred shares unless all dividends up to and including the dividend payment for the last completed period for which such dividends shall be payable on each series of the preferred shares then issued and outstanding shall have been declared and paid or set apart for payment at the date of such declaration or payment or setting apart for payment on the common shares or such other shares of Enerflex ranking junior to the preferred shares; nor shall Enerflex call for redemption or purchase for cancellation any of the preferred shares (less than the total number of preferred shares then outstanding) or any shares of Enerflex ranking junior to the preferred shares unless |
time or would become impaired as a result of the redemption or repurchase of such shares. If Exterran were to designate and issue shares of a series of preferred stock that is redeemable in accordance with its terms, such terms would govern the redemption of such shares. Repurchased and redeemed shares may be retired or held as treasury shares. Shares that have been repurchased but have not been retired may be resold by Exterran for such consideration as the Exterran board may determine in its discretion. Purchases by Subsidiaries of Exterran Under the DGCL, Exterran common stock may be acquired by subsidiaries of Exterran without stockholder approval. Shares of such common stock owned by a majority-owned or otherwise controlled subsidiary are neither entitled to vote nor counted as outstanding for quorum purposes. |
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Enerflex |
Exterran | ||
all dividends up to and including the dividends which shall then be payable on each series of the preferred shares then issued and outstanding shall have been declared and paid or set apart for payment at the date of such call for redemption or purchase. Repurchases/Redemptions Under the CBCA, Enerflex may repurchase its own shares, provided there are no reasonable grounds for believing that (i) Enerflex is, or would be after the payment for the purchase of such shares, unable to pay its liabilities as they become due or (ii) the realizable value of Enerflex’s assets would after the payment for the purchase of such shares be less than the aggregate of Enerflex’s liabilities and the stated capital of all classes of Enerflex’s shares. Under the CBCA, Enerflex may purchase or redeem any redeemable shares issued by it at prices not exceeding the redemption price, or as calculated according to a formula, stated in Enerflex’s articles; provided Enerflex may only purchase or redeem its redeemable shares if there are no reasonable grounds for believing that (i) Enerflex is, or would be after the payment for the purchase or redemption of such shares, unable to pay its liabilities as they become due or (ii) the realizable value of Enerflex’s assets would after the payment for the purchase or redemption of such shares be less than the aggregate of Enerflex’s liabilities and the amount that would be required to pay the holders of Enerflex’s shares that have a right to be paid, on a redemption or in a liquidation, ratably with or before the holders of the shares to be purchased or redeemed, to the extent that the amount has not been included in its liabilities. Under the CBCA, neither Enerflex nor subsidiaries of Enerflex may hold Enerflex common shares , unless it is holding such shares solely in the capacity of a personal |
Provision |
Enerflex |
Exterran | ||
representative with no beneficial interest in the shares, or by way of security for the purposes of a transaction entered into in the ordinary course of business that includes the lending of money. | ||||
Lien on Shares, Calls on Shares and Forfeiture of Shares |
Under the CBCA, shares must be fully paid prior to issue, and are non-assessable. Enerflex common shares will not be issued until the consideration for the shares is fully paid in money or in property or past services that are not less in value than the fair equivalent of the money that Enerflex would have received if the shares had been issued for money. The determination of whether property or past services are the fair equivalent of monetary consideration will be made by the Enerflex board. |
Under the DGCL, Exterran may issue the whole or any part of its shares of common stock or preferred stock as partly paid and subject to call for the remainder of the consideration to be paid therefor. When the whole of the consideration payable for shares of Exterran has not been paid in full, and the assets of Exterran are insufficient to satisfy the claims of creditors, each holder of shares not paid in full will be bound to pay the unpaid balance due for such shares. | ||
Voting Rights |
The holders of Enerflex common shares are entitled to receive notice of and to attend all annual and special meetings of the shareholders of Enerflex and to one vote in respect of each common share held at all such meetings, except at separate meetings of or on separate votes by the holders of another class or series of shares of Enerflex. The holders of preferred shares will not be entitled to receive notice of or to attend any meeting of the shareholders of Enerflex and will not be entitled to vote at any such meeting, except as may be required by law. |
Each share of Exterran common stock entitles the holder to one vote in the election of each director and on all other matters voted on generally by Exterran stockholders, other than any matter that solely relates to the terms of any outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to the Exterran certificate of incorporation. | ||
Number of Directors |
Under Enerflex’s articles, the actual number of directors on the Enerflex board may be determined from time to time by resolution of the directors, provided that the Enerflex board consists of at least three (3) and at most twelve (12) directors. | Delaware law provides that a corporation’s board of directors must consist of one or more members and that the number of directors will be fixed by, or in the manner provided in, the corporation’s bylaws, or the certificate of incorporation. Exterran’s certificate of incorporation and bylaws provide that the number of directors constituting its board of directors is determined from time to time by resolution adopted by a majority of the “whole board” of directors, meaning the total number of directors that Exterran would have if there were no vacancies or unfilled newly created |
Provision |
Enerflex |
Exterran | ||
directorships. Eight directors currently serve on the Exterran board. | ||||
Qualification of Directors |
No person will be elected or appointed a director if the person is disqualified from being a director under the CBCA. A director ceases to hold office at the end of an expressly stated term, or if not elected for an expressly stated term, at the close of the first annual meeting of shareholders or when the director ceases to be qualified as a director under the CBCA or Enerflex’s articles. No person will be eligible for election as a director of Enerflex unless nominated in accordance with the nomination procedures provided for in Enerflex’s by-laws. Nomination Procedures Nominations of persons for election to the Enerflex board may be made at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called is the election of directors: (i) by or at the direction of the Enerflex board, including pursuant to a notice of meeting; (ii) by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the CBCA, or a requisition of the shareholders made in accordance with the provisions of the CBCA; or (iii) by any person (which we refer to as a “Nominating Shareholder”): (A) who, at the close of business on the date of the giving of the notice provided for in Enerflex’s by-laws and on the record date for notice of such meeting of shareholders, is entered in the securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) who |
Under the DGCL, directors need not be stockholders and the certificate of incorporation or bylaws may prescribe other qualifications for directors. Exterran’s certificate of incorporation and bylaws do not provide for any other qualifications for directors. No person nominated for election as a director at a meeting of stockholders shall be eligible to serve as director unless nominated in accordance with the procedures set forth in Exterran’s bylaws. Nomination Procedures Nominations of persons for election to the Exterran board may be made at an annual meeting of stockholders: (a) pursuant to Exterran’s notice of meeting delivered pursuant to the bylaws (or any supplement thereto); (b) by or at the direction of the board or any committee thereof; or (c) by any Exterran stockholder who (i) was a stockholder of record at the time of giving of notice provided for in Exterran’s bylaws and at the time of the meeting (including any postponement or adjournment thereof), (ii) is entitled to vote at the meeting, and (iii) complies with the notice and other procedures set forth in Exterran’s bylaws as to such nomination. In addition, nominations for persons for election to the Exterran board may be made at a special meeting of stockholders at which directors are to be elected pursuant to Exterran’s notice of meeting: (a) by or at the direction of the Board of Directors; or (b) by any Exterran stockholder who (i) was a stockholder of record at the time of giving of notice provided for in |
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Enerflex |
Exterran | ||
has given timely notice in proper written form as set forth in Enerflex’s by-laws (see the information set forth in the table below in the section entitled “Notice of Shareholder Nominations and Proposals |
Exterran’s bylaws and at the time of the meeting (including any postponement or adjournment thereof) (ii) is entitled to vote at the meeting and (iii) complies with the notice and other procedures set forth in Exterran’s bylaws as to such nomination. | |||
Citizenship and Residency of Directors |
The CBCA requires that at least 25% of the directors of Enerflex (or if Enerflex ever has less than four directors, at least one director) must be resident Canadians. |
Not applicable. | ||
Election of Directors |
Subject to the CBCA and Enerflex’s articles, Enerflex’s by-laws provide that nominations of persons for election to the Enerflex board may be made at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called is the election of directors.Under the CBCA, the Enerflex board has the ability to appoint additional directors between shareholder meetings without shareholder approval, provided that such additional number does not exceed one third of the number of directors elected at the most recent shareholder meeting. Per the requirements of the TSX, Enerflex has a majority voting policy, which requires any director nominee who does not receive at least a majority of votes in their favor in an uncontested election to tender their resignation for consideration by the Nominating and Corporate Governance Committee of the Enerflex board. Upon receipt of such a resignation, the NCG Committee will consider the relevant facts and circumstances and make a recommendation to the Enerflex board of the action to be taken with respect to the offer of resignation. This policy does not apply to contested elections in which the number of director nominees for election is greater than the number of director positions on the board, in which case directors are elected by a plurality of votes cast. There are amendments to the CBCA pending that, once in force, will require a majority voting standard be used for |
Directors are elected at the annual meeting of stockholders or at a special meeting called for such purpose and hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Directors of Exterran are elected by a plurality of the votes cast at an annual or special meeting called for the election of directors; provided that, in uncontested elections (meaning elections in which the number of individuals nominated does not exceed the number of directors to be elected in such election as of the date which is five days prior to the date that Exterran first mails notice of the meeting), a majority of the votes cast is required to elect each director. Exterran’s bylaws contemplate that, in an uncontested election, any director who receives a greater number of “against” votes than “for” votes must submit his or her resignation for consideration by the Exterran board. |
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Enerflex |
Exterran | ||
uncontested elections of directors of distributing corporations governed by the CBCA, such as Enerflex. | ||||
Cumulative Voting |
Under the CBCA, cumulative voting is only permitted if the articles of a corporation specifically provide for it. Enerflex’s articles do not provide for cumulative voting. | Under the DGCL, cumulative voting is only permitted if the certificate of incorporation specifically provides for it. Exterran’s certificate of incorporation does not provide for cumulative voting. | ||
Vacancies |
The CBCA generally allows a vacancy on the board of directors to be filled by a quorum of directors, except a vacancy resulting from an increase in the number or the minimum or maximum number of directors or a failure to elect the number or minimum number of directors provided for in the articles. | Under Exterran’s certificate of incorporation, the Exterran board has the exclusive power to fill all vacancies and newly created directorships by resolution adopted by a majority of the whole board. | ||
Votes to Govern |
At all meetings of the Enerflex board, every question must be decided by a majority of the votes cast. The chairman of any meeting may vote as a director. | Under Exterran’s bylaws, a majority of Exterran’s whole board at a meeting duly assembled constitutes a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present will be the act of the Exterran board unless otherwise provided by the Exterran Certificate of Incorporation or required by law or the Exterran Bylaws. In the absence of a quorum, a majority of the directors present may adjourn the meeting to another place, date or time without further notice or waiver thereof. | ||
Duties of Directors |
Under the CBCA, the directors of Enerflex owe a statutory fiduciary duty to Enerflex. The directors have a duty to manage, or supervise the management of, the business and affairs of Enerflex. In exercising their powers and discharging their duties, the directors must: (i) act honestly and in good faith with a view to the best interests of Enerflex; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. When acting with a view to the best interests of Enerflex, the directors may consider, but are not limited to, the following factors: (a) the interests of shareholders, employees, retirees and pensioners, creditors, consumers and | Under Delaware law, the directors of Exterran owe a duty of care and a duty of loyalty. The duty of care requires that directors act on an informed basis after appropriate deliberation and that they inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing the business of the corporation. The duty of loyalty requires directors to act in good faith and in what they reasonably believe to be the best interests of Exterran and its stockholders and not in their own interests. A party challenging the propriety of a decision of a board of |
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Enerflex |
Exterran | ||
governments; (b) the environment; and (c) the long-term interests of Enerflex. Under the CBCA, the directors of Enerflex may delegate their duties to a managing director who is a resident Canadian or committee of directors and delegate to such managing director or committee any of the powers of the directors, or to an officer of Enerflex; provided, that the directors may not delegate the power to: (i) submit to the Enerflex shareholders any question or matter requiring the approval of the shareholders; (ii) fill a vacancy among the directors or in the office of auditor, or appoint additional directors; (iii) issue securities except as authorized by the directors; (iv) issue shares of a series except as authorized by the directors; (v) declare dividends; (vi) purchase, redeem or otherwise acquire shares issued by Enerflex; (vii) pay a commission to any person in consideration of the person’s purchasing or agreeing to purchase shares of Enerflex from Enerflex or from any other person, or procuring or agreeing to procure purchasers for any such shares except as authorized by the directors; (viii) approve a management information circular; (ix) approve a takeover bid circular or directors’ circular; (x) approve any financial statements of Enerflex; or (xi) adopt, amend or repeal by-laws. |
directors typically bears the burden of rebutting the applicability of the “business judgment rule” presumption, which presumes that directors acted in accordance with the duties of care and loyalty. Notwithstanding the foregoing, Delaware courts may subject directors’ conduct to enhanced scrutiny of, among other matters, defensive actions taken in response to a threat to corporate control and approval of a transaction resulting in a “sale of control” of the corporation, as the term “sale of control” is used in Delaware caselaw. Under Delaware law, a member of the board of directors, or a member of any committee designated by the board of directors, shall, in the performance of such member’s duties, be fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports or statements presented to the corporation by any of the corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation. | |||
Conflicts of Interest of Directors and Officers |
Under the CBCA, each of the directors and officers of Enerflex must disclose to Enerflex, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with Enerflex, if the | Under Delaware law, a contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association or other organization in which one or more |
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Enerflex |
Exterran | ||
director or officer (i) is a party to the contract or transaction, (ii) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction, or (iii) has a material interest in a party to the contract or transaction. In the case of a director, such disclosure must be made (i) at the meeting at which a proposed contract or transaction is first considered, (ii) if the director was not, at the time of the meeting, interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested, (iii) if the director becomes interested after a contract or transaction is made, at the first meeting after he or she becomes so interested, or (iv) if an individual who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director. In the case of an officer who is not a director, such disclosure must be made (i) immediately after he or she becomes aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting, (ii) if the officer becomes interested after a contract or transaction is made, immediately after he or she becomes so interested, or (iii) if an individual who is interested in a contract later becomes an officer, immediately after he or she becomes an officer. If the contract or material transaction, whether entered into or proposed, is one that, in the ordinary course of Enerflex’s business, would not require approval by the directors or shareholders, a director or officer shall disclose in writing to Enerflex or request to have it entered into the minutes of meetings of directors or meetings of committees of directors, the nature and extent of his or her interest immediately after he or she becomes aware of the contract or transaction. A director who discloses such a conflict of interest will not vote on any resolution to |
of its directors or officers are directors or officers or have a financial interest will not be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee which authorizes the contract or transaction, or solely because any such director’s or officer’s votes are counted for such purpose if (i) the material facts about such interested director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors (even if the disinterested directors are less than a quorum), (ii) the material facts about such interested director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders, or (iii) the transaction is fair to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes the contract or transaction. |
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Enerflex |
Exterran | ||
approve the contract or transaction, unless the contract or transaction relates primarily to his or her remuneration as a director, officer, employee, agent or mandatory of Enerflex or an affiliate, is for indemnity or insurance of directors of Enerflex, or is with an affiliate of Enerflex. Where Enerflex enters into a contract or transaction with a director of Enerflex, or with another person or entity of which a director of Enerflex is a director or officer or in which a director of Enerflex has a material interest, the director or officer is not accountable to Enerflex or its shareholders if (i) disclosure of the interest was made as described above, (ii) the directors of Enerflex approved the contract or transaction, and (iii) the contract or transaction was reasonable and fair to Enerflex when it was approved. Despite the foregoing, even if the conditions described immediately above are not met, provided the director was acting honestly and in good faith, such director is not accountable to Enerflex or to its shareholders in respect of a transaction or contract in which the director has an interest; provided, that: (i) the contract or transaction is approved or confirmed by special resolution at a meeting of the Enerflex shareholders; (ii) disclosure of the interest was made to the Enerflex shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and (iii) the contract or transaction was reasonable and fair to Enerflex when it was approved or confirmed. |
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Shareholders’ Disclosure of Interests in Shares |
Enerflex shareholders are not required to disclose their interests in shares of Enerflex, except in limited circumstances, including when nominating a candidate for election as a director, making certain other shareholder proposals or requisitioning a meeting of shareholders in accordance with each of the CBCA and Enerflex’s by-laws. |
Neither the DGCL nor Exterran’s certificate of incorporation or bylaws impose an obligation with respect to disclosure by stockholders of their interests in Exterran common stock, except, in the case of Exterran’s bylaws, as part of a stockholders’ nomination of a director or proposal of business to be made at a stockholder meeting. |
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Enerflex |
Exterran | ||
Under the U.S. Exchange Act, all beneficial owners of holders of 5% or greater of Enerflex’s outstanding share capital must report their holdings to the SEC on “Schedule 13G” if the holdings are passive and held not with an intent to acquire control and on “Schedule 13D” if the holdings are non-passive and held with an intent to acquire control.In accordance with applicable Canadian securities laws, an Enerflex shareholder is required to disclose their interest in Enerflex’s shares where such shareholder’s holdings equal or exceed 10% of the voting rights attached to the voting securities. |
Under the U.S. Exchange Act, all beneficial owners of holders of 5% or greater of the outstanding shares of Exterran’s capital stock must report their holdings to the SEC on “Schedule 13G” if the holdings are passive and held not with an intent to acquire control and on “Schedule 13D” if the holdings are non-passive and held with an intent to acquire control. | |||
Record Dates |
Under the CBCA, the Enerflex board may fix a record date for the purpose of determining shareholders entitled to receive payment of a dividend or entitled to participate in a liquidation distribution or for any other purpose, other than to establish a shareholder’s right to receive notice of or to vote at a meeting, which record date must be not more than 60 days before the day on which the particular action is to be taken. If no record date is fixed by the Enerflex board, the record date will be at the close of business on the day on which the directors pass the resolution in respect of the applicable action. Under the CBCA, the Enerflex board may fix a record date for the purpose of determining shareholders entitled to receive notice of and vote at a meeting of shareholders, which record date must be not less than 21 days and not more than 60 days before the date of the meeting. If no record date is fixed by the Enerflex board, the record date for the determination of shareholders entitled to receive notice of or vote at a meeting of shareholders will be at the close of business on the day immediately preceding the day on which the notice is given, or if no notice is given, the day on which the meeting is held. If a record date is fixed, unless notice of the record date is waived in writing by every |
Under Exterran’s bylaws and the DGCL, the directors may fix a record date to determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, which record date must not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date must be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose will be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Under Exterran’s bylaws and the DGCL, the directors may fix a record date to determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, which record date must not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date must not be more than 60 nor less than 10 days before the date of such meeting. If the board of |
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Enerflex |
Exterran | ||
holder of a share of the class or series affected, notice thereof will be given, not less than seven days before the date so fixed, (i) by advertisement in a newspaper published or distributed in the place where Enerflex has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its shares may be recorded; and (ii) by written notice to each stock exchange in Canada on which the shares of Enerflex are listed for trading. | directors so fixes a date, such date will also be the record date for determining the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting will be the date for making such determination. If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders will be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders will apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case will also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting. | |||
Annual Meetings of Shareholders |
Under the CBCA and Enerflex’s articles, the Enerflex board must call an annual meeting of shareholders not later than 15 months after holding the last preceding annual meeting but no later than six months after the end of Enerflex’s preceding financial year. Under the CBCA and Enerflex’s articles, meetings of Enerflex shareholders will be held at such place in Canada as the directors may determine, or at a place outside Canada if all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place. At an annual meeting, shareholders will receive the financial statements of Enerflex |
Under the DGCL, an annual meeting of stockholders is required for the election of directors and for such other proper business as may be conducted thereat. If there is a failure to hold the annual meeting for a period of 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after its last annual meeting, the Delaware Court of Chancery may order a meeting to be held upon the application of any stockholder or director. The Exterran bylaws provide that the annual meeting of stockholders will be held at the time and place determined by Exterran’s board, and that meetings of |
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Enerflex |
Exterran | ||
and the auditor’s report, elect directors of Enerflex and appoint Enerflex’s auditor. All other business that may properly come before an annual meeting of shareholders or any business coming before a special meeting of shareholders is considered special business. |
the stockholders may be within or without the State of Delaware. | |||
Meeting Notice Provisions |
Under the CBCA, notice of the time and place of a meeting of Enerflex shareholders must be given not less than 21 days and not more than 60 days before the meeting to each director, to the auditor and to each shareholder entitled to vote at the meeting. Notice of a meeting of shareholders at which special business is to be transacted must state (i) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and (ii) the text of any special resolution to be submitted to the meeting. Method of Giving Notices Any notice, communication or document to be given, sent, delivered or served under the CBCA, the regulations thereunder, Enerflex’s articles, Enerflex’s by-laws or otherwise, to a shareholder, director, officer or auditor may be delivered personally or sent by prepaid mail to the shareholder or director, as applicable, at their latest address as shown in the records of Enerflex or its transfer agent. A notice or document so delivered will be deemed to be received at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the shareholder or director did not receive the notice or document at that time or at all.Under the CBCA, a requirement to provide a person with a notice, document or other information may be satisfied by the provision of an electronic document where the addressee consents and has designated an information system for the receipt of the electronic document and the electronic document is provided to such designated information system, unless otherwise prescribed. |
Under the DGCL and the Exterran bylaws, notice of annual and special meetings of Exterran stockholders must be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. The Exterran bylaws provide that notice of an annual and special meeting of stockholders must be in writing or given by electronic transmission and, in the case of special meetings, state the purpose for which the special meeting is called. |
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Enerflex |
Exterran | ||
Notice of Shareholder Nominations and Proposals |
Under the CBCA, a shareholder of Enerflex who is entitled to vote at an annual meeting of shareholders may submit to Enerflex notice of a matter that the shareholder proposes to raise at the upcoming annual shareholder meeting, and any such shareholder proposal submitted in compliance with the requirements of the CBCA will be set out in or attached to the management information circular for the relevant shareholder meeting. See “ Advance Notice Requirements for Shareholder Proposals and Director Nominations A shareholder proposal submitted in accordance with the CBCA must be submitted to Enerflex at least 90 days before the anniversary date of the previous annual meeting of shareholders and comply with the other requirements set forth in the CBCA for shareholder proposals. See “ Advance Notice Requirements for Shareholder Proposals and Director Nominations In addition to the applicable requirements under the CBCA, Nominating Shareholders wishing to elect nominees for election to the Enerflex’s board must comply with Enerflex’s amended and restated By-Law No. 3 which requires that notice of a nomination of a director must be timely and in proper written form.For a nomination made by a Nominating Shareholder to be a timely notice as required by Enerflex’s by-laws, the Nominating Shareholder’s notice must be received by the corporate secretary of Enerflex and must be made:(i) in the case of an annual meeting of shareholders, not less than 30 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made |
Under Exterran’s bylaws, an Exterran stockholder wishing to nominate a director for election to the Exterran board, or make a proposal for business other than the nomination of directors, must provide written notice, in proper form, within the following time periods: (i) annual meetings (ii) special meetings In the case of special meetings, the time periods are applicable only with respect to nominations of persons for election at a special meeting at which directors are to be elected pursuant to Exterran’s notice of meeting. Only such business shall be conducted at a special meeting as shall have been brought before the meeting pursuant to Exterran’s notice of meeting. |
Provision |
Enerflex |
Exterran | ||
not later than the close of business on the tenth day following the notice date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes as well), not later than the close of business on the fifteenth day following the day on which the first public announcement of the date of the special meeting of shareholders was made. Notwithstanding the above, in either instance, if notice-and-access 101- Communication with Beneficial Owners of Securities of a Reporting Issuer) is used for delivery of proxy related materials in respect of a meeting and the Notice Date in respect of the meeting is not less than 50 days before the date of the applicable meeting, the notice must be received not later than the close of business on the 40th day before the date of the applicable meeting.To be in proper written form, a Nominating Shareholder’s notice to the secretary of Enerflex must set forth: (i) as to each person whom the Nominating Shareholder proposes to nominate for election as a director: (A) the name, age, business address and residential address of the person, principal occupation or employment for the past five (5) years, status as a “resident Canadian”; (B) their direct or indirect beneficial ownership in, or control over, any class of securities of Enerflex; (C) any relationships between the proposed nominee and the Nominating Shareholder; (D) their written consent to being named as a nominee and to serving as a director of Enerflex, if directed; and (E) any other information relating to the person that would be required to be disclosed in a dissident proxy circular in connection |
In the event that the number of directors to be elected to the Exterran board at the annual meeting is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased board made by Exterran at least 100 days prior to the anniversary of the date on which Exterran first mailed its proxy materials for the preceding year’s annual meeting, a stockholder’s notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if delivered not later than the close of business on the 10th day following the day on which such public announcement is first made by Exterran. The public announcement of an adjournment or postponement of an annual meeting of stockholders will not commence a new time period for the giving of a stockholder’s notice as described above. To be in proper form, the notice must include certain information about the stockholder making such nomination or proposal (including any beneficial owner on whose behalf the nomination or proposal is made or their affiliates, associates or others acting in concert therewith) and, in the case of a nomination, the nominee, and in the case of a proposal other than the nomination of directors, a description of the business, the reasons for conducting such business and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made. The notice must also state whether either the stockholder, or beneficial owner on whose behalf a nomination or proposal is made, intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of Exterran’s common stock required by law to carry the proposal or, in the case of a nomination, a sufficient |
Provision |
Enerflex |
Exterran | ||
with solicitations of proxies for election of directors in accordance with the CBCA and applicable Canadian securities laws; and (ii) as to the Nominating Shareholder giving the notice: (A) their name, business and residential address, direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of Enerflex; (B) their interests in, or rights or obligations associated with, agreements which alter the person’s economic interest in a security of Enerflex; (C) any proxy pursuant to which such person has any interests, rights or obligations relating to the voting of any securities of Enerflex or the nomination of directors to the Enerflex board; (D) any relationships between the proposed nominee and the Nominating Shareholder; (E) a representation as to whether such person intends to deliver a proxy circular and/or form of proxy to any shareholder of Enerflex in connection with such nomination or otherwise solicit proxies or votes from shareholders of Enerflex in support of such nomination; and (F) any information relating to such Nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors in accordance with the CBCA and applicable Canadian securities laws. All information to be provided in a timely notice must be provided as of the date of such notice. A Nominating Shareholder’s notice shall be promptly updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct in all material respects as of the date that is ten (10) business days prior to the date of the meeting, or any adjournment or postponement thereof. Notice given to the secretary of Enerflex pursuant to Enerflex’s by-laws may only be |
number of holders of Exterran’s common stock to elect such nominees, and such stockholder or beneficial owner must have acted consistent with such statement in order to make such proposal or nomination. Information included in the notice must be supplemented, if necessary, so that the information provided or required to be provided is true and correct as of the record date for the meeting and as of the date that is ten business days prior to the meeting or any adjournment or postponement thereof, within the time periods contemplated by the Exterran bylaws. With respect to any proposed nominee for director, Exterran may require such proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director. A stockholder must also comply with all applicable requirements of the Securities Exchange Act of 1934. |
Provision |
Enerflex |
Exterran | ||
given by personal delivery, facsimile transmission or by email (to the secretary of Enerflex), and is deemed to have been given and made only at the time it is served by personal delivery, email or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received) to the secretary at the address of the principal executive offices of Enerflex; provided, that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Calgary time) on a day which is a business day, then such delivery or electronic communication will be deemed to have been made on the subsequent day that is a business day. Notwithstanding the foregoing, Enerflex may, in its sole discretion, waive any requirement described in this section of the table entitled “ Notice of Shareholder Nominations Enerflex’s by-laws. |
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Proxy Access |
Under the CBCA, Enerflex shareholders may nominate candidates for election to the board through the shareholder proposal mechanism provided for under the CBCA (provided such shareholder either owns, as registered or beneficial holder, or has the support of shareholders who own, as registered or beneficial holders, such number of shares either equal to 1% of the outstanding voting shares of Enerflex or having a fair market value of at least C$2,000 for a period of at least six months immediately prior to the day on which the shareholder submits the proposal) and provided such shareholder complies with the notice procedures in Enerflex’s by-laws (see the information set forth in the table above in the section entitled “Notice of Shareholder Nominations and Proposals |
Delaware law authorizes the bylaws of any corporation to require that, if the corporation solicits proxies with respect to an election of directors, it include in its proxy solicitation materials (including any form of proxy it distributes), in addition to individuals nominated by the board of directors, one or more individuals nominated by a stockholder. Exterran’s bylaws do not provide for such proxy access. Exterran’s bylaws provide that the nomination procedures set forth therein shall not be deemed to affect any rights of stockholders to request inclusion of proposals in Exterran’s proxy statement pursuant to Rule 14a-8 under the Exchange Act. | ||
Calling Special Meetings of Shareholders |
Under the CBCA, the Enerflex board may call a special meeting of shareholders at any time. In addition, holders of 5% or more of the outstanding shares of Enerflex that carry the right to vote at a meeting sought to be held may requisition a shareholders | Under Delaware law, a special meeting of stockholders may be called only by a corporation’s board of directors or other persons authorized in the corporation’s certificate of incorporation or bylaws. |
Provision |
Enerflex |
Exterran | ||
meeting. The requisition must be sent to Enerflex and each of its directors and state the business to be transacted at the meeting. The Enerflex board must call a meeting of shareholders to transact the business stated in the requisition within 21 days of receiving the requisition; otherwise the shareholder may call the meeting. The Enerflex board is not required to call a meeting upon receiving a requisition by a shareholder if (i) the business stated in the requisition is of a proscribed nature, (ii) a record date has already been fixed and notice provided in respect of a meeting, or (iii) the Enerflex board has already called a meeting and given notice of such meeting. |
Exterran’s certificate of incorporation provides that special meetings of stockholders for any purpose or purposes may be called only by the chair of the Exterran board, any Vice Chairman or President, or by a resolution adopted by a majority of the whole board. Only such business shall be conducted at a special meeting as shall have been brought before the meeting pursuant to Exterran’s notice of meeting. | |||
Shareholder Action by Written Consent |
Except where a written statement is submitted by a director or by an auditor in accordance with the CBCA, the CBCA allows any matters required to be voted on at a meeting of shareholders to be approved by Enerflex shareholders via written resolution signed by all of the shareholders entitled to vote on the matter. | Under Delaware law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting and without prior notice if a consent in writing is signed by the holders of the minimum number of votes necessary to authorize the action at a meeting at which all shares entitled to vote were present and voted. Exterran’s certificate of incorporation provides that no actions may be taken by stockholders by written consent in lieu of a meeting. | ||
Quorum of Shareholders |
Two persons present in person, each holding or representing by proxy at least one issued share of Enerflex shall be a quorum of any meeting of shareholders for the choice of a chair of the meeting and for the adjournment of the meeting to a fixed time and place but may not transact any other business. For all other purposes, a quorum for any meeting shall be not less than two persons present and holding or representing by proxy not less than 10% of the total number of Enerflex common shares entitled to be voted at the meeting. |
Exterran’s bylaws provide that the holders of a majority of the voting power of all of the outstanding shares of the stock entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business at all meetings of the stockholders, except to the extent that the presence of a larger number may be required by law or Exterran’s certificate of incorporation. Where a separate vote by a class or classes or series is required, the holders of a majority of the voting power of all of the outstanding shares of such class or classes or series, present in person or represented by proxy, will constitute a |
Provision |
Enerflex |
Exterran | ||
quorum entitled to take action with respect to that vote on that matter. | ||||
Adjournment of Shareholder Meetings |
Under the CBCA, the shareholders may adjourn the meeting if a quorum is not present at the opening of the meeting. If a meeting of the Enerflex shareholders is adjourned for less than 30 days it will not be necessary to give notice of the adjourned meeting, other than by announcement at the meeting that it is adjourned. If a meeting of Enerflex shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting will be given as for an original meeting, in accordance with the provisions of the CBCA. | Exterran’s bylaws provide that if a quorum is not present or represented at any meeting of the stockholders, then either (i) the chair of the meeting, or (ii) the stockholders present at such meeting, by the affirmative vote of the holders of a majority in voting power thereof, will have power to adjourn the meeting to another place, if any, date or time, until a quorum is present. At such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally noticed. When a meeting is adjourned to another time and/or place, unless Exterran’s bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place (if any) thereof, and the means of remote communications (if any) by which stockholders and proxyholders may be deemed to be present in person and vote at such adjournment meeting, are announced at the meeting at which the adjournment is taken. If the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or a new record date for stockholders entitled to vote is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. | ||
Amendments to Articles or Certificate of Incorporation |
Under the CBCA, an amendment to Enerflex’s articles requires approval by special resolution, being a majority of not less than two-thirds (2/3) of the votes cast, in person or by proxy, in respect of the resolution at a meeting of Enerflex shareholders, including, if applicable, a separate special resolution of the holders of any separately affected class of shares in accordance with the provisions of the CBCA. |
Generally, a proposal to amend, alter, change or repeal any provision of Exterran’s certificate of incorporation, requires approval by the Exterran board and the holders of a majority of the voting power of all of the shares of Exterran’s capital stock entitled to vote thereon and, if applicable, the holders of a majority of the voting power of each class entitled to vote thereon as a separate class, provided that no such stockholder vote is required to amend |
Provision |
Enerflex |
Exterran | ||
the certificate of incorporation to change the name of the corporation. However, except as otherwise required by law, holders of common stock, as such, are not entitled to vote on any amendment to Exterran’s certificate of incorporation that relates solely to the terms of one or more outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to applicable law or Exterran’s certificate of incorporation. | ||||
Amendments to By-laws |
The Enerflex board may, by resolution, make, amend or repeal any by-law that regulates the business or affairs of Enerflex. Where the directors make, amend or repeal a by-law, they are required under the CBCA to submit the by-law, or the amendment or repeal of a by-law, to the Enerflex shareholders at the next meeting of shareholders and the shareholders may confirm, reject or amend the by-law, by an ordinary resolution. If the by-law, amendment or repeal is rejected by the shareholders, or the directors do not submit the by-law, amendment or repeal to the shareholders as required, the by-law, amendment or repeal ceases to be effective and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders. |
Delaware law provides that the stockholders entitled to vote have the power to adopt, amend or repeal bylaws. A corporation may also confer, in its certificate of incorporation, that power upon the board of directors. Exterran’s certificate of incorporation confers upon the board of directors the power to adopt, amend or repeal the Exterran bylaws. Exterran’s certificate of incorporation requires that any amendment to the Exterran bylaws by stockholders be approved by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the Exterran capital stock entitled to vote generally in the election of directors, voting together as a single class. | ||
Shareholder Suits |
Derivative Action Oppression Remedy |
Under Delaware law, a stockholder may bring a derivative action on behalf of, and for the benefit of, a corporation. Generally, a person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction that is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Delaware law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, |
Provision |
Enerflex |
Exterran | ||
complainant has given notice to the Enerflex board or its subsidiary of the complainant’s intention to apply to the court for such leave not less than 14 days before bringing the application if the Enerflex board or its subsidiary do not bring, diligently prosecute or defend or discontinue the action; (ii) the complainant is acting in good faith; and (iii) it appears to be in the interests of Enerflex or its subsidiary that the action be brought, prosecuted, defended or discontinued. Under the CBCA, the court in a derivative action may make any order it determines to be appropriate, including, without limitation, an order authorizing the complainant or any other person to control the conduct of the action, an order giving directions for the conduct of the action, an order directing that any amount determined to be payable by a defendant in the action will be paid, in whole or in part, directly to former and present security holders of Enerflex or its subsidiary instead of to Enerflex or its subsidiary and an order requiring Enerflex or its subsidiary to pay reasonable legal fees incurred by the complainant in connection with the action. A complainant is not required to give security for costs in a derivative action. Oppression Remedy (i) restraining the conduct complained of; (ii) appointing a receiver or receiver-manager; (iii) to regulate Enerflex’s affairs by amending Enerflex’s articles or Enerflex’s by-laws or creating or amending a unanimous shareholder agreement;(iv) directing an issue or exchange of securities; |
unless such demand would be futile. In certain circumstances, class action lawsuits are available to stockholders. The DGCL does not provide for a remedy similar to the oppression remedy under the CBCA; however, stockholders may be entitled to remedies for violation of a director’s fiduciary duties under Delaware common law. Exterran’s certificate of incorporation provides that, unless Exterran consents in writing to the selection of an alternate forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on Exterran’s behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder to Exterran or Exterran’s stockholders, (iii) any action asserting a claim against Exterran arising pursuant to any provision of the DGCL, Exterran’s certificate of incorporation or Exterran’s bylaws, or as to which the DGCL confers jurisdiction on the Court of Chancery, or (iv) any action asserting a claim governed by the internal affairs doctrine. |
Provision |
Enerflex |
Exterran | ||
(v) appointing directors in place of or in addition to all or any of the directors then in office; (vi) directing Enerflex or any other person, to purchase securities of a security holder; (vii) directing Enerflex or any other person, to pay a security holder any part of the monies that the security holder paid for securities; (viii) varying or setting aside a transaction or contract to which Enerflex is a party and compensating Enerflex or any other party to the transaction or contract; (ix) requiring Enerflex, within a time specified by the court, to produce to the court or an interested person financial statements in the required form or an accounting in such other form as the court may determine; (x) compensating an aggrieved person; (xi) directing rectification of the registers or other records of Enerflex; (xii) liquidating and dissolving Enerflex; (xiii) directing an investigation under the CBCA to be made; and (xiv) requiring the trial of any issue. An application under the oppression remedy may be made by a “complainant,” which means: (i) a registered holder or beneficial owner, and a former registered holder or former beneficial owner, of a security of Enerflex or any of its affiliates; (ii) a director or an officer or a former director or former officer of Enerflex or any of its affiliates; (iii) the director appointed under the CBCA; or (iv) any other person who, in the discretion of a court, is a proper person to make such an application. |
Provision |
Enerflex |
Exterran | ||
Enforcement of Civil Liabilities Against Foreign Persons |
A judgment for the payment of money rendered by a federal or provincial court in Canada based on civil liability would generally be enforceable elsewhere in Canada. A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in federal or provincial courts of Canada. The party seeking enforcement would first have to commence proceedings at the appropriate level of court in the Canadian jurisdiction in which enforcement is sought and obtain an order from that court for the recognition and enforcement of the judgment. The following requirements must generally be met before the foreign monetary judgment will be recognized and enforceable in a Canadian court: (i) the foreign court must have properly asserted jurisdiction; (ii) the judgment must not have been obtained by fraud or in a manner contrary to natural justice; (iii) the judgment must be final and conclusive; and (iv) the judgment is not for a penalty, taxes or enforcement of a foreign public law, or otherwise contrary to Canadian public policy. |
A judgment for the payment of money rendered by a U.S. federal court or any state court based on civil liability generally would be enforceable elsewhere in the U.S. | ||
Limitation of Personal Liability of Directors and Officers |
Under the CBCA, no provision in a contract, Enerflex’s articles, Enerflex’s by-laws or a resolution of the Enerflex board or shareholders relieves a director or officer of Enerflex from the duty to act in accordance with the CBCA or the regulations thereunder or relieves them from liability for a breach thereof.Under the CBCA, directors of a corporation who vote for or consent to any resolution authorizing (i) the issuance of shares for consideration other than money are liable to the corporation for any amount by which the consideration received is less than the |
Exterran’s certificate of incorporation provides that, to the fullest extent permitted by the DGCL, a director of Exterran will not be personally liable to Exterran or its stockholders for monetary damages for breach of fiduciary duty as a director. If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of each director shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. |
Provision |
Enerflex |
Exterran | ||
fair equivalent of the money that the corporation would have received if the share had been issued for money on the date of the resolution, and (ii) among other things, will be liable to restore to Enerflex any amounts distributed or paid and not otherwise recovered with respect to a purchase or redemption of shares, a payment of a dividend on shares, a commission contrary to the provisions of the CBCA, a payment to a shareholder contrary to the provisions of the CBCA or the payment of an indemnity to a director or officer contrary to the provisions of the CBCA. In addition, subject to certain conditions, directors of a corporation are liable to its employees for all debts not exceeding six months wages payable to such employees for services performed for the corporation while they are directors. |
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Indemnification of Directors and Officers |
Under the CBCA, Enerflex may indemnify its directors and officers, its former directors and officers or another individual who acts or acted at Enerflex’s request as a director or officer, or an individual acting in a similar capacity, of another entity (which we refer to as an “indemnifiable person”) against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the indemnifiable person in respect of any civil, criminal, administrative, investigative or other proceeding in which the indemnifiable person is involved because of that association with Enerflex or other entity, provided that: (i) the indemnifiable person acted honestly and in good faith with a view to the best interests of Enerflex, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at Enerflex’s request; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the indemnifiable person had reasonable grounds for believing that |
Section 145 of the DGCL provides that a corporation may indemnify any person against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which such person is made a party or threatened to be made a party by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity (other than an action by or in the right of Exterran), if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. A similar standard is applicable in the case of actions by or in the right of Exterran, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the |
Provision |
Enerflex |
Exterran | ||
the indemnifiable person’s conduct was lawful. Enerflex may advance funds to an indemnifiable person for the costs, charges and expenses of a proceeding referred to above; provided, however, that the indemnifiable person will repay the funds if the individual does not fulfill the above-mentioned conditions. An indemnifiable person is also entitled to indemnity from Enerflex in respect of all costs, charges and expenses reasonably incurred by the indemnifiable person in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the indemnifiable person is subject because of the indemnifiable person’s association with Enerflex or other entity, if the indemnifiable person: (i) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the indemnifiable person ought to have done; and (ii) fulfills the conditions first set out above. In the case of a derivative action, indemnity may be made only with court approval, if the indemnifiable person fulfills the requirements first mentioned above. In addition, Enerflex may, under the CBCA, purchase and maintain insurance for the benefit of an indemnifiable person. Under Enerflex’s By-Laws No. 1, Enerflex shall indemnify a director or officer of Enerflex, a former director or officer of Enerflex or a person who acts or acted at Enerflex’s request as a director or officer, or an individual acting in a similar capacity, of another entity, to the extent permitted by the CBCA. |
statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by Exterran’s bylaws, disinterested director vote, stockholder vote, agreement or otherwise. In addition, Exterran may purchase and maintain insurance against liability asserted against or incurred by any of the persons referred to above whether or not it would have the power to indemnify them against such liability under Delaware law. A corporation must indemnify directors and officers (as defined in the statute) to the extent they are successful on the merits or otherwise in defense of the action or matter at issue. In addition, Delaware law allows for the advance payment of expenses prior to final disposition of an action, so long as, in the case of a current director or officer, the person undertakes to repay any amount advanced if it is later determined that the person is not entitled to indemnification. The Exterran bylaws provide that, to the full extent permitted by Delaware law, Exterran will indemnify each person who was or is or is threatened to be or is made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of Exterran, or while serving in such capacity, is or was serving at the request of Exterran as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, |
Provision |
Enerflex |
Exterran | ||
against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement reasonably incurred in connection with any such action, suit or proceeding, except with respect to certain proceedings initiated by such persons without authorization by the Exterran board. Such right also includes the right to advance payment of expenses prior to the final disposition of an action to the fullest extent permitted by Delaware law. | ||||
Appraisal/Dissent Rights |
The CBCA provides that Enerflex shareholders are entitled to exercise dissent rights in certain situations and to be paid the fair value of their shares as determined in accordance with the provisions of the CBCA by following the dissent procedures set out therein, if Enerflex: (i) is subject to an order in respect of an “arrangement” (as such term is defined in the CBCA) in accordance with the provisions of the CBCA; (ii) resolves to amend its articles to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares of that class; (iii) resolves to amend its articles to add, change or remove any restriction on the business or businesses that Enerflex may carry on; (iv) resolves to amalgamate, other than an amalgamation with a parent or a subsidiary or an amalgamation with a sister corporation, in each case in accordance with the provisions of the CBCA; (v) resolves to be continued under the laws of another jurisdiction; (vi) resolves to sell, lease or exchange all or substantially all its property other than in the ordinary course of business; or (vii) resolves to carry out a going-private transaction or a squeeze-out |
Delaware law provides that a holder of shares of any class or series has the right, in specified circumstances, to dissent from a merger or consolidation by demanding payment in cash for the stockholder’s shares equal to the fair value of those shares, as determined by the Delaware Court of Chancery in an action timely brought by the corporation or a dissenting stockholder. Delaware law grants these appraisal rights only in the case of mergers or consolidations and not in the case of a sale or transfer of assets or a purchase of assets for stock. Further, no appraisal rights are available for shares of any class or series that is listed on a national securities exchange or held of record by more than 2,000 stockholders, unless the agreement of merger or consolidation requires the holders to accept for their shares anything other than: • Shares of stock of the surviving corporation; • Shares of stock of another corporation that are either listed on a national securities exchange or held of record by more than 2,000 stockholders; • Cash in lieu of fractional shares of the stock described in the two precedent clauses; or • Any combination of the above. |
Provision |
Enerflex |
Exterran | ||
transaction (as such terms are defined in the CBCA). A shareholder is not entitled to dissent if an amendment to Enerflex’s articles is effected by a court order approving a reorganization (as defined in the CBCA) or by a court order made in connection with an action for an oppression remedy. Enerflex shareholders are not entitled to dissent or appraisal rights under the CBCA in connection with the transactions contemplated by the Merger Agreement. In order to exercise any dissent rights pursuant to the CBCA, Enerflex shareholders will be required to follow the terms and process as outlined in the CBCA. |
In addition, appraisal rights are not available to holders of shares of the surviving corporation in specified mergers that do not require the vote of the stockholders of the surviving corporation. The Exterran certificate of incorporation does not provide for appraisal rights in any additional circumstance. | |||
Approval of Extraordinary Transactions; Anti-Takeover Provisions |
Under the CBCA, a merger, consolidation, sale, lease, exchange or other disposition of all or substantially all of the property of Enerflex other than in the ordinary course of business of Enerflex, including an amalgamation (other than an amalgamation with a parent or a subsidiary or an amalgamation with a sister corporation in accordance with the provisions of the CBCA) and an arrangement (as defined in the CBCA), or a dissolution of Enerflex, is generally required to be approved by special resolution, being a majority of not less than two-thirds (2/3) of the votes cast, in person or by proxy, in respect of the resolution at a meeting of Enerflex shareholders.Additionally, Multilateral Instrument 61-101— Protection of Minority Security Holders in Special Transactions “MI 61-101”) of the Canadian Securities Administrators contains detailed requirements in connection with, among other transactions, “related party transactions” and “business combinations.” A related party transaction means, generally, any transaction by which an issuer, directly or indirectly, consummates one or more specified transactions with a related party, including purchasing or disposing of an asset, issuing securities or assuming liabilities. |
A sale, lease or exchange of all or substantially all of a corporation’s assets, a merger or consolidation of a corporation with another corporation or a dissolution of a corporation generally requires the approval of the corporation’s board of directors and, with limited exceptions, the affirmative vote of at least a majority of the shares of Exterran common stock outstanding as of the record date and entitled to vote. Exterran is subject to the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination with any interested stockholder for a three-year period following the time that such stockholder becomes an interested stockholder, unless (i) the board of directors approves the business combination or the transaction by which such stockholder becomes an interested stockholder, in either case, before the stockholder becomes an interested stockholder, (ii) the interested stockholder acquires 85% of the corporation’s outstanding voting stock in the transaction by which such stockholder becomes an interested |
Provision |
Enerflex |
Exterran | ||
“Related party,” as defined in MI 61-101, includes (i) directors and senior officers of the issuer, (ii) holders of voting securities of the issuer carrying more than 10% of the voting rights attached to all the issuer’s outstanding voting securities and (iii) holders of a sufficient number of any securities of the issuer to materially affect control of the issuer. A “business combination” means, generally, any amalgamation, arrangement, consolidation, amendment to share terms or other transaction, as a consequence of which the interest of a holder of an equity security may be terminated without the holder’s consent.MI 61-101 requires, subject to certain exceptions, specific detailed disclosure in the proxy (information) circular sent to security holders in connection with a related party transaction or business combination where a meeting is required and, subject to certain exceptions, the preparation of a formal valuation of the subject matter of the related party transaction or business combination and any non-cash consideration offered in connection therewith, and the inclusion of a summary of the valuation in the proxy circular. MI 61-101 also requires, subject to certain exceptions, that an issuer not engage in a related party transaction or business combination unless, in addition to any other required shareholder approvals, the disinterested shareholders of the issuer have approved the related party transaction or business combination by a simple majority of the votes cast. |
stockholder, or (iii) the business combination is subsequently approved by the board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds (2/3) of the corporation’s outstanding voting stock not owned by the interested stockholder. | |||
Compulsory Acquisitions |
The CBCA provides that if an offer is made to shareholders of a distributing corporation (as defined in the CBCA), such as Enerflex, at approximately the same time to acquire all of the shares of a class of issued shares, including an offer made by a distributing corporation to repurchase all of the shares of a class of its shares (which we refer to as a “takeover bid”) and such offer is accepted within 120 days of the takeover bid by holders of not less than 90% of the shares (other than the shares held by the offeror or | Not applicable. |
Provision |
Enerflex |
Exterran | ||
an affiliate or associate of the offeror) of any class of shares to which the takeover bid relates, then the offeror is entitled to acquire the shares held by those holders of securities of that class who did not accept the takeover bid either on the same terms on which the offeror acquired shares under the takeover bid or for payment of the fair value of such holder’s shares as determined in accordance with the dissent right procedures under the CBCA. |
||||
Rights Upon Liquidation |
Under the CBCA, Enerflex may liquidate and dissolve by special resolution of the holders of each class of Enerflex common shares , whether or not such Enerflex shareholders are otherwise entitled to vote. In the event of the liquidation, dissolution, or winding up of Enerflex or other distribution of assets of Enerflex among its shareholders for the purpose of winding up its affairs, the holders of Enerflex common shares are, subject to the rights of the holders of any other class of shares of Enerflex entitled to receive the assets of Enerflex upon such a distribution in priority to or ratably with the holders of Enerflex common shares, entitled to participate ratably in any distribution of the assets of Enerflex. Under Enerflex’s articles, with respect to any distribution of assets of Enerflex in the event of any liquidation, dissolution or winding up of Enerflex or the other distribution of the assets of Enerflex among its shareholders for the purpose of winding up its affairs, the preferred shares of each series are entitled to priority over the Enerflex common shares to the extent of the amount paid up on the preferred shares together with an amount equal to the accrued and unpaid dividends thereon and no more. The preferred shares of each series may also be given such other preferences over the Enerflex common shares as may be determined as to the respective series authorized to be issued. Under Enerflex’s articles, the preferred shares of each series shall rank on a parity |
In case of liquidation or dissolution of Exterran, subject to the rights of the holders of Exterran preferred stock, if any, the remaining assets and funds of Exterran available for distribution will be paid to the holders of common stock. |
Provision |
Enerflex |
Exterran | ||
with the preferred shares of every other series with respect to priority in payment of dividends and in 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 Enerflex among its shareholders for the purpose of winding up its affairs. |
Exterran Filings with the SEC (File No. 001-04717) |
Period and/or Filing Date | |
Annual Report on Form 10-K | Year ended December 31, 2021 | |
Current Reports on Form 8-K |
Filed January 24, 2022, [ ], and [ ] |
* | Other than the portions of those documents not deemed to be filed. |
Exterran Corporation 11000 Equity Drive Houston, Texas 77041 Attention: Corporate Secretary Telephone: (281) 836-7000 |
Enerflex Ltd. 1331 Macleod Trail SE, Suite 904 Calgary, Alberta, Canada T2G 0K3 Attention: Office of the Corporate Secretary and Associate General Counsel, Corporate Telephone: (403) 261-4280 |
Page |
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ENERFLEX LTD |
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AUDITED CONSOLIDATED FINANCIAL STATEMENTS: |
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F-2 | ||||
F-4 | ||||
F-4 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9 |
![]() |
Ernst & Young LLP 2200, 215 2nd St SW Calgary, AB T2P 1M4 |
Tel: +1 403 206 5000 Fax: +1 403 290 4265 ey.com/ca |
![]() |
Ernst & Young LLP 2200, 215 2nd St SW Calgary, AB T2P 1M4 |
Tel: +1 403 206 5000 Fax: +1 403 290 4265 ey.com/ca |
|
Measurement of revenue recognized from the supply of engineered systems products | |
Description of the Matter |
As described in Note 3q, 5, and 23 to the consolidated financial statements, revenues from the supply of engineered systems involving design, manufacture, installation and start-up are recognized using the percentage of completion method, based on total costs incurred as a proportion of expected total costs of the project. During the year ended December 31, 2021, revenue from the supply of engineered systems was $354 million. | |
How We Addressed the Matter in Our Audit |
Auditing the Company’s measurement of the revenue recognized on projects where the Company has not fulfilled all performance obligations of the contract’s scope of work as at December 31, 2021 was identified as a critical audit matter due to the significant judgment and estimation uncertainty relating to several estimates including expected margin to be earned on the contract and the estimated remaining costs to complete. Our audit procedures, among others, included comparing estimated costs to complete for in-progress jobs to actual costs incurred on similar completed projects and comparing to third-party vendor quotes or price sheets for estimated costs to complete for in-progress jobs. We assessed the historical accuracy of management’s forecasts by comparing them with actual results and assessed monthly trending for significant changes in gross margin. | |
|
Valuation of goodwill | |
Description of the Matter |
As described in Notes 3f, 5, and 14 to the consolidated financial statements, the carrying value of $566 million of goodwill is assessed against the estimated recoverable amount of each operating segment, at least annually or at any time an indicator of impairment exists. Auditing the recoverable amounts in the goodwill impairment test was determined to be a critical audit matter due to the significant level of judgment applied by management and the subjectivity of the significant assumptions in determining the recoverable amount. Significant assumptions included cash flow projections, revenue growth rate, earnings margins, and discount rate, which are affected by expectations about future market and economic conditions. | |
How We Addressed the Matter in Our Audit |
Our audit procedures included, among others, comparing assumptions incorporated into the estimated recoverable amount such as revenue forecasts and growth rates to publicly available data and historically realized results. We assessed the historical accuracy of management’s gross margin forecasts by comparing them with actual results and performed a sensitivity analysis to evaluate the assumptions that were most significant to the determination of the recoverable amount. We evaluated the Company’s determination of the industry outlook on price by comparing to externally available third-party future price estimates. We also involved our internal valuation specialists to assist in our evaluation of the methodology and our evaluation of select key assumptions in management’s estimation of the recoverable amounts, such as the discount rate. |
($ Canadian thousands) |
December 31, 2021 |
December 31, 2020 |
||||||
Assets |
||||||||
Current assets |
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Cash and cash equivalents |
$ |
|
$ |
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Accounts receivable (Note 7) |
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|
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Contract assets (Note 7) |
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|
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Inventories (Note 8) |
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Work-in-progress |
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Current portion of finance leases receivable (Note 11) |
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Income taxes receivable |
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Derivative financial instruments (Note 28) |
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Other current assets |
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Total current assets |
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Property, plant and equipment (Note 9) |
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Rental equipment (Note 9) |
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Lease right-of-use |
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Finance leases receivable (Note 11) |
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Deferred tax assets (Note 20) |
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Other assets (Note 12) |
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Intangible assets (Note 13) |
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Goodwill (Note 14) |
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Total assets |
$ |
|
$ |
|||||
|
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|
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|
|
|
||||
Liabilities and Shareholders’ Equity |
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Current liabilities |
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|
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Accounts payable and accrued liabilities (Note 15) |
$ |
|
$ |
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Warranty provisions (Note 16) |
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Income taxes payable |
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Deferred revenues (Note 17) |
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Current portion of long-term debt (Note 18) |
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Current portion of lease liabilities (Note 19) |
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Derivative financial instruments (Note 28) |
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Total current liabilities |
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Long-term debt (Note 18) |
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Lease liabilities (Note 19) |
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Deferred tax liabilities (Note 20) |
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Other liabilities |
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Total liabilities |
$ |
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$ |
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Shareholders’ equity |
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Share capital (Note 21) |
$ |
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$ |
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Contributed surplus (Note 22) |
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Retained earnings |
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Accumulated other comprehensive income |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
$ |
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$ |
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Years ended December 31, | ||||||||||||
($ Canadian thousands, except per share amounts) |
2021 |
2020 | 2019 | |||||||||
Revenue (Note 23) |
$ |
$ | $ | |||||||||
Cost of goods sold |
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Gross margin |
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Selling and administrative expenses |
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Operating income |
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Gain on disposal of property, plant and equipment (Note 9) |
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Equity earnings from associate and joint venture |
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Earnings before finance costs and income taxes |
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Net finance costs (Note 26) |
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Earnings before income taxes |
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Income taxes (Note 20) |
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|
|||||||
Net earnings (loss) |
$ |
( |
) |
$ | $ | |||||||
|
|
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|
|||||||
Net earnings (loss) attributable to: |
||||||||||||
Controlling interest |
$ |
( |
) |
$ | $ |
|||||||
Non-controlling interest |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
( |
) |
$ | $ | ||||||||
|
|
|
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|
|||||||
Earnings (loss) per share – basic (Note 27) |
$ |
( |
) |
$ | $ | |||||||
Earnings (loss) per share – diluted (Note 27) |
$ |
( |
) |
$ | $ | |||||||
Weighted average number of shares – basic |
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Weighted average number of shares – diluted |
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|
Years ended December 31, | ||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Net earnings (loss) |
$ |
( |
) |
$ | $ | |||||||
Other comprehensive income (loss): |
||||||||||||
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods: |
||||||||||||
Change in fair value of derivatives designated as cash flow hedges, net of income tax recovery |
( |
) | ||||||||||
Gain (loss) on derivatives designated as cash flow hedges transferred to net earnings (loss), net of income tax expense |
( |
) |
||||||||||
Unrealized gain on translation of foreign denominated debt |
||||||||||||
Unrealized loss on translation of financial statements of foreign operations |
( |
) |
( |
) | ( |
) | ||||||
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|
|
|
|
|
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Other comprehensive income (loss) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Total comprehensive income (loss) |
$ |
( |
) |
$ | $ | |||||||
|
|
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|
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Other comprehensive income (loss) attributable to: |
||||||||||||
Controlling interest |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Non-controlling interest |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
$ |
( |
) |
$ | ( |
) | $ | ( |
) | ||||
|
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|
|
Years ended December 31, | ||||||||||||
($ Canadian thousands) |
2021 |
2020 | 2019 | |||||||||
Operating Activities |
||||||||||||
Net earnings (loss) |
$ |
( |
) |
$ | $ | |||||||
Items not requiring cash and cash equivalents: |
||||||||||||
Depreciation and amortization |
||||||||||||
Equity earnings from associate and joint venture |
( |
) |
( |
) | ( |
) | ||||||
Deferred income taxes (Note 20) |
||||||||||||
Share-based compensation expense (Note 24) |
||||||||||||
Gain on disposal of property, plant and equipment (Note 9) |
( |
) |
( |
) | ( |
) | ||||||
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|
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|
|||||||
Net change in non-cash working capital and other (Note 30) |
( |
) | ||||||||||
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|
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|
|||||||
Cash provided by operating activities |
$ |
$ | $ | |||||||||
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|
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|
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Investing Activities |
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Additions to: |
||||||||||||
Property, plant and equipment (Note 9) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Rental equipment (Note 9) |
( |
) |
( |
) | ( |
) | ||||||
Proceeds on disposal of: |
||||||||||||
Property, plant and equipment (Note 9) |
||||||||||||
Rental equipment (Note 9) |
||||||||||||
Change in other assets |
( |
) |
( |
) | ||||||||
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|
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Cash used in investing activities |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
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|
|||||||
Financing Activities |
||||||||||||
Repayment of long-term debt (Note 30) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Lease liability principal repayment (Note 19) |
( |
) |
( |
) | ( |
) | ||||||
Lease interest (Note 19) |
( |
) |
( |
) | ( |
) | ||||||
Dividends |
( |
) |
( |
) | ( |
) | ||||||
Stock option exercises |
— |
— | ||||||||||
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|
|
|
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|
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Cash used in financing activities |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
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|
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Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies |
$ |
( |
) |
$ | ( |
) | $ | ( |
) | |||
Increase (decrease) in cash and cash equivalents |
( |
) | ( |
) | ||||||||
Cash and cash equivalents, beginning of period |
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|
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Cash and cash equivalents, end of period |
$ |
$ | $ | |||||||||
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|
($ Canadian thousands) |
Share capital |
Contributed surplus |
Retained earnings |
Foreign currency translation adjustments |
Hedging reserve |
Accumulated other comprehensive income |
Total shareholders’ equity before non-controlling interest |
Non-controlling interest |
Total | |||||||||||||||||||||||||||
At January 1, 2019 |
$ | $ | $ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||
Net earnings |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
— | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
Effect of stock option plans |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Dividends |
— | — | ( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
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At December 31, 2019 |
$ | $ | $ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||
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Net earnings |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
— | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
Purchase of non-controlling interest |
— | — | ( |
) | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
Effect of stock option plans |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Dividends |
— | — | ( |
) | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
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At December 31, 2020 |
$ | $ | $ | $ | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
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|
|
|
|
|
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|
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|
|
|||||||||||||||||||
Net loss |
— |
— |
( |
) |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Other comprehensive income (loss) |
— |
— |
— |
( |
) |
( |
) |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Effect of stock option plans |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
Dividends |
— |
— |
( |
) |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
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|
|
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|
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At December 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
— |
$ |
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Name |
Jurisdiction of Incorporation |
Ownership |
Operating Segment | |||
Public Shareholders |
||||||
|
||||||
1 |
||||||
1 |
Enerflex indirectly owns |
(a) |
Statement of Compliance |
(b) |
Basis of Measurement |
(c) |
Functional Currency and Presentation Currency |
(d) |
Use of Estimates and Judgment |
(e) |
Basis of Consolidation |
(a) |
Investments in Associates and Joint Ventures |
(b) |
Foreign Currency Translation |
(c) |
Business Combinations |
(d) |
Property, Plant and Equipment |
Asset Class |
Estimated Useful Life Range | |
Buildings | ||
Equipment |
(e) |
Rental Equipment |
(f) |
Goodwill |
(g) |
Intangible Assets |
(h) |
Impairment of Non-Financial Assets (excluding Goodwill) |
(i) |
Inventories |
(j) |
Trade Receivables |
(k) |
Cash |
(l) |
Provisions |
(m) |
Onerous Contracts |
(n) |
Employee Future Benefits |
(o) |
Share-Based Payments |
(p) |
Leases |
• | The contract involves the use of an identified asset, either explicitly or implicitly, and whether the supplier has a substantive substitution right for the asset; |
• | The Company has the right to obtain substantially all the economic benefits from the use of the asset throughout the period; and |
• | The Company has the right to direct the use of the identified asset. |
(q) |
Revenue Recognition |
(r) |
Financial Instruments |
• | Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an on-going basis; |
• | Level 2: Fair value measurements are those derived from inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and |
• | Level 3: Fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs). In these instances, internally developed methodologies are used to determine fair value. |
• | Cash and cash equivalents are measured at fair value through profit or loss. Gains and losses resulting from the periodic revaluation are recorded in the consolidated statements of earnings; |
• | Accounts receivable and preferred shares are recorded at amortized cost using the effective interest rate method; and |
• | Accounts payable, accrued liabilities, and long-term debt are recorded at amortized cost using the effective interest rate method. |
(s) |
Derivative Financial Instruments and Hedge Accounting |
(t) |
Income Taxes |
• | Where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; |
• | In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future; and |
• | Deferred income tax assets are recognized only to the extent that it is probable that a taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilized. |
(u) |
Earnings Per Share |
(v) |
Finance Income and Costs |
(w) |
Government Grants |
December 31, |
2021 |
2020 | ||||||
Trade receivables |
$ |
$ | ||||||
Less: allowance for doubtful accounts 1 |
( |
) |
( |
) | ||||
|
|
|
|
|
|
|
|
|
Trade receivables, net |
$ |
$ | ||||||
Other receivables |
||||||||
|
|
|
|
|||||
Total accounts receivable |
$ |
$ | ||||||
|
|
|
|
1 |
During the third quarter of 2020, management identified certain receivable balances in the Rest of World segment that may be at higher risk of credit loss, leading to an increase in the allowance for doubtful accounts provision at September 30, 2020. The value of the provision relating to these receivables at December 31, 2020 represents only the outstanding amounts owed to Enerflex , as the total value of the associated contract was recognized and largely collected prior to 2020. |
December 31, |
2021 |
2020 | ||||||
Current to 90 days |
$ |
$ | ||||||
Over 90 days |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Impairment provision additions on receivables |
||||||||
Amounts settled and derecognized during the year |
( |
) |
( |
) | ||||
Currency translation effects |
( |
) |
( |
) | ||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Unbilled revenue recognized |
||||||||
Amounts billed |
( |
) |
( |
) | ||||
Amounts transferred to other assets |
( |
) | ||||||
Currency translation effects |
( |
) |
||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Direct materials |
$ |
$ | ||||||
Repair and distribution parts |
||||||||
Work-in-progress |
||||||||
Equipment |
||||||||
|
|
|
|
|||||
Total inventories |
$ |
$ | ||||||
|
|
|
|
|||||
December 31, |
2021 |
2020 | ||||||
Work-in-progress |
$ |
$ |
Land | Building | Equipment | Assets under construction |
Total property, plant and equipment |
Rental equipment |
|||||||||||||||||||
Cost |
||||||||||||||||||||||||
January 1, 2021 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Additions |
— | — | ||||||||||||||||||||||
Reclassification |
— | ( |
) | ( |
) | — | ||||||||||||||||||
Disposals |
— | ( |
) | ( |
) | — | ( |
) | ( |
) | ||||||||||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated depreciation |
| |||||||||||||||||||||||
January 1, 2021 |
$ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | ||||||||
Depreciation charge |
— | ( |
) | ( |
) | — | ( |
) | ( |
) | ||||||||||||||
Impairment |
— | — | — | — | — | ( |
) | |||||||||||||||||
Disposals |
— | — | ||||||||||||||||||||||
Currency translation effects |
— | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2021 |
$ |
— |
$ |
( |
) |
$ |
( |
) |
$ |
— |
$ |
( |
) |
$ |
( |
) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net book value – December 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Land | Building | Equipment | Assets under construction |
Total property, plant and equipment |
Rental equipment |
|||||||||||||||||||
Cost |
||||||||||||||||||||||||
January 1, 2020 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Additions |
— | |||||||||||||||||||||||
Reclassification |
— | ( |
) | ( |
) | — | ||||||||||||||||||
Disposals |
— | ( |
) | ( |
) | — | ( |
) | ( |
) | ||||||||||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2020 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated depreciation |
| |||||||||||||||||||||||
January 1, 2020 |
$ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | ||||||||
Depreciation charge |
— | ( |
) | ( |
) | — | ( |
) | ( |
) | ||||||||||||||
Impairment |
— | — | — | — | — | ( |
) | |||||||||||||||||
Disposals |
— | — | ||||||||||||||||||||||
Currency translation effects |
— | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2020 |
$ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net book value – December 31, 2020 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Land | Building | Equipment | Assets under construction |
Total property, plant and equipment |
Rental equipment |
|||||||||||||||||||
Cost |
||||||||||||||||||||||||
January 1, 2019 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Additions |
— | |||||||||||||||||||||||
Reclassification |
— | ( |
) | ( |
) | — | ||||||||||||||||||
Disposals |
( |
) | ( |
) | ( |
) | — | ( |
) | ( |
) | |||||||||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2019 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Accumulated depreciation |
| |||||||||||||||||||||||
January 1, 2019 |
$ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | ||||||||
Depreciation charge |
— | ( |
) | ( |
) | — | ( |
) | ( |
) | ||||||||||||||
Impairment |
— | — | — | — | — | ( |
) | |||||||||||||||||
Disposals |
— | — | ||||||||||||||||||||||
Currency translation effects |
— | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2019 |
$ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net book value – December 31, 2019 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Land and buildings | Equipment | Total lease right-of-use assets |
||||||||||
Cost |
||||||||||||
January 1, 2021 |
$ | $ | $ | |||||||||
Additions |
||||||||||||
Disposal |
( |
) | ( |
) | ( |
) | ||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
December 31, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
|||||||
Accumulated depreciation |
| |||||||||||
January 1, 2021 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Depreciation charge |
( |
) | ( |
) | ( |
) | ||||||
Disposal |
||||||||||||
Currency translation effects |
||||||||||||
|
|
|
|
|
|
|||||||
December 31, 2021 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
Land and buildings | Equipment | Total lease right-of-use assets |
||||||||||
Cost |
||||||||||||
January 1, 2020 |
$ | $ | $ | |||||||||
Additions |
||||||||||||
Disposal |
( |
) | ( |
) | ( |
) | ||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Accumulated depreciation |
| |||||||||||
January 1, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Depreciation charge |
( |
) | ( |
) | ( |
) | ||||||
Disposal |
||||||||||||
Currency translation effects |
||||||||||||
|
|
|
|
|
|
|||||||
December 31, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Land and buildings | Equipment | Total lease right-of-use assets |
||||||||||
Cost |
||||||||||||
January 1, 2019 |
$ | $ | $ | |||||||||
Additions |
||||||||||||
Disposal |
( |
) | ( |
) | ( |
) | ||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
December 31, 2019 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Accumulated depreciation |
| |||||||||||
January 1, 2019 |
$ | — | $ | — | $ | — | ||||||
Depreciation charge |
( |
) | ( |
) | ( |
) | ||||||
Disposal |
||||||||||||
Currency translation effects |
||||||||||||
|
|
|
|
|
|
|||||||
December 31, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2019 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Minimum lease payments |
Present value of minimum lease payments |
|||||||||||||||
December 31, |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Less than one year |
$ |
$ | $ |
$ | ||||||||||||
Between one and five years |
||||||||||||||||
Later than five years |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
$ | $ |
$ | |||||||||||||
Less: unearned finance income |
( |
) |
( |
) | — |
— | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
$ | $ |
$ | |||||||||||||
|
|
|
|
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Additions |
||||||||
Interest income |
||||||||
Billings and payments |
( |
) |
( |
) | ||||
Currency translation effects |
( |
) | ||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Investment in associates and joint ventures |
$ |
$ | ||||||
Long-term receivables |
||||||||
Prepaid deposits |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
Customer relationships and other |
Software | Total intangible assets |
||||||||||
Cost |
||||||||||||
January 1, 2021 |
$ | $ | $ | |||||||||
Reclassification |
— | |||||||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
December 31, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
|||||||
Accumulated amortization |
||||||||||||
January 1, 2021 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Amortization charge |
( |
) | ( |
) | ( |
) | ||||||
Currency translation effects |
||||||||||||
|
|
|
|
|
|
|||||||
December 31, 2021 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
Customer relationships and other |
Software | Total intangible assets |
||||||||||
Cost |
||||||||||||
January 1, 2020 |
$ | $ | $ | |||||||||
Reclassification |
— | |||||||||||
Disposal |
— | ( |
) | ( |
) | |||||||
Currency translation effects |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Accumulated amortization |
||||||||||||
January 1, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Amortization charge |
( |
) | ( |
) | ( |
) | ||||||
Disposal |
— | |||||||||||
Currency translation effects |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
December 31, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Customer relationships and other |
Software | Total intangible assets |
||||||||||
Cost |
||||||||||||
January 1, 2019 |
$ | $ | $ | |||||||||
Additions |
— | |||||||||||
Reclassification |
— | |||||||||||
Disposal |
— | ( |
) | ( |
) | |||||||
Currency translation effects |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
December 31, 2019 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Accumulated amortization |
||||||||||||
January 1, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Amortization charge |
( |
) | ( |
) | ( |
) | ||||||
Disposal |
— | |||||||||||
Currency translation effects |
||||||||||||
|
|
|
|
|
|
|||||||
December 31, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
|||||||
Net book value – December 31, 2019 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Currency translation effects |
( |
) |
||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
• | Earnings Before Finance Costs and Taxes: Management has made estimates relating to the amount and timing of revenue recognition for projects included in backlog, and the assessment of the likelihood of maintaining and growing market share. For each ten percent change in earnings before finance costs and taxes, the impact on the value-in-use |
• | Discount Rate: Management determines a discount rate for each segment based on the estimated weighted average cost of capital of the Company, using the five-year average of the Company’s peer group debt to total enterprise value, adjusted for a number of risk factors specific to each segment. This discount rate has been calculated using an estimated risk-free rate of return adjusted for the Company’s estimated equity market risk premium, the Company’s cost of debt, and the tax rate in the local jurisdiction. For each one percent change in the discount rate, the impact on the value-in-use |
December 31, |
2021 |
2020 |
||||||
Accounts payable and accrued liabilities |
$ |
$ | ||||||
Accrued dividend payable |
||||||||
Cash-settled share-based payments |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 |
||||||
Balance, January 1 |
$ |
$ | ||||||
Additions during the year |
||||||||
Amounts settled and released in the year |
( |
) |
( |
) | ||||
Currency translation effects |
( |
) | ||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 |
||||||
Balance, January 1 |
$ |
$ | ||||||
Cash received in advance of revenue recognition |
||||||||
Revenue subsequently recognized |
( |
) |
( |
) | ||||
Currency translation effects |
( |
) |
||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Drawings on Bank Facility |
$ |
$ | ||||||
Drawings on Asset-Based Facility |
— | |||||||
Notes due June 22, 2021 |
— |
|||||||
Notes due December 15, 2024 |
||||||||
Notes due December 15, 2027 |
||||||||
Deferred transaction costs |
( |
) |
( |
) | ||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
|||||
Current portion of long-term debt |
$ |
— |
$ | |||||
Non-current portion of long-term debt |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Additions |
||||||||
Lease interest |
||||||||
Payments made against lease liabilities |
( |
) |
( |
) | ||||
Currency translation effects and other |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Closing balance |
$ |
$ | ||||||
|
|
|
|
|||||
Current portion of lease liabilities |
$ |
$ | ||||||
Non-current portion of lease liabilities |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
December 31, 2021 |
||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
|
|
|||
$ |
||||
Less: |
||||
Imputed interest |
||||
Short-term leases |
||||
Low-value leases |
||||
|
|
|||
$ |
||||
|
|
(a) |
Income Tax Recognized in Net Earnings |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Current income taxes |
$ |
$ | ( |
) | $ | |||||||
Deferred income taxes |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ||||||||||
|
|
|
|
|
|
(b) |
Reconciliation of Tax Expense |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Earnings before income taxes |
$ |
$ | $ | |||||||||
Canadian statutory rate |
% |
% | % | |||||||||
|
|
|
|
|
|
|||||||
Expected income tax provision |
$ |
$ | $ | |||||||||
Add (deduct): |
||||||||||||
Exchange rate effects on tax basis |
( |
) |
( |
) | ||||||||
Earnings taxed in foreign jurisdictions |
( |
) | ( |
) | ||||||||
Revaluation of Canadian deferred tax assets due to change in statutory rate |
( |
) |
||||||||||
Withholding tax on dividends received from foreign subsidiaries |
— | — | ||||||||||
Amounts not deductible (taxable) for tax purposes |
||||||||||||
Impact of accounting for associates and joint ventures |
( |
) |
( |
) | ( |
) | ||||||
Change in recognized deferred tax assets |
— | — | ||||||||||
Other |
( |
) |
( |
) | ||||||||
|
|
|
|
|
|
|||||||
Income tax expense from continuing operations |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
(c) |
Income Tax Recognized in Other Comprehensive Income |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Deferred Tax |
||||||||||||
Arising on income and expenses recognized in other comprehensive income: |
||||||||||||
Fair value remeasurement of hedging instruments entered into for cash flow hedges |
$ |
$ | $ | ( |
) | |||||||
Arising on income and expenses reclassified from other comprehensive income to net earnings: |
||||||||||||
Relating to cash flow hedges |
( |
) |
||||||||||
Arising on foreign exchange movement on long-term debt: |
||||||||||||
Relating to net investment hedge |
— |
— | ||||||||||
|
|
|
|
|
|
|||||||
Total income tax recognized in other comprehensive income |
$ |
$ | $ | ( |
) | |||||||
|
|
|
|
|
|
(d) |
Net Deferred Tax Assets (Liabilities) |
Accounting provisions and accruals |
Tax losses |
Long-term assets |
Other |
Exchange rate effects on tax bases |
Cash flow hedges |
Total 1 |
||||||||||||||||||||||
January 1, 2021 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
Charged to net earnings |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Charged to OCI |
( |
) | ( |
) | ||||||||||||||||||||||||
Exchange differences |
( |
) | ( |
) | — |
( |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2021 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Net deferred tax liabilities at December 31, 2021 of $ |
Accounting provisions and accruals |
Tax losses | Long-term assets |
Other | Exchange rate effects on tax bases |
Cash flow hedges |
Total 1 |
||||||||||||||||||||||
January 1, 2020 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
Charged to net earnings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Charged to OCI |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Exchange differences |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2020 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Net deferred tax liabilities at December 31, 2020 of $ |
(e) |
Unrecognized Deferred Tax Assets |
Years ended December 31, |
2021 |
2020 | ||||||
Canadian: |
||||||||
Tax losses |
$ |
$ | — | |||||
Capital assets |
— | |||||||
Accounting provisions & other accruals |
— | |||||||
Foreign: |
||||||||
Tax losses |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
2021 |
2020 |
|||||||||||||||
Years ended December 31, |
Number of common shares |
Common share capital |
Number of common shares |
Common share capital |
||||||||||||
Balance, January 1 |
$ |
$ | ||||||||||||||
Exercise of stock options |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
$ | |||||||||||||||
|
|
|
|
|
|
|
|
Years ended December 31, |
2021 |
2020 | ||||||
Balance, January 1 |
$ |
$ | ||||||
Share-based compensation |
||||||||
Exercise of stock options |
— |
— | ||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Engineered Systems |
$ |
$ | $ | |||||||||
Service 1 |
||||||||||||
Energy Infrastructure 1,2 |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenue |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
1 |
During the second quarter of 2020, revenues from the operation and maintenance of BOOM contracts have been reclassified from the Service to Energy product line, including $I nfrastructure Energy .I nfrastructure |
2 |
Energy Infrastructure revenue for 2021 and 2020 includes the recognition of revenue from finance lease transactions in the fourth quarter of the same period. Upon commencement of the renegotiated leases, the Company recognized the sale of the related rental assets and a corresponding finance lease receivable. Refer to Note 11 for further details on finance leases. |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
United States |
$ |
$ | $ | |||||||||
Canada |
||||||||||||
Oman |
||||||||||||
Australia |
||||||||||||
Bahrain |
||||||||||||
Argentina |
||||||||||||
Mexico |
||||||||||||
Colombia |
||||||||||||
Brazil |
||||||||||||
Nigeria |
||||||||||||
Bolivia |
||||||||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenue |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
Less than one year |
One to two years |
Greater than two years |
Total | |||||||||||||
Engineered Systems |
$ | $ | $ | $ | ||||||||||||
Service |
||||||||||||||||
Energy Infrastructure |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
|
|
|
|
|
|
|
|
(a) |
Share-Based Compensation Expense |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Equity settled share-based payments |
$ |
$ | $ | |||||||||
Deferred share units |
( |
) | ( |
) | ||||||||
Phantom share entitlement plan |
( |
) | ( |
) | ||||||||
Performance share units |
||||||||||||
Restricted share units |
||||||||||||
Cash performance target |
||||||||||||
|
|
|
|
|
|
|||||||
Share-based compensation expense |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
(b) |
Equity-Settled Share-Based Payments |
2021 |
2020 | |||||||||||||||
Years ended December 31, |
Number of options |
Weighted average exercise price |
Number of options |
Weighted average exercise price |
||||||||||||
Options outstanding, beginning of period |
$ |
$ | ||||||||||||||
Granted |
||||||||||||||||
Forfeited |
( |
) |
( |
) | ||||||||||||
Expired |
( |
) |
( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options outstanding, end of period |
$ |
$ | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options exercisable, end of period |
$ |
$ | ||||||||||||||
|
|
|
|
|
|
|
|
1 |
|
Years ended December 31, |
2021 |
2020 | ||||||
Expected life (years) |
||||||||
Expected volatility 1 |
% |
% | ||||||
Dividend yield |
% |
% | ||||||
Risk-free rate |
% |
% | ||||||
Estimated forfeiture rate |
% |
% |
1 |
Expected volatility is based on the historical volatility of Enerflex over a five-year period, consistent with the expected life of the option. |
Options Outstanding |
Options Exercisable |
|||||||||||||||||||||||
Range of exercise prices |
Number outstanding |
Weighted average remaining life (years) |
Weighted average exercise price |
Number outstanding |
Weighted average remaining life (years) |
Weighted average exercise price |
||||||||||||||||||
$ |
$ | $ | ||||||||||||||||||||||
$ |
||||||||||||||||||||||||
$ |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ |
$ |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Deferred Share Units |
Number of DSUs | Weighted average grant date fair value per unit |
|||||||
DSUs outstanding, January 1, 2021 |
$ | |||||||
Granted |
||||||||
In lieu of dividends |
||||||||
|
|
|
|
|||||
DSUs outstanding, December 31, 2021 |
$ |
|||||||
|
|
|
|
(d) |
Phantom Share Entitlement Plan |
Number of PSEs | Weighted average grant date fair value per unit |
|||||||
PSEs outstanding, January 1, 2021 |
$ | |||||||
Granted |
||||||||
|
|
|
|
|||||
PSEs outstanding, December 31, 2021 |
$ |
|||||||
|
|
|
|
(e) |
Performance Share Units |
Number of PSUs | Weighted average grant date fair value per unit |
|||||||
PSUs outstanding, January 1, 2021 |
$ | |||||||
Granted |
||||||||
In lieu of dividends |
||||||||
Vested |
( |
) | ||||||
|
|
|
|
|||||
PSUs outstanding, December 31, 2021 |
$ |
|||||||
|
|
|
|
(f) |
Restricted Share Units |
Number of RSUs | Weighted average grant date fair value per unit |
|||||||
RSUs outstanding, January 1, 2021 |
$ | |||||||
Granted |
||||||||
In lieu of dividends |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|
|
|||||
RSUs outstanding, December 31, 2021 |
$ |
|||||||
|
|
|
|
(g) |
Cash Performance Target Plan |
(h) |
Employee Share Purchase Plan |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Defined contribution plans |
$ |
$ | $ | |||||||||
401(k) matched savings plan |
||||||||||||
|
|
|
|
|
|
|||||||
Net pension expense |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Finance Costs |
||||||||||||
Short and long-term borrowings |
$ |
$ | $ | |||||||||
Interest on lease liability |
||||||||||||
|
|
|
|
|
|
|||||||
Total finance costs |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
|||||||
Finance Income |
||||||||||||
Interest income |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
|||||||
Net finance costs |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
Year ended December 31, 2021 |
Net earnings |
Weighted average shares outstanding |
Per share |
|||||||||
Basic |
$ |
( |
) |
$ |
( |
) | ||||||
Dilutive effect of stock option conversion |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted |
$ |
( |
) |
$ |
( |
) | ||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
| |||
Year ended December 31, 2020 |
Net earnings |
Weighted average shares outstanding |
Per share |
|||||||||
Basic |
$ | $ | ||||||||||
Dilutive effect of stock option conversion |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted |
$ | $ | ||||||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
| |||
Year ended December 31, 2019 |
Net earnings |
Weighted average shares outstanding |
Per share |
|||||||||
Basic |
$ | $ | ||||||||||
Dilutive effect of stock option conversion |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted |
$ | $ | ||||||||||
|
|
|
|
|
|
December 31, 2021 |
Carrying value |
Estimated fair value |
||||||
Financial Assets |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Derivative instruments in designated hedge accounting relationships |
||||||||
Loans and receivables: |
||||||||
Accounts receivable |
||||||||
Contract assets |
||||||||
Long-term receivables |
||||||||
Financial Liabilities |
||||||||
Derivative instruments in designated hedge accounting relationships |
||||||||
Other financial liabilities: |
||||||||
Accounts payable and accrued liabilities |
||||||||
Long-term debt – Bank Facility |
||||||||
Long-term debt – Asset-Based Facility |
||||||||
Long-term debt – Notes |
||||||||
Other long-term liabilities |
December 31, 2020 |
Ca rrying valu e |
Estimated fair value |
||||||
Financial Assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Derivative instruments in designated hedge accounting relationships |
||||||||
Loans and receivables: |
||||||||
Accounts receivable |
||||||||
Contract assets |
||||||||
Long-term receivables |
||||||||
Financial Liabilities |
||||||||
Derivative instruments in designated hedge accounting relationships |
||||||||
Other financial liabilities: |
||||||||
Accounts payable and accrued liabilities |
||||||||
Current portion of long-term debt - Notes |
||||||||
Long-term debt – Bank Facility |
||||||||
Long-term debt – Notes |
||||||||
Other long-term liabilities |
Carrying value |
Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||
Financial Assets |
||||||||||||||||
Derivative financial instruments |
$ | $ | $ | $ | ||||||||||||
Long-term receivables |
$ | $ | $ | $ | ||||||||||||
Financial Liabilities |
||||||||||||||||
Derivative financial instruments |
$ | $ | $ | $ | ||||||||||||
Long-term debt – Notes |
$ | $ | $ | $ |
Notional amount |
Maturity |
|||||||||||
Canadian Dollar Denominated Contracts |
|
|||||||||||
Purchase contracts |
USD | January 2022 – June 2022 | ||||||||||
Sales contracts |
USD | ( |
) |
January 2022 – September 2022 | ||||||||
Purchase contracts |
EUR | June 2022 | ||||||||||
Sales contracts |
EUR | ( |
) |
June 2022 |
Canadian dollar weakens by 5 percent |
USD |
AUD |
BRL |
|||||||||
Earnings before income taxes |
$ |
$ |
( |
) |
$ |
Canadian dollar weakens by 5 percent |
USD |
AUD |
BRL |
|||||||||
Financial instruments held in foreign operations |
||||||||||||
Other comprehensive income |
$ |
$ |
$ |
|||||||||
Financial instruments held in Canadian operations |
||||||||||||
Earnings before income taxes |
$ |
( |
) |
$ |
$ |
Less than 3 months |
3 months to 1 year |
Greater than 1 year |
Total |
|||||||||||||
Derivative financial instruments |
||||||||||||||||
Foreign currency forward contracts |
$ | $ | $ | $ | ||||||||||||
Accounts payable and accrued liabilities |
||||||||||||||||
Long-term debt – Bank Facility |
||||||||||||||||
Long-term debt – Asset-Based Facility |
||||||||||||||||
Long-term debt – Notes |
||||||||||||||||
Other long-term liabilities |
Years ended December 31, |
2021 |
2020 |
||||||
Long-term debt |
$ |
$ | ||||||
Cash and cash equivalents |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Net debt |
$ |
$ | ||||||
|
|
|
|
|||||
Earnings before finance costs and income taxes |
$ |
$ | ||||||
Depreciation and amortization |
||||||||
|
|
|
|
|||||
EBITDA |
$ |
$ | ||||||
|
|
|
|
|||||
Net debt to EBITDA ratio |
:1 |
:1 | ||||||
|
|
|
|
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Net change in non-cash working cap ital and other |
||||||||||||
Accounts receivable |
$ |
$ | $ | |||||||||
Contract assets |
( |
) |
( |
) | ||||||||
Inventories |
( |
) | ||||||||||
Work-in-progress |
( |
) |
||||||||||
Deferred revenue |
( |
) | ( |
) | ||||||||
Accounts payable and accrued liabilities, provisions, and income taxes payable |
( |
) | ||||||||||
Foreign currency and other |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
$ |
$ | $ | ( |
) | ||||||||
|
|
|
|
|
|
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Interest paid – short- and long-term borrowings |
$ |
$ | $ | |||||||||
Interest paid – lease liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
Total interest paid |
$ |
$ | $ | |||||||||
Interest received |
||||||||||||
Taxes paid |
||||||||||||
Taxes received |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Long-term debt, opening balance |
$ |
$ | $ | |||||||||
Changes from financing cash flows |
( |
) |
( |
) | ( |
) | ||||||
The effect of changes in foreign exchange rates |
( |
) |
( |
) | ( |
) | ||||||
Amortization of deferred transaction costs |
||||||||||||
Other changes |
( |
) |
( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Long-term debt, closing balance |
$ |
$ | $ | |||||||||
|
|
|
|
|
|
2022 |
$ |
|||
2023 |
||||
2024 |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Associate – Roska DBO |
||||||||||||
Revenue |
$ |
$ | $ | |||||||||
Purchases |
||||||||||||
Accounts receivable |
||||||||||||
Accounts Payable |
||||||||||||
Joint Operation – Geogas |
||||||||||||
Revenue |
$ |
$ | $ | |||||||||
Purchases |
||||||||||||
Accounts receivable |
||||||||||||
Accounts payable |
Years ended December 31, |
2021 |
2020 | 2019 | |||||||||
Short-term compensation |
$ |
$ | $ | |||||||||
Post-employment compensation |
||||||||||||
Share-based payments |
• | USA generates revenue from manufacturing natural gas compression, refrigeration, processing, and electric power equipment, including custom and standard compression packages and modular natural gas processing equipment and refrigeration systems, in addition to generating revenue from mechanical services and parts, operations and maintenance solutions, and contract compression rentals; |
• | Rest of World generates revenue from manufacturing (focusing on large-scale process equipment), after-market services, including parts and components, as well as operations, maintenance, and overhaul services, and rentals of compression and processing equipment. The Rest of World segment has been successful in securing build-own-operate-maintain |
• | Canada generates revenue from manufacturing both custom and standard natural gas compression, processing, and electric power equipment, as well as providing after-market mechanical service, parts, and compression and power generation rentals. |
USA |
Rest of World |
Canada |
Total |
|||||||||||||||||||||||||||||
Years ended December 31, |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||||||||
Segment revenue |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
Intersegment revenue |
( |
) |
( |
) | ( |
) |
( |
) | ( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Revenue |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
Revenue – Engineered Systems |
||||||||||||||||||||||||||||||||
Revenue – Service |
||||||||||||||||||||||||||||||||
Revenue – Energy Infrastructure 1 |
||||||||||||||||||||||||||||||||
Operating income 2 |
$ |
$ | $ |
$ | $ |
$ | $ |
$ |
1 |
Energy Infrastructure revenue for 2021 includes the recognition of revenue from a finance lease transaction in the fourth quarter of 2021 and 2020. Upon commencement of the renegotiated lease, the Company recognized the sale of the related rental assets and a corresponding finance lease receivable. Refer to Note 11 for further details on finance leases. |
2 |
In the year ended December 31, 2021, the Company recognized $ |
a reduction in cost of goods sold and selling and administrative expenses within the consolidated statements of earnings in accordance with where the associated expenses were recognized. |
USA |
Rest of World |
Canada |
Total |
|||||||||||||||||||||||||||||
Years ended December 31, |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||||||||
Segment revenue |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
Intersegment revenue |
( |
) |
( |
) | ( |
) |
( |
) | ( |
) |
( |
) | ( |
) |
( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Revenue |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
Revenue – Engineered Systems |
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Revenue – Service 1 |
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Revenue – Energy Infrastructure 1,2 |
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Operating income |
$ |
$ | $ |
$ | $ |
$ | $ |
$ |
1 |
Revenues from the operation and maintenance of BOOM contracts have been reclassified from the Service to Energy Infrastructure product line including $ |
2 |
Energy Infrastructure revenue for 2020 includes the recognition of revenue from a finance lease transaction in the fourth quarter of 2020. Upon commencement of the renegotiated leases, the Company recognized the sale of the related rental assets and a corresponding finance lease receivable. Refer to Note 11 for further details on finance leases. |
USA |
Rest of World | Canada | Total | |||||||||||||||||||||||||||||
As at December 31, |
2021 |
2020 | 2021 |
2020 | 2021 |
2020 | 2021 |
2020 | ||||||||||||||||||||||||
Segment assets |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
Goodwill |
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Corporate |
( |
) |
( |
) | ||||||||||||||||||||||||||||
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Total segment assets |
$ |
$ | $ |
$ | $ |
$ | $ |
$ | ||||||||||||||||||||||||
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ARTICLE 1 THE MERGER |
A-2 | |||||
1.1 |
The Merger | A-2 | ||||
1.2 |
Closing | A-2 | ||||
1.3 |
Effective Time | A-2 | ||||
1.4 |
Effects of the Merger | A-2 | ||||
1.5 |
Organizational Documents of the Surviving Corporation | A-3 | ||||
1.6 |
Directors and Officers of the Surviving Corporation | A-3 | ||||
ARTICLE 2 CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES |
A-3 | |||||
2.1 |
Effect of the Merger on Capital Stock | A-3 | ||||
2.2 |
Exchange of Certificates | A-4 | ||||
2.3 |
Treatment of Company Equity Awards | A-7 | ||||
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
A-8 | |||||
3.1 |
Qualification, Organization, Subsidiaries | A-8 | ||||
3.2 |
Capitalization | A-9 | ||||
3.3 |
Corporate Authority Relative to This Agreement; Consents and Approvals; No Violation | A-10 | ||||
3.4 |
Reports and Financial Statements | A-11 | ||||
3.5 |
Internal Controls and Procedures | A-13 | ||||
3.6 |
No Undisclosed Liabilities | A-14 | ||||
3.7 |
Compliance with Law; Permits | A-14 | ||||
3.8 |
Anti-Corruption; Anti-Bribery; Anti-Money Laundering | A-15 | ||||
3.9 |
Sanctions | A-15 | ||||
3.10 |
Environmental Laws and Regulations | A-16 | ||||
3.11 |
Employee Benefit Plans; Labor Matters | A-16 | ||||
3.12 |
Absence of Certain Changes or Events | A-19 | ||||
3.13 |
Investigations; Litigation | A-19 | ||||
3.14 |
Company Information | A-19 | ||||
3.15 |
Tax Matters | A-20 | ||||
3.16 |
Intellectual Property; IT Assets; Privacy | A-21 | ||||
3.17 |
Title to Assets; Backlog | A-22 | ||||
3.18 |
Title to Properties | A-23 | ||||
3.19 |
Opinion of Financial Advisor | A-23 | ||||
3.20 |
Required Vote of the Company Stockholders | A-24 | ||||
3.21 |
Material Contracts | A-24 |
3.22 |
Suppliers and Customers | A-26 | ||||
3.23 |
Canadian Assets and Revenues | A-26 | ||||
3.24 |
Insurance Policies | A-26 | ||||
3.25 |
Affiliate Party Transactions | A-26 | ||||
3.26 |
Finders or Brokers | A-27 | ||||
3.27 |
Takeover Laws | A-27 | ||||
3.28 |
Warranties; Products | A-27 | ||||
3.29 |
No Other Representations or Warranties; No Reliance | A-27 | ||||
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
A-28 | |||||
4.1 |
Qualification, Organization, Subsidiaries | A-28 | ||||
4.2 |
Capitalization | A-28 | ||||
4.3 |
Corporate Authority Relative to This Agreement; Consents and Approvals; No Violation | A-30 | ||||
4.4 |
Reports and Financial Statements | A-31 | ||||
4.5 |
Disclosure Controls and Internal Control over Financial Reporting | A-32 | ||||
4.6 |
No Undisclosed Liabilities | A-33 | ||||
4.7 |
Compliance with Law; Permits | A-33 | ||||
4.8 |
Anti-Corruption; Anti-Bribery; Anti-Money Laundering | A-34 | ||||
4.9 |
Sanctions | A-34 | ||||
4.10 |
Environmental Laws and Regulations | A-35 | ||||
4.11 |
Employee Benefit Plans; Labor Matters | A-35 | ||||
4.12 |
Absence of Certain Changes or Events | A-37 | ||||
4.13 |
Investigations; Litigation | A-37 | ||||
4.14 |
Parent Information | A-37 | ||||
4.15 |
Tax Matters | A-38 | ||||
4.16 |
Opinion of Financial Advisor | A-39 | ||||
4.17 |
Capitalization of Merger Sub | A-39 | ||||
4.18 |
Required Vote of Parent Shareholders | A-39 | ||||
4.19 |
Finders or Brokers | A-39 | ||||
4.20 |
Certain Arrangements; Related Party Transactions | A-39 | ||||
4.21 |
Ownership of Common Stock | A-40 | ||||
4.22 |
Suppliers and Customers | A-40 | ||||
4.23 |
Financing | A-40 | ||||
4.24 |
Solvency | A-41 | ||||
4.25 |
No Other Representations or Warranties; No Reliance | A-42 |
ARTICLE 5 COVENANTS AND AGREEMENTS |
A-42 | |||||
5.1 |
Conduct of Business by the Company | A-42 | ||||
5.2 |
Conduct of Business by Parent | A-46 | ||||
5.3 |
Reorganization | A-47 | ||||
5.4 |
Access to Information; Confidentiality | A-48 | ||||
5.5 |
No Solicitation by the Company | A-49 | ||||
5.6 |
No Solicitation by Parent | A-53 | ||||
5.7 |
Preparation of Registration Statement and Management Information Circular; Shareholders Meetings; Regulatory Filings; Other Actions | A-58 | ||||
5.8 |
Employee Matters | A-63 | ||||
5.9 |
Company Material Contracts; Consents | A-64 | ||||
5.10 |
Legal Conditions to the Merger | A-64 | ||||
5.11 |
Takeover Statute | A-64 | ||||
5.12 |
Public Announcements | A-65 | ||||
5.13 |
Indemnification and Insurance | A-65 | ||||
5.14 |
Stock Exchange De-listing; 1934 Act Deregistration; US Stock Exchange Listing |
A-66 | ||||
5.15 |
Rule 16b-3 |
A-66 | ||||
5.16 |
Stockholder Litigation | A-66 | ||||
5.17 |
Certain Tax Matters | A-66 | ||||
5.18 |
Merger Sub Stockholder Approvals | A-67 | ||||
5.19 |
Governance | A-67 | ||||
5.20 |
Advice of Changes | A-67 | ||||
5.21 |
Financing Cooperation | A-68 | ||||
5.22 |
Debt Financing | A-71 | ||||
ARTICLE 6 CONDITIONS TO THE MERGER |
A-73 | |||||
6.1 |
Conditions to Obligation of Each Party to Effect the Merger | A-73 | ||||
6.2 |
Conditions to Obligation of the Company to Effect the Merger | A-74 | ||||
6.3 |
Conditions to Obligations of Parent and Merger Sub to Effect the Merger | A-75 | ||||
6.4 |
Frustration of Closing Conditions | A-75 | ||||
ARTICLE 7 TERMINATION |
A-76 | |||||
7.1 |
Termination or Abandonment | A-76 | ||||
7.2 |
Notice of Termination; Effect of Termination | A-77 | ||||
7.3 |
Termination Fees | A-78 |
ARTICLE 8 MISCELLANEOUS |
A-80 |
|||||
8.1 |
No Survival of Representations and Warranties | A-80 | ||||
8.2 |
Expenses | A-80 | ||||
8.3 |
Counterparts; Effectiveness | A-80 | ||||
8.4 |
Governing Law; Jurisdiction | A-80 | ||||
8.5 |
Specific Enforcement | A-81 | ||||
8.6 |
WAIVER OF JURY TRIAL | A-81 | ||||
8.7 |
Notices | A-81 | ||||
8.8 |
Assignment; Binding Effect | A-82 | ||||
8.9 |
Severability | A-82 | ||||
8.10 |
Entire Agreement; No Third-Party Beneficiaries | A-83 | ||||
8.11 |
Amendments; Waivers | A-83 | ||||
8.12 |
Headings | A-83 | ||||
8.13 |
Interpretation | A-83 | ||||
8.14 |
Obligations of Merger Sub and Subsidiaries | A-84 | ||||
8.15 |
Financing Provisions | A-84 | ||||
8.16 |
Definitions | A-85 | ||||
8.17 |
Certain Defined Terms | A-94 |
1.1 | The Merger. |
1.2 | Closing. |
1.3 | Effective Time. |
1.4 | Effects of the Merger. |
1.5 | Organizational Documents of the Surviving Corporation. |
1.6 | Directors and Officers of the Surviving Corporation. |
2.1 | Effect of the Merger on Capital Stock. |
(a) | At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub or the holders of any securities of the Company or Merger Sub: |
(i) | Conversion of Company Common Stock. Merger Consideration Book-Entry Shares Certificate |
(ii) | Treatment of Excluded Shares. Excluded Shares |
(iii) | Conversion of Merger Sub Common Stock. non-assessable share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates representing the common stock of Merger Sub shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence. |
(b) | No Dissenters ’ Rights. |
(c) | Certain Adjustments. |
(d) | No Fractional Shares. |
(i) | No fractional Parent Common Shares shall be issued in connection with the Merger and no certificates or scrip representing fractional Parent Common Shares shall be delivered on the conversion of shares of Company Common Stock pursuant to Section 2.1(a)(i). Each holder of shares of Company Common Stock who would otherwise have been entitled to receive as a result of the Merger a fraction of a Parent Common Share (after aggregating all shares represented by the Certificates and Book-Entry Shares delivered by such holder) shall receive, in lieu of such fractional Parent Common Share, cash (without interest) in an amount (rounded to the nearest cent) representing such holder’s proportionate interest in the net proceeds from the sale by the Exchange Agent, on behalf of all such holders, of the aggregate number of fractional Parent Common Shares that would otherwise have been issuable to such holders as part of the Merger Consideration (the “ Fractional Share Cash Amount |
(ii) | As soon as practicable after the Effective Time, the Exchange Agent shall, on behalf of all such holders of fractional Parent Common Shares, effect the sale of all such Parent Common Shares that would otherwise have been issuable as part of the Merger Consideration at the then-prevailing prices on the NYSE or Nasdaq, as applicable, or the TSX. After the proceeds of such sale have been received, the Exchange Agent shall determine the applicable Fractional Share Cash Amount payable to each applicable holder and shall make such amounts available to such holders in accordance with Section 2.2(b). The Parties acknowledge that payment of such cash consideration in lieu of issuing fractional shares is not separately bargained-for consideration, but merely represents a mechanical rounding off for purposes of avoiding the expense and inconvenience that would otherwise be caused by the issuance of fractional shares. |
(iii) | No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional Parent Common Share that would otherwise have been issuable as part of the Merger Consideration. |
(e) | Issuance of Compensatory Shares |
2.2 | Exchange of Certificates. |
(a) | Exchange Agent. Exchange Agent |
Agent from time to time, as needed, cash sufficient to pay any dividends and other distributions pursuant to Section 2.2(c). Any such cash and book-entry shares deposited with the Exchange Agent shall be referred to as the “ Exchange Fund |
(b) | Payment Procedures. |
(i) | As soon as reasonably practicable after the Effective Time and in any event not later than the fifth (5 th ) Business Day following the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of shares of Company Common Stock whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.1, (A) a letter of transmittal, in form and substance reasonably satisfactory to the Company (which approval shall not be unreasonably withheld, conditioned or delayed), with respect to Book-Entry Shares (to the extent applicable) and Certificates (which shall specify that delivery shall be effected, and risk of loss and title to Certificates shall pass, only on delivery of Certificates (or effective affidavits of loss in lieu thereof) to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may mutually reasonably agree), and (B) instructions for use in effecting the surrender of Book-Entry Shares (to the extent applicable) or Certificates (or effective affidavits of loss in lieu thereof) in exchange for the Merger Consideration. |
(ii) | On surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, or, in the case of Book-Entry Shares, receipt of an “agent’s message” by the Exchange Agent, and such other documents as may customarily be required by the Exchange Agent, the holder of such Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares shall be entitled to receive in exchange therefor, and the Exchange Agent shall be required to promptly deliver to each such holder, the Merger Consideration, into which the shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Article 2 (together with any Fractional Share Cash Amount and any dividends or other distributions payable pursuant to Section 2.2(c)). No interest shall be paid or accrued on any amount payable on due surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (A) the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and (B) the Person requesting such payment shall have paid any transfer and other similar Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established that such Tax either has been paid or is not required to be paid. |
(iii) | The Parties and any other Person that has any withholding obligation with respect to any payment made pursuant to this Agreement as determined by such Party or person in good faith shall be entitled to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from any payment such amounts as are required to be withheld or deducted under the Internal Revenue Code of 1986, as amended (the “ Code non-U.S. Tax Law. To the extent that amounts are so withheld and paid over to the appropriate Governmental Entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the deduction and withholding was made. The Parties shall use reasonable best efforts to reduce or eliminate withholding tax in connection with any payment made pursuant to Section 7.3 hereof to the extent permitted by applicable Law. |
(c) | Treatment of Unexchanged Shares. |
of Company Common Stock to be converted into Parent Common Shares pursuant to Section 2.1(a)(i), the holder thereof shall be entitled to receive (in addition to the Merger Consideration and the Fractional Share Cash Amount payable to such holder pursuant to this Article 2) any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to the Parent Common Shares represented by such share of Company Common Stock, less such withholding or deduction for any Taxes required by applicable Law. Until the holders of any unsurrendered shares of Company Common Stock surrender such shares of Company Common Stock in accordance with this Section 2.2, each unsurrendered share of Company Common Stock shall represent only the right to receive, upon surrender, the Merger Consideration and the Fractional Share Cash Amount payable to such holder pursuant to this Article 2, and the holders of such unsurrendered shares of Company Common Stock shall have no rights as a stockholder of the Company or the Surviving Corporation. After and only after surrender in accordance with this Section 2.2, the record holder thereof shall be entitled to receive any dividends or other distributions, without interest thereon, which theretofore had become payable with respect to the whole Parent Common Shares that the shares of Company Common Stock represented by such unsurrendered certificate have been converted into the right to receive. |
(d) | Closing of Transfer Books. |
(e) | Termination of Exchange Fund. |
(f) | No Liability. |
(g) | Investment of Exchange Fund. provided provided further |
Company Common Stock. Any interest and other income resulting from such investments shall be paid to or at the direction of Parent pursuant to Section 2.2(e). |
(h) | Lost Certificates. |
2.3 | Treatment of Company Equity Awards. |
(a) | Each award of shares of Company Common Stock granted subject to any vesting, forfeiture or other lapse restrictions (each, a “ Company Restricted Share Award Parent Restricted Share Award multiplied by (ii) the Exchange Ratio. Except as expressly provided in this Section 2.3(a), each such Parent Restricted Share Award shall be subject to the same terms and conditions (including settlement terms) as applied to the corresponding Company Restricted Share Award immediately prior to the Effective Time. |
(b) | Each award of restricted stock units (excluding any Company Performance Share Award described in Section 2.3(c)) in respect of shares of Company Common Stock (a “ Company RSU Award Parent RSU Award |
(c) | Each award of restricted stock units in respect of shares of Company Common Stock granted subject to performance targets (each, a “ Company Performance Share Award i.e |
same terms and conditions (including settlement terms) as applied to the corresponding Company Performance Share Award immediately prior to the Effective Time. |
(d) | Prior to the Effective Time, the Company, through the Company Board or an appropriate committee thereof, shall adopt such resolutions as may reasonably be required to effectuate the actions contemplated by this Section 2.3. |
3.1 | Qualification, Organization, Subsidiaries. |
(a) | (i) The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the state of Delaware. The Company has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted. The Company is qualified to do business in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except, in each case, as would not reasonably be expected to be material to the Company |
(b) | All of the outstanding shares of capital stock or voting securities of, or other equity interests in, each of the Company’s Subsidiaries, is owned directly or indirectly by the Company, have been validly issued, where applicable, are fully paid and non-assessable and were issued free of pre-emptive rights, and are free and clear of all Liens other than restrictions imposed by applicable securities Laws or the Organizational Documents of any such Subsidiary or any Permitted Liens. No Company Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of the Company’s Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of the Company’s Subsidiaries. |
(c) | Except for the capital stock and voting securities of, and other equity interests in, the Company’s Subsidiaries, none of the Company or the Company’s Subsidiaries owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any capital stock or voting securities of, or other equity interests in, any Person. |
(d) | The Company has made available to Parent true, complete and correct copies of the Organizational Documents of the Company and of each other entity in which the Company owns directly or indirectly an equity interest of less than 100%, each as amended prior to the date of this Agreement, and each as made available to Parent is in full force and effect. |
3.2 | Capitalization. |
(a) | The authorized capital of the Company consists of 250,000,000 shares of Company Common Stock, par value $0.01 per share, and 50,000,000 shares of preferred stock, par value $0.01 per share. As of 5:00 p.m. Central time on the Business Day prior to the date hereof (the “ Reference Time non-assessable, and are not subject to and were not issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. |
(b) | Section 3.2(b) of the Company Disclosure Schedules sets forth as of the date of this Agreement a list of each outstanding Company Equity Award granted under the Company stock plans and: (A) the name of the holder of such Company Equity Award; (B) the number of shares of Company Common Stock subject to such outstanding Company Equity Award; (C) if applicable, the exercise price, purchase price, or similar pricing of such Company Equity Award; (D) the date on which such Company Equity Award was granted or issued; (E) the applicable vesting, repurchase, or other lapse of restrictions schedule, and the extent to which such Company Equity Award is vested and exercisable as of the date hereof; and (F) with respect to Company stock options, the date on which such Company stock option expires. |
(c) | (i) All outstanding shares of capital stock, voting securities or other ownership interests of each Material Subsidiary are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized and validly issued as fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. All outstanding shares of stock of each Material Subsidiary and all other outstanding shares of capital stock, voting securities or other ownership interests of each Subsidiary have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws. |
(d) | Except as set forth in Section 3.2(a), as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, calls, convertible securities or other similar rights, agreements or commitments relating to the issuance of capital stock of any of the Company’s Subsidiaries to which the Company or any of the Company’s Subsidiaries is a party obligating any of the Company’s Subsidiaries to (i) issue, transfer or sell any shares of capital stock of any of the Company’s Subsidiaries or securities convertible into, exercisable for or exchangeable for such shares, (ii) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, or (iii) redeem or otherwise acquire any such shares of capital stock. All outstanding shares of capital stock, voting securities, or other ownership interests in any Subsidiary of the Company, have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws. None of the Company’s Subsidiaries has outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into, exercisable for or exchangeable for securities having the right to vote) with the stockholders of the Company or a Company Subsidiary on any matter. |
(e) | Neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into, exercisable for or exchangeable for securities having the right to vote) with the stockholders of the Company on any matter. No Subsidiary of the Company owns any capital stock of the Company. Except for its interests (i) in its Subsidiaries and (ii) in any Person in connection with any joint venture, partnership or other similar arrangement with a third party, the Company does not own, directly or indirectly, any capital stock of, or other equity interests in any Person. |
(f) | Except for the Company Voting Agreements, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting or issuance, or restricting the transfer of, or providing registration rights with respect to the capital stock of the Company or any of its Subsidiaries. |
(g) | Section 3.2(g) of the Company Disclosure Schedules lists each Subsidiary of the Company, its jurisdiction of organization and the percentage of its equity interests directly or indirectly held by the Company. |
3.3 | Corporate Authority Relative to This Agreement; Consents and Approvals; No Violation. |
(a) | The Company has all requisite corporate power and authority to enter into this Agreement and, subject to receipt of the Company Stockholder Approval, to perform its obligations hereunder and to consummate the transactions contemplated hereby. Except for the Company Stockholder Approval and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company are necessary to authorize the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company, and, assuming this Agreement constitutes the valid and binding agreement of Parent and Merger Sub, constitutes the valid and binding agreement of the Company, enforceable against the |
Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights generally and (ii) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought (collectively, the “ Enforceability Exceptions |
(b) | The Company Board at a duly called and held meeting has unanimously (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement, (ii) approved the execution, delivery and performance of this Agreement and the consummation of the Merger and the other transactions contemplated hereby and (iii) resolved to recommend that the stockholders of the Company adopt this Agreement (the “ Company Recommendation |
(c) | The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger and the other transactions contemplated hereby by the Company do not and will not require the Company or any of its Subsidiaries to procure, make or provide prior to the Closing Date any consent, approval, authorization or permit of, action by, filing with or notification to any United States or foreign, state, provincial, territorial or local governmental or regulatory agency, commission, court, arbitrator, body, entity or authority (each, a “ Governmental Entity Company Approvals |
(d) | Assuming compliance with the matters referenced in Section 3.3(c) and receipt of the Company Approvals and the Company Stockholder Approval, the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby, do not and will not (i) contravene or conflict with the Organizational Documents of (A) the Company or (B) any of its Subsidiaries, (ii) contravene or conflict with or constitute a violation of any provision of any Law binding on or applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, (iii) require any consent, waiver or approval, result in any violation of, or default (or an event that with or without notice or lapse of time or both would become a default) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any Contract, instrument, permit, concession, franchise, right or license binding on the Company or any of its Subsidiaries, or (iv) result in the creation of a Lien (other than Permitted Lien), other than, in the case of clauses (ii), (iii) and (iv), any such contravention, conflict, violation, default, termination, cancellation, acceleration, right, loss or Lien that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. |
3.4 | Reports and Financial Statements. |
(a) | The Company has filed or furnished, on a timely basis, all forms, statements, certifications, documents, correspondence, registrations, and reports required to be filed or furnished by it with the SEC pursuant to the Exchange Act or the Securities Act since December 31, 2018 (the forms, statements, certifications, documents and reports so filed or furnished by the Company and those filed or furnished to the SEC subsequent to the date of this Agreement, including any amendments thereto, including |
exhibits, schedules thereto and all other information incorporated by reference, the “ Company SEC Documents |
(b) | The Company and each Material Subsidiary has filed or furnished, on a timely basis (taking into account any relevant extensions), all material forms, statements, certifications, documents, correspondence, registrations, and reports required to be filed or furnished by it with any Governmental Entity since December 31, 2018 (the “ Company Governmental Filings |
(c) | The Company is in all material respects in compliance with the applicable listing and corporate governance rules and regulations of the NYSE. Except as permitted by the Exchange Act, neither the Company nor any of its Affiliates has made, arranged or modified (in any material way) any extensions of credit in the form of a personal loan to any executive officer or director of the Company. There (i) is no unresolved violation, criticism, or exception by any regulatory agency with respect to any report or statement relating to any examinations or inspections of the Company or any Company Subsidiaries and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any regulatory agency with respect to the business, operations, policies or procedures of the Company or any Company Subsidiary since December 31, 2018. |
(d) | The consolidated financial statements (including all related notes and schedules) of the Company included in or incorporated by reference into the Company SEC Documents (or, if any such Company SEC Document is amended or superseded by a filing prior to the date of this Agreement, such amended or superseding Company SEC Document) (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) fairly presented, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto), (iii) complied, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iv) and were prepared, in all material respects, in conformity with GAAP (except, in the case of the unaudited financial statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). Since December 31, 2018, no independent public accounting firm of the Company has resigned (or informed the Company that it intends to resign) or been dismissed as independent public accountants of the |
Company as a result of or in connection with any disagreements with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. |
(e) | Section 3.4(e) of the Company Disclosure Schedules lists and describes any amounts of cash or funds that are subject to any restrictions on transfer or that otherwise cannot be transferred to the equity holders of the Company at will or without incurring material costs, Taxes or penalties, such as cash held by Company Subsidiaries that are subject to foreign exchange restrictions by foreign governments. |
3.5 | Internal Controls and Procedures. |
(a) | The Company has established and maintains disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act. Such disclosure controls and procedures are effective in providing reasonable assurance that all information required to be disclosed by the Company is recorded and reported on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. |
(b) | The Company maintains a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) that is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company in all material respects, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets, that access to assets is permitted only in accordance with authorizations of management and directors of the Company and that receipts and expenditures of the Company are being made only in accordance with appropriate authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. The records, systems, controls, data and information of the Company and its Subsidiaries that are used in the systems of disclosure controls and procedures and of financial reporting controls and procedures described above are recorded, stored, maintained and operated under means that are under the exclusive ownership and direct control of the Company or a wholly-owned Subsidiary of the Company or its accountants, except as would not reasonably be expected to materially and adversely affect or disrupt the Company’s systems of disclosure controls and procedures and of financial reporting controls and procedures or the reports generated thereby. |
(c) | The Company’s management has completed an assessment of the effectiveness of the Company’s internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2020, and such assessment concluded that such controls were effective. The Company has disclosed, based on its most recent evaluation of its internal controls prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board, (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal control over financial reporting. As of the date of its most recent audited financial statements, neither the Company nor its auditors had identified any significant deficiencies or material weaknesses in its internal controls over financial reporting and, as of the date of this Agreement, to the Knowledge of the Company, nothing has come to the auditors’ attention, that has caused it to believe that there are any material weaknesses or significant deficiencies in such internal controls. To the Company’s Knowledge, since December 31, 2018, no material complaints from any source regarding accounting, internal accounting controls or auditing matters, and no concerns from Company employees regarding questionable accounting or auditing matters, have been received by the Company. To the Company’s Knowledge, since December 31, 2018, no attorney representing the Company or any of its Subsidiaries, whether or not |
employed by the Company or any of its Subsidiaries, has reported evidence of a violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company’s chief legal officer, audit committee (or other committee designated for the purpose) of the Company Board pursuant to the rules adopted pursuant to Section 307 of the Sarbanes-Oxley Act or any Company policy contemplating such reporting, including in instances not required by those rules. |
(a) | The Company and its Subsidiaries are, and since December 31, 2018 have been, in material compliance with and not in default under or in violation of all applicable Laws, including any federal, state, provincial, local and foreign law, statute, ordinance, rule, resolutions, determinations, injunctions, common law rulings, awards (including awards of any arbitrator) regulation, judgment, Order, injunction or decree of any Governmental Entity, in the U.S. and foreign jurisdictions (collectively, “ Laws Law |
(b) | The Company and its Subsidiaries are in possession of all material franchises, grants, concessions, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances, tariffs, qualifications, registrations and Orders of any Governmental Entities (“ Permits Company Permits non-renewal, adverse modifications, administrative or judicial proceeding that would reasonably be expected to result in modification, termination or revocation thereof, and the Company and each of its Subsidiaries is in compliance with the terms and requirements of such Company Permit, except where the failure to be in full force and effect or in compliance would not reasonably be expected to be material to the Company or any of its Material Subsidiaries. |
(c) | Since December 31, 2018, neither the Company nor any of its Subsidiaries has received any written notice that the Company or its Subsidiaries is in material violation of any Law applicable to the Company or any of its Subsidiaries or any Permit. There are no Actions pending, threatened in writing or, to the Knowledge of the Company, otherwise threatened that would reasonably be expected to result in the revocation, withdrawal, suspension, non-renewal, termination, revocation, or adverse modification or limitation of any such Permit material to the Company or any of its Material Subsidiaries. |
(d) | The Company, including any Subsidiaries or Affiliates, is not a TID U.S. Business, as such term is defined in 31 C.F.R. § 800.248. |
3.8 | Anti-Corruption; Anti-Bribery; Anti-Money Laundering. |
(a) | The Company, its Subsidiaries and, to the Knowledge of the Company, each of their employees, directors, officers, agents and each other Person acting on behalf of the Company or its Subsidiaries are in all respects compliant with and for the past five (5) years, have complied with (i) the Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA Anti-Corruption Laws |
(b) | None of the Company, its Subsidiaries or, to the Knowledge of the Company, any of their directors, officers and employees and each other Person acting on behalf of the Company or its Subsidiaries has, in the past five (5) years, directly or indirectly, violated any, or been subject to actual or, to the Knowledge of the Company, pending or threatened Action alleging violations on the part of any of the foregoing Persons of the FCPA or Anti-Corruption Laws or any terrorism financing Law. |
(c) | None of the Company, its Subsidiaries or, to the Knowledge of the Company, any of their directors, officers, employees or any other Person acting on behalf of the Company or its Subsidiaries has, in the past five (5) years: (i) directly or indirectly, paid, offered or promised to pay, or authorized or ratified the payment of any monies, gifts or anything of value (A) which would violate any applicable Anti-Corruption Law, including the FCPA, or (B) to any national, provincial, municipal or other Government Official or any political party or candidate for political office for the purpose of (x) influencing any act or decision of such official or of any Governmental Entity, (y) to obtain or retain business, or direct business to any Person or (z) to secure any other improper benefit or advantage; (ii) established or maintained any unlawful fund of monies or other assets of the Company or any of the Company Subsidiaries; (iii) made any fraudulent entry on the books or records of the Company or any of the Company Subsidiaries; (iv) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for the Company or any of the Company Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for the Company or any of the Company Subsidiaries; or (v) aided, abetted, caused (directly or indirectly), participated in, or otherwise conspired with, any Person to violate the terms of any Order or applicable Law. |
3.9 | Sanctions. |
(a) | The Company and each of its Subsidiaries are and, in the past five (5) years have been, in all material respects in compliance with all applicable economic sanctions and export control Laws (collectively “ Export and Sanctions Regulations |
(b) | None of the Company or any of its Subsidiaries, or, to the Knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of any of the Company or its Subsidiaries, in their capacity as such, is currently, or has been in the past five (5) years: (i) a Sanctioned Person or (ii) engaging in any dealings or transactions with, or for the benefit of, any Sanctioned Person or in any Sanctioned Country, to the extent such activities would cause the Company to violate applicable Export and Sanctions Regulations in the United States or in other jurisdictions in which the Company or any of its Subsidiaries do business or are otherwise subject to such jurisdiction. |
(c) | For the past five (5) years, the Company and its Subsidiaries have (i) instituted policies and procedures that are reasonably designed to ensure compliance, in all material respects, with the Export and |
Sanctions Regulations in each jurisdiction in which the Company and its Subsidiaries operate or are otherwise subject to jurisdiction and (ii) maintained such policies and procedures in full force and effect, in all material respects. |
(d) | For the past five (5) years, neither the Company nor any of its Subsidiaries (i) has been found in violation of, charged with or convicted of, any Export and Sanctions Regulations, (ii) to the Knowledge of the Company, is under investigation by any Governmental Entity for possible violations of any Export and Sanctions Regulation, (iii) has been assessed civil penalties under any Export and Sanctions Regulations or (iv) has filed any voluntary disclosures with any Governmental Entity regarding possible violations of any Export and Sanctions Regulations. |
3.10 | Environmental Laws and Regulations . |
3.11 | Employee Benefit Plans; Labor Matters. |
(a) | Section 3.11(a) of the Company Disclosure Schedules lists all material Company Benefit Plans. |
(b) | Each Company Benefit Plan (including any related trusts) has been established, maintained and administered in material compliance with its terms and with applicable Law, including ERISA and the Code to the extent applicable thereto and all material premiums required by contract or Law to be paid, all material benefits, expenses and other amounts due and payable and all material contributions, transfers or payments required to be made to or under the terms of any Company Benefit Plan prior to the date hereof have been timely made, paid or accrued in accordance with GAAP and are reflected, to the extent required, in the Company’s financial statements. To the Knowledge of the Company, no material fact, event or omission has occurred which would reasonably be expected to cause any Company Benefit Plan to lose its qualification to provide Tax-favored benefits under applicable Law including the Code (including under, Sections 105, 106, 125, 132, 137 or 401(a) of the Code). |
(c) | No employee benefit plan of the Company, its Subsidiaries or its ERISA Affiliates is (i) a “multiemployer plan” within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA, (ii) a plan subject to Title IV of ERISA or Section 412, 430 or 4971 of the Code, (iii) a plan that has two (2) or more contributing sponsors at least two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA, or (iv) a plan to which the Company is required to contribute pursuant to a collective agreement, participation agreement, any other agreement or statute or |
municipal by-law and which is not maintained or administered by the Company or its Affiliates, and none of the Company, its Subsidiaries or any of its ERISA Affiliates has, at any time during the last six (6) years, contributed to, been obligated to contribute to or incurred any liability with respect to, any such plan. |
(d) | For each Company Benefit Plan intended to be “qualified” under Section 401(a) of the Code, the Company has received a favorable determination letter from the Internal Revenue Service or is entitled to rely on a favorable opinion or advisory letter issued by the Internal Revenue Service and, to the Knowledge of the Company, no fact or event has occurred that would reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan under Section 401(a) of the Code, No trust funding any Company Benefit Plan is intended to meet the requirements of Section 501(c)(9) of the Code. |
(e) | No Company Benefit Plan provides health or other welfare benefits after retirement or other termination of employment for current, former or future retired or terminated employees, their spouses, or their dependents (other than (i) continuation coverage required under Section 4980B(f) of the Code or other similar applicable Law, (ii) coverage or benefits the full cost of which is borne by the employee or former employee (or any beneficiary of the employee or former employee), (iii) death benefits when termination occurs upon death or (iv) benefits provided during any applicable severance period). |
(f) | There are no pending, threatened or, to the Knowledge of the Company, anticipated claims, including any audit or inquiry by the Internal Revenue Service or Department of Labor (other than claims for benefits in accordance with the terms of the Company Benefit Plans) by, on behalf of or against any of the Company Benefit Plans or any trusts related thereto and, to the Knowledge of the Company, no set of circumstances exists which may reasonably give rise to a valid claim or lawsuit against the Company Benefit Plans, any fiduciaries thereof with respect to their duties to the Company Benefit Plans or the assets of any of the trusts under any of the Company Benefit Plans that would reasonably be expected to result in any material liability of the Company or any of its Subsidiaries or to the U.S. Pension Benefit Guaranty Corporation, the Internal Revenue Service, the U.S. Department of Labor, any participant in a Company Benefit Plan, or any other Person. Neither the Company nor any of its Subsidiaries has taken any action to take corrective action or make a filing under any voluntary correction program of the Internal Revenue Service, the Department of Labor or any other Governmental Entity with respect to any Company Benefit Plan that remains unresolved, and to the Knowledge of the Company, no plan defect including, any defect that would qualify for correction under any such program, exists. |
(g) | None of the Company, its Subsidiaries or any of its ERISA Affiliates, or any other Person, including any fiduciary, has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) that would reasonably be expected to subject any of the Company Benefit Plans or their related trusts, the Company, any of its Subsidiaries, any of its ERISA Affiliates or any Person to any material Tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA. |
(h) | Section 3.11(h) of the Company Disclosure Schedules lists each Company Benefit Plan that provides for the payment (whether in cash or property or the vesting of property) as a result of the consummation of the transactions contemplated by this Agreement, including the Merger (either alone or, upon the occurrence of any additional or subsequent event), to any employee, officer or director of the Company or any Subsidiary of the Company who is a “disqualified individual” (as such term is defined in Treasury Regulation §1.280G-1) under any Company Benefit Plan that is reasonably expected to be characterized as an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code). The Company has provided to Parent and Merger Sub preliminary calculations reflecting a good faith estimate of the consequences of Sections 280G and 4999 on any “disqualified individuals” within the meaning of Section 280G of the Code in connection with the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event). |
(i) | Except as provided in this Agreement or required by applicable Law, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee or director of the Company or any of its Subsidiaries to severance pay, or any other payment from the Company or its Subsidiaries, (ii) accelerate the time of payment or vesting, or increase the amount of, compensation due to any such employee, director or a consultant, (iii) directly or indirectly cause the Company to transfer or set aside any assets to fund any material benefits under any Company Benefit Plan or (iv) limit or restrict the right to merge, materially amend, terminate or transfer the assets of any Company Benefit Plan on or following the Effective Time. |
(j) | Except as provided in this Agreement or required by applicable Law, there has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of the Company’s Subsidiaries relating to, or change in employee participation or coverage under, any Company Benefit Plan that could increase materially the expense to the Company and the Company’s Subsidiaries, taken as a whole, of maintaining such plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof. |
(k) | All Company Benefit Plans that are subject to Section 409A of the Code are in material compliance, in both form and operation, with the requirements of Section 409A of the Code and the Treasury regulations and guidance thereunder. |
(l) | The Company is not a party to nor does it have any obligation under any Company Benefit Plan to compensate, indemnify or reimburse any person for excise Taxes payable pursuant to Section 4999 of the Code or for additional Taxes payable pursuant to Section 409A of the Code. |
(m) | With respect to each Company Benefit Plan that is mandated by applicable Law or by a Governmental Entity outside of the United States or that is subject to the Laws of any jurisdiction outside of the United States (a “ Non-U.S. PlanNon-U.S. Plan under applicable Law and the terms of any such plan; (v) no material Taxes, penalties or fees are due by the Company or any Company Subsidiary with respect to any Non-U.S. Plan and (vi) no Non-U.S. Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA (whether or not the Non-U.S. Plan is subject to ERISA). |
(n) | The Company and its Subsidiaries are in material compliance with their obligations pursuant to all notification and bargaining obligations arising under any Company Labor Agreements. |
(o) | Except as would not reasonably be expected to result in, individually or in the aggregate, material liability to the Company and its Subsidiaries, taken as a whole as of the date of this Agreement, (i) there are no strikes or lockouts with respect to any employees of the Company or any of its Subsidiaries; (ii) to the Knowledge of the Company, there is no union organizing effort pending or threatened against the Company or any of its Subsidiaries; (iii) there is no labor dispute or labor arbitration Action pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries (other than, in each case, routine grievances, including those brought by unions or other collectively represented employees, to be heard by the applicable Governmental Entity); and (iv) there is no slowdown, or work stoppage in effect or, to the Knowledge of the Company, threatened with respect to employees of the Company or any of its Subsidiaries. |
(p) | Since December 31, 2018, the Company and its Subsidiaries have complied, in all material respects, with applicable Laws with respect to employment and employment practices (including all applicable |
Laws, rules and regulations regarding wage and hour requirements, employee and worker classification, immigration status, discrimination in employment, harassment, employee health and safety, and collective bargaining). |
(q) | The consent or consultation of, or the rendering of formal advice by, any labor or trade union, works council or similar organization is not required for the Company to enter into this Agreement or to consummate any of the transactions contemplated hereby other than any consent, consultation or formal advice, the failure of which to obtain or, in the case of consultation, engage in, would not delay or prevent the consummation of the transactions contemplated by this Agreement or otherwise reasonably be expected to result in, individually or in the aggregate, material liability to the Company and its Subsidiaries, taken as a whole as of the date of this Agreement. |
3.12 | Absence of Certain Changes or Events. |
(a) | Since December 31, 2020 (the “ Company Balance Sheet Date |
(b) | From the Company Balance Sheet Date, except for the transactions contemplated by this Agreement, the Company and its Subsidiaries have conducted their respective businesses in all material respects in the Ordinary Course of Business. |
3.13 | Investigations; Litigation. |
3.14 | Company Information. |
3.15 | Tax Matters. |
(a) | the Company and each of its Subsidiaries have prepared and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them under applicable Law with the appropriate Governmental Entity and all such Tax Returns are true, complete and accurate, in all material respects and were prepared in material compliance with applicable Law; |
(b) | the Company and each of its Subsidiaries have paid all material Taxes required to be paid under applicable Law to the appropriate Governmental Entity and have withheld or collected all material Taxes required to be withheld or collected by any of them (including in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, stockholder or other Person), except with respect to matters contested in good faith and for which reserves have been established in accordance with GAAP. All Taxes that have been withheld or collected by the Company or any if its Subsidiaries have been timely remitted to the applicable Governmental Entity in accordance with applicable Law; |
(c) | neither the Company nor any of its Subsidiaries is the beneficiary of any extension of time within which to file any material Tax Return (other than extensions to file Tax Returns obtained in the Ordinary Course of Business). Neither the Company nor any of its Subsidiaries has granted in writing any extension or waiver of the limitation period applicable to any material Tax or Tax Return that remains in effect (other than extension or waiver granted in the Ordinary Course of Business); |
(d) | there are no outstanding assessments for Taxes and there are no pending or, to the Knowledge of the Company, threatened assessments, audits, examinations, investigations or other proceedings in respect of any material Taxes or Tax Returns of the Company or any of its Subsidiaries, except with respect to matters contested in good faith and for which reserves have been established in accordance with GAAP. Neither the Company nor any of its Subsidiaries has received written notice of any claim made by a Governmental Entity in a jurisdiction where the Company or any of its Subsidiaries, as applicable, does not file a particular Tax Return or pay a particular Tax that indicates that the Company or such Subsidiary is or may be subject required to file such Tax Return or pay such Tax. There are no pending or proposed changes in the income Tax accounting methods of the Company or any of its Subsidiaries; |
(e) | there are no Liens for Taxes on any property of the Company or any of its Subsidiaries, except for Permitted Liens; |
(f) | neither the Company nor any of its Subsidiaries has been a “controlled corporation” or a “distributing corporation” in any distribution occurring during the two-year period ending on the date of this Agreement, or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, that was purported or intended to be governed by Section 355 of the Code; |
(g) | neither the Company nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2); |
(h) | neither the Company nor any of its Subsidiaries (i) is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than such an agreement or arrangement (A) exclusively between or among the Company and/or its Subsidiaries or (B) not primarily related to Taxes and entered into in the Ordinary Course of Business), (ii) has been a member of an affiliated, consolidated, unitary or combined group filing a consolidated federal income Tax Return (other than a group the common parent of which is or was the Company or any of its Subsidiaries), or (iii) has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of federal, state, local or non- U.S. Law), as a transferee or successor; and |
(i) | neither the Company nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that would reasonably be expected to (i) prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) cause the stockholders (other than any Excepted Stockholder) of the Company to recognize gain pursuant to Section 367(a)(1) of the Code or (iii) cause Parent to be treated as a “domestic corporation” pursuant to Section 7874(b) of the Code as a result of the Merger. |
3.16 | Intellectual Property; IT Assets; Privacy. |
(a) | Section 3.16(a) of the Company Disclosure Schedules sets forth a true, correct and complete list as of the date hereof of all material Registered Intellectual Property owned by the Company and its Subsidiaries (the “ Registered Company Intellectual Property Owned Company Intellectual Property |
(b) | The Company and its Subsidiaries (i) own or have a written, valid and enforceable right and license to use all material Intellectual Property used in or necessary for the operation of their respective businesses as currently conducted (the “ Company Intellectual Property |
(c) | Since December 31, 2018, to the Knowledge of the Company, the operation of the businesses of the Company and its Material Subsidiaries has not infringed, violated or otherwise misappropriated any Intellectual Property of any third Person. Since December 31, 2018, (i) to the Knowledge of the Company, no third Person has materially infringed, violated or otherwise misappropriated any Owned Company Intellectual Property and (ii) there has been no pending or asserted claim in writing asserting that the Company or any Material Subsidiary has infringed, violated or otherwise misappropriated, or is infringing, violating or otherwise misappropriating, any Intellectual Property of any third Person. |
(d) | The Company and its Subsidiaries have received from each Person (including current and former employees and contractors) who has created or developed any material Owned Company Intellectual Property for or on behalf of the Company or any of its Subsidiaries, a written present assignment of such material Owned Company Intellectual Property to the Company or its applicable Subsidiary. |
(e) | The Company and its Subsidiaries own all right, title and interest in and to the Company IT Assets, free and clear of any Liens other than Permitted Liens, except as would not reasonably be expected to be, individually or in the aggregate, material to the business of the Company and its Subsidiaries, taken as a whole. The Company and its Subsidiaries own or have a written valid and enforceable right to use all IT Assets, except as would not reasonably be expected to be, individually or in the aggregate, material to the business of the Company and its Subsidiaries, taken as a whole. Except as would not reasonably be expected to be, individually or in the aggregate, material to the business of the Company and its Subsidiaries, taken as a whole, the Company and each of its Subsidiaries have taken commercially reasonable steps and implemented commercially reasonable safeguards to protect the Company IT Assets from any unauthorized access, use or other security breach and free from any disabling codes or instructions, spyware, trojan horses, worms, viruses, or other software routines that permit or cause |
unauthorized access to, or disruption, impairment, disablement, or destruction of software, data or other materials, or any viruses, Trojan horses, spyware or other malicious code (“ Malicious Code |
(f) | The Company and its Subsidiaries have taken commercially reasonable measures to protect the confidentiality of the material trade secrets owned or purported to be owned by the Company and its Subsidiaries, and to the Knowledge of the Company, no such material trade secrets has been used or discovered by or disclosed to any Person except pursuant to non-disclosure agreements protecting the confidentiality thereof, which agreements, to the Knowledge of the Company, have not been materially breached by the receiving party. |
(g) | Since December 31, 2018, the Company and its Subsidiaries have complied with all Privacy Laws and with its and their privacy policies and other contractual commitments relating to privacy, security, collection, storage, transmission, transfer (including cross-border transfers), disclosure, use or processing of personal data (which, as used herein, includes similar terms used in Privacy Laws, such as personal information and personally identifiable information) in their possession or control (collectively, the “ Data Protection Requirements |
(h) | Since December 31, 2018, the Company and its Subsidiaries have not had any actual disclosure or loss of, or inability to access or account for, or any incident relating to unauthorized access to or acquisition of, any personal data (“ Security Incident |
(i) | To the Knowledge of the Company, neither the Company nor any of its Subsidiaries have any threatened or pending Actions, or events or circumstances that are reasonably likely to give rise to material Actions as a result of any Security Incident or material vulnerability. |
3.17 | Title to Assets; Backlog. |
(a) | The Company or one of its Subsidiaries has good and valid title to all material tangible assets owned by the Company or any of its Subsidiaries as of the date of this Agreement, free and clear of all Liens other than Permitted Liens, or good and valid leasehold interests in all material tangible assets leased or subleased by the Company or any of its Subsidiaries as of the date of this Agreement. Except as, individually or in the aggregate, would not reasonably be expected to have, a Company Material Adverse Effect, all items of equipment and other tangible assets (other than any Company equipment, |
machinery, fixtures or other tangible assets that is undergoing repairs or maintenance), owned by or leased to and necessary for the operation of the Company are: (i) suitable for the uses to which they are being put; (ii) in good operating condition and repair (ordinary wear and tear excepted) and have been maintained in accordance with standard industry practice; (iii) adequate for the continued conduct of the businesses of the Company in the manner in which such businesses are currently being conducted without need for replacement or repair, except in the Ordinary Course of Business; and (iv) conform in all material respects with all applicable Laws. |
(b) | The Company and its Subsidiaries either possess sufficient inventory of parts, materials and personnel to perform, in all material respects, the obligations within their scheduled delivery dates or such parts or materials have lead times such that the Company and its Subsidiaries can acquire such parts and materials in time to produce and ship or otherwise perform such unsatisfied performance obligations backlog in accordance with the scheduled performance dates. |
3.18 | Title to Properties. |
(a) | Except as would not reasonably be expected to result in material liability to the Company or any of its Material Subsidiaries, each Contract under which the Company or any of its Subsidiaries is the landlord, sublandlord, tenant, subtenant or occupant (a “ Company Real Property Lease Company Leased Real Property |
(b) | The Company or its Subsidiaries has good and valid title to all of the real property owned by the Company and its Subsidiaries (the “ Owned Real Property |
(c) | Neither the Company nor any of its Subsidiaries has received written notice of any condemnation proceeding or proposed action or agreement for taking in lieu of condemnation, nor is any such proceeding, action or agreement pending before a Governmental Entity or, to the Knowledge of the Company, threatened, with respect to any portion of any Owned Real Property. |
3.19 | Opinion of Financial Advisor. |
3.20 | Required Vote of the Company Stockholders. |
3.21 | Material Contracts. |
(a) | Except for this Agreement, agreements filed as exhibits to the Company SEC Documents or as set forth in Section 3.21 of the Company Disclosure Schedules, as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a party to or expressly bound by any Contract (excluding any Company Benefit Plan) that: |
(i) | would constitute a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act); |
(ii) | contains a non-compete, non-solicit, exclusivity or similar restriction that materially restricts the conduct of any line of business by the Company or any of its Affiliates or the solicitation of any business from any third party or upon consummation of the Merger will materially restrict the ability of the Surviving Corporation or any of its Affiliates to engage in any line of business or in any geographic region or to solicit any business from any third party; |
(iii) | contains a non-solicit of the employees of any entity or similar restriction that materially restricts solicitation of management-level or professional prospective hires or upon consummation of the Merger will materially restrict the ability of the Surviving Corporation or any of its Affiliates to solicit the employment or services of any management-level or professional prospective hire (in each case, other than customary non-solicitation provisions included in non-disclosure agreements); |
(iv) | that is a settlement, consent or similar agreement that would require the Company or any of its Subsidiaries to pay consideration of more than $500,000 after the date of this Agreement or that contains any material continuing obligations of the Company or any of its Subsidiaries; |
(v) | that includes a material indemnification obligation of the Company or any of its Subsidiaries which was granted outside of the Ordinary Course of Business; |
(vi) | that contains a put, call or similar right pursuant to which the Company or any of its Subsidiary could be required to sell, as applicable, any equity interests of any person or material amount of assets; |
(vii) | that provides any current employees, officers or directors of the Company or any Company Subsidiary with annual base compensation in excess of $275,000, other than Contracts that are terminable without penalty or notice or employment Contracts entered into on standard Governmental Entity forms; |
(viii) | is a Contract that involves the payment or delivery of cash or other consideration or minimum purchase obligations (by or to the Company or any Company Subsidiary) in an amount or having a value in excess of $5,000,000 in the aggregate, or contemplates or involves the performance of services (by or for the Company or any Company Subsidiary) having a value in excess of $5,000,000 in the aggregate; |
(ix) | is a Company Real Property Lease pursuant to which the Company or any of its Subsidiaries leases real property that is material to the business of the Company or any of its Subsidiaries; |
(x) | is a Contract providing for the purchase of goods or services or the development or construction of, or additions or expansions to, any property or equipment under which the Company or any Company Subsidiary has, or expects to incur, costs or obligations in excess of $5,000,000 in the aggregate; |
(xi) | that is material and obligates the Company or any Company Subsidiary, or will obligate the Surviving Corporation, to provide a party with “most favored nation” or “most favored customer” status that, following the Merger, would apply to Parent and its Subsidiaries, including the Company and its Subsidiaries; |
(xii) | provides for the formation, creation, operation, management or control of any material joint venture, partnership, strategic alliance, collaboration or other similar arrangement with a third party; |
(xiii) | is a Contract relating to any material currency or other hedging arrangement; |
(xiv) | is an indenture, credit agreement, loan agreement, note, or other Contract providing for indebtedness for borrowed money of the Company or any if its Subsidiaries or any guaranty of such obligations or guarantee of obligations of any Person that is not the Company or a Subsidiary (other than indebtedness among the Company and/or any of its Subsidiaries), in each case in excess of $1,000,000 individually, or $5,000,000 in the aggregate; |
(xv) | provides for the acquisition or disposition by the Company or any of its Subsidiaries of any business (whether by merger, sale of stock, sale of assets or otherwise), or any real property, that would, in each case, reasonably be expected to result in the receipt or making by the Company or any Subsidiary of the Company of future payments (including “earnout” or other material contingent payment obligations) in excess of $1,000,000, in each case, except for purchases and sales of goods, services or inventory in the Ordinary Course of Business; |
(xvi) | obligates the Company or any Subsidiary of the Company to make any future capital investment or capital expenditure outside the Ordinary Course of Business and in excess of $500,000; |
(xvii) | limits or restricts the ability of the Company or any of its Subsidiaries to declare or pay dividends or make distributions in respect of their capital stock, partner interests, membership interests or other equity interests; |
(xviii) | pursuant to which the Company or any of the Company Subsidiaries receives from any third party a license or similar right to any Intellectual Property that is material to the Company, other than licenses with respect to software that is generally commercially available; |
(xix) | that is a Contract entered into outside of the Ordinary Course of Business, pursuant to which the Company or any of its Subsidiaries is a party, or is otherwise bound, and the contracting counterparty of which is a Governmental Entity; or |
(xx) | that is a Contract (or form thereof and a list of the parties thereto) between the Company or any Company Subsidiary, on the one hand, and any officer, director or affiliate (other than a wholly-owned Company Subsidiary) of the Company or any Company Subsidiary or any of their respective “associates” or “immediate family” members (as such terms are defined in Rule 12b-2 and Rule 16a-1 of the Exchange Act), on the other hand (other than any Contract that is a Company Benefit Plan). |
(b) | Neither the Company nor any Subsidiary of the Company is in material breach of or material default under the terms of any Company Material Contract. To the Knowledge of the Company, as of the date of this Agreement, no other party to any Company Material Contract is in material breach of or material default under the terms of any Company Material Contract. Each Company Material Contract |
is a valid and binding obligation of the Company or the Subsidiary of the Company that is party thereto and to the Knowledge of the Company, of each other party thereto, and is in full force and effect, subject to the Enforceability Exceptions, except as would not or would not reasonably be expected to be material to the Company or any Material Subsidiary. |
3.22 | Suppliers and Customers. |
(a) | Section 3.22(a) of the Company Disclosure Schedules sets forth a correct and complete list of (i) the top ten (10) suppliers (each a “ Company Top Supplier Company Top Customer |
(b) | Except as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, since December 31, 2018 through the date of this Agreement, (i) there has been no termination of or a failure to renew the business relationship of the Company or its Subsidiaries with any Company Top Supplier or any Company Top Customer and (ii) no Company Top Supplier or Company Top Customer has notified the Company or any of its Subsidiaries that it intends to terminate or not renew its business. Neither the Company nor any Company Subsidiary has received any written notice, letter, complaint or other communication from any Company Top Supplier or Company Top Customer to the effect that it has materially changed, modified, amended or reduced, or is expected to materially change, modify, amend or reduce, its business relationship with the Company or the Company Subsidiaries in a manner that is materially adverse to the Company and its Subsidiaries, taken as a whole. |
3.23 | Canadian Assets and Revenues. |
3.24 | Insurance Policies. |
3.25 | Affiliate Party Transactions. |
3.26 | Finders or Brokers. |
3.27 | Takeover Laws. |
3.28 | Warranties; Products |
3.29 | No Other Representations or Warranties; No Reliance. |
4.1 | Qualification, Organization, Subsidiaries. |
(a) | Each of Parent and Merger Sub is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of incorporation, organization or formation, as applicable. Except as would not reasonably be expected to be material to Parent and its Subsidiaries, taken as a whole, each of Parent’s Subsidiaries is a legal entity duly organized, validly existing and (where such concept is recognized) in good standing under the Laws of its respective jurisdiction of incorporation, organization or formation, as applicable. Each of Parent and Merger Sub and each of their respective Subsidiaries has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business. Each of Parent and Merger Sub and each of their respective Subsidiaries is in good standing in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except, in each case, as would not reasonably be expected to be material to the Parent and its Subsidiaries, taken as a whole. Parent has made available to the Company true, complete and correct copies of Parent and Merger Sub’s Organizational Documents, each as amended prior to the date of this Agreement, and each as made available to the Company is in full force and effect. |
(b) | All of the outstanding shares of capital stock or voting securities of, or other equity interests in, each of Parent’s wholly-owned Subsidiaries is owned directly or indirectly by Parent, have been validly issued and, where applicable, are fully paid and non-assessable and were issued free of pre-emptive rights, and are free and clear of all Liens other than restrictions imposed by applicable securities Laws or the Organizational Documents of any such Subsidiary or any Permitted Liens. No Parent Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of the Parent’s Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of the Parent’s Subsidiaries. |
(c) | Except for the capital stock and voting securities of, and other equity interests in, the Parent’s Subsidiaries, and except as set forth in Section 4.1(c) of the Parent’s Disclosure Schedules, none of Parent or the Parent’s Subsidiaries owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any capital stock or voting securities of, or other equity interests in, any Person. |
4.2 | Capitalization. |
(a) | The authorized share capital of Parent consists of an unlimited number of Parent Common Shares and unlimited number of Parent preferred shares. As of the Reference Time, there were (i) 89,678,845 |
Parent Common Shares issued and outstanding; (ii) no Parent preferred shares issued and outstanding, (iii) Parent Options to purchase an aggregate of 4,456,444 Parent Common Shares issued and outstanding. Except as set forth in Section 4.2(a) or as required by the terms of the Parent Benefit Plans, as of the date of this Agreement, (i) Parent does not have any shares issued or outstanding, other than Parent Common Shares that have become outstanding after the Reference Time, which were reserved for issuance as of the Reference Time, as set forth in Section 4.2(a). Except as set forth in Section 4.2(a) or as required by the terms of the Parent Benefit Plans, as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, calls, convertible securities or other similar rights, agreements or commitments relating to the issuance of shares in the capital of Parent to which Parent is a party obligating Parent to (i) issue, transfer or sell any shares in the capital of Parent or securities convertible into, exercisable for or exchangeable for such shares, (ii) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, or (iii) redeem or otherwise acquire any such shares. Parent does not have any outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into, exercisable for or exchangeable for securities having the right to vote) with the shareholders of Parent on any matter. All outstanding Parent Common Shares are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized and validly issued as fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. |
(b) | All outstanding Parent Common Shares have been duly authorized and validly issued as fully paid and non-assessable and listed and posted for trading on the TSX, and not subject to or issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. The Parent Common Shares to be issued in the Merger, when issued and delivered in accordance with the terms of this Agreement will be duly authorized and validly issued as fully paid and non-assessable, listed and posted for trading on the TSX and the NYSE or Nasdaq, as applicable, and not subject to or issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. The Parent Common Shares to be issued as part of the Merger Consideration shall not be treated as “restricted securities” within the meaning of Rule 144. The Parent Common Shares to be issued as part of the Merger Consideration shall not be subject to any resale restrictions under applicable Canadian Securities Laws provided 45-102 – Resale of Securities |
(c) | Except as set forth in Section 4.2(a) or as required by the terms of the Parent Benefit Plans, as of the date of this Agreement, there are no outstanding subscriptions, options, warrants, calls, convertible securities or other similar rights, agreements or commitments relating to the issuance of shares in the capital of any of Parent’s Subsidiaries to which any of Parent’s Subsidiaries is a party obligating any of Parent’s Subsidiaries to (i) issue, transfer or sell any shares in the capital of any of Parent’s Subsidiaries or securities convertible into, exercisable for or exchangeable for such shares, (ii) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, or (iii) redeem or otherwise acquire any such shares. |
(d) | All outstanding shares of each Parent Subsidiary are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized and validly issued as fully paid and non-assessable, and are not subject to and were not issued in violation of any pre-emptive or similar right, purchase option, call or right of first refusal or similar right. All outstanding Parent Common Shares, all outstanding Parent Options, and all other outstanding shares of capital stock, voting securities have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws. All outstanding shares of stock of each Parent Subsidiary and all other outstanding shares of capital stock, voting securities of each Subsidiary have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws. |
(e) | No Parent Subsidiary has outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into, exercisable for or exchangeable for securities having the right to vote) with the shareholders of Parent or a Parent Subsidiary on any matter. |
(f) | No Subsidiary of Parent owns any capital stock of Parent. Except for its interests (i) in its Subsidiaries and (ii) in any Person in connection with any joint venture, partnership or other similar arrangement with a third party, Parent does not own, directly or indirectly, any capital stock of, or other equity interests in any Person. |
(g) | Except for the Parent Voting Agreements, there are no voting trusts or other agreements or understandings to which Parent or any of its Subsidiaries is a party with respect to the voting of the Parent Common Shares or other shares in the capital of Parent or any shares in the capital of any of Parent’s Subsidiaries. |
4.3 | Corporate Authority Relative to This Agreement; Consents and Approvals; No Violation. |
(a) | Each of Parent and Merger Sub has all requisite power and authority to enter into this Agreement and, subject to receipt of Parent Shareholder Approval, to perform its obligations hereunder and to consummate the transactions contemplated hereby. Except for (i) the Parent Shareholder Approval, (ii) the adoption of this Agreement by Parent, as the sole stockholder of Merger Sub (which such adoption shall occur immediately following the execution of this Agreement), and (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub, and, assuming this Agreement constitutes a valid and binding agreement of the Company, constitutes the valid and binding agreement of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the Enforceability Exceptions. |
(b) | (i) The Parent Board at a duly called and held meeting has unanimously (A) determined that it is in the best interests of Parent to enter into this Agreement, (B) approved the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and the Debt Financing, and (C) resolved to recommend that the holders of Parent Common Shares approve the Parent Share Issuance (the “ Parent Recommendation |
(c) | The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation of the Merger and the other transactions contemplated hereby by Parent and Merger Sub do not and will not require Parent, Merger Sub or any of their Subsidiaries to procure, make or provide prior to the Closing Date any consent, approval, authorization or permit of, action by, filing with or notification to any Governmental Entity, other than (i) the filing of the Certificate of Merger, (ii) compliance with any applicable requirements of any U.S. or foreign Antitrust Laws, (iii) compliance with the applicable requirements of the Securities Act, the Exchange Act and the Canadian Securities Laws, including the filing with the SEC of the US Registration Statement (including the Proxy Statement/Prospectus) and the filing of the Management Information Circular with the Canadian Securities Administrators, (iv) compliance with the rules and regulations of the TSX, (v) compliance with any applicable foreign or state securities or blue sky Laws and (vi) the other consents, approvals or notices set forth on Section 4.3(c) of the Parent Disclosure Schedules (clauses |
(i) through (vi), collectively, the “ Parent Approvals |
(d) | Assuming compliance with the matters referenced in Section 4.3(c) and receipt of the Parent Approvals and the Parent Shareholder Approval, the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the Merger and the other transactions contemplated hereby, do not and will not (i) contravene or conflict with the Organizational Documents of (A) Parent or (B) any of its Subsidiaries, (ii) contravene or conflict with or constitute a violation of any provision of any Law binding on or applicable to Parent or any of its Subsidiaries or any of their respective properties or assets, (iii) require any consent, waiver or approval, result in any violation of, or default (with or without notice or lapse of time or both would become a default) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a benefit under any Contract, instrument, permit, concession, franchise, right or license binding on Parent or any of its Subsidiaries, or (iv) result in the creation of a Lien (other than Permitted Lien) other than, in the case of clauses (ii), (iii) and (iv), any such contravention, conflict, violation, default, termination, cancellation, acceleration, right, loss or Lien that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
4.4 | Reports and Financial Statements. |
(a) | Parent is a “reporting issuer” or the equivalent and not on the list of reporting issuers in default under applicable Canadian Securities Laws in each of the provinces and territories in Canada. Since December 31, 2018, (i) Parent has filed or furnished, on a timely basis, all forms, statements, certifications, documents, correspondence, registrations and reports required to be filed or furnished by it with the Canadian Securities Administrators prior to the date of this Agreement (the forms, statements, certifications, documents and reports so filed or furnished by Parent and those filed or furnished to the Canadian Securities Administrators subsequent to the date of this Agreement, including any amendments thereto, including exhibits, schedules thereto and all other information incorporated by reference, the “ Parent Public Documents |
(b) | Parent and each Parent Subsidiary has filed or furnished, on a timely basis (taking into account any relevant extensions), all material forms, statements, certifications, documents, correspondence, registrations, and reports required to be filed or furnished by it with any Governmental Entity since December 31, 2018 (the “ Parent Governmental Filings |
(c) | The Parent Common Shares are listed and posted for trading on the TSX. Parent is not in default of any material requirements of any applicable Canadian Securities Laws or the rules and regulations of the |
TSX. As of the date of this Agreement, Parent has not taken any action to cease to be a reporting issuer in any province or territory of Canada, nor has Parent received notification from any Canadian Securities Administrators seeking to revoke the reporting issuer status of Parent. As of the date of this Agreement, no delisting, suspension of trading or cease trade or other order or restriction with respect to any securities of Parent is pending or, to the Knowledge of Parent, threatened. |
(d) | No Governmental Entity has initiated or has pending any Action or, to the Knowledge of Parent, threatened investigation into the business or operations of Parent or any of the Parent Subsidiaries since December 31, 2018, except where such Actions would not reasonably be expected to have, either individually or in the aggregate, a Parent Material Adverse Effect. There (i) is no unresolved violation, criticism, or exception by any Governmental Entity with respect to any report or statement relating to any examinations or inspections of Parent or any of the Parent Subsidiaries and (ii) has been no formal or informal inquiries by, or disagreements or disputes with, any Governmental Entity with respect to the business, operations, policies or procedures of Parent or any of the Parent Subsidiaries since December 31, 2018, in each case, which would reasonably be expected to have, either individually or in the aggregate, a Parent Material Adverse Effect. No Parent Subsidiary is required as of the date of this Agreement, and after the date of this Agreement, except as required in connection with the transactions contemplated by this Agreement, to file or furnish any report, statement, schedule, form or other document with or make any other filing with or furnish any other material to the SEC. |
(e) | The consolidated financial statements (including all related notes and schedules) of Parent included in the Parent Public Documents (or, if any such Parent Public Document is amended or superseded by a filing prior to the date of this Agreement, such amended or superseding Parent Public Document) fairly presented in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) and were prepared in all material respects in conformity with IFRS (except, in the case of the unaudited financial statements, as permitted by the Canadian Securities Administrators) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto). Since December 31, 2018, no independent public accounting firm of Parent has resigned (or informed Parent that it intends to resign) or been dismissed as independent public accountants of Parent as a result of or in connection with any disagreements with Parent on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure. |
4.5 | Disclosure Controls and Internal Control over Financial Reporting . |
(a) | Parent has established and maintains a system of disclosure controls and procedures (as such term is defined in National Instrument 52-109 – Certification of Disclosure in Issuers ’ Annual and Interim Filings NI 52-109 |
(b) | Parent has established and maintains a system of internal control over financial reporting (as such term is defined in NI 52-109) that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS and has otherwise complied with NI 52-109 and management of Parent has assessed the |
effectiveness of Parent’s internal control over financial reporting as at December 31, 2020, and has concluded that such internal control over financial reporting was effective as of such date. |
(c) | To the Knowledge of Parent, there is no material weakness (as such term is defined in NI 52-109) relating to the design, implementation or maintenance of its internal control over financial reporting, or fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of Parent. |
(d) | To the Knowledge of Parent, as of the date of this Agreement: (i) there are no material weaknesses in, the internal controls over financial reporting of Parent that could reasonably be expected to adversely affect Parent’s ability to record, process, summarize and report financial information; and (ii) there is and has been no fraud, whether or not material, involving management or any other employees who have a significant role in the internal control over financial reporting of Parent. |
(e) | Since December 31, 2018, Parent has received no: (i) complaints from any source regarding accounting, internal accounting controls or auditing matters; or (i) expressions of concern from employees of Parent or any Parent Subsidiaries regarding questionable accounting or auditing matters. |
4.6 | No Undisclosed Liabilities. |
4.7 | Compliance with Law; Permits. |
(a) | Parent and its Subsidiaries are, and since December 31, 2018 have been, in compliance with and not in default under or in violation of any Law applicable to Parent and its Subsidiaries, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
(b) | Parent and its Subsidiaries are in possession of all Permits necessary for Parent and Parent’s Subsidiaries to own, lease and operate their properties and assets or to carry on their businesses as they are now being conducted (such Permits, the “ Parent Permits non-renewal, adverse modifications, administrative or judicial proceeding that would reasonably be expected to result in modification, termination or revocation thereof, and Parent and each of its Subsidiaries is in compliance with the terms and requirements of such Parent Permit, except where the failure to be in full force and effect or in compliance or where such proceeding would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
(c) | Since December 31, 2018, neither Parent nor any of its Subsidiaries has received any written notice that Parent or its Subsidiaries is in violation of any Law applicable to Parent or any of its Subsidiaries or any Permit, except for such violations that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. There are no Actions pending, threatened in writing or, to the Knowledge of Parent, otherwise threatened that would reasonably be expected to result in the |
revocation, withdrawal, suspension, non-renewal, termination, revocation, or adverse modification or limitation of any such Permit, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
4.8 | Anti-Corruption; Anti-Bribery; Anti-Money Laundering. |
(a) | Parent, its Subsidiaries, and, to the Knowledge of Parent, each of their directors, officers, employees, agents and each other Person acting on behalf of Parent or its Subsidiaries are in all respects compliant with and for the past five (5) years, have complied with (i) the Corruption of Foreign Public Officials Act (Canada) (the “ CFPOA |
(b) | None of Parent, its Subsidiaries or, to the Knowledge of Parent, any of their directors, officers and employees and each other Person acting on behalf of Parent or its Subsidiaries has, in the past five (5) years, directly or indirectly, violated any, or been subject to actual or, to the Knowledge of Parent, pending or threatened Action alleging violations on the part of any of the foregoing Persons of the CFPOA or Anti-Corruption Laws or any terrorism financing Law. |
(c) | None of Parent, its Subsidiaries or, to the Knowledge of Parent, any of their directors, officers, employees or any other Person acting on behalf of Parent or its Subsidiaries has, in the past five (5) years: (i) directly or indirectly, paid, offered or promised to pay, or authorized or ratified the payment of any monies, gifts or anything of value (A) which would violate any applicable Anti-Corruption Law, including the CFPOA, applied for purposes hereof as it applies to domestic concerns, or (B) to any national, provincial, territorial, municipal or other Government Official or any political party or candidate for political office for the purpose of (x) influencing any act or decision of such official or of any Governmental Entity, (y) to obtain or retain business, or direct business to any Person or (z) to secure any other improper benefit or advantage; (ii) established or maintained any unlawful fund of monies or other assets of Parent or any of the Parent Subsidiaries, (iii) made any fraudulent entry on the books or records of Parent or any of the Parent Subsidiaries; (iv) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business, to obtain special concessions for Parent or any of the Parent Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for Parent or any of the Parent Subsidiaries; or (v) aided, abetted, caused (directly or indirectly), participated in, or otherwise conspired with, any Person to violate the terms of any Order or applicable Law. |
4.9 | Sanctions. |
(a) | Parent and each of its Subsidiaries are and, in the past five (5) years, have been, in all material respects in compliance with applicable Export and Sanctions Regulations. |
(b) | None of Parent or any of its Subsidiaries, or, to the Knowledge of Parent, any director, officer, agent, employee or other Person acting on behalf of any of Parent or its Subsidiaries, in their capacity as such, is currently, or has been for the past five (5) years: (i) a Sanctioned Person or (ii) engaging in any dealings or transactions with, or for the benefit of, any Sanctioned Person or in any Sanctioned Country, to the extent such activities would cause Parent to violate applicable Export and Sanctions Regulations. |
(c) | For the past five (5) years, Parent and its Subsidiaries have (i) instituted policies and procedures that are reasonably designed to ensure compliance in all material respects with the Export and Sanctions |
Regulations in each jurisdiction in which Parent and its Subsidiaries operate or are otherwise subject to jurisdiction and (ii) maintained such policies and procedures in full force and effect in all material respects. |
(d) | For the past five (5) years, neither Parent nor any of its Subsidiaries (i) has been found in violation of, charged with or convicted of, any Export and Sanctions Regulations, (ii) to the Knowledge of Parent, is under investigation by any Governmental Entity for possible violations of any Export and Sanctions Regulation, (iii) has been assessed civil penalties under any Export and Sanctions Regulations or (iv) has filed any voluntary disclosures with any Governmental Entity regarding possible violations of any Export and Sanctions Regulations. |
4.10 | Environmental Laws and Regulations. |
(a) | Except as would not reasonably be material to Parent or any of its Subsidiaries, taken as a whole, (i) Parent and its Subsidiaries have, for the past five (5) years, conducted their respective businesses in compliance in all material respects with all applicable Environmental Laws, (ii) for the past five (5) years, neither Parent nor any of its Subsidiaries has received any written notices, demand letters or written requests for information from any Governmental Entity alleging that Parent or any of its Subsidiaries is in violation of or has liability under any Environmental Law and there are no Actions pending, or to the Knowledge of Parent threatened in writing, against Parent or any of its Subsidiaries alleging any violation of or liability relating to any Environmental Law, in each case other than with respect to matters that have been fully resolved; (iii) there has been no treatment, storage, disposal, release or migration of any Hazardous Substance generated or used by Parent or its Subsidiaries for the past five (5) years, or, to the Knowledge of Parent, by any third party in violation of any applicable Environmental Law at, to or from any properties currently or formerly owned or leased or held under concession by Parent or any of its Subsidiaries or any predecessor; (iv) neither Parent nor any Subsidiary is subject to any agreement, Order, judgment, decree or agreement by or with any Governmental Entity or other third party imposing any liability or obligation relating to any Environmental Law and, to the Knowledge of Parent, there are no facts, conditions or circumstances that would reasonably be expected to form the basis for any such agreement, Order, judgment or decree; and (v) neither Parent nor any of its Subsidiaries has provided any indemnity regarding, or otherwise become subject to, any liability of any third party arising under Environmental Laws. |
4.11 | Employee Benefit Plans; Labor Matters. |
(a) | Section 4.11(a) of the Parent Disclosure Schedules lists all material Parent Benefit Plans. |
(b) | Except as would not have, individually or in the aggregate, a Parent Material Adverse Effect each Parent Benefit Plan (including any related trusts) has been established, maintained, administered, funded and invested in compliance with its terms and with applicable Law, and all premiums required by contract or Law to be paid, all benefits, expenses and other amounts due and payable and all contributions, transfers or payments required to be made to or under the terms of any Parent Benefit Plan prior to the date hereof have been timely made, paid or accrued in accordance with GAAP or IFRS, as applicable, and are reflected, to the extent required, in the Parent’s financial statements. To the Knowledge of Parent, no fact, event or omission has occurred which would reasonably be expected to cause any Parent Benefit Plan to lose its qualification to provide Tax-favored benefits under applicable Law. |
(c) | No Parent Benefit Plan provides health or other welfare benefits after retirement or other termination of employment for current, former or future retired or terminated employees, their spouses, or their dependents (other than (i) continuation coverage required under applicable Law, (ii) coverage or benefits the full cost of which is borne by the employee or former employee (or any beneficiary of the employee or former employee), (iii) death benefits when termination occurs upon death or (iv) benefits provided during any applicable severance period). |
(d) | None of the Parent Benefit Plans is a (i) “registered pension plan” within the meaning of subsection 248(1) of the CITA that provides for defined benefits, (ii) a “salary deferral arrangement” for purposes of section 248 of the CITA, (iii) a “retirement compensation arrangement” for purposes of section 248 of the CITA or (iv) plan to which Parent or any of its Subsidiaries are required to contribute pursuant to a collective agreement, participation agreement, any other agreement or statute or municipal by-law and which is not maintained or administered by Parent or any of its Subsidiaries and none of Parent or its Subsidiaries have, at any time during the last six (6) years, contributed to, been obligated to contribute to or incurred any liability with respect to, any such plan. |
(e) | Except as provided in this Agreement, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement will not (i) result in any material payment (including, without limitation, bonus, golden parachute, retirement, severance, or other benefit or enhanced benefit) becoming due or payable to any of the employees (present or former) of Parent or its Subsidiaries; (ii) increase the compensation or benefits otherwise payable to any such employee (present or former), or (iii) result in the acceleration of the time of payment or vesting of any material benefits or entitlements otherwise available pursuant to any Parent Benefit Plan. |
(f) | There are no pending, threatened or, to the Knowledge of Parent, anticipated claims, including any audit or inquiry by the Canada Revenue Agency, Internal Revenue Service, the U.S. Department of Labor of the U.S. Pension Benefit Guaranty Corporation (other than claims for benefits in accordance with the terms of the Parent Benefit Plans) by, on behalf of or against any of the Parent Benefit Plans or any trusts related thereto and, to the Knowledge of Parent, no set of circumstances exists which may reasonably give rise to a valid claim or lawsuit against the Parent Benefit Plans, any fiduciaries thereof with respect to their duties to the Parent Benefit Plans or the assets of any of the trusts under any of the Parent Benefit Plans that would reasonably be expected to result in any material liability of Parent or any of its Subsidiaries, any participant in a Parent Benefit Plan, or any other Person. Neither Parent nor any of its Subsidiaries has taken any action to take corrective action or make a filing under any voluntary correction program of the Canada Revenue Agency or any other Governmental Entity with respect to any Parent Benefit Plan that remains unresolved, and to the Knowledge of Parent, no material plan defect including, any defect that would qualify for correction under any such program, exists. |
(g) | Except as provided in this Agreement or required by applicable Law, there has been no amendment to, written interpretation of or announcement (whether or not written) by Parent or any of its Subsidiaries relating to, or change in employee participation or coverage under, any Parent Benefit Plan that could increase materially the expense to Parent or any of its Subsidiaries, taken as a whole, of maintaining such plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof. |
(h) | None of Parent, its Subsidiaries or any of its ERISA Affiliates, or any other Person, including any fiduciary, has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) that would reasonably be expected to subject any of the Parent Benefit Plans or their related trusts, Parent, any of its Subsidiaries, any of its ERISA Affiliates or any Person to any material Tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA. |
(i) | Except as would not have, individually or in the aggregate, a Parent Material Adverse Effect, all Parent Benefit Plans that are subject to Section 409A of the Code are in compliance, in both form and operation, with the requirements of Section 409A of the Code and the Treasury regulations and guidance thereunder. |
(j) | Parent and its Subsidiaries are in compliance with their obligations pursuant to all notification and bargaining obligations arising under any Parent Labor Agreements, except as would not have, individually or in the aggregate, a Parent Material Adverse Effect. |
(k) | Except as would not reasonably be expected to result in, individually or in the aggregate, material liability to Parent and its Subsidiaries, taken as a whole as of the date of this Agreement, (i) there are |
no strikes or lockouts with respect to any employees of Parent or any of its Subsidiaries; (ii) to the Knowledge of Parent, there is no union organizing effort pending or threatened against Parent or any of its Subsidiaries; (iii) there is no labor dispute or labor arbitration proceeding pending or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries (other than, in each case, routine grievances, including those brought by unions or other collectively represented employees, to be heard by the applicable Governmental Entity); and (iv) there is no slowdown, or work stoppage in effect or, to the Knowledge of Parent, threatened with respect to employees of Parent or any of its Subsidiaries. |
(l) | Except as would not have, individually or in the aggregate, a Parent Material Adverse Effect, since December 31, 2018, Parent and its Subsidiaries have complied with all applicable Laws with respect to employment and employment practices (including all applicable Laws, rules and regulations regarding wage and hour requirements, employee and worker classification, immigration status, discrimination in employment, harassment, employee health and safety, and collective bargaining). |
(m) | The consent or consultation of, or the rendering of formal advice by, any labor or trade union, works council or similar organization is not required for Parent to enter into this Agreement or to consummate any of the transactions contemplated hereby other than any consent, consultation or formal advice, the failure of which to obtain or, in the case of consultation, engage in, would not delay or prevent the consummation of the transactions contemplated by this Agreement or otherwise reasonably be expected to result in, individually or in the aggregate, material liability to Parent and its Subsidiaries, taken as a whole as of the date of this Agreement. |
4.12 | Absence of Certain Changes or Events. |
(a) | Since December 31, 2020 (the “ Parent Balance Sheet Date |
(b) | From the Parent Balance Sheet Date, except for the transactions contemplated by this Agreement, Parent and its Subsidiaries have conducted their respective businesses in all material respects in the Ordinary Course of Business. |
4.13 | Investigations; Litigation. |
4.14 | Parent Information. |
(a) | Parent and each of its Subsidiaries have prepared and timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them under applicable Law with the appropriate Governmental Entity. All such Tax Returns are true, complete and accurate in all material respects and were prepared in material compliance with applicable Law; |
(b) | Parent and each of its Subsidiaries have paid all material Taxes required to be paid under applicable Law to the appropriate Governmental Entity and have withheld or collected all material Taxes required to be withheld or collected by any of them (including in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, stockholder or other Person), except with respect to matters contested in good faith and for which reserves have been established in accordance with IFRS. All Taxes that have been withheld or collected by Parent or any if its Subsidiaries have been timely remitted to the applicable Governmental Entity in accordance with applicable Law; |
(c) | neither Parent nor any of its Subsidiaries is the beneficiary of any extension of time within which to file any material Tax Return (other than extensions to file Tax Returns obtained in the Ordinary Course of Business). Neither Parent nor any of its Subsidiaries has granted in writing any extension or waiver of the limitation period applicable to any material Tax or Tax Return that remains in effect (other than extension or waiver granted in the Ordinary Course of Business); |
(d) | there are no outstanding assessments for Taxes and there are no pending or, to the Knowledge of Parent, threatened assessments, audits, examinations, investigations or other proceedings in respect of any material Taxes or Tax Returns of Parent or any of its Subsidiaries, except with respect to matters contested in good faith and for which reserves have been established in accordance with IFRS. Neither Parent nor any of its Subsidiaries has received written notice of any claim made by a Governmental Entity in a jurisdiction where Parent or any of its Subsidiaries, as applicable, does not file a particular Tax Return or pay a particular Tax that indicates that Parent or such Subsidiary is or may be subject required to file such Tax Return or pay such Tax. There are no pending or proposed changes in the income Tax accounting methods of Parent or any of its Subsidiaries; |
(e) | there are no Liens for Taxes on any property of Parent or any of its Subsidiaries, except for Permitted Liens; |
(f) | neither Parent nor any of its Subsidiaries has been a “controlled corporation” or a “distributing corporation” in any distribution occurring during the two-year period ending on the date of this Agreement, or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, that was purported or intended to be governed by Section 355 of the Code; |
(g) | neither Parent nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2); |
(h) | neither Parent nor any of its Subsidiaries (i) is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than such an agreement or arrangement (A) exclusively between or among Parent and/or its Subsidiaries or (B) not primarily related to Taxes and entered into in the Ordinary Course of Business), (ii) has been a member of an affiliated, consolidated, unitary or combined group filing a consolidated federal income Tax Return (other than a group the common parent of which is or was Parent or any of its Subsidiaries), or (iii) has any liability for the Taxes of any Person (other than Parent or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of federal, state, local or non- U.S. Law), as a transferee or successor; and |
(i) | neither Parent nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that would reasonably be expected to (i) prevent or impede the |
Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (ii) cause the stockholders (other than any Excepted Stockholder) of the Company to recognize gain pursuant to Section 367(a)(1) of the Code, or (iii) cause Parent to be treated as a “domestic corporation” pursuant to Section 7874(b) of the Code as a result of the Merger. |
4.16 | Opinion of Financial Advisor. |
4.17 | Capitalization of Merger Sub. |
4.18 | Required Vote of Parent Shareholders. |
4.19 | Finders or Brokers. |
4.20 | Certain Arrangements; Related Party Transactions. |
(a) | Since December 31, 2018 through the date of this Agreement, there have been no Contracts, undertakings, commitments, agreements, obligations or understandings, whether written or oral, or any material transactions, between Parent, Merger Sub or any of their respective Affiliates, on the one hand, and any beneficial owner of five percent or more of the outstanding shares of Company Common Stock or any member of the Company’s management or the Company Board, on the other hand, relating in any way to the Company, the transactions contemplated by this Agreement or to the operations of the Surviving Corporation after the Effective Time. |
(b) | As of the date of this Agreement, there are no transactions or series of related Contracts, transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related Contracts, transactions, between Parent or any of the Parent Subsidiaries, on the one hand, and any related party of Parent or any of the Parent Subsidiaries, on the other hand, that would be considered to be a “related party transaction” for purposes of Canadian Securities Laws. |
4.21 | Ownership of Common Stock. |
4.22 | Suppliers and Customers. |
4.23 | Financing. |
(a) | On or prior to the date hereof, Parent has delivered to the Company true, accurate and complete copies of (i) the fully executed debt commitment letter, dated as of the date of this Agreement, by and among inter alia Initial Debt Commitment Letter Debt Commitment Letters Debt Financing |
(b) | As of the date of this Agreement, to the Knowledge of the Parent the commitments under the Debt Commitment Letters are in full force and effect and have not been withdrawn, rescinded, reduced or terminated, or otherwise amended or modified in any respect and, to the Knowledge of Parent, no termination, reduction, withdrawal, rescission, amendment or modification is contemplated (other than as expressly set forth therein and to add additional lenders, arrangers, bookrunners, syndication agents and similar entities who had not executed the Debt Commitment Letters as of the date of this Agreement), and the Debt Commitment Letters, in the form so delivered, constitute the legal, valid and binding obligations of, and are enforceable against, Parent, its Subsidiaries party thereto and, to the Knowledge of Parent, each of the other parties thereto, subject, in each case, to the Enforceability Exceptions. |
(c) | Parent has fully paid (or caused to be paid) any and all commitment fees or other fees required by the Debt Commitment Letters to be paid on or before the date of this Agreement, and will pay in full any |
such other amounts that are due and payable under the Debt Commitment Letters on or before the Closing Date as and when due and payable. Except as expressly set forth in the Debt Commitment Letters, there are no conditions precedent to the obligations of the Financing Parties party thereto to provide the Debt Financing or any contingencies that would permit the Financing Parties party thereto to reduce the aggregate principal amount of the Debt Financing. As of the date of this Agreement, other than the Debt Commitment Letters and a securities engagement letter (together with one or more fee and credit letters related thereto), there are no Contracts, agreements, “side letters” or other arrangements to which Parent or any of its Subsidiaries is a party relating to the Debt Commitment Letters or the Debt Financing. |
(d) | As of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, constitutes, or would reasonably be expected to constitute, a default or breach or a failure to satisfy a condition precedent by Parent or its Subsidiaries or, to the Knowledge of Parent, any other party thereto, under the terms and conditions of the Initial Debt Commitment Letter or would result in any of the conditions in any of the Debt Commitment Letters not being satisfied on the Closing Date. Assuming the satisfaction of the conditions set forth in Section 6.3(a) and Section 6.3(b), the Debt Financing, when funded in accordance with the Initial Debt Commitment Letter and giving effect to any “flex” provision in or related to the Initial Debt Commitment Letter (including with respect to fees, expenses and original issue discount and similar premiums or charges and after giving effect to the maximum amount of flex (including original issue discount flex) provided under the Initial Debt Commitment Letter), together with cash and cash equivalents immediately available to Parent on the Closing Date, shall provide Parent with proceeds on the Closing Date sufficient for the satisfaction of all of Parent’s and its Affiliates’ obligations required to be satisfied on the Closing Date under this Agreement and the Initial Debt Commitment Letter (and the Definitive Agreements for the Debt Financing contemplated therein), including the payment of any fees, expenses and other amounts of or payable by Parent or Merger Sub or Parent’s other Affiliates on the Closing Date in connection with the Merger (as described in this Agreement) and the Debt Financing contemplated by the Initial Debt Commitment Letter and for any repayment or refinancing of the outstanding indebtedness of the Company, Parent and/or their respective Subsidiaries that is defined as the “Refinanced Indebtedness” in Exhibit A to the Initial Debt Commitment Letter (such amounts, collectively, the “ Financing Amounts |
(e) | Parent and Merger Sub expressly acknowledge and agree that their obligations under this Agreement to consummate the Merger or any of the other transactions contemplated by this Agreement, are not subject to, or conditioned on, the receipt or availability of any funds or financing (including, for the avoidance of doubt, the Debt Financing). |
4.24 | Solvency. |
4.25 | No Other Representations or Warranties; No Reliance. |
5.1 | Conduct of Business by the Company. |
(a) | From and after the date of this Agreement and prior to the earlier of the Effective Time and the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “ Termination Date provided |
(b) | From and after the date of this Agreement and prior to the earlier of the Effective Time and the Termination Date, except (w) as may be required by applicable Law, (x) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (y) as set forth in Section 5.1(b) of the Company Disclosure Schedules or (z) as may be expressly contemplated, required or expressly permitted by this Agreement, the Company: |
(i) | shall not, and shall not permit any of its Subsidiaries that is not wholly-owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (other than dividends, distributions, payments or return of capital made to the Company or a wholly owned Subsidiary by any of its Subsidiaries) or other equity interests (whether in cash, assets, shares, property or other securities or any combination thereof); |
(ii) | shall not, and shall not permit any of its Subsidiaries to, split, combine, redeem or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except for any such transaction by a wholly-owned Subsidiary of the Company that remains a wholly-owned Subsidiary after consummation of such transaction; |
(iii) | shall not, and shall not permit any of its Subsidiaries to (A) except in the Ordinary Course of Business, (1) hire any employee or engage any independent contractor who is a natural person, in each case with annual base salary, base wages or base compensation in excess of $100,000 (except where such employment is terminable on no more than 30 days’ prior notice without material cost or penalty) or (2) terminate the employment of any employee of the Company or any of its Subsidiaries at the vice president-level (or its equivalent) or above, (B) (1) increase the compensation or other benefits, or accelerate the vesting or payment of any compensation or other benefits, payable or provided, to the Company’s or any of its Subsidiaries’ directors or officers or (2) increase the compensation or other benefits, or accelerate the vesting or payment of any compensation or other benefits, payable or provided, to the Company’s or any of its Subsidiaries’ employees, which increases do not exceed (I) 10% of the aggregate annualized compensation paid to an employee during calendar year 2021 (any such increases over 6% to be limited to non-union employees) and, (II) in the aggregate, 4.5% of total compensation for all employees (except as required pursuant to the terms of any new or amended union Contract), or (C) except as required pursuant to the terms of any Company Benefit Plan in effect as of the date of this Agreement, (1) grant any transaction or retention bonuses, (2) grant any Company Equity Awards or other equity or long-term incentive compensation awards, or (3) enter into any employment, change of control, severance or retention agreement with any employee of the Company or any of its Subsidiaries; |
(iv) | shall not, and shall not permit any of its Subsidiaries to, change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by applicable Law, GAAP or SEC rule or policy; |
(v) | shall not adopt any amendments, modifications, waivers, rescissions or otherwise make changes to the Organizational Documents of the Company or any of its Subsidiaries; |
(vi) | shall not, and shall not permit any of its Subsidiaries to, issue, deliver, grant, sell, pledge, transfer, dispose, or otherwise encumber, or authorize or approve or agree to issue, grant, sell, pledge or otherwise encumber any shares of Company Common Stock or other securities of the Company or any of its Subsidiaries, or securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, shares of Company Common Stock or other securities of the Company or any of its Subsidiaries, including but not limited to the issue or award of any Company Equity Awards or any rights, warrants or options to acquire any such shares, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units, except vesting in the Ordinary Course of Business pursuant to awards under Company Benefit Plans in effect as of the date hereof or as disclosed on Section 5.1(b)(vi) of the Company Disclosure Schedules; |
(vii) | shall not, and shall not permit any of its Subsidiaries to, redeem, terminate early, unwind, repurchase, prepay, defease, create, suffer to exist, incur, enter into, assume, endorse, guarantee, or otherwise become liable for or modify or amend (including seeking or obtaining a waiver) in any material respects the terms of, any indebtedness for borrowed money, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities, any indebtedness or assume, guarantee, endorse or otherwise become liable or responsible for such obligations or the obligations of any other person, or make any loans or advances (directly, contingently or otherwise), except for (A) intercompany loans or advances in the Ordinary |
Course of Business among the Company and its direct or indirect 100% owned Subsidiaries and (B) incremental borrowings under the Company’s existing Credit Facility contemplated by the Company Budget which do not require any amendments or waivers to such Credit Facility; |
(viii) | shall not, and shall not permit any of its Subsidiaries to make any loans, advances, guarantees or capital contributions to or investments in any Person, except for (A) loans solely between or among the Company or any of its wholly-owned Subsidiaries, on the one hand, and any of the Company’s wholly-owned Subsidiaries, on the other hand, and (B) advances for reimbursable employee expenses in the Ordinary Course of Business; |
(ix) | shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, transfer, exchange or swap, or subject to any Lien (other than Permitted Liens), or otherwise dispose of, any of its businesses, material properties or assets, whether voluntarily or by the failure to exercise a right or make a payment, except (A) dispositions of obsolete or worthless equipment, in the Ordinary Course of Business, (B) non-exclusive licenses or other non-exclusive grants of rights in, to or under Company Intellectual Property entered in the Ordinary Course of Business with customers of the Company or the Company Subsidiaries (C) sales of products or services in the Ordinary Course of Business that do not require the incurrence of indebtedness in breach of Section 5.1(b)(vii) or the extension of capital in breach Section 5.1(b)(xiii) and (D) for transactions solely among the Company and its wholly-owned Company Subsidiaries or solely among wholly-owned Company Subsidiaries; |
(x) | shall not, and shall not permit any of its Subsidiaries to (i) enter into any Contract that would have been a Company Material Contract under Section 3.21(a)(ii) or Section 3.21(a)(xi) had it been entered into prior to this Agreement, or amend or modify any Contract in a manner that would make it a Company Material Contract under Section 3.21(a)(ii) or Section 3.21(a)(xi), (ii) enter into any other Contract that would require aggregate expenditures by the Company or any Company Subsidiary in excess of the Company Budget, (iii) materially modify, materially amend, extend, accelerate, terminate, cancel, exercise or fail to exercise an expiring renewal option or terminate any Company Material Contract (in each case, in a manner adverse to the Company or its Subsidiaries and not including terminations or expirations due to the natural expiration or termination of such agreements) or (iv) waive, release or assign any material rights or claims thereunder (other than in the Ordinary Course of Business or as would not result in a breach of Section 5.1(b)(xii)); |
(xi) | shall not, and shall not permit any of its Subsidiaries to, acquire (including by merger, consolidation or acquisition of stock or assets or any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, directly or indirectly, any equity interests in or assets (including intangible assets) of any person or any business, division, securities, properties or interests thereof, or otherwise engage in any mergers, consolidations or business combinations (other than pursuant to any capital expenditures permitted by Section 5.1(b)(xiii)) from any other Person, other than (A) transactions solely between the Company and a wholly-owned Company Subsidiary or solely between wholly-owned Company Subsidiaries or acquisitions of supplies or equipment in the Ordinary Course of Business and (B) acquisitions of properties, assets, equipment or inventory in the Ordinary Course of Business and consistent with the Company Budget; |
(xii) | shall not, and shall not permit any of its Subsidiaries to, settle, pay, discharge or satisfy any Action, other than any Action that involves only the payment of monetary damages not in excess of $250,000 individually or $1,000,000 in the aggregate over the amount reflected or reserved against in the September 30, 2021 consolidated balance sheet of the Company for such specific Actions and would not result in (A) the imposition of any Order that would restrict the future activity or conduct of the Company or any of its Subsidiaries (excluding, for the avoidance of doubt, releases of claims, confidentiality and other de minimis |
(xiii) | shall not, and shall not permit any of its Subsidiaries to incur or commit to capital expenditures or development expenses or expenses relating to integration of its accounting or ERP systems, in each case, in excess of the amounts set forth in Section 5.1(b)(xiii) to the Company Disclosure Schedules (the “ Company Budget |
(xiv) | shall not, and shall not permit any of its Subsidiaries to, terminate or permit any material Company Permit to lapse, other than in accordance with the terms and regular expiration thereof, or fail to apply on a timely basis for any renewal of any renewable material Company Permit (excluding, in each case, any Company Permit that the Company, in its reasonable judgment, no longer believes to be material or necessary to the conduct of the business); |
(xv) | shall not, and shall not permit any of its Subsidiaries to, adopt any plan of merger, consolidation, reorganization, liquidation or dissolution, adopt resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, file a petition in bankruptcy under any provisions of federal or state bankruptcy applicable Law on behalf of the Company or any of its Subsidiaries or consent to the filing of any bankruptcy petition against the Company or any of its Subsidiaries under applicable Law; |
(xvi) | shall not, and shall not permit any of its Subsidiaries to, enter into any new line of business that is not reasonably related to the existing business lines of the Company and its Subsidiaries, or abandon or discontinue any existing line of business of the Company or its Subsidiaries; |
(xvii) | except as required by applicable Law, shall not (A) make (other than in the Ordinary Course of Business), change or revoke any material Tax election (B) change any material method of Tax accounting or Tax accounting period, (C) file any amended Tax Return with respect to any material Tax, (D) settle or compromise any material Tax proceeding, (E) surrender any right to claim a material Tax refund, or (F) agree to an extension or waiver of the statute of limitations with respect to the assessment of any material Tax; |
(xviii) | shall not, and shall not permit any of its Subsidiaries to become a party to, establish, adopt, materially amend, commence participation in or terminate any collective bargaining agreement or other agreement with a labor union, works council or similar organization; |
(xix) | shall not, and shall not permit any of its Subsidiaries to enter into any consent decree or similar agreement that, individually or in the aggregate, is material to the Company and its Subsidiaries, taken as a whole; |
(xx) | shall not, and shall not permit any of its Subsidiaries to terminate or fail to exercise renewal rights with respect to any insurance policies of the Company and its Subsidiaries in a manner that would (after taking into account any replacement insurance policies) materially and adversely affect the insurance coverage of the Company or its Subsidiaries; |
(xxi) | shall not, and shall not permit any of its Subsidiaries to, sell, transfer, lease, license, mortgage, pledge, surrender, encumber, divest, or otherwise dispose of any material Company Intellectual Property (other than Permitted Liens), except for non-exclusive licenses of Company Intellectual Property granted in the Ordinary Course of Business; |
(xxii) | shall not, and shall not permit any of its Subsidiaries to abandon or otherwise allow to lapse or expire any Registered Company Intellectual Property, other than lapses or expirations of any Registered Company Intellectual Property that is at the end of its maximum statutory term (with renewals); |
(xxiii) | shall not, and shall not permit any of its Subsidiaries to engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of the Company or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC; |
(xxiv) | shall not convene any special meeting (or any adjournment or postponement thereof) of the stockholders of the Company; |
(xxv) | shall not, and shall not permit any of its Subsidiaries to modify, amend or replace that certain lease Contract listed in Section 5.1(b)(xxv) of the Company Disclosure Schedules; and |
(xxvi) | shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions. |
(c) | Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’ operations prior to the Closing Date. Prior to the Closing Date, the Company shall exercise, consistent with the terms and conditions of this Agreement and subject to applicable Law, complete control and supervision over its and its Subsidiaries’ operations. |
5.2 | Conduct of Business by Parent. |
(a) | From and after the date of this Agreement and prior to earlier of the Effective Time and the Termination Date, except (i) as may be required by applicable Law, (ii) as may be agreed in writing by the Company (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may be expressly contemplated, required or expressly permitted by this Agreement or (iv) as set forth in Section 5.2(a) of the Parent Disclosure Schedules, Parent shall, and shall cause its Subsidiaries to, use its reasonable best efforts to (A) conduct its business in the Ordinary Course of Business and (B) preserve intact its business organization and maintain existing relationships and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, creditors, lessors, distributors, employees, contractors and business associates, in each case, with whom it and they have material business relations; provided |
(b) | From and after the date of this Agreement and prior to the earlier of the Effective Time and the Termination Date, except (w) as may be required by applicable Law, (x) as may be agreed in writing by the Company (which consent shall not be unreasonably withheld, delayed or conditioned), (y) as may be expressly contemplated, required or expressly permitted by this Agreement or (z) as set forth in Section 5.2(b) of the Parent Disclosure Schedules, Parent: |
(i) | shall not, and shall not permit any of its Subsidiaries that is not wholly-owned to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares (whether in cash, assets, shares or other securities of Parent or its Subsidiaries), except (A) regular quarterly cash dividends paid by Parent on the Parent Common Shares in the Ordinary Course of Business, appropriately adjusted to reflect any stock dividends, subdivisions, splits, combinations or other similar events relating to the Parent Common Shares, and (B) dividends and distributions paid by Subsidiaries of Parent to Parent or to any of Parent’s other wholly-owned Subsidiaries; |
(ii) | shall not, and shall not permit any of its Subsidiaries to, split, combine or reclassify any of its capital or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for its shares, except for any such transaction by a wholly-owned Subsidiary of Parent that remains a wholly-owned Subsidiary after consummation of such transaction; |
(iii) | shall not, and shall not permit any of its Subsidiaries to, issue, deliver, grant, sell, transfer, dispose, or otherwise encumber, or authorize or approve or agree to issue, grant, sell, pledge or otherwise encumber any Parent Common Shares or other equity securities of Parent, or securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Parent Common Shares or other equity securities of Parent, including but not limited to the issue or award of any Parent Options or any rights, warrants or options to acquire any such shares, voting equity securities or equity interest or share based performance units, except (A) in the |
Ordinary Course of Business pursuant to awards under Parent Benefit Plans in effect as of the date hereof or as disclosed on Section 5.2(b)(iii) of the Parent Disclosure Schedules or (B) pledges or encumbrances required in connection with the Debt Financing (including for the repayment or refinancing of the “Refinanced Indebtedness” (as defined in the Initial Debt Commitment Letter) or any other repayment or refinancing contemplated thereby); |
(iv) | shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by IFRS or rule or policy of the Canadian Securities Administrators; |
(v) | shall not, and shall not permit any of its Subsidiaries to, redeem, terminate early, unwind, repurchase, prepay, defease, create, suffer to exist, incur, enter into, assume, endorse, guarantee or otherwise become liable for or modify in any material respects the terms of any indebtedness for borrowed money, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for (A) any indebtedness solely among Parent and its wholly-owned Parent Subsidiaries or solely among wholly-owned Parent Subsidiaries, (B) incremental borrowings under Parent’s existing credit facilities if either (1) contemplated by Section 5.2(b)(v) of the Parent Disclosure Schedules (the “ Parent Budget |
(vi) | shall not adopt any amendments to the Organizational Documents of Parent; |
(vii) | shall not, and shall not permit any of its Subsidiaries to, acquire (including by merger, consolidation or acquisition of stock or assets or any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, directly or indirectly, any equity interests in or assets (including intangible assets) of any person or any business, division, securities, properties or interests thereof, or otherwise engage in any mergers, consolidations or business combinations from any other Person, other than (A) transactions solely between Parent and a wholly-owned Parent Subsidiary or solely between wholly-owned Parent Subsidiaries or acquisitions of supplies or equipment in the Ordinary Course of Business, (B) acquisitions of properties, assets, equipment or inventory in the Ordinary Course of Business and (C) transactions that would not reasonably be expected to have a material adverse effect on the Parent’s ability to complete the Merger or the Financing; and |
(viii) | shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions. |
(a) | The Company agrees that, upon the request by Parent and Merger Sub, the Company shall use its reasonable best efforts to: (i) effect one or more reorganizations of the corporate structure, capital structure, business operations and assets of the Company or any of its wholly-owned Subsidiaries or such other transactions as Parent and Merger Sub may reasonably request, (each, a “ Pre- Closing Reorganization (ii) co-operate with Parent, Merger Sub and their advisors in order to determine the nature of the Pre-Closing Reorganizations that might be undertaken and the manner in which they might most effectively be undertaken and whether such reorganizations would require prior approval by a Governmental Entity; provided Pre-Closing Reorganizations are not prejudicial to |
the Company, any of its Subsidiaries or any of the Company stockholders in any material respect and will not, if the Merger is not consummated, adversely affect the Company, any of its Subsidiaries or any of the Company stockholders in any material manner; (B) the Pre-Closing Reorganizations do not impair the ability of the Company or Parent or Merger Sub to complete the Merger or materially delay completion of the Merger; (C) the Pre-Closing Reorganizations are effected as close as reasonably practicable to the Effective Time and do not require the approval of any of the Company stockholders; and (D) the Pre-Closing Reorganizations do not unreasonably and materially interfere with the ongoing operations of the Company and its Subsidiaries and do not result in any breach by the Company or any of its Subsidiaries of any Contract or any breach by the Company or any of its Subsidiaries of their respective Organizational Documents or Law. Parent waives any breach of a representation, warranty or covenant by the Company, where such breach is solely a result of an action taken or not taken by the Company or a Subsidiary pursuant to a request by Parent in accordance with this Section 5.3. Parent and Merger Sub shall provide written notice to the Company of any proposed Pre-Closing Reorganization at least ten (10) Business Days prior to the Effective Time. |
(b) | Parent shall reimburse and indemnify the Company (and each Subsidiary) for all out-of-pocket Pre-Closing Reorganization if the Merger is not completed as contemplated herein. |
(a) | Subject to compliance with applicable Laws and the terms of any existing Contracts, each of the Company and Parent shall (and each shall cause its Subsidiaries to): (i) afford to the other party and to its officers, employees, accountants, consultants, legal counsel, financial advisors and agents and other representatives (collectively, “ Representatives provided COVID-19 Measures). Solely for purposes of furthering the Merger and the other transactions contemplated hereby or integration planning relating thereto, following the date of this Agreement, the Company and its Subsidiaries shall use reasonable best efforts to make available to Parent true and accurate copies of all environmental site assessments, environmental investigation reports, environmental audit reports and other environmental reports and documents in their possession. |
(b) | Subject to compliance with applicable Laws, throughout the period from the Effective Time until the Closing Date, the Company shall (and shall cause its Subsidiaries and Representatives to) (i) afford to Parent and its Representatives reasonable access, for purposes of furthering the transactions contemplated hereby or integration planning relating thereto, during normal business hours, on reasonable advance notice (which shall be deemed reasonable if not less than two (2) Business Days), to the Company’s and its Subsidiaries’ businesses, properties, personnel, agents, accountants, Contracts, commitments, books and records, and (ii) promptly furnish Parent and its Representatives (A) such financial and operating data and other information concerning the Company and its Subsidiaries as may be reasonably requested and is necessary or advisable in connection with any filings contemplated pursuant to Section 5.7, (B) all reports or other information concerning the Company and its Subsidiaries provided to third parties pursuant to the terms of any outstanding |
indebtedness of the Company or any of its Subsidiaries and (C) all other information concerning the Company’s business, properties and personnel as may reasonably be requested by the other party; provided COVID-19 Measures). |
(c) | The foregoing provisions of this Section 5.3 notwithstanding, neither the Company nor Parent shall be required to afford such access or furnish such information if it would unreasonably disrupt the operations of such party or any of its Subsidiaries, would cause a violation of any agreement to which such party or any of its Subsidiaries is a party, would result in a loss of privilege or trade secret protection to such party or any of its Subsidiaries, would result in the disclosure of any information in connection with any litigation or similar dispute among the Parties hereto, would constitute a violation of any applicable Law or result in the disclosure of any personal information that would expose the such party to the risk of liability. In the event that Parent or the Company objects to any request submitted pursuant to and in accordance with this Section 5.3 and withholds information on the basis of the foregoing sentence, the Company or Parent, as applicable, shall inform the other party as to the general nature of what is being withheld and the Company and Parent shall use reasonable best efforts to make appropriate substitute arrangements to permit reasonable disclosure that does not suffer from any of the foregoing impediments, including through the use of reasonable best efforts to (i) obtain the required consent or waiver of any third party required to provide such information and (ii) implement appropriate and mutually agreeable measures to permit the disclosure of such information in a manner to remove the basis for the objection, including by arrangement of appropriate clean room procedures, if the Parties determine that doing so would reasonably permit the disclosure of such information without violating applicable Law or jeopardizing such privilege. |
(d) | Notwithstanding anything to the contrary herein, no Party shall be permitted to conduct any testing, sampling or subsurface or invasive analysis (commonly known as a Phase II environmental assessment) at any property of the other Parties or of any Parent Subsidiary or Company Subsidiary, as applicable. |
(e) | Each of the Company and Parent hereby agrees that all information provided to it or any of its Representatives in connection with this Agreement and the consummation of the transactions contemplated hereby shall be deemed to be “Confidential Information,” as such term is used in, and shall be treated in accordance with, the non-disclosure agreement, dated October 3, 2021, between the Company and Parent (the “Confidentiality Agreement |
(f) | No investigation by any of the Parties or their respective Representatives shall affect or be deemed to modify or waive the representations and warranties of the other set forth herein. |
(a) | Subject to the provisions of this Section 5.5, from the date of this Agreement until the earlier of the Effective Time and the Termination Date, the Company agrees that it shall not, and shall cause its Subsidiaries, and its and their respective directors and officers not to, and shall use reasonable best efforts to cause its and its Subsidiaries other Representatives not to, directly or indirectly, (i) solicit, initiate or knowingly encourage or knowingly facilitate any inquiry regarding, or the making or submission of any proposal, offer or indication of interest that constitutes, or would reasonably be expected to lead to, or result in, a Company Alternative Proposal, (ii) engage in, knowingly encourage, continue or otherwise participate in any discussions or negotiations with any Person regarding a Company Alternative Proposal, or any communications regarding or any inquiry, proposal or offer that would reasonably be expected to lead to, or result in, a Company Alternative Proposal (except to notify such Person that the provisions of this Section 5.5 prohibit any such discussions or negotiations), (iii) furnish any nonpublic information relating to the Company or its Subsidiaries in connection with or for the purpose of facilitating a Company Alternative Proposal or any inquiry, proposal, offer or indication of interest that would reasonably be expected to lead to, or result in, a Company Alternative Proposal |
and request the prompt return or destruction of any confidential information provided to any third party in connection with any Company Alternative Proposal; (iv) recommend or enter into any other letter of intent, memorandum of understandings, agreement in principle, option agreement, acquisition agreement, merger agreement, joint venture agreement, partnership agreement or other similar agreement with respect to a Company Alternative Proposal (except for confidentiality agreements permitted under Section 5.5(b)); (v) approve any transaction under, or any third party becoming an “interested stockholder” under, Section 203 of the DGCL; or (vi) adopt, approve, endorse, authorize, agree or publicly propose to adopt, approve, endorse or authorize to do any of the foregoing or otherwise knowingly facilitate any effort or attempt to make a Company Alternative Proposal. |
(b) | Notwithstanding anything in this Section 5.5 to the contrary, at any time prior to, but not after, obtaining the Company Stockholder Approval, if the Company receives a bona fide non-public information is provided or made available to such third party, any non-public information furnished to such third party that was not previously furnished to Parent; provided however non-public information to such third party in connection with any actions permitted by this Section 5.5(b) other than in accordance with customary “clean room” or other similar procedures designed to limit the disclosure of competitively sensitive information, and (ii) engage in discussions or negotiations with the third party (including its Representatives) with respect to the Company Alternative Proposal. The Company shall promptly (and in any event within 24 hours) notify Parent in writing if: (i) any inquiries, proposals or offers with respect to a Company Alternative Proposal are received by the Company or any of its Representatives or (ii) any information is requested from the Company or any of its Representatives that, to the Knowledge of the Company, has been or is reasonably likely to have been made in connection with any Company Alternative Proposal, which notice shall identify the material terms and conditions thereof (including the name of the applicable third party and complete copies of any written requests, proposals or offers and any other material documents, including proposed agreements). It is understood and agreed that any contacts, disclosures, discussions or negotiations permitted under this Section 5.5(b), including any public announcement that the Company or the Company Board has made any determination contemplated under this Section 5.5(b) to take or engage in any such actions, shall not constitute a Company Change of Recommendation or otherwise constitute a basis for Parent to terminate this Agreement pursuant to Section 7.1(d)(ii) The Company shall keep Parent fully informed on a current basis of any material developments regarding any Company Alternative Proposals or any material change to the terms of any such Company Alternative Proposal and any material change to the status of any such discussions or negotiations with respect thereto. |
(c) | Except as expressly permitted by Section 5.5(d), the Company Board, including any committee thereof, shall not (i) withdraw, withhold, qualify or modify, or propose publicly to withdraw, withhold, qualify or modify, the Company Recommendation, (ii) fail to include the Company Recommendation in the Proxy Statement/Prospectus that is mailed by the Company to the stockholders of the Company; (iii) if any Company Alternative Proposal that is structured as a tender offer or exchange offer for the outstanding shares of Company Common Stock is commenced pursuant to Rule 14d-2 under the Exchange Act (other than by Parent or an Affiliate of Parent), fail to recommend and publicly announce, within ten (10) Business Days after such commencement, against acceptance of such tender offer or exchange offer by its stockholders; (iv) approve, adopt, recommend or declare advisable any Company Alternative Proposal or publicly propose to approve, adopt or recommend, or declare advisable any Company Alternative Proposal; (v) fail to publicly reaffirm the Company Recommendation, within ten (10) Business Days after a Company Alternative Proposal (or material modification thereto) is first publicly announced by the Company or the person making such Company Alternative Proposal (or, with respect to any material amendments, revisions or changes to the terms of any such previously publicly disclosed Company Alternative Proposal that are publicly disclosed within the last five (5) Business Days prior to the Effective Time, fail to take the actions referred to in this clause (v), with references to the applicable ten (10) Business Day period being replaced with three (3) Business Days); (vi) approve, adopt or recommend, or declare advisable or enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (other than a confidentiality agreement referred to in and entered into compliance with Section 5.5(b)) with respect to any Company Alternative Proposal; (vii) exempt any person other than Parent or Merger Sub from any Takeover Statute or approve or authorize, or cause or permit the Company or any of its Subsidiaries to enter into, a Company Acquisition Agreement, or (viii) resolve or publicly propose to take any action described in the foregoing clauses (i) through (vii) (any such action set forth in the foregoing clauses (i) through (viii), a “Company Change of Recommendation |
(d) | Notwithstanding anything to the contrary set forth in this Agreement, but subject to Section 5.5(e), prior to obtaining the Company Stockholder Approval (i) the Company Board may make a Company Change of Recommendation in response to a Company Intervening Event if the Company Board has determined, in good faith after consultation with the Company’s outside legal counsel, that the failure to take such action would breach or would reasonably be expected to breach the Company Board’s fiduciary duties to the Company’s stockholders under applicable Law, or (ii) the Company Board may, in response to a Company Superior Proposal (A) make a Company Change of Recommendation and/or (B) cause the Company to terminate this Agreement pursuant to Section 7.1(c)(ii) in order to enter into a Company Acquisition Agreement that did not result from a breach of this Section 5.5 which Company Acquisition Agreement the Company Board determines, in good faith after consultation with the Company’s outside legal counsel and financial advisors, is a Company Superior Proposal, but only if the Company Board has determined in good faith after consultation with the Company’s outside legal counsel, that the failure to make such a Company Change of Recommendation and / or terminate this Agreement to enter into such Company Acquisition Agreement providing for such Company Superior Proposal would breach or would reasonably be expected to breach the Company Board’s fiduciary duties to the Company’s stockholders under applicable Law. |
(e) | Prior to the Company taking any action permitted (i) under Section 5.5(d)(i) in response to a Company Intervening Event, the Company shall provide Parent with ten (10) Business Days’ prior written notice advising Parent it intends to effect a Company Change of Recommendation and specifying, in reasonable detail, the reasons therefor, and during such ten (10) Business Day period, the Company shall cause its Representatives (including its executive officers) to be available to negotiate in good faith (to the extent Parent desires to negotiate) any proposal by Parent to amend the terms and conditions of this Agreement in a manner that would obviate the need to effect a Company Change of Recommendation and at the end of such ten (10) Business Day period the Company Board again makes the fiduciary determination under Section 5.5(d)(i) (after in good faith taking into account any |
amendments to this Agreement proposed by Parent), or (ii) under Section 5.5(d)(ii) in response to a Company Superior Proposal, (A) the Company shall provide Parent with five (5) Business Days’ prior written notice (a “ Company Superior Proposal Notice |
(f) | Nothing contained in this Agreement shall prohibit the Company or the Company Board or any committee thereof from complying with its disclosure obligations under applicable Law or rules and policies of the NYSE, including taking and disclosing to its stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) or Item 1012(a) of Regulation M-A under the Exchange Act (or any similar communication to stockholders) or from issuing a “stop, look and listen” statement pending disclosure of its position thereunder. For the avoidance of doubt, this Section 5.5(f) shall not permit the Company Board to make (or otherwise modify the definition of) a Company Change of Recommendation except to the extent expressly permitted by Section 5.5(d). |
(g) | Further to Section 5.5(a), the Company shall (and shall cause its Subsidiaries and its and their respective directors and officers and shall use its reasonable best efforts to cause its other Representatives to) promptly terminate any existing discussions and negotiations conducted heretofore with any Person (other than Parent, the Company or any of their respective Affiliates or Representatives) with respect to any Company Alternative Proposal, or proposal or transaction that could reasonably be expected to lead to or result in a Company Alternative Proposal. Further, the Company shall promptly terminate all physical and electronic data access previously granted to such Persons and request that any such Persons promptly return or destroy all confidential information concerning the Company and any of its Subsidiaries and provide prompt written confirmation thereof. |
(h) | “ Company Acquisition Agreement provided, that |
(i) | “ Company Alternative Proposal |
(iii) the direct or indirect acquisition by any Person of more than 20% of the outstanding shares of Company Common Stock. |
(j) | “ Company Intervening Event provided however |
(k) | “ Company Superior Proposal bona fide |
(a) | Subject to the provisions of this Section 5.6, from the date of this Agreement until the earlier of the Effective Time and the Termination Date, Parent agrees that it shall not, and shall cause its Subsidiaries |
and its and their respective directors and officers not to, and shall use reasonable best efforts to cause its and its Subsidiaries’ other Representatives not to, directly or indirectly, (i) solicit, initiate or knowingly encourage or knowingly facilitate any inquiry regarding, or the making or submission of any proposal, offer or indication of interest that constitutes, or would reasonably be expected to lead to, or result in, a Parent Alternative Proposal, (ii) engage in, knowingly encourage, continue or otherwise participate in any discussions or negotiations with any Person regarding Parent Alternative Proposal, or any communications regarding or any inquiry, proposal or offer that would reasonably be expected to lead to, or result in, a Parent Alternative Proposal (except to notify such Person that the provisions of this Section 5.6 prohibit any such discussions or negotiations), (iii) furnish any non-public information relating to Parent or its Subsidiaries in connection with or for the purpose of facilitating a Parent Alternative Proposal or any inquiry, proposal, offer or indication of interest that would reasonably be expected to lead to, or result in, a Parent Alternative Proposal and request the prompt return or destruction of any confidential information provided to any third party in connection with any Parent Alternative Proposal; (iv) recommend or enter into any other letter of intent, memorandum of understandings, agreement in principle, option agreement, acquisition agreement, merger agreement, arrangement agreement, amalgamation agreement, joint venture agreement, partnership agreement or other similar agreement with respect to a Parent Alternative Proposal (except for confidentiality agreements permitted under Section 5.6(b)); (v) approve any transaction under, or any third party becoming an “interested stockholder” under Section 203 of the DGCL (or similar Takeover Statute applicable to Parent under Canadian Law); or (vi) adopt, approve, endorse, authorize agree or publicly propose to adopt, approve, endorse or authorize to do any of the foregoing or otherwise knowingly facilitate any effort or attempt to make a Parent Alternative Proposal. |
(b) | Notwithstanding anything in this Section 5.6 to the contrary, at any time prior to, but not after, obtaining the Parent Shareholder Approval, if Parent receives a bona fide, unsolicited Parent Alternative Proposal in writing that did not result from a breach of this Section 5.6 (which Parent Alternative Proposal is not withdrawn), Parent and its Representatives may contact the third party making such Parent Alternative Proposal to clarify the terms and conditions thereof. If the Parent Board determines in good faith after consultation with Parent’s outside legal counsel and financial advisors that such Parent Alternative Proposal constitutes a Parent Superior Proposal or would reasonably be expected to result in a Parent Superior Proposal, then Parent may take the following actions: (i) furnish nonpublic information to the third party making such Parent Alternative Proposal (including its Representatives, including its equity and debt financing sources) in response to a request therefor, if, and only if, (A) prior to so furnishing such information the third party has executed a confidentiality agreement with Parent (a copy of which shall be provided to the Company within 24 hours of execution) having confidentiality and use provisions that, in each case, are not less restrictive to such third party than the provisions in the Confidentiality Agreement are to the Company (it being understood that such confidentiality agreement need not contain any “standstill” or similar provisions or otherwise prohibit the making or amendment of any Parent Alternative Proposal, but such confidentiality agreement shall not grant such third party the exclusive right to negotiate with Parent), and (B) Parent also provides to the Company, prior to or substantially concurrently with the time such non-public information is provided or made available to such third party, any non-public information furnished to such third party that was not previously furnished to the Company; provided however non-public information to such third party in connection with any actions permitted by this Section 5.6(b) other than in accordance with customary “clean room” or other similar procedures designed to limit the disclosure of competitively sensitive information, and (ii) engage in discussions or negotiations with the third party (including its Representatives) with respect to the Parent Alternative Proposal. Parent shall promptly (and in any event within 24 hours) notify the Company in writing if: (i) any inquiries, proposals or offers with respect to a Parent Alternative Proposal are received by Parent or any of its Representatives or (ii) any information is requested from Parent or any of its Representatives that, to the Knowledge of Parent, has |
been or is reasonably likely to have been made in connection with any Parent Alternative Proposal, which notice shall identify the material terms and conditions thereof (including the name of the applicable third party and, complete copies of any written requests, proposals or offers and any other material documents, including proposed agreements). It is understood and agreed that any contacts, disclosures, discussions or negotiations permitted under this Section 5.6(b), including any public announcement that Parent or the Parent Board has made any determination contemplated under this Section 5.6(b) to take or engage in any such actions, shall not constitute a Parent Change of Recommendation or otherwise constitute a basis for the Company to terminate this Agreement pursuant to Section 7.1. Parent shall keep the Company fully informed on a current basis of any material developments regarding any Parent Alternative Proposals or any material change to the terms of any such Parent Alternative Proposal and any material change to the status of any such discussions or negotiations with respect thereto. |
(c) | Except as expressly permitted by Section 5.6(d), the Parent Board, including any committee thereof, shall not (i) withdraw, withhold, qualify or modify, or propose publicly to withdraw, withhold, qualify or modify, the Parent Recommendation; (ii) fail to include the Parent Recommendation in the Management Information Circular that is mailed by Parent to the shareholders of Parent; (iii) if any Parent Alternative Proposal that is structured as a tender offer or exchange offer for the outstanding Parent Common Shares is commenced (other than by the Company or an Affiliate of the Company), fail to recommend and publicly announce, within ten (10) Business Days after such commencement, against acceptance of such tender offer or exchange offer by its shareholders; (iv) approve, adopt, recommend or declare advisable any Parent Alternative Proposal or publicly propose to approve, adopt or recommend, or declare advisable any Parent Alternative Proposal; (v) fail to publicly reaffirm the Parent Recommendation, within ten (10) Business Days after a Parent Alternative Proposal (or material modification thereto) is first publicly announced by Parent or the person making such Parent Alternative Proposal (or, with respect to any material amendments, revisions or changes to the terms of any such previously publicly disclosed Parent Alternative Proposal that are publicly disclosed within the last five (5) Business Days prior to the Effective Time, fail to take the actions referred to in this clause (v), with references to the applicable ten (10) Business Day period being replaced with three (3) Business Days); (vi) approve, adopt or recommend, or declare advisable or enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (other than a confidentiality agreement referred to in and entered into compliance with Section 5.6(b)) with respect to any Parent Alternative Proposal; (vii) exempt any person other than the Company from any Takeover Statute or approve or authorize, or cause or permit Parent any of its Subsidiaries to enter into a Parent Acquisition Agreement, or (viii) resolve or publicly propose to take any action described in the foregoing clauses (i) through (vii) (any such action set forth in the foregoing clauses (i) through (ix), a “ Parent Change of Recommendation |
(d) | Notwithstanding anything to the contrary set forth in this Agreement, but subject to Section 5.6(e), prior to obtaining the Parent Shareholder Approval, (i) the Parent Board may make a Parent Change of Recommendation in response to a Parent Intervening Event if the Parent Board has determined, in good faith after consultation with the Parent’s outside legal counsel, that the failure to take such action would breach or would reasonably be expected to breach the Parent Board’s fiduciary duties to the Parent’s stockholders under applicable Law, or (ii) the Parent Board may, in response to a Parent Superior Proposal, (i) make a Parent Change of Recommendation and/or (ii) cause Parent to terminate this Agreement pursuant to Section 7.1(d)(ii) in order to enter into a Parent Acquisition Agreement that did not result from a breach of this Section 5.6 which Parent Acquisition Agreement the Parent Board determines, in good faith after consultation with Parent’s outside legal counsel and financial advisors, is a Parent Superior Proposal, but only if the Parent Board has determined in good faith after consultation with Parent’s outside legal counsel, that the failure make such a Parent Change of Recommendation and / or terminate this Agreement to enter into a Parent Acquisition Agreement |
providing for a Parent Superior Proposal would breach or would reasonably be expected to breach the Parent Board’s fiduciary duties to Parent’s shareholders under applicable Law. |
(e) | Prior to Parent taking any action permitted under (i) Section 5.6(d)(i) in response to a Parent Intervening Event, the Parent shall provide Company with ten (10) Business Days’ prior written notice advising Company it intends to effect a Parent Change of Recommendation and specifying, in reasonable detail, the reasons therefor, and during such ten (10) Business Day period, the Parent shall cause its Representatives (including its executive officers) to be available to negotiate in good faith (to the extent Company desires to negotiate) any proposal by Company to amend the terms and conditions of this Agreement in a manner that would obviate the need to effect a Parent Change of Recommendation and at the end of such ten (10) Business Day period the Parent Board again makes the fiduciary determination under Section 5.6(d)(i) (after in good faith taking into account any amendments to this Agreement proposed by Company), or (ii) Section 5.6(d)(ii) in response to a Parent Superior Proposal, (A) Parent shall provide the Company with five (5) Business Days’ prior written notice (a “ Parent Superior Proposal Notice |
(f) | Nothing contained in this Agreement shall prohibit Parent or the Parent Board or any committee thereof from (i) complying with its disclosure obligations under applicable Law or rules and policies of the TSX, including taking and disclosing to its shareholders a position a “stop, look and listen” statement pending disclosure of its position thereunder, or (ii) complying with Part 2 – Division 1 of National Instrument 62-104 – Take-Over Bids and Issuer Bids |
(g) | Further to Section 5.6(a), Parent shall (and shall cause its Subsidiaries and its and their respective directors and officers and shall use its reasonable best efforts to cause its other Representatives to) promptly terminate any existing discussions and negotiations conducted heretofore with any Person (other than the Company, Parent or any of their respective Affiliates or Representatives) with respect to any Parent Alternative Proposal, or proposal or transaction that could reasonably be expected to lead to or result in a Parent Alternative Proposal. Further, Parent shall promptly terminate all physical and electronic data access previously granted to such Persons and request that any such Persons promptly return or destroy all confidential information concerning Parent and any of its Subsidiaries and provide prompt written confirmation thereof. |
(h) | “ Parent Acquisition Agreement |
provided, that |
(i) | “ Parent Alternative Proposal |
(j) | “ Parent Intervening Event provided however |
(k) | “ Parent Superior Proposal |
contemplated by this Agreement proposed by Company during the notice period, would, if consummated, result in a transaction (i) that is more favorable to Parent’s shareholders from a financial point of view than the transactions contemplated by this Agreement and (ii) that is reasonably likely to be completed, taking into account any regulatory, financing or approval requirements and any other aspects considered relevant by the Parent Board. For purposes of the reference to a “Parent Alternative Proposal” in this definition, all references to (x) “20%” in the definition of “Parent Alternative Proposal” will be deemed to be references to “80%” and (y) “80%” in the definition of “Parent Alternative Proposal” will be deemed to be references to “20%”. |
5.7 | Preparation of Registration Statement and Management Information Circular; Shareholders Meetings; Regulatory Filings; Other Actions. |
(a) | (i) As promptly as reasonably practicable after the date of this Agreement and, the Parties will use their respective reasonable best efforts to complete within forty-five (45) days following the date hereof, the Company and Parent shall prepare and file with the SEC the preliminary US Registration Statement (including the Proxy Statement/Prospectus with respect to the Company Stockholder Meeting) and (ii) Parent shall prepare and file with the TSX the draft Management Information Circular with respect to the Parent Shareholder Meeting. Each of the Company and Parent shall use its reasonable best efforts to (A) have the US Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and (B) keep the US Registration Statement effective for so long as necessary to complete the Merger. Each of the Company and Parent shall furnish all information concerning itself, its Affiliates and the holders of its shares to the other and provide such other assistance as may be reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement/Prospectus, the Management Information Circular and the US Registration Statement. Each of the Company and Parent shall provide the other Party with a reasonable period of time to review the Proxy Statement/Prospectus and the Management Information Circular and any amendments thereto prior to filing and shall reasonably consider any comments from the other Party. Each of the Company and Parent shall respond promptly to any comments from the SEC or the staff of the SEC, any of the Canadian Securities Administrators, or the TSX, as applicable. Each of the Company and Parent shall notify the other Party promptly of the receipt of any comments (whether written or oral) from the SEC or the staff of the SEC, any of the Canadian Securities Administrators, or the TSX and of any request by the SEC or the staff of the SEC or the TSX for amendments or supplements to the Proxy Statement/Prospectus, the Management Information Circular or US Registration Statement or for additional information and shall supply the other Party with copies of all correspondence between it and any of its Representatives, on the one hand, and the SEC or the staff of the SEC or the TSX, on the other hand, with respect to the Proxy Statement/Prospectus, the Management Information Circular or US Registration Statement or the transactions contemplated by this Agreement within 24 hours of the receipt thereof. The Proxy Statement/Prospectus, the Management Information Circular and US Registration Statement shall comply as to form in all material respects with the applicable requirements of the Exchange Act, the Securities Act and applicable Canadian Securities Laws and corporate Laws, as applicable, and, without limiting the foregoing, Parent shall ensure that the Management Information Circular shall provide shareholders of Parent with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the Parent Shareholder Meeting. If at any time prior to the Company Stockholder Meeting or the Parent Shareholder Meeting (or any adjournment or postponement of the Company Stockholder Meeting or the Parent Shareholder Meeting) any information relating to Parent or the Company, or any of their respective Affiliates, officers or directors, is discovered by Parent or the Company that should be set forth in an amendment or supplement to the Proxy Statement/Prospectus, the Management Information Circular and/or US Registration Statement, so that the Proxy Statement/Prospectus, the Management Information Circular and/or US Registration Statement would not include a misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which |
they were made, not misleading, the Party that discovers such information shall promptly notify the other Parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed by the Company and/or Parent with the SEC, the Canadian Securities Administrators and/or the TSX, as applicable, and, to the extent required by applicable Law, disseminated to the stockholders of the Company and the shareholders of Parent. The Company shall cause the Proxy Statement/Prospectus and US Registration Statement to be mailed to the Company’s stockholders as promptly as reasonably practicable after the US Registration Statement is declared effective under the Securities Act (such effectiveness date, the “ Clearance Date |
(b) | Each of Parent and the Company shall provide the other Party and its legal counsel with a reasonable opportunity to review and comment on drafts of the Proxy Statement/Prospectus, the Management Information Circular, the US Registration Statement and other documents related to the Company Stockholder Meeting, the Parent Shareholder Meeting or the issuance of the Parent Common Shares (and any amendments thereto) in connection with the Merger, prior to filing such documents with the applicable Governmental Entity and mailing such documents to the Company’s stockholders or Parent’s shareholders, as applicable. Each Party hereto shall consider in good faith in the Proxy Statement/Prospectus, the Management Information Circular, the US Registration Statement and such other documents related to the Company Stockholder Meeting, the Parent Shareholder Meeting or the issuance of Parent Common Shares in connection with the Merger, all comments reasonably and promptly proposed by the other Party or its legal counsel. Subject to applicable Law, the information contained in the Management Information Circular shall be consistent in all material respects with the substantive information contained in the Proxy Statement/Prospectus; provided |
(c) | Subject to Section 5.4(e), Section 5.7(d) and Section 5.7(g), the Company shall take all action necessary in accordance with applicable Law and the certificate of incorporation and bylaws of the Company to set a record date for, duly give notice of, convene and hold a special meeting of its stockholders following the mailing of the Proxy Statement/Prospectus for the purpose of obtaining the Company Stockholder Approval (the “ Company Stockholder Meeting |
(d) | The Company shall cooperate with and keep Parent informed on a reasonably current basis regarding its solicitation efforts and voting results following the dissemination of the Proxy Statement/Prospectus to its shareholders. The Company (i) shall adjourn or postpone the Company Stockholder Meeting (A) to allow time for the filing and dissemination of any supplemental or amended disclosure document that the Company Board has determined in good faith (after consultation with its outside legal counsel) is required to be filed and disseminated under applicable Law or (B) if as of the time that the Company Stockholder Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Stockholder Meeting and (ii) may, and at Parent’s request shall, adjourn or postpone the Company Stockholder Meeting to allow reasonable additional time to solicit additional proxies necessary to obtain the Company Stockholder Approval; provided, however |
Company Stockholder Meeting shall not be adjourned or postponed to a date that is more than twenty (20) Business Days after the date for which the Company Stockholder Meeting was previously scheduled; provided further |
(e) | Subject to Section 5.6, Section 5.7(f) and Section 5.7(g), Parent shall take all action necessary in accordance with applicable Law and the articles of incorporation and bylaws of Parent to set a record date for, duly give notice of, convene and hold a meeting of its shareholders following the mailing of the Proxy Statement/Prospectus for the purpose of obtaining the Parent Shareholder Approval (the “ Parent Shareholder Meeting |
(f) | Parent shall cooperate with and keep the Company informed on a reasonably current basis regarding its solicitation efforts and voting results following the dissemination of the Management Information Circular to its shareholders. Parent (i) shall adjourn or postpone the Parent Shareholder Meeting (A) to allow time for the filing and dissemination of any supplemental or amended disclosure document that the Parent Board has determined in good faith (after consultation with its outside legal counsel) is required to be filed and disseminated under applicable Law or (B) if as of the time that the Parent Shareholder Meeting is originally scheduled (as set forth in the Management Information Circular) there are insufficient Parent Common Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Shareholder Meeting and (ii) may, and at the Company’s request shall, adjourn or postpone the Parent Shareholder Meeting to allow reasonable additional time to solicit additional proxies necessary to obtain the Parent Shareholder Approval; provided, however provided further |
(g) | Subject to applicable Law, each of the Parties shall reasonably cooperate and use their reasonable best efforts to cause the record dates and date and time of the Company Stockholder Meeting and the Parent Shareholder Meeting to be coordinated such that they occur on the same calendar day (and in any event as close in time as possible). |
(h) | Without limiting the generality of the foregoing, the Company agrees that its obligations to hold the Company Stockholder Meeting pursuant to this Section 5.7 shall not be affected solely by the making of a Company Change of Recommendation, and Parent agrees that its obligations to hold the Parent Shareholder Meeting pursuant to this Section 5.7 shall not be affected solely by the making of a Parent Change of Recommendation. The Company agrees that notwithstanding any Company Change of |
Recommendation, this Agreement shall be submitted to the holders of the Company Common Stock at the Company Stockholder Meeting for the purpose of voting on the adoption of this Agreement and the approval of the Merger, and its obligations pursuant to this Section 5.7 shall not be affected by the Company Change of Recommendation, unless the Company terminates this Agreement in accordance with its terms prior to the Company Stockholder Meeting. Parent agrees that notwithstanding any Parent Change of Recommendation, the approval of the Parent Share Issuance in connection with the Merger shall be submitted to the holders of the Parent Common Shares at the Parent Shareholder Meeting, and its obligations pursuant to this Section 5.7 shall not be affected by the Parent Change of Recommendation, unless Parent terminates this Agreement in accordance with its terms prior to the Parent Shareholder Meeting. |
(i) | Subject to the terms and conditions herein provided, each of Parent and the Company shall (and shall cause their Subsidiaries to) use their respective reasonable best efforts to promptly take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under this Agreement and applicable Laws to cause the conditions to Closing set forth in Article 6 of this Agreement to be satisfied and to consummate, and make effective as promptly as practicable after the date hereof, the Merger and the other transactions contemplated by this Agreement as promptly as practicable after the date of this Agreement and in any event prior to the End Date, including by preparing and filing with all Governmental Entities as promptly as practicable after the date of this Agreement all applications, notices, petitions, filings, ruling requests, and other documents necessary to consummate the Merger, and to obtain as promptly as practicable after the date of this Agreement all permits, consents, waivers, approvals, clearances, authorizations and expirations or terminations of waiting periods necessary to be obtained from the Antitrust Authorities and any other Governmental Entity in order to consummate the Merger (collectively, the “ Governmental Approvals non-U.S. jurisdictions of the Antitrust Authorities, if required to have a waiting period, or enter into any agreement with the Antitrust Authorities or any other Governmental Entity not to consummate the Merger, without consulting with the other Party in good faith. Parent and the Company shall supply as promptly as practicable any additional information or documentation that may be requested by the Antitrust Authorities and use their respective reasonable best efforts to take all other actions necessary, proper or advisable to obtain the Required Antitrust Approvals or to cause the expiration or termination of the applicable waiting periods under the HSR Act and any other Antitrust Law as soon as practicable (including complying with any “second request” for information or similar request from a Governmental Entity pursuant to other regulatory Laws). In connection with the actions referenced in Section 5.7(i) to obtain all Governmental Approvals for the Merger under the Antitrust Laws, each of Parent and the Company shall: (A) cooperate in all respects with each other in connection with any material communication, filing or submission and in connection with any investigation or other inquiry, including any Action initiated by a private party; (B) keep the other Party and its counsel promptly informed of any material communication received by such Party from, or given by such Party to, the Antitrust Authorities or other Governmental Entity and of any material communication received or given in connection with any Action by a private party, in each case regarding any of the Merger; (C) consult with each other in advance of any meeting or conference with the Antitrust Authorities or any other Governmental Entity or, in connection with any Action by a private party, with any other person, and to the extent permitted by the Antitrust Authorities or such other Governmental Entity or other person, give the other Party or its counsel the opportunity to attend and participate in such meetings and conferences; and (D) permit the other Party and its counsel to review in advance any submission, filing or material communication (and documents submitted therewith) intended to be given by it to the Antitrust Authorities or any other Governmental Entity; provided |
be redacted to remove business secrets and other confidential material so long as the disclosing Party acts reasonably in identifying such material for redaction. Parent and the Company may, as each deems advisable and necessary, reasonably designate any competitively sensitive material to be provided to the other under this Section 5.7(i) as “Antitrust Counsel Only Material.” Such materials and the information contained therein shall be given only to the outside antitrust counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials (Parent or the Company, as the case may be) or its legal counsel. In furtherance and not in limitation of the other covenants of the Parties in this Agreement, if Parent determines, in its sole discretion, to defend through litigation on the merits any claim asserted in any court or other governmental body with respect to the Merger by the FTC, DOJ or any other applicable Governmental Entity, the Company shall use its reasonable best efforts to cooperate with and support the Parent’s efforts. Without limiting the generality of the foregoing and notwithstanding anything in this Agreement to the contrary, in furtherance of the Parties reasonable best efforts, each of Parent and the Parent Subsidiaries, on the one hand, and each of the Company and the Company Subsidiaries, on the other hand, to the extent required to obtain Required Antitrust Approvals or any necessary Governmental Approvals, shall (x) propose, negotiate or offer to effect, or consent or commit to, any sale, leasing, licensing, transfer, disposal, divestiture or other encumbrance, or holding separate, of any assets, licenses, operations, rights, product lines, businesses or interest therein (collectively, a “ Divestiture Remedy provided provided further |
(j) | Parent shall not, and shall cause the Parent Subsidiaries not to, and the Company shall not, and shall cause the Company Subsidiaries not to, acquire or agree to acquire, by merging with or into or consolidating with, or by purchasing a portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, |
or otherwise acquire or agree to acquire any assets, or take any other action, if the entering into of a definitive agreement relating to, or the consummation of such acquisition, merger or consolidation, or the taking of any other action, would reasonably be expected to (i) impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any authorizations, consents, orders, clearances or approvals of any Governmental Entity necessary to consummate the transactions contemplated hereby or the expiration or termination of any applicable waiting period; (ii) increase, in any material respect, the risk of any Governmental Entity entering an Order prohibiting the consummation of the transactions contemplated hereby; (iii) increase the risk, in any material respect, of not being able to remove any such Order on appeal or otherwise; or (iv) prevent or materially delay the consummation of the transactions contemplated hereby. |
5.8 | Employee Matters . |
(a) | During the period commencing at the Effective Time and ending on December 31, 2022 (the “ Continuation Period Company Continuing Employees pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to such Company Continuing Employees, to the extent such pre-existing conditions, exclusions or waiting periods were satisfied under the similar Company Benefit Plan in effect immediately prior to the Effective Time; and (y) provide each such Company Continuing Employee with credit for any co-payments and deductibles paid (to the same extent such credit was given for the year under the similar Company Benefit Plan in effect immediately prior to the Effective Time) in satisfying any applicable deductible or out-of-pocket |
(b) | With respect to any Parent Benefit Plan, excluding any retiree health plans or programs maintained by Parent or any of its Subsidiaries, if any, any defined benefit retirement plans or programs maintained by Parent or any of its Subsidiaries, if any, and any equity compensation arrangements maintained by Parent or any of its Subsidiaries, (collectively, the “ Applicable Parent Benefit Plans provided |
(c) | The Company shall terminate the Company Non-Qualified Deferred Compensation Plan effective no later than the day immediately prior to the Closing Date. The Parent has its own 401(k) plan, therefore, |
effective as of no later than the day immediately prior to the Closing Date, the Company will, if requested by Parent in its sole discretion, freeze and terminate the Company’s 401(k) Plan with Fidelity Investments. Effective no later than the day immediately preceding the Closing Date, the Company shall terminate any Company employee plans maintained by the Company or its Subsidiaries that Parent has requested to be terminated by providing a written notice to the Company at least five (5) days prior to the Closing Date, provided |
(d) | Without limiting the generality of Section 8.10, the provisions of this Section 5.8 are solely for the benefit of the Parties to this Agreement, and no current or former director, employee or consultant or any other person shall be a third-party beneficiary of this Agreement, and nothing herein shall prevent Parent, the Surviving Corporation or any of their Affiliates from terminating the employment of any Company Continuing Employee. |
(e) | Parent, Merger Sub and Company acknowledge and agree that (i) the Merger will constitute a “Change in Control” (or concept of similar import) under the Company Benefit Plans identified in Section 5.8(e) of the Company Disclosure Schedules and (ii) as a result of the Merger, the individuals identified in Section 5.8(e) of the Company Disclosure Schedules will be deemed to have experienced a “Good Reason” event (or concept of similar import), as applicable, as defined under such Company Benefit Plans. |
(f) | With respect to matters described in this Section 5.8, the Company will not send any written notices or other written communication materials to Company employees without the prior written consent of Parent. The Company will cooperate and collaborate with the Parent on any such notices or communications. |
5.9 | Company Material Contracts; Consents. |
(a) | The Company shall use reasonable best efforts to provide true and correct copies of all Company Material Contracts (subject to the redaction of any commercially sensitive information) to Parent promptly following the date of this Agreement. |
(b) | The Company shall give any notices to third parties required under the Company Material Contracts and shall use, and cause each of its respective Subsidiaries to use, its and their reasonable best efforts to obtain any third party consents with respect to such Company Material Contracts that are necessary, proper or advisable to consummate the transactions, including the Merger. |
(c) | Neither the failure of the Company to provide copies of all Company Material Contracts nor the Company’s failure to receive any required third party consents with respect to such Company Material Contract following the Company’s reasonable best efforts to obtain such consents shall be a breach of this Section 5.9. |
5.10 | Legal Conditions to the Merger. |
5.11 | Takeover Statute. |
5.12 | Public Announcements. |
5.13 | Indemnification and Insurance. |
(a) | Parent, Merger Sub and the Company agree that all rights to indemnification and related rights to expense reimbursement, if any, (in each case, solely with respect to claims arising from actions taken or not taken, in each case, in good faith within the scope of their employment or service with the Company or its Subsidiaries prior to Closing) existing in favor of the present directors, officers and employees of the Company or any of its Subsidiaries (each such present director, officer or employee of the Company or any of its Subsidiaries (in each case, solely with respect to such claims when acting in such capacity and scope) being herein referred to as an “ Indemnified Party Indemnified Parties |
(b) | Prior to the Effective Time, notwithstanding any other provision hereof, the Company may purchase prepaid non-cancellable runoff directors’ and officers’ liability insurance providing equivalent coverage and amounts for a period of six (6) years from the Closing Date with respect to claims arising from or related to facts or events which occur on or prior to the Closing Date, provided that the total cost of such run-off directors’ and officers’ liability insurance shall not exceed 300% of the current annual aggregate premium for directors’ and officers’ liability insurance currently maintained by the Company, as set forth in Section 5.13(a) of the Company Disclosure Schedules. |
(c) | The provisions of this Section 5.13 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs. If the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person |
and is not the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its assets to any other Person or engages in any similar transaction, then in each such case, the Surviving Corporation will cause proper provision to be made so that the successors and assigns of the Surviving Corporation will expressly assume the obligations set forth in this Section 5.13. |
5.14 | Stock Exchange De-listing ; 1934 Act Deregistration; US Stock Exchange Listing. |
(a) | The Company shall cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of the NYSE and the SEC to enable the delisting by the Surviving Corporation of the Company Common Stock from the NYSE and the deregistration of the Company Common Stock under the Exchange Act as promptly as practicable after the Effective Time. |
(b) | Parent shall use its reasonable best efforts to cause the Parent Common Shares to be issued in the Merger to be approved for listing on the NYSE or NASDAQ, subject to official notice of issuance, and the TSX, subject to customary listing conditions prior to the Effective Time. |
5.15 | Rule 16b- 3 . |
5.16 | Stockholder Litigation. |
5.17 | Certain Tax Matters. |
(a) | Each of Parent and the Company (i) shall use its reasonable best efforts to cause the Merger to qualify (A) as a “reorganization” within the meaning of Section 368(a) of the Code and (B) for an exception to the general rule of Section 367(a)(1) of the Code and (ii) shall not take or knowingly fail to take (and shall cause its Affiliates not to take or knowingly fail to take) any action that would reasonably be expected to (A) prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, (B) cause stockholders of the Company (other than any Excepted Stockholder) to recognize gain pursuant to Section 367(a)(1) of the Code, (C) prevent or impede the Company from being able to deliver one or more executed representation letters pursuant to Section 5.17(b), or (D) prevent or impede Parent from being able to deliver one or more executed representation letters pursuant to Section 5.17(b). |
(b) | Each of Parent and the Company shall use its reasonable best efforts and shall cooperate with one another to obtain the opinion(s) of counsel and any similar opinions required to be delivered in |
connection with the effectiveness of the US Registration Statement or the Proxy Statement/Prospectus. In connection with the foregoing, Parent shall use its reasonable best efforts to deliver to the Tax counsel of the Company and the Parent, one or more representation letters (in form and substance reasonably satisfactory to such applicable counsel) dated as of the Closing Date (and, if requested, dated as of the date the US Registration Statement shall have been declared effective by the SEC or such other date(s) as determined necessary by counsel in connection with the filing of the US Registration Statement, the Proxy Statement/Prospectus or their respective exhibits) and signed by an officer of Parent, and the Company shall use its reasonable best efforts to deliver to Tax counsel of the Company and the Parent one or more representation letters (in form and substance reasonably satisfactory to such applicable Tax counsel) dated as of the Closing Date (and, if requested, dated as of the date the US Registration Statement shall have been declared effective by the SEC or such other date(s) as determined necessary by counsel in connection with the filing of the US Registration Statement, Proxy Statement Prospectus or their respective exhibits) and signed by an officer of the Company. |
5.18 | Merger Sub Stockholder Approvals. |
5.19 | Governance. |
5.20 | Advice of Changes. |
5.21 | Financing Cooperation. |
(a) | The Company shall use its reasonable best efforts, and shall cause each of its Subsidiaries to use its reasonable best efforts, and each of them shall use their reasonable best efforts to cause their respective Representatives to use their reasonable best efforts, to provide customary, reasonable and timely cooperation to the Parent and Merger Sub and their respective Representatives, to the extent reasonably requested by Parent, in connection with the offering, arrangement, syndication, marketing, consummation, issuance or sale of any Debt Financing (including, for greater certainty, any potential Alternative Financing ) ( provided |
(i) | as promptly as reasonably practical, furnish Parent, Merger Sub and the Financing Parties (and their respective Representatives, as applicable) with the Required Financing Information and such further information as may be reasonably necessary for the Required Financing Information to remain Compliant and such other customary financial and other information regarding the Company and its Subsidiaries as may reasonably be requested by, and is necessary for, Parent or Merger Sub to fulfill the conditions and obligations applicable to it under the Debt Commitment Letters; |
(ii) | provide reasonable and customary assistance to Parent, Merger Sub and the Financing Parties (and their respective Representatives, agents and advisors, as applicable) in their preparation of (A) offering documents, offering memoranda, offering circulars, private placement memoranda, registration statements, prospectuses, syndication documents and other syndication materials, including information memoranda, lender and investor presentations, bank books and other marketing documents, and similar documents to be used in connection with any portion of the Debt Financing and (B) materials for rating agency presentations, including (but subject to Section 5.21(b)), by providing any financial information and other data required to prepare any pro forma financial statements that are required under applicable securities Laws to be included in, or as may otherwise be reasonably required for and are customarily included in the foregoing financing materials; |
(iii) | make senior management of the Company available, at reasonable times and locations and upon reasonable prior notice, to participate in meetings (including one-on-one provided |
(iv) | cause the Company’s independent registered accounting firm to provide customary assistance, including by using reasonable best efforts to cause the Company’s independent registered accounting firm (A) to provide customary comfort letters (including “negative assurance” comfort) in connection with any capital markets transaction comprising a part of the Debt Financing to the applicable Financing Parties, (B) to provide any necessary consent to the inclusion of its audit report in respect of any financial statements of the Company included or incorporated in any of the applicable financing materials referred to in Section 5.21(a)(ii), and (C) to participate in a reasonable number of due diligence sessions at reasonable times and locations and upon reasonable prior notice; provided |
(v) | provide customary authorization letters authorizing the distribution of Company information to prospective lenders in connection with a syndicated bank financing; |
(vi) | assist Parent, Merger Sub and the Financing Parties in obtaining or updating corporate, facility and issue credit ratings; |
(vii) | assist in the negotiation, preparation and (contingent upon the Closing) execution and delivery of any credit agreement, indenture, note, debenture or other debt security, purchase, underwriting or agency agreement, guarantees, security documents, including any required information schedules or disclosures thereto, cash management agreements, hedging agreements, other supporting documents and customary closing certificates, and any other definitive and ancillary documentation for the Debt Financing as may be reasonably requested by Parent, in each case as contemplated in connection with the Debt Financing; |
(viii) | make introductions of Parent to the Company’s existing lenders and facilitate relevant coordination between Parent and such lenders; |
(ix) | cooperate with the due diligence of Financing Parties and their Representatives in connection with the Debt Financing, to the extent customary and reasonable, including the provision of all such information requested with respect to the property and assets of the Company and its Subsidiaries and by providing to internal and external counsel of Parent, Merger Sub and the Financing Parties, as applicable, customary back-up certificates and factual information to support any legal opinion that such counsel may be required to deliver in connection with the Debt Financing; provided |
(x) | deliver, at least seven (7) Business Days prior to Closing, to the extent reasonably requested in writing at least ten (10) Business Days prior to Closing, all documentation and other information regarding the Company and its Subsidiaries that any Financing Party reasonably determines is required by domestic and foreign regulatory authorities under applicable “know your customer” and domestic and foreign anti-money laundering rules and regulations, including the USA Patriot Act of 2001, and, to the extent required by any Financing Party, a beneficial ownership certificate (substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association) in respect of any of the Company or any of its Subsidiaries that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation (31 C.F.R. § 1010.230); |
(xi) | cooperate with and use reasonable best efforts to provide all reasonable assistance to Parent in connection with any steps Parent may determine are necessary or desirable to take to prepay some or all amounts outstanding under the Company’s existing Credit Facility, including (A) preparing and submitting customary notices in respect of any such prepayment; provided |
(xii) | to the extent requested by Parent, provide guarantees and facilitate the pledging of collateral and granting of security interests in connection with the Debt Financing (which discharges, releases, guarantees and security interests, for the avoidance of doubt, shall not be required to take effect before the Closing): |
(xiii) | as soon as reasonably practical following the receipt of a written request of Parent, as determined by Parent in its sole discretion, (A) commence one or more consent solicitations to the holders of the Company’s Senior Notes, to waive, amend or remove any applicable change of control provisions, defaults or other covenants that would apply in connection with, or otherwise restrict the ability of the parties to consummate, the Merger or the Debt Financing as contemplated in this |
Agreement or the Debt Commitment Letters, as applicable (the “ Consent Solicitations Debt Offers Debt Redemptions Debt Discharge Debt Transactions provided provided |
(xiv) | consent to the use of its and its Subsidiaries’ trademarks, trade names and logos in connection with the Debt Financing; provided |
(b) | Notwithstanding the foregoing, none of the Company nor any of its Affiliates shall be required to take or permit the taking of any action pursuant to Section 5.21 that would: (i) require the Company or its Subsidiaries or any of their respective Affiliates or any persons who are officers or directors of such entities to pass resolutions or consents to approve or authorize the execution of the Debt Financing or enter into, execute or deliver any certificate, document, instrument or agreement or agree to any change or modification of any existing certificate, document, instrument or agreement (except for the authorization letters contemplated by Section 5.21(a)(v)) in each case, which are not contingent on Closing, (ii) cause any representation, warranty or other provision in this Agreement to be breached by the Company or any of its Affiliates, (iii) require the Company or any of its Affiliates to (x) pay any commitment or other similar fee or (y) incur any other expense, liability or obligation which expense, liability or obligation is not reimbursed or indemnified hereunder in connection with the Debt Financing prior to the Closing, or (z) have any obligation of the Company or any of its Affiliates under any agreement, certificate, document or instrument be effective until the Closing, (iv) cause any director, officer, employee or stockholder of the Company or any of its Affiliates to incur any personal liability, (v) conflict with the Organizational Documents of the Company or any of its Affiliates or any Laws, (vi) reasonably be expected to result in a material violation or material breach of, or a default (with or without notice, lapse of time, or both) under, any Contract to which the Company or any of its Affiliates is a party, (vii) provide access to or disclose information to the extent that the Company or any of its Affiliates determines in good faith would jeopardize any attorney-client privilege or other similar privilege or protection of the Company or any of its Affiliates in respect of such information, or (viii) require the Company to prepare any financial statements or information (other than the Required Financing Information) that are not available to it and prepared in the Ordinary Course of Business consistent with its historic financial reporting practice, with it being further understood that Parent (and not the Company or any of its Affiliates) shall be responsible for the preparation of any pro forma financial statements for the Debt Financing (including, for the avoidance of doubt, any Alternative Financing), including the preparation of any pro forma calculations, any post-Closing or other pro forma cost savings synergies, capitalization, ownership or other pro forma adjustments that may be included therein. Nothing contained in this Section 5.21 or otherwise shall require the Company or any of its Affiliates, prior to the Closing, to be an issuer or other obligor with respect to the Debt Financing. Parent shall, promptly on request by the Company, reimburse the Company and its Affiliates for all reasonable and documented out-of-pocket |
Affiliates and their respective Representatives from and against any and all losses suffered or incurred by them in connection with the arrangement of the Debt Financing, any action taken by them at the request of Parent or its Representatives pursuant to this Section 5.21 and any information used in connection therewith (other than information provided by or on behalf of the Company expressly for use in connection therewith). |
(c) | The Parties hereto acknowledge and agree that the provisions contained in this Section 5.21 represent the sole obligation of the Company and its Subsidiaries with respect to cooperation in connection with the arrangement of any financing (including the Debt Financing) to be obtained by Parent with respect to the transactions contemplated by this Agreement, and no other provision of this Agreement shall be deemed to expand or modify such obligations. In no event shall the receipt or availability of any funds or financing (including the Debt Financing) by Parent any of its Affiliates or any other financing or other transactions be a condition to any of Parent’s obligations under this Agreement. Notwithstanding anything to the contrary in this Agreement, the Company’s breach of any of the covenants required to be performed by it under this Section 5.21 shall not be considered in determining the satisfaction of the condition set forth in Section 6.3(b), unless such breach is the primary cause of Parent being unable to consummate, and obtain the proceeds of, the Debt Financing at or prior to Closing. |
(d) | All non-public or otherwise confidential information regarding the Company or any of its Affiliates obtained by Parent or its Representatives pursuant to this Section 5.21 shall be kept confidential in accordance with the Confidentiality Agreement; provided |
5.22 | Debt Financing. |
(a) | Parent shall use its reasonable best efforts, and shall cause each of its Subsidiaries to use its reasonable best efforts, to take, or cause to be taken, all actions, and do, or cause to be done, all things necessary to obtain the Debt Financing on the conditions described in the Debt Commitment Letters, including by (i) maintaining in effect the Debt Commitment Letters (subject to any amendment, replacement, supplement, termination modification or waiver permitted elsewhere under this Section 5.22), (ii) negotiating and entering into (on or prior to the Closing Date) definitive agreements with respect to the Debt Financing including any joinder agreements, indentures, or credit agreements entered into in connection therewith (the “ Definitive Agreements provided |
(b) | In the event (x) any portion of the Debt Financing contemplated by the Debt Commitment Letters that is required to fund the Financing Amounts becomes unavailable (including pursuant to the “flex” terms within the Debt Commitment Letters) regardless of the reason therefor, Parent shall promptly notify the Company in writing of such unavailability and shall use its reasonable best efforts, and shall cause each of its Subsidiaries to use their reasonable best efforts, to obtain as promptly as practicable following the occurrence of such event, alternative debt or other financing for any such unavailable portion from alternative sources or (y) Parent decides, in its sole discretion, to replace all or any portion of the Debt Financing with alternative debt or other financing (in each case, an “ Alternative Financing mutatis mutandis |
(c) | Parent and its Subsidiaries shall have the right from time to time to amend, replace, restate, supplement, terminate, or otherwise modify, or waive any right or provision under, any Debt Commitment Letter or Definitive Agreement, including to reduce available funding under or to terminate any such Debt Commitment Letter or Definitive Agreement in order to obtain alternative sources of financing in lieu of all or a portion of the Debt Financing, including by way of one or more offerings of debt or other securities; provided provided |
amendment, replacement, supplement, termination, modification or waiver (1) decreases (or has the effect of decreasing) the aggregate amount of the Debt Financing (including, for greater certainty, any Alternative Financing) to an amount that, when taken together with cash or cash equivalents immediately available to Parent and the Company on the Closing Date, would be less than the amount that would be required to pay the Financing Amounts, (2) would reasonably be expected to prevent, materially delay or materially impede the consummation of the Merger or prevent or materially impede the repayment or refinancing of a material portion of any indebtedness of the Company that constitutes “Refinanced Indebtedness” (as defined in the Initial Debt Commitment Letter), in each case, as contemplated by this Agreement, (3) materially adversely impacts the ability of Parent to enforce its rights against the other parties to the Debt Commitment Letters or the Definitive Agreements as so amended, replaced, supplemented or otherwise modified, (4) imposes material obligations on the Company or any of its Subsidiaries that would be effective prior to Closing, or (5) adds new (or adversely modifies in any material respect any existing) conditions precedent to the consummation of all or any portion of the Debt Financing (except any customary conditions for a bridge facility or a bond financing that (taken as a whole) are not (in the reasonable judgment of Parent) materially less favorable to Parent than the conditions (taken as a whole) contained in the Debt Commitment Letters); provided Debt Commitment Letters Definitive Agreements Debt Financing Debt Financing Financing Debt Commitment Letters Definitive Agreements |
6.1 | Conditions to Obligation of Each Party to Effect the Merger. |
(a) | The Company Stockholder Approval shall have been obtained. |
(b) | The Parent Shareholder Approval shall have been obtained. |
(c) | The US Registration Statement shall have become effective in accordance with the provisions of the Securities Act and no stop order suspending the effectiveness of the US Registration Statement shall have been issued by the SEC and remain in effect and no Action to that effect shall have been commenced by the SEC, unless subsequently withdrawn. |
(d) | No Governmental Entity of competent jurisdiction shall have enacted, issued or promulgated any Law that remains in effect that prohibits or makes illegal the consummation of the Merger. |
(e) | The approvals by the Antitrust Authorities under the Antitrust Laws set forth in Schedule A Required Antitrust Approvals |
(f) | The Parent Common Shares to be issued to the Company stockholders in accordance with this Agreement shall have been conditionally approved for listing on the NYSE or Nasdaq, subject to official notice of issuance, and the TSX, subject to customary listing requirements. |
6.2 | Conditions to Obligation of the Company to Effect the Merger. |
(a) | (i) the representations and warranties of Parent and Merger Sub set forth in Section 4.12(a) (after giving effect to the lead-in in Article 4) shall be true and correct in all respects at and as of the date of this Agreement and at and as of Closing, as if made at and as of such time; |
(b) | Parent and Merger Sub shall have performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by them prior to the Closing. |
(c) | Since the date of this Agreement, there shall not have occurred any event, change, occurrence, effect or development that has had, or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
(d) | Parent shall have delivered to the Company a certificate, dated as of the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the effect that the conditions set forth in Section 6.2(a), Section 6.2(b) and Section 6.2(c) have been satisfied. |
(a) | (i) the representations and warranties of the Company set forth in Section 3.12(a) (after giving effect to the lead-in in Article 3) shall be true and correct in all respects at and as of the date of this Agreement and at and as of Closing, as if made at and as of such time; |
(b) | The Company shall have performed in all material respects all obligations and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by it prior to the Closing. |
(c) | Since the date of this Agreement, there shall not have occurred any event, change, occurrence, effect or development that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. |
(d) | The Company shall have delivered to Parent a certificate, dated as of the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the effect that the conditions set forth in Section 6.3(a), Section 6.3(b) and Section 6.3(c) have been satisfied. |
6.4 | Frustration of Closing Conditions. |
7.1 | Termination or Abandonment. |
(a) | by the mutual written consent of the Company and Parent; |
(b) | by either the Company or Parent, if: |
(i) | (A) the Effective Time shall not have occurred on or before October 24, 2022 (the “ End Date provided provided further provided further |
(ii) | any court or Governmental Entity of competent jurisdiction that must grant a Required Antitrust Approval has denied approval of the Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final and nonappealable Order permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger, unless the failure to obtain a Required Antitrust Approval is due to the failure of the Party seeking to terminate this Agreement to perform or observe the obligations, covenants and agreements of such Party set forth herein; |
(iii) | the Company Stockholder Meeting (including any adjournments or postponements thereof) shall have been held and been concluded and the Company Stockholder Approval shall not have been obtained; or |
(iv) | the Parent Shareholder Meeting (including any adjournments or postponements thereof) shall have been held and been concluded and the Parent Shareholder Approval shall not have been obtained; |
(c) | by the Company: |
(i) | if Parent or Merger Sub shall have breached or failed to perform in any material respect any of their representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (A) would result in a failure of a condition set forth in Section 6.1 or Section 6.2 and (B) cannot be cured by the End Date or, if curable, is not cured within twenty (20) Business Days following the Company’s delivery of written notice to Parent stating the Company’s intention to terminate this Agreement pursuant to this Section 7.1(c)(i) and the basis for such termination; provided |
(ii) | prior to receipt of the Company Stockholder Approval, in order to enter into a definitive agreement providing for a Company Superior Proposal to the extent permitted by and subject to compliance with the applicable terms and conditions of this Agreement that did not result from a breach of Section 5.5; provided 7.3(a)(i); |
(iii) | prior to receipt of the Parent Shareholder Approval, if (A) the Parent Board shall have effected a Parent Change of Recommendation or (B) Section 5.6 is materially breached; or |
(iv) | if (A) all of the conditions set forth in Article 6 have been satisfied (other than (x) conditions which by their nature cannot be satisfied until Closing, but subject to the satisfaction of those conditions at Closing and (y) any conditions set forth in Section 6.2 that have been waived by the Company), (B) Parent and Merger Sub fail to consummate the Closing on the day that the Closing should have been consummated pursuant to Section 1.2 due to the failure of all, or any portion of, the Debt Financing to be funded at Closing for any reason, (C) the Company shall have delivered to Parent an irrevocable written notice confirming that (x) all of the conditions set forth in Article 6 have been satisfied or, with respect to the conditions set forth in Section 6.2, waived and (y) the Company stands ready, willing and able to consummate the Closing, and (D) Parent and Merger Sub fail to consummate the Closing within five (5) Business Days following the later of (x) the date the Closing should have occurred pursuant to Section 1.2 and (y) receipt of the written notice set forth in clause (C); |
(d) | by Parent: |
(i) | if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (A) would result in a failure of a condition set forth in Section 6.1 or Section 6.3 and (B) cannot be cured by the End Date or, if curable, is not cured within twenty (20) Business Days following Parent’s delivery of written notice to the Company stating Parent’s intention to terminate this Agreement pursuant to this Section 7.1(d)(i) and the basis for such termination; provided |
(ii) | prior to receipt of the Parent Shareholder Approval, in order to enter into a definitive agreement providing for a Parent Superior Proposal to the extent permitted by and subject to compliance with the applicable terms and conditions of this Agreement that did not result from a breach of Section 5.6; provided |
(iii) | prior to receipt of the Company Stockholder Approval, if (A) the Company Board shall have effected a Company Change of Recommendation or (B) Section 5.5 is materially breached. |
7.2 | Notice of Termination; Effect of Termination. |
7.3 | Termination Fees. |
(a) | Company Termination Fee. |
(i) | If this Agreement is terminated by the Company pursuant to Section 7.1(c)(ii), then the Company shall pay to Parent in consideration of Parent disposing of its rights hereunder (other than those rights set out in Section 7.2), by wire transfer of immediately available funds to an account designated in writing by Parent, a fee of $10,000,000 in cash (the “ Company Termination Fee |
(ii) | If this Agreement is terminated by Parent pursuant to Section 7.1(d)(iii), then the Company shall pay to Parent in consideration of Parent disposing of its rights hereunder (other than those rights set out in Section 7.2), by wire transfer of immediately available funds to an account designated in writing by Parent, the Company Termination Fee, less any amounts required to be withheld or deducted on account of Taxes, such payment to be made concurrently with such termination. |
(iii) | If (A) after the date of this Agreement, a Company Alternative Proposal (substituting in the definition thereof “50%” for “20%” and for “80%” in each place each such phrase appears) is publicly proposed or publicly disclosed prior to, and is not publicly withdrawn at least two (2) Business Days prior to, the Company Stockholder Meeting (a “ Company Qualifying Transaction |
(iv) | Notwithstanding anything to the contrary herein, but without limiting the right of any party to recover liabilities or damages to the extent permitted herein, in no event shall the Company be required to pay the Company Termination Fee more than once. |
(b) | Parent Termination Fee; Financing Termination Fee |
(i) | If this Agreement is terminated by Parent pursuant to Section 7.1(d)(ii), then Parent shall pay or cause to be paid to the Company in consideration of the Company disposing of its rights hereunder (other than those rights set out in Section 7.2), a fee of $20,000,000 (the “ Parent Termination Fee |
(ii) | If this Agreement is terminated by the Company pursuant to Section 7.1(c)(iii), then Parent shall pay or cause to be paid to the Company in consideration of the Company disposing of its rights hereunder (other than those rights set out in Section 7.2), the Parent Termination Fee, less any amounts required to be withheld or deducted on account of Taxes, such payment to be made within three (3) Business Days after such termination. |
(iii) | If (A) after the date of this Agreement, a Parent Alternative Proposal (substituting in the definition thereof “50%” for “20%” and for “80%” in each place each such phrase appears) is publicly proposed or publicly disclosed prior to, and is not publicly withdrawn at least two (2) Business Days prior to, the Parent Shareholder Meeting (a “ Parent Qualifying Transaction |
termination, Parent (1) consummates a Parent Qualifying Transaction or (2) enters into a definitive agreement providing for a Parent Qualifying Transaction and later consummates such Parent Qualifying Transaction, then Parent shall pay or cause to be paid to the Company in consideration of the Company disposing of its rights hereunder (other than those rights set out in Section 7.2), the Parent Termination Fee, less any amounts required to be withheld or deducted on account of Taxes, such payment to be made after the consummation of such Parent Qualifying Transaction. |
(iv) | If this Agreement is terminated by the Company pursuant to Section 7.1(c)(iv), then Parent shall pay or cause to be paid to the Company in consideration of the Company disposing of its rights hereunder (other than those rights set out in Section 7.2), a fee of $30,000,000 (the “ Financing Termination Fee |
(v) | Notwithstanding anything to the contrary herein, but without limiting the right of any Party to recover liabilities or damages to the extent permitted herein, in no event shall Parent be required to pay the Parent Termination Fee or Financing Termination Fee more than once or to pay both the Parent Termination Fee and the Financing Termination Fee. |
(c) | Acknowledgements. Wall Street Journal |
(y) upon the Company’s receipt of the full Parent Termination Fee or Financing Termination Fee, as applicable (and any other amounts contemplated by this Agreement), pursuant to this Section 7.3 in circumstances in which the Parent Termination Fee or Financing Termination Fee is payable, none of Parent, any Subsidiary of Parent (including the Merger Sub) or any of their respective former, current or future officers, directors, partners, stockholders, managers, members, Affiliates or agents shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby, except for Willful and Material Breach by Parent or fraud. |
8.1 | No Survival of Representations and Warranties. |
8.2 | Expenses. |
8.3 | Counterparts; Effectiveness. |
(a) | The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Each Party agrees that, in the event of any breach or threatened breach by any other Party of any covenant or obligation contained in this Agreement, the non-breaching Party shall be entitled (in addition to any other remedy that may be available to it whether in law or equity, including monetary damages) to obtain (i) a decree or Order of specific performance to enforce the observance and performance of such covenant or obligation and (ii) an injunction restraining such breach or threatened breach. |
(b) | While the Company may pursue both a grant of specific performance under this Section 8.5 and the payment of the Financing Termination Fee under Section 7.3(b)(iv), under no circumstances shall the Company be permitted or entitled to receive both (i) a grant of specific performance that permits the consummation of the transactions contemplated by this Agreement, including the Merger, in accordance with the terms of this Agreement and |
(ii) | monetary damages in connection with this Agreement or any termination of this Agreement, including all or any portion of the Financing Termination Fee. |
(c) | Each Party further agrees that no Party or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.5, and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. |
8.6 | WAIVER OF JURY TRIAL. |
8.7 | Notices. |
8.8 | Assignment; Binding Effect. |
8.9 | Severability. |
8.10 | Entire Agreement; No Third-Party Beneficiaries. |
8.11 | Amendments; Waivers. |
8.12 | Headings. |
8.13 | Interpretation. |
8.14 | Obligations of Merger Sub and Subsidiaries. |
8.15 | Financing Provisions. |
Term |
Section |
|||
Agreement |
Preamble | |||
Alternative Financing |
5.22(b) | |||
Anti-Corruption Laws |
3.8(a) | |||
Book-Entry Shares |
2.1(a)(i) | |||
Chosen Courts |
8.4 | |||
Certificate |
2.1(a)(i) | |||
Certificate of Merger |
1.3 | |||
CFPOA |
4.8(a) | |||
Chosen Courts |
8.4 | |||
Clearance Date |
5.7(a) | |||
Closing |
1.2 | |||
Closing Date |
1.2 | |||
Code |
2.2(b)(iii) | |||
Company |
Preamble | |||
Company Acquisition Agreement |
5.5(h) | |||
Company Alternative Proposal |
5.5(i) | |||
Company Approvals |
3.3(c) | |||
Company Balance Sheet Date |
3.12(a) | |||
Company Board |
Recitals | |||
Company Budget |
5.1(b)(xiii) | |||
Company Change of Recommendation |
5.5(c) | |||
Company Continuing Employees |
5.8(a) | |||
Company Designee |
5.19 | |||
Company Disclosure Schedules |
Article 3 | |||
Company Governmental Filings |
3.4(b) | |||
Company Intellectual Property |
3.16(b) | |||
Company Intervening Event |
5.5(j) | |||
Company Leased Real Property |
3.18(a) | |||
Company Material Contract |
3.21(a) | |||
Company Performance Share Award |
2.3(c) | |||
Company Permits |
3.7(b) | |||
Company Qualifying Transaction |
7.3(a)(iii) | |||
Company Real Property Lease |
3.18(a) | |||
Company Recommendation |
3.4(b) | |||
Company Restricted Share Award |
2.3(a) | |||
Company RSU Award |
2.3(b) | |||
Company SEC Documents |
3.4(a) | |||
Company Stockholder Approval |
3.20 | |||
Company Stockholder Meeting |
5.7(c) | |||
Company Superior Proposal |
5.5(k) | |||
Company Superior Proposal Notice |
5.5(e) |
Company Tax Counsel |
5.17(b) | |||
Company Termination Fee |
7.3(a)(i) | |||
Company Top Customer |
3.22(a) | |||
Company Top Supplier |
3.22(a) | |||
Company Voting Agreements |
Recitals | |||
Confidentiality Agreement |
5.4(e) | |||
Consent Solicitations |
5.21(a)(xiii) | |||
Continuation Period |
5.8(a) | |||
Data Protection Requirements |
3.16(g) | |||
Debt Commitment Letters |
4.23(a) | |||
Debt Discharge |
5.21(a)(xiii) | |||
Debt Financing |
4.23(a) | |||
Debt Offers |
5.21(a)(xiii) | |||
Debt Redemptions |
5.21(a)(xiii) | |||
Debt Transactions |
5.21(a)(xiii) | |||
Definitive Agreements |
5.22(a) | |||
DGCL |
Recitals | |||
Divestiture |
5.7(i) | |||
Effective Time |
1.3 | |||
End Date |
7.1(b)(i) | |||
Enforceability Exceptions |
3.3(a) | |||
Exchange Agent |
2.2(a) | |||
Exchange Fund |
2.2(a) | |||
Excluded Shares |
2.1(a)(ii) | |||
Export and Sanctions Regulations |
3.9(a) | |||
FCPA |
3.8(a) | |||
Financing Amounts |
4.23(d) | |||
Financing Termination Fee |
7.3(b)(iv) | |||
Fractional Share Cash Amount |
2.1(d)(i) | |||
Governmental Approvals |
5.7(i) | |||
Governmental Entity |
3.3(c) | |||
Indemnified Party or Indemnified Parties |
5.13(a) | |||
Law or Laws |
3.7(a) | |||
Malicious Code |
3.16(e) | |||
Management Information Circular |
3.14 | |||
Merger |
Recitals | |||
Merger Consideration |
2.1(a)(i) | |||
Merger Sub |
Preamble | |||
New Plans |
5.8(a) | |||
NI 52-109 |
4.5(a) | |||
Non-U.S. Plan |
3.11(m) | |||
Old Plans |
5.8(a) | |||
Owned Company Intellectual Property |
3.16(a) | |||
Owned Real Property |
3.18(b) | |||
Parent |
Preamble | |||
Parent Acquisition Agreement |
5.6(h) | |||
Parent Alternative Proposal |
5.6(i) | |||
Parent Approvals |
4.3(c) | |||
Parent Balance Sheet Date |
4.12(a) | |||
Parent Board |
Recitals | |||
Parent Budget |
5.2(b)(v) |
Parent Canadian Pension Plan |
4.11(c) | |||
Parent Change of Recommendation |
5.6(c) | |||
Parent Disclosure Schedules |
Article 4 | |||
Parent Governmental Filings |
4.4(b) | |||
Parent Intervening Event |
5.6(j) | |||
Parent Permits |
4.7(b) | |||
Parent Public Documents |
4.4(a) | |||
Parent Qualifying Transaction |
7.3(b)(iii) | |||
Parent Recommendation |
4.3(b) | |||
Parent Restricted Share Award |
2.3(a) | |||
Parent RSU Award |
2.3(b) | |||
Parent Share Issuance |
Recitals | |||
Parent Shareholder Approval |
4.18 | |||
Parent Shareholder Meeting |
5.7(e) | |||
Parent Superior Proposal |
5.6(k) | |||
Parent Superior Proposal Notice |
5.6(e) | |||
Parent Termination Fee |
7.3(b)(i) | |||
Parent Voting Agreements |
Recitals | |||
Party or Parties |
Preamble | |||
Permits |
3.7(b) | |||
Pre-Closing Reorganization |
5.3 | |||
Proxy Statement/Prospectus |
3.14 | |||
Reference Time |
3.2(a) | |||
Registered Company Intellectual Property |
3.16(a) | |||
Remedy |
5.7(i) | |||
Representatives |
5.4(a) | |||
Required Antitrust Approvals |
6.1(e) | |||
Securities Engagement Letter |
4.23(a) | |||
Security Incident |
3.16(h) | |||
Surviving Corporation |
1.1 | |||
Takeover Statutes |
3.27 | |||
Termination Date |
5.1(a) | |||
US Registration Statement |
3.14 |
ENERFLEX LTD. | ||
Per: | /s/ Marc E. Rossiter | |
Name: Marc. E. Rossiter | ||
Title: President and Chief Executive Officer | ||
ENERFLEX US HOLDINGS INC. | ||
Per: | /s/ Sanjay Bishnoi | |
Name: Sanjay Bishnoi | ||
Title: Treasurer | ||
EXTERRAN CORPORATION | ||
Per: | /s/ Andrew J. Way | |
Name: Andrew J. Way | ||
Title: President and Chief Executive Officer |
• | reviewed a draft, dated January 21, 2022, of the Agreement; |
• | reviewed certain publicly available business and financial information relating to the Company and the Acquiror and the industries in which they operate; |
• | compared the financial and operating performance of the Company and the Acquiror with publicly available information concerning certain other companies we deemed relevant, and compared current and historic market prices of the Company Common Stock and the Acquiror Common Stock with similar data for such other companies; |
• | compared the proposed financial terms of the Transaction with the publicly available financial terms of certain other business combinations that we deemed relevant; |
• | reviewed certain internal financial analyses and forecasts for the Company (the “Company Projections”) and the Acquiror (the “Acquiror Projections”) prepared by the managements of the Company and the Acquiror; |
• | reviewed certain estimates prepared by the managements of the Company and the Acquiror as to the potential cost savings and synergies expected by such managements to be achieved as a result of the Transaction (the “Synergies”); |
• | discussed with the managements of the Company and the Acquiror regarding certain aspects of the Transaction, the business, financial condition and prospects of the Company and the Acquiror, respectively, the effect of the Transaction on the business, financial condition and prospects of the Company and the Acquiror, respectively, and certain other matters that we deemed relevant; and |
• | considered such other financial analyses and investigations and such other information that we deemed relevant. |
Very truly yours, |
/s/ Wells Fargo Securities, LLC |
WELLS FARGO SECURITIES, LLC |
Attention: | Brian P. Fenske | |
Telephone: | [REDACTED TEXT] | |
E-mail: |
[REDACTED TEXT] |
ENERFLEX LTD. | ||
By | /s/ Marc E. Rossiter | |
Name: |
Marc E. Rossiter | |
Title: |
President and Chief Executive Officer |
Stockholder Name: |
EGI-Fund (05-07) Investors, |
By: | /s/ Joseph Miron | |
Name: |
Joseph Miron | |
Title: |
Vice President | |
Stockholder Name: EGI-Fund (08-10) Investors, L.L.C. | ||
By: | /s/ Joseph Miron | |
Name: |
Joseph Miron | |
Title: |
Vice President |
Stockholder Name: |
EGI-Fund (11-13) Investors, L.L.C. |
By: | /s/ Joseph Miron | |
Name: |
Joseph Miron | |
Title: |
Vice President |
Stockholder Name: |
EGI-Fund B, L.L.C. |
By: | /s/ Joseph Miron | |
Name: |
Joseph Miron | |
Title: |
Vice President |
Stockholder Name: |
EGI-Fund C, L.L.C. |
By: | /s/ Joseph Miron | |
Name: |
Joseph Miron | |
Title: |
Vice President |
Name |
Original Shares |
Options |
Address |
Shares Subject to Pledge Agreement 1 | ||||
EGI-Fund (05-07) Investors LLC |
447,567 | 0 | 2 N. Riverside Plaza Suite 600 Chicago, IL 60606 Email: jmiron@egii.com |
0 | ||||
EGI-Fund (08-10) Investors LLC |
332,327 | 0 | 2 N. Riverside Plaza Suite 600 Chicago, IL 60606 Email: jmiron@egii.com |
0 | ||||
EGI-Fund (11-13) Investors LLC |
908,742 | 0 | 2 N. Riverside Plaza Suite 600 Chicago, IL 60606 Email: jmiron@egii.com |
908,742 | ||||
EGI-Fund B LLC |
1,849,806 | 0 | 2 N. Riverside Plaza Suite 600 Chicago, IL 60606 Email: jmiron@egii.com |
849,806 | ||||
EGI-Fund C LLC |
4,618,973 | 0 | 2 N. Riverside Plaza Suite 600 Chicago, IL 60606 Email: jmiron@egii.com |
850,000 |
ENERFLEX LTD. | ||||
By | /s/ Marc E. Rossiter | |||
Name: | Marc E. Rossiter | |||
Title: | President and Chief Executive Officer |
By: |
/s/ Andrew J. Way | |
Name: |
Andrew J. Way | |
Title: |
President and Chief Executive Officer | |
Address for Notice: | ||
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Email: |
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By: |
/s/ David A. Barta | |
Name: |
David A. Barta | |
Title: |
Senior Vice President, Chief Financial Officer and Chief Accounting Officer | |
Address for Notice: | ||
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Email: |
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By: |
/s/ Roger George | |
Name: |
Roger George | |
Title: |
President Exterran Water Solutions | |
Address for Notice: | ||
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Email: |
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By: |
/s/ Mark R. Sotir | |
Name: |
Mark R. Sotir | |
Title: |
Executive Chairman | |
Address for Notice: | ||
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Email: |
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By: |
/s/ William M. Goodyear | |
Name: |
William M. Goodyear | |
Title: |
Director | |
Address for Notice: | ||
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Email: |
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By: |
/s/ James C. Gouin | |
Name: |
James C. Gouin | |
Title: |
Director | |
Address for Notice: | ||
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Email: |
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By: |
/s/ John P. Ryan | |
Name: |
John P. Ryan | |
Title: |
Director | |
Address for Notice: | ||
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Email: |
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By: |
/s/ Christopher T. Seaver | |
Name: |
Christopher T. Seaver | |
Title: |
Director | |
Address for Notice: | ||
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Email: |
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By: |
/s/ Hatem Soliman | |
Name: |
Hatem Soliman | |
Title: |
Director | |
Address for Notice: | ||
| ||
Email: |
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By: |
/s/ Ieda Gomes Yell | |
Name: |
Ieda Gomes Yell | |
Title: |
Director | |
Address for Notice: | ||
| ||
Email: |
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By: |
/s/ Kelly M. Battle | |
Name: |
Kelly M. Battle | |
Title: |
Vice President, General Counsel & Corporate Secretary | |
Address for Notice: | ||
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Email: |
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By: |
/s/ Kerric Peyton | |
Name: |
Kerric Peyton | |
Title: |
Senior Vice President, Health, Safety, Security & Environment | |
Address for Notice: | ||
| ||
Email: |
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By: |
/s/ Tara Wineinger | |
Name: |
Tara Wineinger | |
Title: |
Vice President and Chief Human Resources Officer | |
Address for Notice: | ||
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Email: |
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(A) | The undersigned registrant hereby undertakes: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by section 10(a)(3) of the U.S. Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the U.S. Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | To file a post-effective amendment to the registration statement to include any financial statements required by “Item 8.A. of Form 20-F” at the start of any delayed offering or throughout a continuous offering. |
(5) | That, for the purpose of determining liability under the US. Securities Act to any purchaser: if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(6) | That, for the purpose of determining liability of the registrant under the U.S. Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free-writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free-writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(B) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the U.S. Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the U.S. Securities Exchange Act of 1934, as amended, or the U.S. Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the U.S. Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide |
(C) | The undersigned registrant hereby undertakes as follows: |
(1) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. |
(2) | That every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the U.S. Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide |
(D) | Insofar as indemnification for liabilities arising under the U.S. Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the U.S. Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the U.S Securities Act and will be governed by the final adjudication of such issue. |
(E) | The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means, and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(F) | The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
ENERFLEX LTD. | ||
By: | /s/ Marc E. Rossiter | |
Name: | Marc E. Rossiter | |
Title: | President and Chief Executive Officer |
Signature |
Title |
Date | ||
/s/ Marc E. Rossiter Marc E. Rossiter |
President, Chief Executive Officer and Director (Principal Executive Officer) | March 18, 2022 | ||
/s/ Sanjay Bishnoi Sanjay Bishnoi |
Senior Vice-President and Chief Financial Officer (Principal Financial Officer) | March 18, 2022 | ||
/s/ Stephen J. Savidant Stephen J. Savidant |
Chair of the Board of Directors | March 18, 2022 | ||
/s/ Fernando Assing Fernando Assing |
Director | March 18, 2022 | ||
/s/ Robert S. Boswell Robert S. Boswell |
Director | March 18, 2022 | ||
/s/ Maureen Cormier Jackson Maureen Cormier Jackson |
Director | March 18, 2022 | ||
/s/ W. Byron Dunn W. Byron Dunn |
Director | March 18, 2022 | ||
/s/ Mona Hale Mona Hale |
Director | March 18, 2022 |
Signature |
Title |
Date | ||
/s/ H. Stanley Marshall H. Stanley Marshall |
Director | March 18, 2022 | ||
/s/ Kevin J. Reinhart Kevin J. Reinhart |
Director | March 18, 2022 | ||
/s/ Juan Carlos Villegas Juan Carlos Villegas |
Director | March 18, 2022 | ||
/s/ Michael A. Weill Michael A. Weill |
Director | March 18, 2022 | ||
/s/ Helen J. Wesley Helen J. Wesley |
Director | March 18, 2022 |
Authorized U.S. Representative | ||
Enerflex Energy Systems Inc. | ||
By: | /s/ Marc E. Rossiter | |
Name: | Marc E. Rossiter | |
Title: | Director and Chief Executive Officer |
Exhibit 3.1
Restated Certificate of Certificat de constitution à Incorporation jour Canada Business Corporations Act Loi canadienne sur les sociétés par actions ENERFLEX LTD. Corporate name / Dénomination sociale 774811-6 Corporation number / Numéro de société I HEREBY CERTIFY that the articles of JE CERTIFIE que les statuts constitutifs de la incorporation of the above-named corporation société susmentionnée ont été mis à jour en vertu were restated under section 180 of the Canada de larticle 180 de la Loi canadienne sur les Business Corporations Act as set out in the sociétés par actions, tel quil est indiqué dans les attached restated articles of incorporation. statuts mis à jour ci-joints. Raymond Edwards Director / Directeur 2019-05-03 Date of Restatement (YYYY-MM-DD) Date de constitution à jour (AAAA-MM-JJ)
Innovation, Science and Innovation, Sciences et Economic Development Canada Developpement economique Canada Corporations Canada Corporations Canada Canada Business Corporations Act (CBCA) FORM7 RESTATED ARTICLES OF INCORPORATION I -Cmpo. (Section 180) ate name IEnerflex L td . 12- Corporat;on number 107 748 111-GJ 3 -The province or territory in Canada where the registered office is situated (do not indicate the full address) Al berta I 4 -The classes and any maximum number of shares that the corporation is authorized to issue see attache d sche dul e I Please I 5- Restrictions, if any, on share transfers Non e 6 - Minimum and maximum number of directors (for a fixed number of directors, indicate the same number in both boxes) Minimum number Q Maximum number~ 7- Restrictions, if any, on the business the corporation may carry on None 8 - Other provisions, if any I Pl ease see at t ach ed sche dul e I 9 - Declaration I hereby certify that I am a director or authorized officer of the corporation and that these restated articles of incorporation correctly set out, without substantive change, the corresponding provisions of the articles of incorporation as amended and supersede the original articles of incorporation. Signature: Print name: Amanda Ko u si ni ori s Telephone number: 403 - 236- 6602 Note: Misrepresentation constitutes an offence and, on summary conviction, a person is liable to a fine not exceeding $5000 or to imprisonment for a term not exceeding six months or to both (subsection 250(1) of the CBCA). ISED-ISDE 3167E (2016/11) Page 1 of 2 Canada
SCHEDULE TO THE ARTICLES OF
ENERFLEX LTD.
The Corporation is authorized to issue an unlimited number of shares to be designated as Preferred Shares and an unlimited number of shares to be designated as Common Shares. The rights, privileges, restrictions and conditions attaching to the Preferred Shares and the Common Shares are as follows:
A. | Preferred Shares |
The rights, privileges, restrictions and conditions attaching to the Preferred Shares are as follows:
1. | Authority to Issue in One or More Series and Set Terms of Each Such Series |
1.1 | The Preferred Shares may at any time and from time to time be issued in one or more series, each series to consist of such number of shares as may, before the issue thereof, be determined by resolution of the board of directors. |
1.2 | The board of directors of the Corporation shall (subject as hereinafter provided), by resolution duly passed before the issue of the Preferred Shares of each series, fix the designation, rights, privileges, restrictions and conditions to be attached to the Preferred Shares of such series, including, but without in any way limiting or restricting the generality of the foregoing, the voting rights (if any), the rate or amount of preferential dividends and whether such dividends shall be cumulative or non-cumulative, the date or dates and places of payment thereof, the date or dates from which such preferential dividends shall accrue, the rights of the Corporation to purchase the same and to redeem the same, the consideration and the terms and conditions of any such purchase or redemption, conversion rights, if any, the terms and conditions of any share purchase plan or sinking fund and the restrictions, if any, respecting payment of dividends on any shares ranking junior to the Preferred Shares, the whole subject to the filing of articles of amendment setting forth the designation, rights, privileges, restrictions and conditions to be attached to the Preferred Shares of such series. |
2. | Liquidation and Ranking |
2.1 | The Preferred Shares of each series shall, in the distribution of assets in event of 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, be entitled to preference over the Common Shares to the extent of the amount paid up on the Preferred Shares together with an amount equal to the accrued and unpaid dividends thereon and no more. The Preferred Shares of each series may also be given such other preferences over the Common Shares as may be determined as to the respective series authorized to be issued. |
2.2 | The Preferred Shares of each series shall rank on a parity with the Preferred Shares of every other series with respect to priority in payment of dividends and in 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. |
3. | Dividends |
3.1 | No dividends (other than stock dividends in shares of the Corporation ranking junior to the Preferred Shares) shall at any time be declared or paid on or set apart for payment on the Common Shares or on any other shares of the Corporation ranking junior to the Preferred Shares unless all dividends up to and including the dividend payment for the last completed period for which such dividends shall be payable on each series of the Preferred Shares then issued and outstanding shall have been declared and paid or set apart for payment at the date of such declaration or payment or setting apart for payment on the Common Shares or such other shares of the Corporation ranking junior to the Preferred Shares; nor shall the Corporation call for redemption or purchase for cancellation any of the Preferred Shares (less than the total number of Preferred Shares then outstanding) or any shares of the Corporation ranking junior to the Preferred Shares unless all dividends up to and including the dividends which shall then be payable on each series of the Preferred Shares then issued and outstanding shall have been declared and paid or set apart for payment at the date of such call for redemption or purchase. |
4. | Conversion |
4.1 | The holders of the Preferred Shares shall not, as such, be entitled as of right to subscribe for or to purchase or receive the whole or any part of any shares, bonds, debentures or other securities or any rights to acquire the same, which may from time to time be issued by the Corporation except in accordance with any conversion rights set forth in the rights, privileges, restrictions and conditions attaching to the Preferred Shares of any series. |
5. | Approval of Preferred Shareholders |
5.1 | The provisions of any or all of the paragraphs of this Section A may be deleted, varied, modified, amended or amplified by articles of amendment but only with the prior approval of the holders of the Preferred Shares given as hereinafter specified in addition to any other approval required by the Canada Business Corporations Act. |
5.2 | The approval of the holders of the Preferred Shares with respect to any and all matters referred to herein may be given in writing by the holders of not less than two-thirds (2/3) of the Preferred Shares for the time being outstanding or by resolution duly passed and carried by not less than two-thirds (2/3) of the votes cast on a poll at a meeting of the holders of the Preferred Shares duly called and held for the purpose of considering the subject matter of such resolution and at which holders of not less than a majority of all Preferred Shares then outstanding are present in person or represented by proxy in accordance with the by-laws of the Corporation; provided, however, that, if at any such meeting, when originally held, the holders of at least a majority of all Preferred Shares then outstanding are not present in person or so represented by proxy within thirty (30) minutes after the time fixed for the meeting, then the meeting shall be adjourned to such date, being not less than fifteen (15) days later, and to such time and place as may be fixed by the chairman of such meeting and, at such adjourned meeting, the holders of Preferred Shares present in person or so represented by proxy, whether or not they hold more or less than a majority of all Preferred Shares then outstanding, may transact the business for which the meeting was originally called, and a resolution duly passed and carried thereat by not less than two-thirds (2/3) of the votes of cast on a poll at such adjourned meeting shall constitute the approval of the holders of the Preferred Shares hereinbefore mentioned. Notice of any such original meeting of the holders of the Preferred Shares shall be given not less than twenty-one (21) days prior to the date fixed for such meeting and shall specify in general terms the purpose for which the meeting is called, and notice of any such adjourned meeting shall be given not less than fifteen (15) days prior to the date fixed for such |
- 2 -
adjourned meeting, but it shall not be necessary to specify in such notice the purpose for which the adjourned meeting is called. The formalities to be observed with respect to the giving of notice of any such original meeting or adjourned meeting and the conduct thereof shall be those from time to time prescribed in the by-laws of the Corporation with respect to meetings of shareholders. On every poll taken at any such original meeting or adjourned meeting the holders of Preferred Shares present in person or so represented by proxy shall be entitled to one (1) vote in respect of each Preferred Share held by each of such holders respectively. |
B. | Common Shares |
1. | Dividends |
1.1 | Subject to the prior rights of the holders any shares ranking senior to the Common Shares with respect to priority in the payment of dividends, the holders of the Common Shares shall be entitled to receive dividends and the Corporation shall pay dividends thereon as and when declared by the board of directors of the Corporation out of moneys properly applicable to the payment of dividends in such amount and in such form as the directors may from time to time determine. |
2. | Dissolution |
2.1 | In the event of the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of property of the Corporation among its shareholders for the purpose of winding up its affairs and subject to the prior rights of the holders of any shares ranking senior to the Common Shares with respect to priority in the distribution of property upon dissolution, liquidation, winding up or distribution for the purpose of winding up, the holders of the Common Shares at the time outstanding shall be equally entitled to receive the remaining property and assets of the Corporation on an equal basis per share. |
3. | Voting |
3.1 | The holders of the Common Shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Corporation and shall have one vote for each Common Share held at all meetings of the shareholders of the Corporation. |
4. | Equality |
4.1 | The Common Shares shall have the same rights and attributes and be the same in all respects. |
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SCHEDULE TO THE ARTICLES OF
ENERFLEX LTD.
7. | Other provisions, if any: |
The board of directors of the Corporation may, at any time and from time to time, by resolution appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next following annual meeting of shareholders of the Corporation, provided that the total number of directors so appointed by the board of directors of the Corporation during the period between any two annual meetings of shareholders of the Corporation shall not exceed one-third of the number of directors elected at the earlier of such two annual meetings of shareholders of the Corporation.
Exhibit 3.2
ENERFLEX LTD.
BY-LAW 1
A by-law relating generally to the conduct of the affairs of ENERFLEX LTD. (the Corporation).
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of the Corporation as follows:
INTERPRETATION
1. | Definitions |
In this by-law and all other by-laws of the Corporation, unless the context otherwise specifies or requires:
(a) | Act means the Canada Business Corporations Act, R.S.C. 1985, c. C-44 and the regulations thereunder, as from time to time amended, and every statute or regulation that may be substituted therefor and, in the case of such amendment or substitution, any reference in the by-laws of the Corporation shall be read as referring to the amended or substituted provisions; |
(b) | by-law means any by-law of the Corporation from time to time in force and effect; |
(c) | all terms contained in the by-laws which are defined in the Act shall have the meanings given to such terms in the Act; |
(d) | words importing the singular number only shall include the plural and vice versa; words importing any gender shall include all genders; words importing persons shall include partnerships, syndicates, trusts and any other legal or business entity; and |
(e) | the headings used in the by-laws are inserted for reference purposes only and are not to be considered or taken into account in construing the terms or provisions thereof or to be deemed in any way to clarify, modify or explain the effect of any such terms or provisions. |
2. | Unanimous Shareholder Agreements |
The provisions of this by-law are subject to the terms of any unanimous shareholder agreement in effect from time to time in respect of the Corporation and, to the extent of any inconsistency between this by-law and any such unanimous shareholder agreement, such unanimous shareholder agreement shall prevail over this by-law.
REGISTERED OFFICE
3. The Corporation may from time to time (i) by resolution of the directors change the place and address of the registered office of the Corporation within the Province in Canada specified in its articles, and (ii) by an amendment to its articles, change the Province in Canada in which its registered office is situated.
SEAL
4. The Corporation may, but need not, have a corporate seal. An instrument or agreement executed on behalf of the Corporation by a director, an officer or an agent of the Corporation is not invalid merely because the corporate seal, if any, is not affixed thereto.
DIRECTORS
5. | Number and Powers |
The number of directors, or the minimum and maximum number of directors of the Corporation, is set out in the articles of the Corporation. If a minimum and maximum number of directors is set out in the articles of the Corporation, the number of directors of the Corporation shall be the number of directors elected by the shareholders of the Corporation at the most recent meeting of shareholders. At least twenty-five per cent of the directors (or one director, if the Corporation has less than four directors) shall be resident Canadians. If the Corporation is a distributing corporation and any of its outstanding securities are held by more than one person, it shall have at least three directors, at least two of whom are not officers or employees of the Corporation or its affiliates.
The directors shall manage, or supervise the management of, the business and affairs of the Corporation and may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation and are not by the Act, the articles, the by-laws, any special resolution of the Corporation, a unanimous shareholder agreement or by statute expressly directed or required to be done in some other manner.
6. | Duties |
Every director and officer of the Corporation in exercising their powers and discharging their duties shall:
(a) | act honestly and in good faith with a view to the best interests of the Corporation; and |
(b) | exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. |
Every director and officer of the Corporation shall comply with the Act, the regulations thereunder, the Corporations articles and by-laws and any unanimous shareholder agreement.
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7. | Qualification |
Every director shall be an individual 18 or more years of age and no one who is of unsound mind and has been so found by a court in Canada or elsewhere or who has the status of a bankrupt shall be a director.
8. | Election of Directors |
Directors shall be elected by the shareholders of the Corporation by ordinary resolution. Whenever at any election of directors of the Corporation the number or the minimum number of directors required by the articles is not elected by reason of the lack of consent, disqualification, incapacity or death of any candidates, the directors elected at that meeting may exercise all the powers of the directors if the number of directors so elected constitutes a quorum, but such quorum of directors may not fill the resulting vacancy or vacancies.
An individual who is elected or appointed to hold office as a director is not a director and is deemed not to have been elected or appointed to hold office as a director unless
(a) | he or she was present at the meeting when the election or appointment took place and he or she did not refuse to hold office as a director; or |
(b) | he or she was not present at the meeting when the election or appointment took place and |
(i) | he or she consented to hold office as a director in writing before the election or appointment or within 10 days after it, or |
(ii) | he or she has acted as a director pursuant to the election or appointment. |
9. | Term of Office |
A directors term of office (subject to the provisions (if any) of the Corporations articles and paragraph 12 below), unless such director was elected for an expressly stated term, shall be from the date of the meeting at which such director is elected or appointed until the close of the annual meeting of shareholders next following such directors election or appointment or until such directors successor is elected or appointed. If qualified, a director whose term of office has expired is eligible for re-election as a director.
10. | Ceasing to Hold Office |
A director ceases to hold office if such director:
(a) | dies or sends to the Corporation a written resignation and such resignation, if not effective upon receipt by the Corporation, becomes effective in accordance with its terms; |
(b) | is removed from office in accordance with paragraph 12 below; |
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(c) | becomes bankrupt; or |
(d) | is found by a court in Canada or elsewhere to be of unsound mind. |
11. | Vacancies |
Notwithstanding any vacancy among the directors, the remaining directors may exercise all the powers of the directors so long as a quorum of the number of directors remains in office. Subject to subsections 111(1) and (3) of the Act and to the provisions (if any) of the Corporations articles, where there is a quorum of directors in office and a vacancy occurs, such quorum of directors may appoint a qualified person to fill such vacancy for the unexpired term of such appointees predecessor.
12. | Removal of Directors |
Subject to subsection 109(2) of the Act and unless the articles of the Corporation provide for cumulative voting, the shareholders of the Corporation may by ordinary resolution at a special meeting remove any director before the expiration of such directors term of office and may, by a majority of the votes cast at the meeting, elect any person in such directors stead for the remainder of such directors term.
If a meeting of shareholders was called for the purpose of removing a director from office as a director, the director so removed shall vacate office forthwith upon the passing of the resolution for such directors removal.
13. | Validity of Acts |
An act of a director or officer is valid notwithstanding an irregularity in their election or appointment or a defect in their qualification.
MEETINGS OF DIRECTORS
14. | Place of Meetings |
Meetings of directors and of any committee of directors may be held at any place.
15. | Calling Meetings |
A meeting of directors may be convened by the Chair of the Board (if any), the President or any director at any time and the Secretary shall upon direction of any of the foregoing convene a meeting of directors.
16. | Notice |
Notice of the time and place for the holding of any such meeting shall be sent to each director not less than two days (exclusive of the day on which the notice is sent but inclusive of the day for which notice is given) before the date of the meeting; provided that meetings of the directors or of any committee of directors may be held at any time without
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formal notice if all the directors are present (except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called) or if all the absent directors have waived notice. The notice shall specify any matter referred to in subsection 115(3) of the Act that is to be dealt with at the meeting.
For the first meeting of directors to be held following the election of directors at an annual or special meeting of the shareholders or for a meeting of directors at which a director is appointed to fill a vacancy in the board, no notice of such meeting need be given to the newly elected or appointed director or directors in order for the meeting to be duly constituted, provided a quorum of the directors is present.
17. | Waiver of Notice |
Notice of any meeting of directors or of any committee of directors or any irregularity in any meeting or in the notice thereof may be waived in any manner by any director, and such waiver may be validly given either before or after the meeting to which such waiver relates. Attendance of a director at a meeting of directors is a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
18. | Electronic Participation |
Where all the directors of the Corporation consent thereto (either before or after the meeting), a director may participate in a meeting of directors or of any committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, and a director participating in a meeting by such means shall be deemed for the purposes of the Act and the by-laws to be present at that meeting.
19. | Quorum and Voting |
A majority of the number of directors of the Corporation shall constitute a quorum for the transaction of business. Subject to subsections 111(1), 114(4) and 117(1) of the Act, no business shall be transacted by the directors except at a meeting of directors at which a quorum is present and at which at least twenty-five per cent of the directors present are resident Canadians or, if the Corporation has less than four directors, at least one of the directors present is a resident Canadian. Questions arising at any meeting of directors shall be decided by a majority of votes. In case of an equality of votes, the chair of the meeting shall not have a second or casting vote in addition to the chairs original vote as a director.
20. | Adjournment |
Any meeting of directors or of any committee of directors may be adjourned from time to time by the chair of the meeting, with the consent of the meeting, to a fixed time and place. No notice of the time and place for the holding of the adjourned meeting need be given to any director if the time and place of the adjourned meeting is announced at the original meeting. Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum is present thereat. The directors who form the quorum at the
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adjourned meeting need not be the same directors who formed the quorum at the original meeting. If there is no quorum present at the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment.
21. | Resolutions in Writing |
A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or committee of directors, is as valid as if it had been passed at a meeting of directors or committee of directors.
COMMITTEES OF DIRECTORS
22. | General |
The directors may from time to time appoint from their number one or more committees of directors. The directors may delegate to each such committee any of the powers of the directors, except that no such committee shall have the authority to:
(a) | submit to the shareholders any question or matter requiring the approval of the shareholders; |
(b) | fill a vacancy among the directors or in the office of auditor, or appoint additional directors; |
(c) | subject to subsection 189(2) of the Act, issue securities except as authorized by the directors; |
(d) | issue shares of a series under section 27 of the Act except as authorized by the directors; |
(e) | declare dividends; |
(f) | purchase, redeem or otherwise acquire shares issued by the Corporation; |
(g) | pay any commission referred to in section 41 of the Act, except as authorized by the directors; |
(h) | approve a management proxy circular; |
(i) | approve a take-over bid circular or directors circular; |
(j) | approve any annual financial statements to be placed before the shareholders of the Corporation; or |
(k) | adopt, amend or repeal by-laws of the Corporation. |
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23. | Audit Committee |
If the Corporation is a distributing corporation and any of its outstanding securities are held by more than one person, the board of directors shall elect annually from among their number an audit committee to be composed of not fewer than three directors, a majority of whom are not officers or employees of the Corporation or any of its affiliates.
Each member of the audit committee shall serve during the pleasure of the board of directors and, in any event, only so long as such member shall be a director. The directors may fill vacancies in the audit committee by election from among their number.
The audit committee shall have power to fix its quorum at not less than a majority of its members and to determine its own rules of procedure subject to any regulations imposed by the board of directors from time to time and to the following paragraph.
The auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation, to attend and be heard thereat; and, if so requested by a member of the audit committee, shall attend every meeting of the committee held during the term of office of the auditor. The auditor of the Corporation or any member of the audit committee may call a meeting of the committee.
The audit committee shall review the financial statements of the Corporation prior to approval thereof by the board of directors and shall have such other powers and duties as may from time to time by resolution be assigned to it by the board.
REMUNERATION OF DIRECTORS, OFFICERS AND EMPLOYEES
24. The remuneration to be paid to the directors of the Corporation shall be such as the directors shall from time to time by resolution determine and such remuneration shall be in addition to the salary paid to any officer or employee of the Corporation who is also a director. The directors may also by resolution award special remuneration to any director in undertaking any special services on the Corporations behalf other than the normal work ordinarily required of a director of a corporation. The confirmation of any such resolution or resolutions by the shareholders shall not be required. The directors may fix the remuneration of the officers and employees of the Corporation. The directors, officers and employees shall also be entitled to be paid their travelling and other expenses properly incurred by them in connection with the affairs of the Corporation.
INDEMNITIES TO DIRECTORS AND OTHERS
25. Subject to the provisions hereof and subsections 124(3) and (4) of the Act, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or another individual who acts or acted at the Corporations request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity.
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The Corporation may not indemnify an individual pursuant hereto unless the individual:
(a) | acted honestly and in good faith with a view to the best interests of the Corporation or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the Corporations request; and |
(b) | in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individuals conduct was lawful. |
The Corporation is hereby authorized to execute agreements evidencing its indemnity in favour of the foregoing persons to the full extent permitted by law.
OFFICERS
26. | Appointment of Officers |
The directors may annually or as often as may be required appoint such officers as they shall deem necessary, who shall have such authority and shall perform such functions and duties as may from time to time be prescribed by resolution of the directors, delegated by the directors or by other officers or properly incidental to their offices or other duties, provided that no officer shall be delegated the power to do anything referred to in paragraph 22 above. Such officers may include, without limitation, any of a President, a Chief Executive Officer, a Chair of the Board, one or more Vice-Presidents, a Chief Financial Officer, a Controller, a Secretary, a Treasurer and one or more Assistant Secretaries and/or one or more Assistant Treasurers. None of such officers (except the Chair of the Board) need be a director of the Corporation. A director may be appointed to any office of the Corporation. Two or more of such offices may be held by the same person.
27. | Removal of Officers |
All officers shall be subject to removal by resolution of the directors at any time, with or without cause. The directors may appoint a person to an office to replace an officer who has been removed or who has ceased to be an officer for any other reason.
28. | Duties of Officers may be Delegated |
In case of the absence or inability or refusal to act of any officer of the Corporation or for any other reason that the directors may deem sufficient, the directors may delegate all or any of the powers of such officer to any other officer or to any director for the time being.
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SHAREHOLDERS MEETINGS
29. | Annual or Special Meetings |
The directors of the Corporation
(a) | shall call an annual meeting of shareholders not later than 18 months after the Corporation comes into existence and subsequently not later than 15 months after holding the last preceding annual meeting but no later than 6 months after the end of the Corporations preceding financial year; and |
(b) | may at any time call a special meeting of shareholders. |
30. | Place of Meetings |
Meetings of shareholders of the Corporation shall be held at such place within Canada as the directors may determine, or at a place outside Canada if the place is specified in the articles or all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place.
31. | Electronic Participation and Voting |
Subject to the Act, any person entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the Corporation makes available such a communication facility. A person participating in a meeting by such means is deemed for all purposes of the Act and the by-laws to be present at the meeting. Subject to the Act, if the directors or the shareholders of the Corporation call a meeting of shareholders pursuant to the Act, those directors or shareholders, as the case may be, may determine that the meeting shall be held entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. Subject to the Act, any vote at a meeting of shareholders may be held entirely by means of a telephonic, electronic or other communication facility, if the Corporation makes available such a communication facility, and any person participating in a meeting of shareholders by means of such facility and entitled to vote at that meeting may vote by means of such facility, provided that any such facility made available by the Corporation shall enable the votes to be gathered in a manner that permits their subsequent verification and permit the tallied votes to be presented to the Corporation without it being possible for the Corporation to identify how each shareholder or group of shareholders voted.
32. | Record Dates for Shareholder Meetings |
Subject to section 134 of the Act, the directors may fix in advance a date as the record date for the purpose of determining shareholders entitled to receive notice of a meeting of shareholders and/or entitled to vote at a meeting of shareholders, but such record date shall not precede by more than 60 days or by less than 21 days the date on which the meeting is to be held. Such shareholders shall be determined as at the close of business on the date fixed by the directors, unless otherwise specified by the directors.
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If no record date is fixed, the record date for the determination of the shareholders entitled to receive notice of a meeting of the shareholders and to vote shall be:
(a) | at the close of business on the day immediately preceding the day on which the notice is given; or |
(b) | if no notice is given, the day on which the meeting is held. |
33. | Shareholder List |
The Corporation shall prepare an alphabetical list of the shareholders entitled to receive notice of a meeting and vote at the meeting, showing the number of shares held by each shareholder,
(a) | if a record date for determining the shareholder entitled to receive notice of the meeting and/or entitled to vote at the meeting has been fixed, not later than 10 days after that date; or |
(b) | if no record date has been fixed, on the record date established in accordance with paragraph 32 above. |
A shareholder whose name appears on such list is entitled to vote the shares shown opposite such shareholders name at the meeting to which the list relates.
34. | Notice |
A notice stating the day, hour and place of meeting and, if special business is to be transacted thereat, stating (i) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon, and (ii) the text of any special resolution to be submitted to the meeting, shall be sent to each shareholder entitled to vote at the meeting, to each director of the Corporation and to the auditor (if any) of the Corporation. Such notice shall be personally delivered or sent by prepaid mail, if the Corporation is a distributing corporation, not less than 21 days (or, if the Corporation is not a distributing corporation, not less than such number of days as may be fixed by the directors) and not more than 60 days (exclusive of the day of mailing and of the day for which notice is given) before the date of every meeting, and shall be addressed to the latest address of each such person as shown in the records of the Corporation or its transfer agent, or if no address is shown therein, then to the last address of each such person known to the Secretary. Notwithstanding the foregoing, a meeting of shareholders may be held for any purpose at any date and time and, subject to subsection 132(2) of the Act, at any place without notice if all the shareholders and other persons entitled to notice of such meeting are present in person or represented by proxy at the meeting (except where a shareholder or such other person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called) or if all the shareholders and other persons entitled to notice of such meeting and not present in person nor represented by proxy thereat waive notice of the meeting. Notice of any meeting of shareholders or the time for the giving of any such notice or any irregularity in any such meeting or in the notice thereof may be waived in any manner by any shareholder, the duly appointed proxy of any shareholder, any director or the auditor of the Corporation and any other person entitled to attend a meeting of shareholders, and any such waiver may be validly given either before or after the meeting to which such waiver relates.
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The auditor (if any) of the Corporation is entitled to receive notice of every meeting of shareholders of the Corporation and, at the expense of the Corporation, to attend and be heard thereat on matters relating to the auditors duties.
35. | Omission of Notice |
The accidental omission to give notice of any meeting to or the non-receipt of any notice by any person shall not invalidate any resolution passed or any proceeding taken at any meeting of shareholders.
36. | Chair |
The Chair of the Board (if any) shall when present preside at all meetings of shareholders. In the absence of the Chair of the Board (if any), the President or, if the President is also absent, a Vice-President (if any) shall act as chair. If none of such officers is present at a meeting of shareholders, the shareholders present entitled to vote shall choose a director as chair of the meeting and if no director is present or if all the directors decline to take the chair then the shareholders present shall choose one of their number to be chair.
37. | Votes |
Votes at meetings of the shareholders may be cast either personally or by proxy. At every meeting at which a shareholder is entitled to vote, such shareholder (if present in person) or the proxyholder for such shareholder shall have one vote on a show of hands. Upon a ballot on which a shareholder is entitled to vote, every shareholder (if present in person or by proxy) shall (subject to the provisions, if any, of the Corporations articles) have one vote for every share registered in such shareholders name.
Every question submitted to any meeting of shareholders shall be decided in the first instance on a show of hands and in case of an equality of votes the chair of the meeting shall neither on a show of hands nor on a ballot have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder or proxy nominee.
At any meeting, unless a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting, either before or after any vote by a show of hands, a declaration by the chair of the meeting that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be evidence of the fact without proof of the number or proportion of votes recorded in favour of or against the motion.
If at any meeting a ballot is demanded on the election of a chair or on the question of adjournment or termination, the ballot shall be taken forthwith without adjournment. If a ballot is demanded on any other question or as to the election of directors, the ballot shall be taken in such manner and either at once or later at the meeting or after adjournment as the chair of the meeting directs. The result of a ballot shall be deemed to be the resolution of the meeting at which the ballot was demanded. A demand for a ballot may be made either before or after any vote by show of hands and may be withdrawn.
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If the chair of a meeting of shareholders declares to the meeting that, if a ballot is conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what to the knowledge of the chair will be the decision of the meeting in relation to any matter or group of matters is less than 5% of all of the votes that might be cast by shareholders personally or by proxy at the meeting on the ballot, unless a shareholder or proxyholder demands a ballot prior to the vote,
(a) | the chair may conduct the vote in respect of that matter or group of matters by a show of hands; and |
(b) | a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by a show of hands, notwithstanding any directions to the contrary given to such proxyholder or alternate proxyholder from any shareholder who appointed such proxyholder or alternate proxyholder, or any conflicting instructions from more than one such shareholder. |
Where a body corporate or association is a shareholder, any individual authorized by a resolution of the directors or governing body of the body corporate or association may represent it at any meeting of shareholders and exercise at such meeting on behalf of the body corporate or association all the powers it could exercise if it were an individual shareholder, provided that the Corporation or the chair of the meeting may require such shareholder or such individual authorized by it to furnish a certified copy of such resolution or other appropriate evidence of the authority of such individual.
Where two or more persons hold the same share or shares jointly, any one of such persons present at a meeting of shareholders has the right, in the absence of the other or others, to vote such share or shares, but if more than one of such persons are present or represented by proxy and vote, they shall vote together as one on the share or shares jointly held by them.
38. | Proxies |
A shareholder entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder or proxyholders or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.
A form of proxy shall be a written or printed form that complies with the regulations under the Act (to the extent applicable). A form of proxy becomes a proxy on completion by or on behalf of a shareholder and execution by the shareholder or such shareholders attorney authorized in writing. Alternatively, a proxy may be an electronic document that satisfies the requirements of Part XX.1 of the Act. A proxy is valid only at the meeting in respect of which it is given or at any adjournment thereof.
The directors may specify in a notice calling a meeting of shareholders a time not exceeding 48 hours, excluding Saturdays and holidays, preceding the meeting or an adjournment
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thereof before which time proxies to be used at the meeting must be deposited with the Corporation or its agent (subject to the rights of shareholders to revoke proxies, as provided below).
A shareholder may revoke a proxy either (i) by depositing an instrument in writing executed by the shareholder or by the shareholders attorney authorized in writing at the registered office of the Corporation at any time up to and including the last business day preceding the day of the meeting, or an adjournment thereof, at which the proxy is to be used, or with the chair of the meeting on the day of the meeting or an adjournment thereof, or (ii) in any other manner permitted by law.
39. | Adjournment |
The chair of the meeting may with the consent of the meeting adjourn any meeting of shareholders from time to time to a fixed time and place. If the meeting is adjourned for less than 30 days, no notice of the time and place for the holding of the adjourned meeting need be given to any shareholder, other than by announcement at the earliest meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for an aggregate of more than 90 days, subsection 149(1) of the Act does not apply. Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum is present thereat. The persons who form the quorum at the adjourned meeting need not be the same persons who formed the quorum at the original meeting. If there is no quorum present at the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment. Any business may be brought before or dealt with at any adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same.
40. | Quorum |
Two persons present and each holding or representing by proxy at least one issued share of the Corporation shall be a quorum of any meeting of shareholders for the choice of a chair of the meeting and for the adjournment of the meeting to a fixed time and place but may not transact any other business; for all other purposes a quorum for any meeting shall be persons present not being less than two in number and holding or representing by proxy not less than 10% of the total number of the issued shares of the Corporation for the time being enjoying voting rights at such meeting. If a quorum is present at the opening of a meeting of shareholders, the shareholders present may proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.
Notwithstanding the foregoing, if the Corporation has only one shareholder, or only one shareholder of any class or series of shares, the shareholder present in person or by proxy constitutes a meeting and a quorum for such meeting.
41. | Resolutions in Writing |
Subject to subsection 142(1) of the Act,
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(a) | a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and |
(b) | a resolution in writing dealing with all matters required by the Act to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of the Act relating to meetings of shareholders. |
SHARES AND TRANSFERS
42. | Issuance |
Subject to the articles of the Corporation, shares in the Corporation may be issued at such time and issued to such persons and for such consideration as the directors may determine.
43. | Security Certificates |
Security certificates (and the form of transfer power on the reverse side thereof) shall (subject to compliance with section 49 of the Act) be in such form as the directors may from time to time by resolution approve and such certificates shall be signed by a director or officer of the Corporation, or by a registrar, transfer agent or branch transfer agent of the Corporation, or an individual on their behalf, or by a trustee who certifies it in accordance with a trust indenture, or the signature shall be printed or otherwise mechanically reproduced on the certificate. If a security certificate contains a printed or mechanically reproduced signature of a person, the Corporation may issue the security certificate, notwithstanding that the person has ceased to be a director or an officer of the Corporation, and the security certificate is as valid as if the person were a director or an officer at the date of its issue.
44. | Agent |
The directors may from time to time by resolution appoint or remove an agent to maintain a central securities register and branch securities registers for the Corporation.
45. | Surrender of Security Certificates |
Subject to the Act, no transfer of a security issued by the Corporation shall be recorded or registered unless and until either (i) the security certificate representing the security to be transferred has been surrendered and cancelled, or (ii) if no security certificate has been issued by the Corporation in respect of such share, a duly executed security transfer power in respect thereof has been presented for registration.
46. | Defaced, Destroyed, Stolen or Lost Security Certificates |
In case of the defacement, destruction, theft or loss of a security certificate, the fact of such defacement, destruction, theft or loss shall be reported by the owner to the Corporation or to a trustee, registrar, transfer agent or other agent of the Corporation (if any)
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acting on behalf of the Corporation, with a statement verified by oath or statutory declaration as to the defacement, destruction, theft or loss and the circumstances concerning the same and with a request for the issuance of a new security certificate to replace the one so defaced, destroyed, stolen or lost. Upon the giving to the Corporation (or, if there is such an agent, then to the Corporation and to such agent) of an indemnity bond of a surety company in such form as is approved by any authorized officer of the Corporation, indemnifying the Corporation (and such agent, if any) against all loss, damage and expense, which the Corporation and/or such agent may suffer or be liable for by reason of the issuance of a new security certificate to such shareholder, and provided the Corporation or such agent does not have notice that the security has been acquired by a bona fide purchaser, a new security certificate may be issued in replacement of the one defaced, destroyed, stolen or lost, if such issuance is ordered and authorized by any authorized officer of the Corporation or by resolution of the directors.
DIVIDENDS
47. | Declaration and Payment of Dividends |
The directors may from time to time by resolution declare and the Corporation may pay dividends on its issued shares, subject to the provisions (if any) of the Corporations articles.
The directors shall not declare and the Corporation shall not pay a dividend if there are reasonable grounds for believing that:
(a) | the Corporation is, or would after the payment be, unable to pay its liabilities as they become due; or |
(b) | the realizable value of the Corporations assets would thereby be less than the aggregate of its liabilities and stated capital of all classes. |
The Corporation may pay a dividend by issuing fully paid shares of the Corporation and, subject to section 42 of the Act, the Corporation may pay a dividend in money or property.
48. | Joint Securityholders |
In case several persons are registered as the joint holders of any securities of the Corporation, any one of such persons may give effectual receipts for all dividends and payments on account of dividends, principal, interest and/or redemption payments on redemption of securities (if any) subject to redemption in respect of such securities.
RECORD DATES
49. | Shareholders Meetings |
Subject to section 134 of the Act, the directors may fix in advance a date as the record date for the purpose of determining shareholders entitled to receive notice of a meeting of shareholders and/or entitled to vote at a meeting of shareholders, but such record date shall not
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precede by more than 60 days or by less than 21 days the date on which the meeting is to be held. Such shareholders shall be determined as at the close of business on the date fixed by the directors, unless otherwise specified by the directors.
If no record date is fixed, the record date for the determination of the shareholders entitled to receive notice of a meeting of the shareholders and to vote shall be:
(a) | at the close of business on the day immediately preceding the day on which the notice is given; or |
(b) | if no notice is given, the day on which the meeting is held. |
50. | Dividends, Distributions or Other Purposes |
Subject to section 134 of the Act, the directors may fix in advance a date as the record date for the determination of shareholders (i) entitled to receive payment of a dividend, (ii) entitled to participate in a liquidation or distribution, (iii) for any other purpose (other than to establish a shareholders right to receive notice of a meeting or to vote), but such record date shall not precede by more than 60 days the particular action to be taken. Such shareholders shall be determined as at the close of business on the date fixed by the directors, unless otherwise specified by the directors.
If no record date is fixed, the record date for the determination of shareholders for any purpose other than to establish a shareholders right to receive notice of a meeting or to vote shall be at the close of business on the day on which the directors pass the resolution relating thereto.
VOTING SECURITIES IN OTHER ISSUERS
51. All securities of any other body corporate or issuer of securities carrying voting rights held from time to time by the Corporation may be voted at all meetings of shareholders, bondholders, debenture holders or holders of such securities, as the case may be, of such other body corporate or issuer and in such manner and by such person or persons as the directors of the Corporation shall from time to time determine and authorize by resolution. The duly authorized signing officers of the Corporation may also from time to time execute and deliver for and on behalf of the Corporation proxies and/or arrange for the issuance of voting certificates and/or other evidence of the right to vote in such names as they may determine without the necessity of a resolution or other action by the directors.
NOTICES, ETC.
52. | Service |
Any notice or other document required to be given or sent by the Corporation to any shareholder or director or the auditor of the Corporation shall be delivered personally or sent by prepaid mail or by fax, electronic mail or other electronic means capable of producing a written copy addressed to:
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(a) | such shareholder at such shareholders latest address as shown on the records of the Corporation or its transfer agent; |
(b) | such director at such directors latest address as shown in the records of the Corporation or in the last notice filed under section 106 or 113 of the Act; and |
(c) | the auditor of the Corporation at the auditors latest address known to the Corporation. |
With respect to every notice or other document sent by prepaid mail, it shall be sufficient to prove that the envelope or wrapper containing the notice or other document was properly addressed and put into a post office or into a post office letter box.
53. | Shareholders Who Cannot be Found |
If the Corporation sends a notice or document to a shareholder and the notice or document is returned on two consecutive occasions because the shareholder cannot be found, the Corporation is not required to send any further notices or documents to the shareholder until the shareholder informs the Corporation in writing of the shareholders new address.
54. | Shares Registered in More than One Name |
All notices or other documents shall, with respect to any shares in the capital of the Corporation registered in more than one name, be given to whichever of such persons is named first in the records of the Corporation and any notice or other document so given shall be sufficient notice or delivery of such document to all the holders of such shares.
55. | Persons Becoming Entitled by Operation of Law |
Every person who by operation of law, transfer or by any other means whatsoever shall become entitled to any shares in the capital of the Corporation shall be bound by every notice or other document in respect of such shares which prior to such persons name and address being entered on the records of the Corporation shall have been duly given to the person or persons from whom such person derives title to such shares.
56. | Deceased Shareholder |
Any notice or other document delivered or sent by post or left at the address of any shareholder as the same appears in the records of the Corporation shall, notwithstanding that such shareholder be then deceased and whether or not the Corporation has notice of such shareholders death, be deemed to have been duly served in respect of the shares held by such shareholder (whether held solely or with other persons) until some other person be entered in such shareholders stead in the records of the Corporation as the holder or one of the holders thereof and such service shall for all purposes be deemed a sufficient service of such notice or other document on such shareholders heirs, executors or administrators and all persons (if any) interested with such shareholder in such shares.
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57. | Signatures to Notices |
The signature of any director or officer of the Corporation to any notice may be written, printed or otherwise mechanically reproduced.
58. | Computation of Time |
Where notice is required to be given under any provisions of the articles or by-laws of the Corporation, or any time period or time limit for the doing of any other act is prescribed by the articles or by-laws, the notice period or such other time period or time limit shall be determined in accordance with sections 26 to 30, inclusive, of the Interpretation Act (Canada), R.S.C. 1985, c. I-21, unless otherwise expressly provided in the articles or by-laws.
59. | Proof of Service |
A certificate of any officer of the Corporation in office at the time of the making of the certificate or of an agent of the Corporation as to facts in relation to the mailing or delivery or service or other communication of any notice or other documents to any shareholder, director, officer or auditor or as to the publication of any notice or other document shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer or auditor of the Corporation, as the case may be.
CHEQUES, DRAFTS, NOTES, ETC.
60. All cheques, drafts or orders for the payment of money and all notes, acceptances and bills of exchange shall be signed by such officer or officers or other person or persons, whether or not officers of the Corporation, and in such manner as the directors, or such officer or officers as may be delegated authority by the directors to determine such matters, may from time to time designate.
CUSTODY OF SECURITIES
61. All securities (including warrants) owned by the Corporation shall be lodged (in the name of the Corporation) with a chartered bank or a trust company or in a safety deposit box or, if so authorized by resolution of the directors, with such other depositaries or in such other manner as may be determined from time to time by the directors.
All securities (including warrants) belonging to the Corporation may be issued and held in the name of a nominee or nominees of the Corporation (and if issued or held in the names of more than one nominee shall be held in the names of the nominees jointly with right of survivorship) and shall be endorsed in blank with endorsement guaranteed in order to enable transfer thereof to be completed and registration thereof to be effected.
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EXECUTION OF CONTRACTS, ETC.
62. Contracts, documents or instruments in writing requiring the signature of the Corporation may be signed by any one director or officer and all contracts, documents or instruments in writing so signed shall be binding upon the Corporation without any further authorization or formality. The directors are authorized from time to time by resolution to appoint any officer or officers or any other person or persons on behalf of the Corporation either to sign contracts, documents or instruments in writing generally or to sign specific contracts, documents or instruments in writing.
The corporate seal, if any, of the Corporation may, when required, be affixed to contracts, documents or instruments in writing signed as aforesaid or by an officer or officers, person or persons appointed as aforesaid by resolution of the board of directors.
The term contracts, documents or instruments in writing as used in this by-law shall include deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property, real or personal, immovable or movable, powers of attorney, agreements, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of securities and all paper writings.
In particular, without limiting the generality of the foregoing, any one director or officer is authorized to sell, assign, transfer, exchange, convert or convey all securities owned by or registered in the name of the Corporation and to sign and execute (under the seal of the Corporation or otherwise) all assignments, transfers, conveyances, powers of attorney and other instruments that may be necessary for the purpose of selling, assigning, transferring, exchanging, converting or conveying any such securities.
The signature or signatures of any officer or director of the Corporation and/or of any other officer or officers, person or persons appointed as aforesaid by resolution of the directors may, if specifically authorized by resolution of the directors, be printed, engraved, lithographed or otherwise mechanically reproduced upon all contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation executed or issued by or on behalf of the Corporation and all contracts, documents or instruments in writing or securities of the Corporation on which the signature or signatures of any of the foregoing officers, directors or persons shall be so reproduced, by authorization by resolution of the directors, shall be deemed to have been manually signed by such officers, directors or persons whose signature or signatures is or are so reproduced and shall be as valid to all intents and purposes as if they had been signed manually and notwithstanding that the officers, directors or persons whose signature or signatures is or are so reproduced may have ceased to hold office at the date of delivery or issue of such contracts, documents or instruments in writing or securities of the Corporation.
FINANCIAL YEAR
63. The financial year of the Corporation shall end on such day in each year as the board of directors may from time to time by resolution determine.
CONFIRMED as a by-law of the Corporation by the board of directors on June 1, 2011.
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Exhibit 3.3
ENERFLEX LTD.
BY-LAW 2
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of ENERFLEX LTD. (the Corporation) as follows:
1. The directors may and they are hereby authorized from time to time to, without authorization of the shareholders,
(a) | borrow money upon the credit of the Corporation; |
(b) | limit or increase the amount to be borrowed; |
(c) | issue, reissue, sell or pledge bonds, debentures, notes or other debt obligations of the Corporation for such sums and at such prices as may be deemed expedient; |
(d) | give a guarantee on behalf of the Corporation to secure payment or performance of an obligation of any person; and |
(e) | mortgage, hypothecate, charge, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real and personal, movable and immovable, property of the Corporation and the undertaking and rights of the Corporation, to secure any such bonds, debentures, notes or other debt obligations, or to secure any present or future borrowing, liability or obligation of the Corporation, including any guarantee given pursuant to subparagraph 1(d) of this by-law. |
2. The directors may from time to time by resolution delegate to any one or more directors or officers, or to any committee of directors, of the Corporation all or any of the powers conferred on the directors by paragraph 1 of this by-law to the full extent thereof or such lesser extent as the directors may in any such resolution provide.
3. The powers hereby conferred shall be deemed to be in supplement of and not in substitution for any other powers to borrow money for the purposes of the Corporation or to do any other acts or things referred to in paragraph 1 of this by-law possessed by its directors or officers pursuant to the articles of the Corporation, any other by-law of the Corporation or applicable law.
CONFIRMED as a by-law of the Corporation by the board of directors on June 1, 2011.
Exhibit 3.4
AMENDED AND RESTATED BY-LAW NO. 3
(Adopted by the Board of Directors, effective August 9, 2018)
ARTICLE 1
NOMINATION OF DIRECTORS
Section 1.1 Eligibility for Election
Only persons who are nominated in accordance with the procedures set out in this Article 1 shall be eligible for election as directors to the board of directors (the Board) of Enerflex Ltd. (the Corporation). Nominations of persons for election to the Board may only be made at an annual meeting of shareholders, or at a special meeting of shareholders called for any purpose which includes the election of directors to the Board, as follows:
(a) | by or at the direction of the Board or an authorized officer of the Corporation, including pursuant to a notice of meeting; |
(b) | by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Canada Business Corporations Act (the Act) or a requisition of shareholders made in accordance with the provisions of the Act; or |
(c) | by any person entitled to vote at such meeting (a Nominating Shareholder), who: |
(i) | is, at the close of business on the date of giving notice provided for in Section 1.3 below and on the record date for notice of such meeting, either entered in the securities register of the Corporation as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and |
(ii) | has given timely notice in proper written form as set forth in this Article 1. |
For the avoidance of doubt, the foregoing Section 1.1 shall be the exclusive means for any person to bring nominations for election to the Board before any annual or special meeting of shareholders of the Corporation.
Section 1.2 Nominations for Election
In addition to any other requirements under applicable laws, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given notice thereof that is both timely (in accordance with this by-law) and in proper written form (in accordance with this by-law) to the corporate secretary of the Corporation at the principal executive offices of the Corporation.
Section 1.3 Notice of Nomination
For a nomination made by a Nominating Shareholder to be timely notice (a Timely Notice), the Nominating Shareholders notice must be received by the corporate secretary of the Corporation:
(a) | in the case of an annual meeting of shareholders, not later than the close of business on the 30th day before the date of the meeting; provided, however, if the first public announcement made by the Corporation of the date of the meeting (the Notice Date) is less than 50 days prior to the meeting date, not later than the close of business on the 10th day following the Notice Date; and |
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(b) | in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes the election of directors to the Board, not later than the close of business on the 15th day following the Notice Date; |
provided that, in either instance, if notice-and-access (as defined in National Instrument 54- 101 - Communication with Beneficial Owners of Securities of a Reporting Issuer) is used for delivery of proxy related materials in respect of a meeting described in Section 1.3(a) or 1.3(b), and the Notice Date in respect of the meeting is not less than 50 days before the date of the applicable meeting, the notice must be received not later than the close of business on the 40th day before the date of the applicable meeting.
Section 1.4 Adjournments or Postponements
In the event of an adjournment or postponement of an annual meeting or special meeting of shareholders or any announcement thereof, a new time period shall commence for the giving of a Timely Notice.
Section 1.5 Written Form of Nomination
To be in proper written form, a Nominating Shareholders notice to the corporate secretary must:
(a) | disclose or include, as applicable, as to each person whom the Nominating Shareholder proposes to nominate for election as a director (a Proposed Nominee): |
(i) | their name, age, business and residential address, principal occupation or employment for the past five years, status as a resident Canadian (as such term is defined in the Act); |
(ii) | their direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount and the date (s) on which such securities were acquired; |
(iii) | any relationships, agreements or arrangements, including financial, compensation and indemnity related relationships, agreements or arrangements, between the Proposed Nominee or any affiliates or associates of, and any person or entity acting jointly or in concert with, the Proposed Nominee or the Nominating Shareholder; |
(iv) | their written consent to being named in the notice as a nominee and to serving as a director of the Corporation if elected; |
(v) | any other information that would be required to be disclosed in a dissident proxy circular or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to the Act or applicable securities laws; and |
(b) | disclose or include, as applicable, as to each Nominating Shareholder giving the notice: |
(i) | their name, business and residential address, direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount and the date(s) on which such securities were acquired; |
(ii) | their interests in, or rights or obligations associated with, an agreement, arrangement or understanding, the purpose or effect of which is to alter, directly or indirectly, the persons economic interest in a security of the Corporation or the persons economic exposure to the Corporation; |
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(iii) | any proxy, contract, arrangement, agreement or understanding pursuant to which such person, or any of its affiliates or associates, or any person acting jointly or in concert with such person, has any interests, rights or obligations relating to the voting of any securities of the Corporation or the nomination of directors to the Board; |
(iv) | any relationships, agreements or arrangements, including financial, compensation and indemnity related relationships, agreements or arrangements, between the Nominating Shareholder or any affiliates or associates of, or any person or entity acting jointly or in concert with, the Nominating Shareholder or any Proposed Nominee; |
(v) | a representation as to whether such person intends to deliver a proxy circular and/or form of proxy to any shareholder of the Corporation in connection with such nomination or otherwise solicit proxies or votes from shareholders of the Corporation in support of such nomination; and |
(vi) | any other information relating to such person that would be required to be included in a dissident proxy circular or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Act or as required by applicable securities laws. |
Section 1.6 Information in Timely Notice
All information to be provided in a Timely Notice pursuant to this Article 1 shall be provided as of the date of such notice. A Nominating Shareholders notice shall be promptly updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct in all material respects as of the date that is ten (10) business days prior to the date of the meeting, or any adjournment or postponement thereof.
Section 1.7 Delivery of Timely Notice
Any notice, or other document or information required to be given to the corporate secretary of the Corporation pursuant to this Article 1 may only be given by personal delivery, facsimile transmission or by email (at such email address as may be stipulated from time to time by the corporate secretary for purposes of this notice), and shall be deemed to have been given and made only at the time it is served by personal delivery to the corporate secretary at the address of the principal executive offices of the Corporation, email (at the address as aforesaid) or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received); provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Calgary time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the next following day that is a business day.
Section 1.8 Additional Matters
(1) | The chair of any meeting of shareholders of the Corporation shall have the power to determine whether any proposed nomination is made in accordance with the provisions of this Article 1, and if any proposed nomination is not in compliance with such provisions, must declare that such defective nomination shall not be considered at any meeting of shareholders. |
(2) | The Board may, in its sole discretion, waive any requirement of this Article 1. |
(3) | For the purposes of this Article 1, public announcement means disclosure in a news release disseminated by the Corporation through a national news service in Canada, or in a document filed by the Corporation for public access under its profile on the System of Electronic Document Analysis and Retrieval at www.sedar.com. |
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(4) | This Article 1 is subject to, and should be read in conjunction with, the Act and the articles of the Corporation. If there is any conflict or inconihsistency between any provision of the Act or the articles and any provision of this Article 1, the provision of the Act or the articles will govern. |
ARTICLE 2
ANNUAL OR SPECIAL MEETINGS OF SHAREHOLDERS
Section 2.1 Business to be Discussed
No business may be transacted at an annual or special meeting of shareholders other than business that is either (i) specified in the Corporations notice of meeting (or any supplement thereto) given by or at the direction of the Board, (ii) otherwise properly brought before the meeting by or at the direction of the Board, or (iii) otherwise properly brought before the meeting by any shareholder of the Corporation who complies with the proposal procedures set forth in Section 2.2 below.
Section 2.2 New Business
For business to be properly brought before a meeting by a shareholder of the Corporation, such shareholder must submit a proposal to the Corporation for inclusion in the Corporations management proxy circular in accordance with the requirements of the Act; provided that any proposal that includes nominations for the election of directors shall also comply with the requirements of Article 1.
ARTICLE 3
AMENDMENT OF SECTION 37 OF BY-LAW NO. 1
Section 3.1 Amendment
The second paragraph of Section 37 of By law No. 1 of the Corporation is deleted and replaced with the following:
Every question submitted to any meeting of shareholders shall, subject to the decision of the chair of the meeting, these by-laws and the Act, be decided in the first instance on a show of hands and in the case of an equality of votes, the chair of the meeting shall neither on a show of hands nor on a ballot have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder or proxy nominee.
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Exhibit 4.1
STOCK CERTIFICATE Stock Certificate No.: ENER- 001 I 00 Shares of Common Stock ENERFLEX US HOLDINGS INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE This Certificate and the 100 shares of common stock, $.01 par value per shares, represented hereby are issued and shall be held by Enerflex Ltd., subject to all the provisions of the Certificate of Incorporation and the Bylaws of ENERFLEX US HOLDINGS INC. (the Corporation) and any amendments thereto, copies of which are on files at the principal office of the Corporation and made a part hereof as fully as though the provisions of said Certificate of Incorporation and Bylaws were imprinted in full on this certificate, to all of which the holder of this certificate by acceptance hereof, assents. A statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the Corporation and upon the holders thereof may be obtained by any stockholder upon request and without charges, a the principal office of the Corporation, and the Corporation shall furnish any stockholder, upon request and without charge, a copy of such statement. IN WITNESS THEREOF, the Corporation has caused this certificate to be signed by it duly authorized officers on January I 8, 2022. President Secretary
TO BE ONLY COMPLETED ON TRANSFER
TRANSFER SECTION
For the value received do hereby sell, assign and transfer unto the designated shares of stock represented by herein contained stock certificate and does hereby irrevocably constitute and authorize the Secretary of , to transfer said shares listed on the books of the corporation.
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DATE |
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING AS SET FORTH IN THE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.
Exhibit 5.1
March 18, 2022
Enerflex Ltd.
904 1331 Macleod Trail S.E.
Calgary, Alberta
T2G 0K3
Ladies and Gentlemen:
We are acting as Canadian counsel to Enerflex Ltd. (Enerflex), a company existing under the Canada Business Corporations Act (CBCA), in connection with the Registration Statement on Form F-4 (the Registration Statement), which includes the proxy statement of Exterran Corporation (Exterran) and prospectus of Enerflex, filed with the U.S. Securities and Exchange Commission (the SEC) under the U.S. Securities Act of 1933, as amended (the Securities Act), and the rules and regulations thereunder. The Registration Statement relates to, among other things, the registration of the common shares of Enerflex (the Shares) proposed to be issued as consideration to holders of shares of Exterran common stock pursuant to the Agreement and Plan of Merger (the Merger Agreement) dated as of January 24, 2022, by and among Enerflex, Enerflex US Holdings Inc. and Exterran in connection with the proposed merger and related transactions contemplated in the Merger Agreement (the Transaction). This opinion is being delivered in connection with the Registration Statement, in which this opinion appears as an exhibit.
For purposes of providing this opinion, we have made such investigations and examined originals or copies certified or otherwise identified to our satisfaction of such documents, records and other documents as we have considered necessary or relevant for the purposes of this opinion, including:
a) | the Merger Agreement attached as Exhibit 2.1 of the Registration Statement; |
b) | the restated articles of incorporation of Enerflex attached as Exhibit 3.1 of the Registration Statement (the Articles) and the by-laws of Enerflex; |
c) | the Registration Statement; |
d) | resolutions of the board of directors of Enerflex relating to, among other things, the issuance and delivery of the Shares pursuant to the terms of the Merger Agreement; and |
e) | such other proceedings, certificates, documents, instruments and records as we have deemed necessary to enable us to render this opinion, subject to the assumptions, limitations and qualifications stated herein. |
For purposes of this opinion, we have assumed with respect to all documents examined by us, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as certified, conformed, photostatic or electronically retrieved copies, the legal capacity of all individuals who have executed any of such documents, and the completeness, truth and accuracy of all facts set forth in the certificate supplied by an officer of Enerflex. As to any facts material to the opinions expressed herein which were not independently established or verified, we have, with your consent, relied upon oral or written statements and representations of officers and other representatives of Enerflex.
Based and relying upon and subject to the foregoing and the further qualifications, assumptions and limitations set forth herein, we are of the opinion that, when (i) the certificate of merger relating to the Transaction is filed with and accepted by the Secretary of State of the State of Delaware; and (ii) the Registration Statement relating to the Shares has become effective under the Securities Act and the Shares have been issued and delivered in accordance with the terms and conditions of the Merger Agreement (following approval of such issuance by the requisite vote of the shareholders of Enerflex) and in a manner contemplated by the Registration Statement, the Shares will be outstanding as validly issued, fully paid and non-assessable.
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This opinion is expressed only with respect to the laws of the Province of Alberta and of the laws of Canada applicable therein in effect on the date of this opinion. We have no responsibility or obligation to: (a) update this opinion; (b) take into account or inform the addressees or any other person of any changes in law, facts or other developments subsequent to this date that do or may affect the opinion we express; or (c) advise the addressees or any other person of any other change in any matter addressed in this opinion.
This opinion is rendered solely in connection with the Registration Statement and is expressed as of the date hereof. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to Enerflex, the Registration Statement, or the Shares. This opinion may not be used or relied upon by you for any other purpose.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading Legal Matters in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the SEC promulgated thereunder.
Yours very truly,
/s/ Norton Rose Fulbright Canada LLP
NORTON ROSE FULBRIGHT CANADA LLP
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Exhibit 10.1
CDN.$725,000,000 REVOLVING CREDIT FACILITIES
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
ENERFLEX LTD. and
ENERFLEX AUSTRALASIA HOLDINGS PTY LTD
as Borrowers
AND
THE FINANCIAL INSTITUTIONS NAMED IN
SCHEDULE A ANNEXED HERETO
and such other persons as become parties hereto as lenders
as Lenders
AND
THE TORONTO-DOMINION BANK
as Agent of the Lenders
MADE AS OF JUNE 1, 2011, AMENDED AND RESTATED AS OF JUNE 30, 2014 AND
FURTHER AMENDED AND RESTATED AS OF MAY 2, 2019
The Toronto-Dominion Bank and The Bank of Nova Scotia
as Co- Lead Arrangers & Bookrunners
The Toronto-Dominion Bank
as Administration Agent
The Bank of Nova Scotia
as Syndication Agent
TABLE OF CONTENTS
CREDIT AGREEMENT
Article 1 - INTERPRETATION |
2 | |||||||
1.1 | Definitions | 2 | ||||||
1.2 | Headings; Articles and Sections | 48 | ||||||
1.3 | Number; persons; including | 48 | ||||||
1.4 | Accounting Principles | 48 | ||||||
1.5 | References to Agreements and Enactments | 49 | ||||||
1.6 | Per Annum Calculations | 49 | ||||||
1.7 | Schedules | 49 | ||||||
1.8 | Amendment and Restatement | 49 | ||||||
Article 2 - THE CREDIT FACILITIES |
50 | |||||||
2.1 | The Credit Facilities | 50 | ||||||
2.2 | Types of Availments; Overdraft Loans; Australian LCs | 51 | ||||||
2.3 | Purpose | 52 | ||||||
2.4 | Availability and Nature of the Credit Facilities | 52 | ||||||
2.5 | Minimum Drawdowns | 52 | ||||||
2.6 | Libor Loan and BBSY Loan Availability | 53 | ||||||
2.7 | Notice Periods for Drawdowns, Conversions and Rollovers | 53 | ||||||
2.8 | Conversion Option | 54 | ||||||
2.9 | Libor Loan and BBSY Loan Rollovers; Selection of Libor and BBSY Interest Periods | 55 | ||||||
2.10 |
Rollovers and Conversions not Repayments | 55 | ||||||
2.11 | Agents Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans | 56 | ||||||
2.12 | Lenders and Agents Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans, Libor Loans and BBSY Loans; |
56 | ||||||
2.13 | Irrevocability | 56 | ||||||
2.14 | Optional Cancellation or Reduction of Credit Facilities | 56 | ||||||
2.15 | Optional Repayment of Credit Facilities | 57 | ||||||
2.16 | Mandatory Repayment and Reduction of Credit Facilities | 58 | ||||||
2.17 | Additional Repayment Terms | 58 | ||||||
2.18 | Currency Excess | 60 | ||||||
2.19 | Hedging with Lenders and Hedging Affiliates | 62 | ||||||
2.20 | Extension of Syndicated Facility Maturity Date | 62 | ||||||
2.21 | Extension of Canadian Operating Facility Maturity Date | 63 | ||||||
2.22 | Extension of Australian Operating Facility Maturity Date | 64 | ||||||
2.23 | Replacement of Lenders | 65 | ||||||
2.24 | Permitted Increase in Syndicated Facility | 67 | ||||||
2.25 | Designation of Non-Guarantor Subsidiaries | 68 | ||||||
2.26 | Australian Letters of Credit | 69 | ||||||
Article 3 - CONDITIONS PRECEDENT TO DRAWDOWNS |
71 | |||||||
3.1 | Conditions for Drawdowns | 71 | ||||||
3.2 | Additional Conditions For Amendment and Restatement | 71 | ||||||
3.3 | Waiver | 73 |
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Article 4 - EVIDENCE OF DRAWDOWNS |
73 | |||||||
4.1 | Account of Record | 73 | ||||||
Article 5 - PAYMENTS OF INTEREST AND FEES |
74 | |||||||
5.1 | Interest on Canadian Prime Rate Loans | 74 | ||||||
5.2 | Interest on U.S. Base Rate Loans | 74 | ||||||
5.3 | Interest on Libor Loans | 74 | ||||||
5.4 | Interest on BBSY Loans | 75 | ||||||
5.5 | Interest on Australian Overdraft Loans | 75 | ||||||
5.6 | Interest Act (Canada); Conversion of 360 Day Rates | 75 | ||||||
5.7 | Nominal Rates; No Deemed Reinvestment | 76 | ||||||
5.8 | Standby Fees | 76 | ||||||
5.9 | Agents Fees | 77 | ||||||
5.10 | Interest on Overdue Amounts | 77 | ||||||
5.11 | Waiver | 78 | ||||||
5.12 | Maximum Rate Permitted by Law | 78 | ||||||
Article 6 - BANKERS ACCEPTANCES |
78 | |||||||
6.1 | Bankers Acceptances | 78 | ||||||
6.2 | Fees | 78 | ||||||
6.3 | Form and Execution of Bankers Acceptances | 78 | ||||||
6.4 | Power of Attorney; Provision of Bankers Acceptances to Lenders | 79 | ||||||
6.5 | Mechanics of Issuance | 82 | ||||||
6.6 | Rollover, Conversion or Payment on Maturity | 83 | ||||||
6.7 | Restriction on Rollovers and Conversions | 84 | ||||||
6.8 | Rollovers | 84 | ||||||
6.9 | Conversion into Bankers Acceptances | 84 | ||||||
6.10 | Conversion from Bankers Acceptances | 84 | ||||||
6.11 | BA Equivalent Advances | 84 | ||||||
6.12 | Termination of Bankers Acceptances | 85 | ||||||
Article 7 - LETTERS OF CREDIT |
85 | |||||||
7.1 | Availability | 85 | ||||||
7.2 | Currency, Type, Form and Expiry | 85 | ||||||
7.3 | No Conversion | 86 | ||||||
7.4 | POA LC Provisions | 86 | ||||||
7.5 | Fronted LC Provisions | 88 | ||||||
7.6 | Records | 89 | ||||||
7.7 | Reimbursement or Conversion on Presentation; | 90 | ||||||
7.8 | Fronting Lender Indemnity | 90 | ||||||
7.9 | Fees and Expenses | 91 | ||||||
7.10 | Additional Provisions | 91 | ||||||
7.11 | Certain Notices to the Agent with Respect to Letters of Credit | 95 | ||||||
Article 8 - PLACE AND APPLICATION OF PAYMENTS |
95 | |||||||
8.1 | Place of Payment of Principal, Interest and Fees; Payments to Agent, Canadian Operating Facility Lender and Australian Operating Facility Lender | 95 | ||||||
8.2 | Designated Accounts of the Lenders | 96 | ||||||
8.3 | Funds | 96 | ||||||
8.4 | Application of Payments | 96 | ||||||
8.5 | Payments Clear of Taxes | 97 | ||||||
8.6 | Set-Off | 98 |
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Article 9 - REPRESENTATIONS AND WARRANTIES |
99 | |||||||||
9.1 | Representations and Warranties | 99 | ||||||||
9.2 | Deemed Repetition | 105 | ||||||||
9.3 | Other Documents | 105 | ||||||||
9.4 | Effective Time of Repetition | 105 | ||||||||
9.5 | Nature of Representations and Warranties | 105 | ||||||||
Article 10 - GENERAL COVENANTS |
106 | |||||||||
10.1 |
Affirmative Covenants of the Canadian Borrower | 106 | ||||||||
10.2 | Negative Covenants of the Canadian Borrower | 112 | ||||||||
10.3 | Financial Covenants | 116 | ||||||||
10.4 | Agent May Perform Covenants | 117 | ||||||||
Article 11 - GUARANTEES |
117 | |||||||||
11.1 | Guarantees | 117 | ||||||||
11.2 | Forms | 118 | ||||||||
11.3 | Dealing with Guarantees | 118 | ||||||||
11.4 | Release of Guarantees | 118 | ||||||||
11.5 | Transfer of Subsidiary Guarantees | 119 | ||||||||
11.6 | Hedging Affiliates and Bank Product Affiliates | 119 | ||||||||
11.7 | Guarantees for Hedging with Former Lenders | 119 | ||||||||
Article 12 - EVENTS OF DEFAULT AND ACCELERATION |
120 | |||||||||
12.1 | Events of Default | 120 | ||||||||
12.2 | Acceleration | 124 | ||||||||
12.3 | Conversion on Default | 125 | ||||||||
12.4 | Remedies Cumulative and Waivers | 125 | ||||||||
12.5 | Termination of Lenders Obligations | 125 | ||||||||
12.6 | Acceleration of All Lender Obligations | 125 | ||||||||
12.7 | Application and Sharing of Payments Following Acceleration | 126 | ||||||||
12.8 | Calculations as at the Adjustment Time | 126 | ||||||||
12.9 | Sharing Repayments | 126 | ||||||||
12.10 | Pro Rata Obligations | 127 | ||||||||
Article 13 - CHANGE OF CIRCUMSTANCES |
127 | |||||||||
13.1 | Market Disruption Respecting LIBOR Loans and BBSY Loans | 127 | ||||||||
13.2 | Market Disruption Respecting Bankers Acceptances | 130 | ||||||||
13.3 | Change in Law | 131 | ||||||||
13.4 | Prepayment of Portion | 133 | ||||||||
13.5 | Illegality | 133 | ||||||||
13.6 | Mitigation Obligations | 134 | ||||||||
Article 14 - COSTS, EXPENSES AND INDEMNIFICATION |
134 | |||||||||
14.1 | Costs and Expenses | 134 | ||||||||
14.2 | General Indemnity | 135 | ||||||||
14.3 | Environmental Indemnity | 136 | ||||||||
14.4 | Judgment Currency | 137 |
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Article 15 - THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITIES |
138 | |||||
15.1 | Authorization and Action | 138 |
15.2 | Procedure for Making Loans | 138 | ||||
15.3 | Remittance of Payments | 139 | ||||
15.4 | Redistribution of Payment | 140 | ||||
15.5 | Duties and Obligations | 141 | ||||
15.6 | Prompt Notice to the Lenders | 142 | ||||
15.7 | Agents and Lenders Authorities | 142 | ||||
15.8 | Lender Credit Decision | 143 | ||||
15.9 | Indemnification of Agent | 143 | ||||
15.10 | Successor Agent | 144 | ||||
15.11 | Taking and Enforcement of Remedies | 144 | ||||
15.12 | Reliance Upon Agent | 145 | ||||
15.13 | No Liability of Agent | 145 | ||||
15.14 | The Agent and Defaulting Lenders | 145 | ||||
15.15 | Article for Benefit of Agent and Lenders | 146 | ||||
Article 16 - GENERAL | 147 | |||||
16.1 | Exchange and Confidentiality of Information | 147 | ||||
16.2 | Nature of Obligation under this Agreement; Defaulting Lenders | 148 | ||||
16.3 | Notices | 151 | ||||
16.4 | Governing Law | 153 | ||||
16.5 | Benefit of the Agreement | 153 | ||||
16.6 | Assignment | 154 | ||||
16.7 | Participations | 154 | ||||
16.8 | Severability | 154 | ||||
16.9 | Whole Agreement | 154 | ||||
16.10 | Amendments and Waivers | 155 | ||||
16.11 | Further Assurances | 155 | ||||
16.12 | Attornment | 155 | ||||
16.13 | Time of the Essence | 156 | ||||
16.14 | Change of Currency | 156 | ||||
16.15 | Credit Agreement Governs | 156 | ||||
16.16 | Know Your Customer Laws | 156 | ||||
16.17 | Counterparts | 156 | ||||
16.18 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 156 | ||||
16.19 | Exiting Fronting Lender and Exiting Lender | 157 |
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS AGREEMENT is made as of June 1, 2011, amended and restated as of June 30, 2014 and further amended and restated as of May 2, 2019
B E T W E E N:
ENERFLEX LTD., a corporation existing under the laws of Canada (hereinafter sometimes referred to as the Canadian Borrower),
OF THE FIRST PART,
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ENERFLEX AUSTRALASIA HOLDINGS PTY LTD, a corporation existing under the laws of Australia (hereinafter sometimes referred to as the Australian Borrower),
OF THE SECOND PART,
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THE TORONTO-DOMINION BANK, THE BANK OF NOVA SCOTIA and those other financial institutions named on Schedule A annexed hereto, together with such other persons as become parties hereto as lenders, (hereinafter sometimes collectively referred to as the Lenders and sometimes individually referred to as a Lender),
OF THE THIRD PART,
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THE TORONTO-DOMINION BANK, a Canadian chartered bank, as agent of the Lenders hereunder (hereinafter referred to as the Agent),
OF THE FOURTH PART.
WHEREAS the Borrowers, certain of the Lenders and the Agent executed and delivered the credit agreement made as June 1, 2011 (as amended and supplemented, the Original Credit Agreement);
AND WHEREAS the Borrowers, certain of the Lenders and the Agent amended and restated the Original Credit Agreement in the form of the amended and restated credit agreement made as of June 30, 2014 (as further amended and supplemented to the date hereof, the Existing Credit Agreement);
AND WHEREAS the parties hereto have agreed to further amend and restate the Existing Credit Agreement on the terms and conditions set forth herein;
AND WHEREAS the Lenders have agreed to provide the Credit Facilities to the Borrowers on the terms and conditions herein set forth;
AND WHEREAS Wells Fargo Bank, N.A. is executing this Agreement solely in its capacity as an exiting Fronting Lender;
AND WHEREAS Bank of America, N.A., Canada Branch is executing this Agreement solely in its capacity as an exiting Lender;
AND WHEREAS the Lenders wish the Agent to act on their behalf with regard to certain matters associated with the Credit Facilities;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:
ARTICLE 1INTERPRETATION
1.1 | Definitions |
(1) In this Agreement, unless something in the subject matter or context is inconsistent therewith:
Acceleration Notice means a written notice delivered by the Agent to the Canadian Borrower pursuant to Section 12.2 declaring all Obligations of the Borrowers outstanding hereunder to be due and payable.
Additional Compensation has the meaning set out in Section 13.3(1).
Additional Debt has the meaning set out in subparagraph (g) of the definition of Permitted Debt.
Adjustment Time means the time of occurrence of the last event necessary (including the delivery of a Demand for Payment) to ensure that all Obligations, all Bank Product Obligations and all Financial Instrument Obligations under any Lender Financial Instruments are thereafter due and payable.
Advance means an advance of funds made by the Lenders or by any one or more of them to a Borrower (including by way of overdraft under the Canadian Operating Facility and the Australian Operating Facility), but does not include any Conversion or Rollover.
Affected Loan has the meaning set out in Section 13.4.
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Affiliate means any person which, directly or indirectly, controls, is controlled by or is under common control with another person; and, for the purposes of this definition, control (including, with correlative meanings, the terms controlled by or under common control with) means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of shares or by contract or otherwise.
Agency Fee Agreement means the Agency Fee Agreement dated June 26, 2014 between the Canadian Borrower and the Agent (as the same may be amended, modified or restated from time to time) respecting the payment of certain fees and other amounts to the Agent for its own account.
Agents Accounts means the following accounts maintained by the Agent to which payments and transfers under this Agreement are to be effected:
(a) | for Canadian Dollars: |
{Wire transfer information redacted}
(b) | for United States Dollars: |
{Wire transfer information redacted}
or such other account or accounts as the Agent may from time to time designate by notice to the Canadian Borrower and the Lenders.
Agreement means this second amended and restated credit agreement, as the same may be further amended, modified, supplemented or restated from time to time in accordance with the provisions hereof.
Applicable Laws or applicable law means, in relation to any person, transaction or event:
(a) | all applicable provisions of laws, statutes, rules (having the force of law) and regulations from time to time in effect of any Governmental Authority; and |
(b) | all Governmental Authorizations to which the person is a party or by which it or its property is bound or having application to the transaction or event. |
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Applicable Pricing Rate, as regards any Loan or the standby fees payable in accordance with Section 5.8 means, when the Net Funded Debt to EBITDA Ratio (calculated as at the Quarter End for the most recently completed 12 months ended on such date) is one of the following, the percentage rate per annum set forth opposite such ratio in the column applicable to the type of Loan in question or such standby fee:
Net Funded Debt to EBITDA Ratio |
Margin on Canadian Prime Rate Loans and U.S. Base Rate Loans |
Margin on LIBOR Loans and BBSY Loans, Acceptance Fees for Bankers Acceptances and Issuance Fees for Letters of Credit |
Standby Fee on each Credit Facility | |||
{Applicable margin and standby fee information redacted} |
provided that:
(a) | upon the occurrence and during the continuance of an Event of Default, the above rates per annum applicable to Loans shall each increase (as applicable) by {Percentage redacted}% per annum; |
(b) | the above rates per annum applicable to Libor Loans and BBSY Loans are expressed on the basis of a year of 360 days; |
(c) | the above rates per annum applicable to all other Loans are expressed on the basis of a year of 365 days; |
(d) | issuance fees for Letters of Credit which are Performance Letters of Credit shall be {Percentage redacted}% of the rate specified above: |
(e) | changes in Applicable Pricing Rate shall be effective: |
(i) | in the case of outstanding Bankers Acceptances, upon the earlier of (A) 90 days after any change in the Net Funded Debt to EBITDA Ratio and (B) the next Rollover or Conversion thereof after such change; |
(ii) | in all other cases, from and as of the third Banking Day following receipt by the Agent of the Compliance Certificate evidencing the change in the Net Funded Debt to EBITDA Ratio which results in a change to the Applicable Pricing Rate in accordance with the provisions of such definition; and |
(iii) | without the necessity of notice to either Borrower; and |
(f) | notwithstanding the foregoing provisions of this definition, if the Canadian Borrower has failed to deliver a Compliance Certificate for the immediately preceding fiscal quarter in accordance with the provisions hereof, then the Net Funded Debt to EBITDA Ratio shall be deemed to be greater than 3.00:1.0 for the purposes of determining the Applicable Pricing Rate until the Canadian Borrower has remedied such failure and delivered such Compliance Certificate (and, from and after such delivery, the Applicable Pricing Rate shall be based upon the Net Funded Debt to EBITDA Ratio set forth in such Compliance Certificate for the remainder of the period until the next such Compliance Certificate is required to be delivered hereunder). |
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Approved Debt Terms means, the Debt in question (a) shall have a final maturity date not sooner than 6 months after the Syndicated Facility Maturity Date in effect on the date such Debt is issued and (b) shall rank subordinate to or pari passu with the Debt incurred under the Credit Facilities.
Approved Securities means obligations maturing within one year from their date of purchase or other acquisition by a Borrower or a Subsidiary (excluding any Project Finance SPV) and which are, directly or indirectly (including through a money market fund administered by the Agent):
(a) | issued by the Government of Canada, the United States of America, the Commonwealth of Australia, the United Kingdom of Great Britain and Northern Ireland or an instrumentality or agency thereof and guaranteed fully as to principal, premium, if any, and interest by the Government of Canada, the United States of America, the Commonwealth of Australia or the United Kingdom of Great Britain and Northern Ireland; |
(b) | issued by a province of Canada, a state of the United States of America or the Commonwealth of Australia or a region of the United Kingdom of Great Britain and Northern Ireland, or an instrumentality or agency thereof, which has a long term debt rating of at least A by S&P, A2 by Moodys, or A by DBRS; or |
(c) | term deposits, guaranteed investment certificates, certificates of deposit, bankers acceptances or bearer deposit notes, in each case, of any Canadian chartered bank or other Canadian financial institution or any bank or other financial institution incorporated under the laws of the United States of America, the Commonwealth of Australia or the United Kingdom of Great Britain and Northern Ireland or any state thereof which has a long term debt rating of at least A+ by S&P, A1 by Moodys, or A (high) by DBRS. |
Asset Specific Non-Recourse Debt means any indebtedness in respect of any amounts borrowed, Purchase Money Obligations, obligations secured by a Security Interest existing on property owned subject to a Security Interest (whether or not the obligations secured thereby shall have been assumed) and guarantees, indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent obligations in respect of obligations of another person for indebtedness of that other person in respect of any amounts borrowed by them and, in each case, incurred to finance the creation, development, construction or acquisition of assets and any increases in or extensions, renewals or refundings of any such indebtedness, liabilities and obligations, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness, liabilities and obligations or any judgment in respect thereof is limited in all circumstances (other than in respect of false or misleading representations or warranties) to the assets created, developed, constructed or acquired in respect of which such indebtedness, liabilities and obligations has been incurred and to any receivables, inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with the assets created, developed, constructed or acquired (and, for certainty, shall include the shares or other ownership interests of or investments in a single purpose entity or a Non-Guarantor Subsidiary, including a Project Finance SPV, which holds only such assets and other rights and collateral arising from or connected therewith) and to which the lender has recourse.
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Assigned Interests has the meaning set out in Section 2.23(2).
Assignment Agreement means an assignment agreement substantially in the form of Schedule B annexed hereto, with such modifications thereto as may be required from time to time by the Agent, with the consent of the applicable Borrower to the extent any such modifications impose any obligations on or require any additional acknowledgement or representation to be made by a Borrower, in each case, acting reasonably.
Attributable Debt means, in respect of any lease (excluding any lease characterized hereunder as an operating lease entered into in the ordinary course of business) entered into by a person or a Subsidiary thereof (excluding any Project Finance SPV) as lessee, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with generally accepted accounting principles) of the lease payments of the lessee, including all rent and payments to be made by the lessee in connection with the return of the leased property, during the remaining term of the lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended) but excluding for certainty, (a) amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labour costs and similar charges and (b) amounts payable by a lessee in connection with the exercise of any end of term purchase option, early buy out option or any similar amounts payable at the election of the lessee.
Australian Corporations Act means the Corporations Act 2001 (Cwlth) of Australia.
Australian Designated Account means the account bearing account number {Account number redacted} of the Australian Borrower maintained with the Australian Operating Facility Lender.
Australian Dollars and AUD$ mean the lawful money of Australia.
Australian Letter of Credit means an irrevocable standby letter of credit issued by the Australian Operating Facility Lender under this Agreement acting at the request of, and in accordance with the instructions of, the Australian Borrower to make payment in accordance with the terms and conditions thereof of an amount to or to the order of a third party.
Australian Operating Facility means the credit facility in the maximum principal amount of the Australian Operating Facility Commitment (comprising (a) a sub-facility for Australian Overdraft Loans in the maximum principal amount of the Equivalent Amount in Australian Dollars of Cdn.$5,000,000, (b) a sub-facility for Australian Letters of Credit with an aggregate Maximum Liability at any time of the Australian Operating Facility Commitment less the Outstanding Principal of Australian Overdraft Loans and BBSY Loans) (the Australian LC Sub-Facility Limit) and (c) a sub-facility for BBSY Loans in the maximum principal amount at any time of the Australian Operating Facility Commitment less the Outstanding Principal of Australian Overdraft Loans and the aggregate Maximum Liability of outstanding Australian Letters of Credit) to be made available to the Australian Borrower by the Australian Operating Facility Lender in accordance with the provisions hereof, subject to any reduction in accordance with the provisions hereof.
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Australian Operating Facility Commitment means the commitment by the Australian Operating Facility Lender under the Australian Operating Facility to provide the Equivalent Amount in Australian Dollars of the amount of Canadian Dollars set forth opposite its name in Schedule A annexed hereto, subject to any reduction in accordance with the terms hereof.
Australian Operating Facility Extension Date has the meaning set out in Section 2.22(2).
Australian Operating Facility Extension Request has the meaning set out in Section 2.22(1).
Australian Operating Facility Lender means HSBC Bank Australia Limited or any other Lender which hereafter has an Australian Operating Facility Commitment.
Australian Operating Facility Maturity Date means, in respect of Obligations outstanding to the Australian Operating Facility Lender, June 30, 2023 or such later date to which the same may be extended in accordance with Section 2.22.
Australian Overdraft Account has the meaning set out in Section 2.2(3).
Australian Overdraft Loans has the meaning set out in Section 2.2(3).
Australian Reference Banks means National Australia Bank Limited, Westpac Banking Corporation, Commonwealth Bank of Australia and New Zealand Banking Group Limited.
Australian Tax Act means the Income Tax Assessment Act 1936 (Cwlth) or the Income Tax Assessment Act 1997 (Cwlth), as the context requires.
BA Discount Rate means:
(a) | in relation to a Bankers Acceptance accepted by a Schedule I Lender, the CDOR Rate; |
(b) | in relation to a Bankers Acceptance accepted by a Schedule II Lender or Schedule III Lender, the lesser of: |
(i) | the Discount Rate then applicable to bankers acceptances accepted by such Schedule II Lender or Schedule III Lender; and |
(ii) | the CDOR Rate plus {Spread redacted}% per annum, |
provided that if both such rates are equal, then the BA Discount Rate applicable thereto shall be the rate specified in (i) above; and
(c) | in relation to a BA Equivalent Advance: |
(i) | made by a Schedule I Lender, ATB Financial or Export Development Canada, the CDOR Rate; |
(ii) | made by a Schedule II Lender or a Schedule III Lender, the rate determined in accordance with subparagraph (b) of this definition; and |
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(iii) | made by any other Lender, the lesser of: |
A. | the average of the rate applicable to Schedule II Lenders and Schedule III Lenders as provided for in subparagraph (b)(i) of this definition; and |
B. | the CDOR Rate plus {Spread redacted}% per annum. |
BA Equivalent Advance means, in relation to a Drawdown of, Conversion into or Rollover of Bankers Acceptances, an advance in Canadian Dollars made by a Non-Acceptance Lender as part of such Loan.
Bail-In Action means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
Bail-In Legislation means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the Bail-In Legislation Schedule.
Bail-In Legislation Schedule means the Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
Bankers Acceptance means a draft in Canadian Dollars drawn by the Canadian Borrower, accepted by a Lender and issued for value pursuant to this Agreement.
Banking Day means, in respect of (a) any BBSY Loan and any Australian Overdraft Loan, a day on which banks are open for business in Calgary, Alberta, Toronto, Ontario and Perth, Australia and (b) any Libor Loans, a day on which banks are open for business in Calgary, Alberta, Toronto, Ontario, New York, New York and London, England and, for all other purposes, shall mean a day on which banks are open for business in Calgary, Alberta, Toronto, Ontario and New York, New York, but does not in any event include a Saturday or a Sunday.
Bank Products means any facilities or services related to cash management, including treasury, depository, overdraft, credit or debit card, purchase card, electronic funds transfer, cash pooling and other cash management arrangements and commercial credit card and merchant card services provided to the Canadian Borrower or its Subsidiaries (excluding any Project Finance SPV) by the Lenders or their Affiliates.
Bank Product Affiliates means an Affiliate of a Lender which provides a Bank Product.
Bank Product Obligations means any obligations arising under or in connection with Bank Products.
BBR means, for any Interest Period, the rate quoted by the Australian Operating Facility Lender as that at which it would purchase Bills accepted by itself with an aggregate face value comparable to the relevant amount and with a period comparable to the Interest Period, at or about 10:00 a.m. (Perth time) on the date of commencement of such Interest Period or otherwise the rate determined by the Australian Operating Facility Lender in good faith and acting reasonably to be the appropriate rate and for this purpose, the Australian Operating Facility Lender may have regard to comparable indices in any market the Australian Operating Facility Lender considers appropriate.
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BBSY means, for any day, means, for an Interest Period, the rate determined by the Australian Operating Facility Lender at or about 10.00 a.m. (Perth time) on the first day of the Interest Period and for the amount and period closest to the relevant amount and relevant period to be (a) the average bid rate quoted on the BBSY page of the Reuters Monitor Money Rates Service or another page that replaces the BBSY page on that system to display average bid rates for Bills accepted by a bank, rounded up as necessary to the nearest 4 decimal places or (b) if the page designated as BBSY (or another page that replaces the BBSY page) is not available for any reason, or the basis on which the rate quoted on that page is changed and in the opinion of the Australian Operating Facility Lender, acting reasonably, that rate no longer reflects its cost of funding, then the average of the buying rates for Bills accepted by a bank quoted by 3 of the Australian Reference Banks, rounded up if necessary, to the nearest 4 decimal places.
BBSY Loan means an Advance in, or Conversion into, Australian Dollars made by the Australian Operating Facility Lender to the Australian Borrower with respect to which the Australian Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the BBSY.
Beneficial Ownership Certification means a certification to be made to a Covered Financial Institution regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.
Beneficial Ownership Regulation means United States 31 C.F.R. § 1010.230.
Bill has the meaning it has in the Bills of Exchange Act 1909 (Cwlth) of Australia and a reference to the drawing, acceptance or endorsement of, or other dealing with, a Bill is to be interpreted in accordance with that Act.
BLR means the base lending rate of the Australian Operating Facility Lender determined by reference to external rates; and in the case of Australian Dollars, as established and quoted from time to time by the Australian Operating Facility Lender in the national daily newspapers or financial papers.
Borrowers means, collectively, the Canadian Borrower and the Australian Borrower and Borrower means either one of such borrowers.
Business means the fabrication or supply of natural gas compression, oil and gas processing, refrigeration systems and electric power equipment, and related services to the global energy market.
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Canadian Borrower EBITDA means, in respect of any financial period for which it is being determined, the consolidated net income of the Canadian Borrower determined in accordance with generally accepted accounting principles for such period, plus (without duplication):
(a) | Interest Expense, to the extent deducted in the calculation of net income; |
(b) | all amounts deducted in the calculation of net income in respect of the provision for income taxes (in accordance with generally accepted accounting principles); |
(c) | all amounts deducted in the calculation of net income in respect of non-cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities; |
(d) | all amounts deducted in the calculation of net income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges; |
(e) | to the extent deducted from net income, non-cash losses resulting from marking-to-market the outstanding Financial Instruments of the Canadian Borrower and its Subsidiaries (excluding any Project Finance SPV) for such period in accordance with generally accepted accounting principles, |
less (in each case, on a consolidated basis), with respect to the Canadian Borrower and its Subsidiaries:
(f) | earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of the Canadian Borrower and its Subsidiaries (excluding any Project Finance SPV) (on an unconsolidated basis), in each case, to the extent included in the calculation of net income; |
(g) | to the extent included in net income, non-cash gains resulting from marking- to-market the outstanding Financial Instruments of the Canadian Borrower and its Subsidiaries (excluding any Project Finance SPV) for such period in accordance with generally accepted accounting principles; |
(h) | all cash payments during such period relating to non-cash charges which were added back in determining Canadian Borrower EBITDA in any prior period; |
(i) | for certainty, any net income from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances; and |
(j) | any net income attributable to any Project Finance SPV, |
and (i) in the event the Canadian Borrower or a Subsidiary (excluding any Project Finance SPV) acquires another entity during any such period, all measures will be calculated pro forma based on the actual results of the acquired entity as if it had been owned by the Canadian Borrower or such Subsidiary over the entire period and (ii) in the event the Canadian Borrower or its Subsidiary (excluding any Project Finance SPV) disposes of an entity during any such period, all measures will be calculated pro forma on the basis that such entity was disposed of at the beginning of the period.
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Canadian Dollars and Cdn.$ mean the lawful money of Canada.
Canadian Operating Facility means the credit facility in the maximum principal amount of Cdn.$10,000,000 or the Equivalent Amount in United States Dollars to be made available to the Canadian Borrower by the Canadian Operating Facility Lender in accordance with the provisions hereof, subject to any reduction in accordance with the provisions hereof.
Canadian Operating Facility Commitment means the commitment by a Lender under the Canadian Operating Facility to provide the amount of Canadian Dollars (or the Equivalent Amount thereof) set forth opposite its name in Schedule A annexed hereto, subject to any reduction in accordance with the terms hereof.
Canadian Operating Facility Extension Date has the meaning set out in Section 2.21(2).
Canadian Operating Facility Extension Request has the meaning set out in Section 2.21(1).
Canadian Operating Facility Maturity Date means, in respect of Obligations outstanding to the Canadian Operating Facility Lender, June 30, 2023 or such later date to which the same may be extended in accordance with Section 2.21.
Canadian Operating Facility Lender means The Toronto-Dominion Bank or any other Lender which hereafter has a Canadian Operating Facility Commitment.
Canadian Overdraft Loans has the meaning set out in Section 2.2(2).
Canadian Prime Rate means, for any day, the greater of:
(a) | the rate of interest per annum established from time to time by the Agent as the reference rate of interest for the determination of interest rates that the Agent will charge to customers of varying degrees of creditworthiness in Canada for Canadian Dollar demand loans in Canada; and |
(b) | the rate of interest per annum equal to the average annual yield rate for one month Canadian Dollar bankers acceptances (expressed for such purpose as a yearly rate per annum in accordance with Section 5.6) which rate is shown on the display referred to as the CDOR Page (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate thereof) at 10:00 a.m. (Toronto time) on such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, plus {Spread redacted}% per annum; |
provided that if both such rates are equal or if such one month bankers acceptance rate is unavailable for any reason on any date of determination, then the Canadian Prime Rate shall be the rate specified in (a) above.
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Canadian Prime Rate Loan means an Advance in, or Conversion into, Canadian Dollars made by the applicable Lenders (or any of them) to the Canadian Borrower with respect to which the Canadian Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the Canadian Prime Rate.
Capital Adequacy Requirements means Guideline A, effective November 2018 / January 2019, entitled Capital Adequacy Requirements (CAR), as applicable to any Lender from time to time, issued by the Office of the Superintendent of Financial Institutions Canada and all other guidelines or requirements relating to capital adequacy issued by the Office of the Superintendent of Financial Institutions or any other governmental agency or regulatory authority in Canada regulating or having jurisdiction with respect to any Lender, as amended, modified, supplemented, reissued or replaced from time to time.
Capital Lease means any lease which is required be classified and accounted for as a capital lease under generally accepted accounting principles.
Cash Collateral has the meaning set out in Section 2.17(3).
Cash Collateral Account has the meaning set out in Section 2.17(3).
CDOR Rate means, on any date which Bankers Acceptances are to be issued pursuant hereto, the per annum rate of interest which is the rate determined as being the arithmetic average of the annual yield rates applicable to Canadian Dollar bankers acceptances having identical issue and comparable maturity dates as the Bankers Acceptances proposed to be issued by the Canadian Borrower displayed and identified as such on the display referred to as the CDOR Page (or any display substituted therefor) of Reuters Limited (or any successor thereto or Affiliate thereof) (rounded to the nearest 1/100th of 1% with 0.05% being rounded up) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day (as adjusted by the Agent, or the Canadian Operating Facility Lender, as applicable, in good faith after 10:00 a.m. (Toronto time) to reflect any error in a posted rate or in the posted average annual rate); provided, however, if such a rate does not appear on such CDOR Page, then the CDOR Rate, on any day, shall be the Discount Rate quoted by the Agent, or the Canadian Operating Facility Lender, as applicable (determined as of 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of bankers acceptances in a comparable amount and with comparable maturity dates to the Bankers Acceptances proposed to be issued by the Canadian Borrower on such day, or if such day is not a Banking Day, then on the immediately preceding Banking Day. In addition, if the rate determined above shall ever be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Change of Control means and shall be deemed to have occurred if and when:
(a) | any person or persons acting jointly or in concert (within the meaning ascribed to such phrase in National Instrument 62-104-Take-Over Bids and Issuer Bids) shall beneficially own, directly or indirectly, Voting Shares in the capital of the Canadian Borrower which have or represent more than 50% of all of the votes entitled to be cast by shareholders for an election of the board of directors of the Canadian Borrower; or |
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(b) | other than in the case of a Permitted Replacement, individuals who were elected as members of the board of directors of the Canadian Borrower by the most recent resolutions of the shareholders of the Canadian Borrower or who were appointed by a majority of the directors of the board of directors of the Canadian Borrower shall no longer constitute a majority of the board of directors of the Canadian Borrower at any time prior to the next following resolutions of the shareholders of the Canadian Borrower relating to the election of the same. |
clearing house has the meaning set out in Section 6.4.
Code means the United States Internal Revenue Code of 1986.
Collateral Investments has the meaning set out in Section 2.17(3).
Commitment means a Syndicated Facility Commitment, a Canadian Operating Facility Commitment or an Australian Operating Facility Commitment.
Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).
Commodity Hedging Agreement means any agreement constituting an Eligible Financial Contract under the regulations issued under the Bankruptcy and Insolvency Act (Canada) for the making or taking of delivery of any commodity (including Petroleum Substances), any commodity swap agreement, floor, cap or collar agreement or commodity future or option or other similar agreements or arrangements, or any combination thereof, entered into by the Canadian Borrower or a Guarantor where the subject matter of the same is any commodity or the price, value or amount payable thereunder is dependent or based upon the price of any commodity or fluctuations in the price of any commodity.
Compliance Certificate means a certificate of the Canadian Borrower signed on its behalf by the president, chief financial officer, vice president finance or treasurer of the Canadian Borrower, substantially in the form annexed hereto as Schedule C, to be given to the Agent and the Lenders by the Canadian Borrower pursuant hereto.
Consolidated Net Tangible Assets means, as at any date of determination, all consolidated assets of the Canadian Borrower as shown in a consolidated balance sheet of the Canadian Borrower for such date, less the aggregate of the following amounts reflected upon such balance sheet:
(a) | all goodwill, deferred assets, trademarks, copyrights and other similar intangible assets; |
(b) | to the extent not already deducted in computing such assets and without duplication, depreciation, depletion, amortization, reserves and any other account which reflects a decrease in the value of an asset or a periodic allocation of the cost of an asset; provided that no deduction shall be made under this subparagraph (b) to the extent that such account reflects a decrease in value or periodic allocation of the cost of any asset referred to in subparagraph (a) above; |
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(c) | minority interests in a person not directly or indirectly owned or held by the Canadian Borrower or one of its Subsidiaries; |
(d) | Non-Recourse Assets to the extent of the outstanding Asset Specific Non-Recourse Debt financing such assets; |
(e) | investments in and advances to Subsidiaries of the Canadian Borrower which are not Guarantors or Material Subsidiaries; and |
(f) | assets owned by any Project Finance SPV, |
all as determined in accordance with generally accepted accounting principles.
Conversion means a conversion or deemed conversion of a Loan under a given Credit Facility into another type of Loan under the same Credit Facility pursuant to the provisions hereof, provided that, subject to Section 2.8 and to Article 6 with respect to Bankers Acceptances, the conversion of (a) a Loan denominated in one currency to a Loan denominated in another currency shall be effected by repayment of the Loan or portion thereof being converted in the currency in which it was denominated and readvance to applicable Borrower of the Loan into which such conversion was made and (b) the conversion of any Australian Overdraft Loans into BBSY Loans shall be effected by repayment of such Australian Overdraft Loans, or the portion thereof being converted, and readvance to the Australian Borrower of such BBSY Loans.
Conversion Date means the date specified by a Borrower as being the date on which such Borrower has elected to convert, or this Agreement requires the conversion of, one type of Loan into another type of Loan and which shall be a Banking Day.
Conversion Notice means a notice substantially in the form annexed hereto as Schedule D to be given to the Agent, the Canadian Operating Facility Lender, or the Australian Operating Facility Lender, as applicable, by a Borrower pursuant hereto.
Convertible Securities means convertible subordinated securities issued by a Borrower or a Guarantor which have all of the following characteristics:
(a) | the obligations under, pursuant or relating to such securities and the indenture or agreement governing such securities shall be unsecured obligations of such Borrower or the applicable Guarantor, and no Subsidiary (other than a Project Finance SPV) shall have provided a Guarantee or any Financial Assistance in respect of any of such obligations; |
(b) | an initial final maturity, or due date in respect of repayment of principal, which is after each Maturity Date in effect at the time such securities are issued; |
(c) | no scheduled or mandatory payments or repurchases of principal thereunder (other than acceleration following an event of default in regard thereto or payments which can be satisfied by the delivery of equity in the capital of the applicable Borrower or the applicable Guarantor as contemplated in (g) below) prior to each Maturity Date in effect at the time such securities are issued; |
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(d) | upon and during the continuance of any Event of Default or acceleration of the time for payment of any of the Obligations or Lender Financial Instrument Obligations which has not been rescinded, (i) all amounts payable by the applicable Borrower or the applicable Guarantor in respect of principal, premium (if any), interest or other obligations under, pursuant or relating to such securities are subordinate and junior in right of payment to all the Obligations and the Lender Financial Instrument Obligations and (ii) no enforcement steps or proceedings may be commenced in respect of such securities; |
(e) | upon any distribution of the assets of the applicable Borrower or the applicable Guarantor on any dissolution, winding up, total liquidation or reorganization of such person (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the applicable Borrower or the applicable Guarantor, or otherwise), all Obligations and all Lender Financial Instrument Obligations shall first be paid in full in cash, or provisions made for such payment, before any payment by the applicable Borrower or the applicable Guarantor is made on account of principal, premium (if any), interest or other obligations payable in regard to such securities; |
(f) | a Default, Event of Default, acceleration of the time for repayment of any of the Obligations or Lender Financial Instrument Obligations or enforcement of the rights and remedies of the Agent and the Lenders hereunder or under any other Document or Lender Financial Instrument or document delivered pursuant thereto shall not: |
(i) | cause a default or event of default (with the passage of time or otherwise) under such securities or the indenture or agreement governing the same; or |
(ii) | cause or permit the obligations under, pursuant or relating to such securities to be due and payable prior to the stated maturity thereof; |
(g) | payments of principal due and payable under, pursuant or relating to such securities can be satisfied, at the option of the applicable Borrower or the applicable Guarantor, by issuing and delivering equity in the capital of the applicable Borrower or the applicable Guarantor in accordance with the indenture or agreement governing such securities; and |
(h) | payments of interest due and payable under, pursuant or relating to such securities can be satisfied, at the option of the applicable Borrower or the applicable Guarantor, by payment of the proceeds of the issue and sale of equity in the capital of the applicable Borrower or the applicable Guarantor resulting from a bid process whereby the trustee under the indenture or agreement governing such securities: |
(i) | accepts delivery from the applicable Borrower or the applicable guarantor of such equity; |
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(ii) | accepts bids with respect to, and consummate sales of, such equity, each as the applicable Borrower or the applicable Guarantor shall direct in its absolute discretion; and |
(iii) | uses the proceeds received from such sale of equity to satisfy such interest, |
where the acceptance of any such bid in accordance with (ii) above is conditional on the acceptance of sufficient bids to result in aggregate proceeds from such issue and sale of equity equalling the interest due on the applicable interest payment date.
Covered Financial Institution has the meaning given to it in US code 31 CFR § 1010.605(e)(1), and for greater certainty, includes only Lenders existing under the laws of the United States or operating through an agency or office within the United States.
Credit Facilities means, collectively, the Syndicated Facility, the Canadian Operating Facility and the Australian Operating Facility, and Credit Facility means either one of such credit facilities.
Currency Excess has the meaning set out in Section 2.18(1).
Currency Excess Deficiency has the meaning set out in Section 2.18(2).
Currency Hedging Agreement means any currency swap agreement, cross currency agreement, forward agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Canadian Borrower or a Guarantor where the subject matter of the same is currency exchange rates or the price, value or amount payable thereunder is dependent or based upon currency exchange rates or fluctuations in currency exchange rates as in effect from time to time.
DBNA has the meaning set out in Section 6.4(1).
DBRS means DBRS Limited and any successors thereto.
Debt means, with respect to any person (X), all obligations, liabilities and indebtedness of X which would, in accordance with generally accepted accounting principles, be classified upon a consolidated balance sheet of X as indebtedness for borrowed money of X and its Subsidiaries and, whether or not so classified, shall include (without duplication):
(a) | indebtedness for borrowed money; |
(b) | obligations for the repayment of: (i) bankers acceptances (including payment and reimbursement obligations in respect thereof), or (ii) letters of credit and letters of guarantee supporting obligations which would otherwise constitute Debt within the meaning of this definition or indemnities issued in connection therewith; |
(c) | obligations with respect to the reimbursement of drawings under all other letters of credit and letters of guarantee; |
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(d) | obligations under Guarantees, indemnities, assurances, legally binding comfort letters or other contingent obligations for the repayment of indebtedness or other obligations of any other person which would otherwise constitute Debt within the meaning of this definition and all other obligations incurred for the purpose of or having the effect of providing financial assistance to another person for the repayment of such indebtedness or such other Debt obligations, including, without limitation, endorsements of bills of exchange (other than for collection or deposit in the ordinary course of business); |
(e) | (i) all indebtedness representing the deferred purchase price of any property to the extent that such indebtedness is or remains unpaid after the expiry of the customary time period for payment (excluding current accounts payable to trade creditors in the ordinary course of business, so long as the same are not outstanding longer than is customary in Xs or the applicable Subsidiarys business), provided however that such time period shall in no event exceed 90 days, (ii) all obligations created or arising under any conditional sales agreement or other title retention agreement and (iii) obligations created or arising under any Capital Lease (to the extent of the amount required to be accounted for as a Capital Lease under generally accepted accounting principles) except for those obligations relating to the Capital Leases that were or, in the case of leases entered into after June 1, 2011, would have been, characterized as operating leases under generally accepted accounting principles immediately prior to the adoption of International Financial Report Standards; |
(f) | all Attributable Debt other than in respect of (i) leases of office space or (ii) operating leases, in each case entered into in the ordinary course of business; |
(g) | all other long term obligations (including the current portion thereof) upon which interest charges are customarily paid prior to default; |
(h) | Prepaid Obligations; and |
(i) | all indebtedness of other persons secured by a Security Interest on any asset, whether or not such indebtedness is assumed thereby; provided that the amount of such indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination, and (ii) the amount of such indebtedness recorded as a liability in accordance with generally accepted accounting principles, |
but shall exclude each of the following, determined (as required) in accordance with generally accepted accounting principles:
(j) | mark to market amounts under Financial Instrument Obligations; |
(k) | accounts payable to trade creditors and accrued liabilities incurred in the ordinary course of business; |
(l) | current taxes payable and future taxes; |
(m) | dividends or other equity distributions payable; and |
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(n) | accrued interest not yet due and payable, |
provided that, unless otherwise expressly provided or the context otherwise requires, references herein to Debt shall be and shall be deemed to be references to Debt of the Canadian Borrower and its Subsidiaries (other than any Project Finance SPV).
Default means any event or condition which, with the giving of notice, lapse of time or upon a declaration or determination being made (or any combination thereof), would constitute an Event of Default.
Defaulting Lender means any Lender:
(a) | that has failed to fund any payment or its portion of any Loan required to be made by it hereunder or to purchase or fund any participation required to be purchased or funded by it hereunder and under the other Documents; |
(b) | that has notified the Canadian Borrower, the Agent or any Lender (verbally or in writing) that it does not intend to or is unable to comply with any of its funding obligations under this Agreement or has made a public statement to that effect or to the effect that it does not intend to or is unable to fund advances generally under credit arrangements to which it is a party; |
(c) | that has failed, within 3 Banking Days after request by the Agent or the Australian Operating Facility Lender, as applicable, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans; |
(d) | that has otherwise failed to pay over to the Agent, a Fronting Lender or any other Lender any other amount required to be paid by it hereunder within 3 Banking Days of the date when due, unless the subject of a good faith dispute; |
(e) | in respect of which a Lender Insolvency Event or a Lender Distress Event has occurred in respect of such Lender or its Lender Parent; or |
(f) | that is generally in default of its obligations under other existing credit and loan documentation under which it has commitments to extend. |
Defaulting Lenders Assigned Interests has the meaning set out in Section 16.2(10).
Demand for Payment means an Acceleration Notice or a Financial Instrument Demand for Payment.
Departing Agent has the meaning set out in Section 11.5.
Discount Proceeds means the net cash proceeds to the Canadian Borrower from the sale of a Bankers Acceptance pursuant hereto or, in the case of BA Equivalent Advances, the amount of a BA Equivalent Advance at the BA Discount Rate, in any case, before deduction or payment of the fees to be paid to the applicable Lenders under Section 6.2.
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Discount Rate means, with respect to the issuance of a bankers acceptance, the rate of interest per annum, calculated on the basis of a year of 365 days, (rounded upwards, if necessary, to the nearest whole multiple of 1/100th of one percent) which is equal to the discount exacted by a purchaser taking initial delivery of such bankers acceptance, calculated as a rate per annum and as if the issuer thereof received the discount proceeds in respect of such bankers acceptance on its date of issuance and had repaid the respective face amount of such bankers acceptance on the maturity date thereof.
Dissenting Lender has the meaning set out in Section 2.23(1).
Distribution means:
(a) | the declaration, payment or setting aside for payment of any dividend or other distribution on or in respect of any shares in the capital of a Borrower or any Guarantor which is not a Wholly-Owned Subsidiary (including any return of capital); |
(b) | the redemption, retraction, purchase, retirement or other acquisition, in whole or in part, of any shares in the capital of a Borrower or any Guarantor which is not a Wholly-Owned Subsidiary or any securities, instruments or contractual rights capable of being converted into, exchanged or exercised for shares in the capital thereof, including, without limitation, options, warrants, conversion or exchange privileges and similar rights; |
(c) | the making of any loan or advance or any other provision of credit or Financial Assistance by a Borrower or any Guarantor to any Related Party other than to a Borrower or a Guarantor; |
(d) | the payment of any principal, interest, fees or other amounts on or in respect of any loans, advances or other Debt owing at any time by a Borrower or any Guarantor to any Related Party, other than to a Borrower or a Guarantor; or |
(e) | (i) the payment of any amount, (ii) the sale, transfer, lease or other disposition of any property or assets, or (iii) any granting or creation of any rights or interests, at any time, by a Borrower or any Guarantor to or in favour of any Related Party, other than, in each case, to or in favour of a Borrower or a Guarantor, |
and whether any of the foregoing is made, paid or satisfied in or for cash, property or any combination thereof.
Documents means this Agreement, the Subsidiary Guarantees, the Parent Guarantee, the Agency Fee Agreement and all certificates, instruments and other documents executed and delivered or to be executed and delivered by a Borrower or a Guarantor to the Agent, the Canadian Operating Facility Lender, the Australian Operating Facility Lender or the Lenders, or each, in relation to the Credit Facilities pursuant hereto or thereto and, when used in relation to any person, the term Documents shall mean and refer to the Documents executed and delivered by such person.
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Drafts means drafts, bills of exchange, receipts, acceptances, demands and other requests for payment drawn or issued under a Letter of Credit.
Drawdown means:
(a) | an Advance of a Canadian Prime Rate Loan, U.S. Base Rate Loan, BBSY Loan, Australian Overdraft Loan or Libor Loan; |
(b) | the issue of a Bankers Acceptance (or the making of a BA Equivalent Advance in lieu thereof) other than as a result of Conversions or Rollovers; or |
(c) | the issuance of a Letter of Credit or an Australian Letter of Credit. |
Drawdown Date means the date on which a Drawdown is made by a Borrower pursuant to the provisions hereof and which shall be a Banking Day.
Drawdown Notice means a notice substantially in the form annexed hereto as Schedule E to be given to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, by a Borrower pursuant hereto.
EBITDA means, in respect of any financial period for which it is being determined:
(a) | the Net Income for such period of the Canadian Borrower and the Guarantors (on an unconsolidated basis), plus (in each case, on an unconsolidated basis of the Canadian Borrower and the Guarantors and without duplication): |
(i) | Interest Expense, to the extent deducted in the calculation of Net Income; |
(ii) | all amounts deducted in the calculation of Net Income in respect of the provision for income taxes (in accordance with generally accepted accounting principles); |
(iii) | all amounts deducted in the calculation of Net Income in respect of non-cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities; |
(iv) | all amounts deducted in the calculation of Net Income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges; |
(v) | all cash distributions received in such period by the Canadian Borrower and the Guarantors from persons which are not Guarantors which, in respect of cash distributions received from Project Finance SPVs (A) do not exceed, in aggregate, {Percentage redacted}% of EBITDA for the most recently completed four consecutive fiscal quarters, including such period, and (B) for certainty, are derived from active business operations and shall not include returns of capital; and |
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(vi) | to the extent deducted from Net Income, non-cash losses resulting from marking-to-market the outstanding Financial Instruments of the Canadian Borrower and the Guarantors for such period in accordance with generally accepted accounting principles, |
less (in each case, on a consolidated basis), with respect to the Canadian Borrower and the Guarantors:
(vii) | earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of the Canadian Borrower and the Guarantors (on an unconsolidated basis), in each case, to the extent included in the calculation of Net Income; |
(viii) | to the extent included in Net Income, non-cash gains resulting from marking- to-market the outstanding Financial Instruments of the Canadian Borrower and the Guarantors for such period in accordance with generally accepted accounting principles; |
(ix) | all cash payments during such period relating to non-cash charges which were added back in determining EBITDA in any prior period; and |
(x) | for certainty, any Net Income (other than any cash distributions received by the Canadian Borrower and the Guarantors from Project Finance SPVs pursuant to subparagraph (v) above) from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances, |
and (i) in the event the Canadian Borrower or a Guarantor acquires another entity during any such period, all measures will be calculated pro forma based on the actual results of the acquired entity as if it had been owned by the Canadian Borrower or such Guarantor over the entire period and (ii) in the event the Canadian Borrower or a Guarantor disposes of an entity during any such period, all measures will be calculated pro forma on the basis that such entity was disposed of at the beginning of the period; plus
(b) | the Non-Guarantor EBITDA for such period of each Non-Guarantor Subsidiary (excluding any Project Finance SPV) in respect of which the Canadian Borrower has obtained political risk insurance (1) (A) on terms and conditions substantially the same in scope as the terms and conditions contained in the insurance policy annexed hereto as Schedule M and, for certainty, covering loss in respect of each of expropriation, political violence and loss of use of assets due to political violence and (B) from an export credit agency or commercial insurer formed under the laws of an OECD Country with (at all times the Non-Guarantor EBITDA of such Non- Guarantor Subsidiary is being included in a determination of EBITDA) a Financial Strength Rating of A- or higher from A.M. Best (or such other policy issuer acceptable to the Agent, acting reasonably) or (2) on such other terms and conditions as agreed to by the Agent, in its sole discretion, such Non-Guarantor EBITDA to be up to a maximum aggregate amount of 5% of the Canadian |
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Borrower EBITDA for such period (provided, for greater certainty, that this subparagraph (b) shall not exclude or limit any cash distributions received by the Canadian Borrower and the Guarantors from Project Finance SPVs, recognized as an inclusion of EBITDA under subparagraph (v) above, and this subparagraph (b) shall be calculated without reference to the inclusion of such cash distributions under subparagraph (v) above). |
Notwithstanding the foregoing, any Guarantor formed under the laws of Thailand shall not be considered a Guarantor for purposes of calculating EBITDA for any period until such Guarantor has received the approval in principal from Governmental Authorities in Thailand required in connection with payments under the Subsidiary Guarantee of such Guarantor to any foreign beneficiary thereunder.
EC Treaty means The Treaty of Maastricht (formally, the Treaty on European Union, (TEU)) signed on February 7, 1992.
EEA Financial Institution means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
EEA Member Country means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
EEA Resolution Authority means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
Eligible Contract Participant means a person that constitutes an eligible contract participant under the Commodity Exchange Act or any regulations promulgated thereunder.
Environmental Claims means any and all administrative, regulatory or judicial actions, suits, demands, claims, liens, notices of non-compliance or violation, investigations, inspections, inquiries or proceedings relating in any way to any Environmental Laws or to any permit issued under any such Environmental Laws including, without limitation:
(a) | any claim by a Governmental Authority for enforcement, clean up, removal, response, remedial or other actions or damages pursuant to any Environmental Laws; and |
(b) | any claim by a person seeking damages, contribution, indemnification, cost recovery, compensation or injunctive or other relief resulting from or relating to Hazardous Materials, including any Release thereof, or arising from alleged injury or threat of injury to human health or safety (arising from environmental matters) or the environment. |
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Environmental Laws means all Applicable Laws with respect to the environment or environmental or public health and safety matters contained in statutes, regulations, rules, ordinances, orders, judgments, Governmental Authorizations or policies, guidelines or directives having the force of law.
Equity Plan Hedging Agreement means any agreement constituting an Eligible Financial Contract under the regulations issued under the Bankruptcy and Insolvency Act (Canada) in connection with equity securities of the Canadian Borrower or a Guarantor, any equity securities plan hedging agreement, floor, cap or collar agreement or equity security plan future or option or other similar agreements or arrangement, or any combination thereof, entered into by the Canadian Borrower or a Guarantor where the subject matter of the same is any equity securities of the Canadian Borrower or a Guarantor or the price, value or amount payable thereunder is dependent or based upon the price of any equity securities of the Canadian Borrower or a Guarantor or fluctuations in the price of any such equity securities.
Equivalent Amount means, on any date, the equivalent amount in Canadian Dollars, United States Dollars, Australian Dollars, Pounds Sterling or Euros, as the case may be, after giving effect to a conversion of a specified amount of:
(a) | United States Dollars to Canadian Dollars, Australian Dollars, Pounds Sterling or Euros; |
(b) | Canadian Dollars to United States Dollars, Australian Dollars, Pounds Sterling or Euros; |
(c) | Australian Dollars to United States Dollars, Canadian Dollars, Pounds Sterling or Euros; |
(d) | Pounds Sterling to United States Dollars, Canadian Dollars, Australian Dollars or Euros; or |
(e) | Euros to United States Dollars, Canadian Dollars, Australian Dollars or Pounds Sterling, |
as the case may be, at the rate of exchange for Canadian interbank transactions established by the Bank of Canada and published at approximately 4:30 p.m. (Toronto time) on the Banking Day immediately preceding the day in question, or, if such rate is for any reason unavailable, at the spot rate quoted for wholesale transactions by the Agent at approximately noon (Toronto time) on the day in question in accordance with its normal practice.
Euros and means the lawful currency of the member states of the European Union that adopt the single currency in accordance with the EC Treaty.
Event of Default has the meaning set out in Section 12.1.
Existing Credit Agreement has the meaning ascribed thereto in the first recital hereof.
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FATCA means sections 1471 through 1474 of the Code (amended from time to time), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
Federal Funds Rate means, for any day, the rate of interest per annum equal to (a) the weighted average (rounded upwards, if necessary, to the next 1/100th of one percent per annum) of the annual rates of interest on overnight Federal funds transactions with members of the Federal Reserve Board of the United States of America (or any successor thereof) arranged by Federal funds brokers on such day, as published on the next succeeding Banking Day by the Federal Reserve Bank of New York (or any successor thereto) or, (b) if such day is not a Banking Day, such weighted average for the immediately preceding Banking Day for which the same is published or, (c) if such rate is not so published for any day that is a Banking Day, the average (rounded upwards, if necessary, to the next 1/100th of one percent per annum) of the quotations for such day on such transactions received by the Agent, or the Canadian Operating Facility Lender, as applicable, from three Federal funds brokers of recognized standing selected by the Agent.
Federal Reserve Board or Federal means the Board of Governors of the Federal Reserve System of the United States of America or any successor thereof.
Financial Assistance means, with respect to any person and without duplication, any loan, Guarantee, indemnity, assurance, acceptance, extension of credit, loan purchase, share purchase, equity or capital contribution, investment or other form of direct or indirect financial assistance or support of any other person or any obligation (contingent or otherwise) intended to enable another person to incur or pay any Debt or to comply with agreements relating thereto or otherwise to assure or protect creditors of the other person against loss in respect of Debt of the other person and includes any Guarantee of or indemnity in respect of the Debt of the other person and any absolute or contingent obligation to (directly or indirectly):
(a) | advance or supply funds for the payment or purchase of any Debt of any other person; |
(b) | purchase, sell or lease (as lessee or lessor) any property, assets, goods, services, materials or supplies primarily for the purpose of enabling any person to make payment of Debt or to assure the holder thereof against loss; |
(c) | guarantee, indemnify, hold harmless or otherwise become liable to any creditor of any other person for, from, against or in respect of any losses, liabilities or damages in respect of Debt; |
(d) | make a payment to another for goods, property or services regardless of the non-delivery or non-furnishing thereof; or |
(e) | make an advance, loan or other extension of credit to or to make any subscription for equity, equity or capital contribution, or investment in or to maintain the capital, working capital, solvency or general financial condition of another person for the purpose of enabling any person to make payment on Debt, |
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The amount of any Financial Assistance is the amount of any loan or direct or indirect financial assistance or support, without duplication, given, or all Debt of the obligor to which the Financial Assistance relates, unless the Financial Assistance is limited to a determinable amount, in which case the amount of the Financial Assistance is such determinable amount.
Financial Instrument means any Equity Plan Hedging Agreement, Interest Hedging Agreement, Currency Hedging Agreement or Commodity Hedging Agreement.
Financial Instrument Demand for Payment means a demand made by a Lender or Hedging Affiliate pursuant to a Lender Financial Instrument demanding payment of the Financial Instrument Obligations which are then due and payable relating thereto and shall include, without limitation, any notice under any agreement evidencing a Lender Financial Instrument which, when delivered, would require an early termination thereof and a payment by the applicable Borrower or Guarantor in settlement of obligations thereunder as a result of such early termination.
Financial Instrument Obligations means obligations arising under Financial Instruments entered into by a Borrower or a Guarantor to the extent of the net amount due or accruing due by such Borrower or Guarantor.
Former Lender has the meaning set out in Section 11.7.
Fronted LC means a Letter of Credit issued by a Fronting Lender for the account of the Syndicated Facility Lenders.
Fronting Lender means, each to a maximum of its respective Fronting Limit, (a) initially, The Toronto-Dominion Bank, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce and HSBC Bank Canada or (b) such other Syndicated Facility Lender as is selected by the Agent and the Canadian Borrower, which assumes in writing with the Canadian Borrower, the Syndicated Facility Lenders and the Agent, the obligation of issuing Letters of Credit for the account of the Syndicated Facility Lenders under the Syndicated Facility; provided that, with respect to particular usage herein and if the context requires, Fronting Lender shall mean the Syndicated Facility Lender which has issued the Letter of Credit in question.
Fronting Limit means, with respect to each Fronting Lender, the maximum Outstanding Principal of Letters of Credit for which such Lender is obligated to be the Fronting Lender hereunder, which limit is set forth opposite the name of such Fronting Lender on Schedule A annexed hereto, as amended from time to time with the written consent of the applicable Fronting Lender.
Governmental Authority means any federal, provincial, state, regional, municipal or local government or any department, agency, board, tribunal or authority thereof or other political subdivision thereof and any entity or person exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government or the operation thereof.
Governmental Authorization means an authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand or the like issued or granted by law or by rule (having the force of law) or regulation of any Governmental Authority.
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Guarantee means any guarantee, undertaking to assume, endorse, contingently agree to purchase or to provide funds for the payment of, or otherwise become liable in respect of, any obligation of any person; provided that the amount of each Guarantee shall be deemed to be the amount of the obligation guaranteed thereby, unless the Guarantee is limited to a determinable amount in which case the amount of such Guarantee shall be deemed to be the lesser of such determinable amount or the amount of such obligation. For greater certainty, nothing contained in this Agreement shall restrict the ability of the Canadian Borrower or any Subsidiary to provide performance guarantees not related to or guaranteeing Debt.
Guarantors means, collectively, the Subsidiaries of the Canadian Borrower (including the Australian Borrower but excluding each Project Finance SPV), each of whose jurisdiction of incorporation, formation, organization, amalgamation or continuation, or in which it exists or subsists, is any of an OECD Country (which includes, for greater certainty, Mexico, Barbados, Oman, Kuwait, Bahrain, Colombia, Peru, Brazil, Thailand, Malaysia, Singapore and Indonesia or any province, territory, state or district of any of the foregoing), which have executed Subsidiary Guarantees in accordance with the provisions hereof.
Hazardous Materials means any substance, product, liquid, waste, pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid matter, organic or inorganic matter, fuel, micro-organism, ray, odour, radiation, energy, vector, plasma, constituent, material or any combination thereof which (a) is regulated or prohibited under any Environmental Law or (b) is hazardous, hazardous waste, toxic, a pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
Hedging Affiliate means any Affiliate of a Lender which enters into a Financial Instrument.
Indemnified Parties means, collectively, the Agent and the Lenders, including a receiver, receiver manager or similar person appointed under applicable law, and their respective Affiliates, officers, directors, employees and agents, and Indemnified Party means any one of the foregoing.
Indemnified Third Party has the meaning set out in Section 14.3.
Information has the meaning set out in Section 16.1(2).
Intellectual Property means, collectively, patents, patents pending, copyrights, proprietary processes or programs, industrial designs, trademarks, trademark applications, trade names and other intellectual property of every nature and kind.
Interest Coverage Ratio means, as at a Quarter End, the ratio of (a) EBITDA for the 12 months ending at such Quarter End to (b) Interest Expense during the same period.
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Interest Expense means, for any period, without duplication, interest expense of the Canadian Borrower determined on a consolidated basis in accordance with generally accepted accounting principles as the same would be set forth or reflected in a consolidated statement of income of the Canadian Borrower and, in any event and without limitation, shall include:
(a) | all interest accrued or payable in respect of such period, including capitalized interest; |
(b) | all fees (including standby, commitment and stamping fees and fees payable in respect of letters of credit and letters of guarantee supporting obligations which constitute Debt) accrued or payable in respect of such period and which relate to any indebtedness for borrowed money or credit agreement, prorated (as required) over such period; |
(c) | any difference between the face amount and the discount proceeds of any bankers acceptances, commercial paper and other obligations of the Canadian Borrower or any Subsidiary issued at a discount, prorated (as required) over such period; and |
(d) | all net amounts charged or credited to interest expense under any Interest Hedging Agreements in respect of such period, |
but excluding any interest expense of Non-Guarantor Subsidiaries in respect of Non-Recourse Debt, which, if such Non-Guarantor Subsidiaries were Guarantors, would constitute Interest Expense and, in any event, excluding Interest Expense on Debt incurred by the Project Finance SPVs.
Interest Hedging Agreement means any interest swap agreement, forward rate agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Canadian Borrower or a Guarantor where the subject matter of the same is interest rates or the price, value or amount payable thereunder is dependent or based upon the interest rates or fluctuations in interest rates in effect from time to time (but, for certainty, shall exclude conventional floating rate debt).
Interest Payment Date means:
(a) | with respect to each Canadian Prime Rate Loan, U.S. Base Rate Loan and Australian Overdraft Loan, the first day of January, April, July and October in each year; and |
(b) | with respect to each Libor Loan and BBSY Loan, the last day of each applicable Interest Period and, if any Interest Period is longer than 3 months, the last Banking Day of each 3 month period during such Interest Period, |
provided that, in any case, the applicable Maturity Date or, if applicable, any earlier date on which a Credit Facility is fully cancelled or permanently reduced in full, shall be an Interest Payment Date with respect to all Loans then outstanding under such Credit Facility.
Interest Period means:
(a) | with respect to each Canadian Prime Rate Loan and U.S. Base Rate Loan, the period commencing on the applicable Drawdown Date or Conversion Date, as the case may be, and terminating on the date selected by the applicable Borrower hereunder for the Conversion of such Loan into another type of Loan or for the repayment of such Loan; |
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(b) | with respect to each Bankers Acceptance, the period selected by the Canadian Borrower hereunder and being of 1, 2, 3 or 6 months duration, subject to market availability, (or, subject to the agreement of the applicable Lenders, a longer or shorter period) commencing on the Drawdown Date, Rollover Date or Conversion Date of such Loan; |
(c) | with respect to each Libor Loan, the period selected by the Canadian Borrower and being of 1, 2, 3 or 6 months duration (or, subject to the agreement of the applicable Lenders, a longer or shorter period) commencing on the applicable Drawdown Date, Rollover Date or Conversion Date, as the case may be; |
(d) | with respect to each BBSY Loan, the period selected by the Australian Borrower and being of 1, 2, 3 or 6 months duration (or, subject to the agreement of the applicable Lenders, a longer or shorter period) commencing on the applicable Drawdown Date or Rollover Date, as the case may be; and |
(e) | with respect to each Letter of Credit, the period commencing on the date of issuance of such Letter of Credit and terminating on the last day the Letter of Credit is outstanding, |
provided that in any case: (i) the last day of each Interest Period shall be also the first day of the next Interest Period whether with respect to the same or another Loan; (ii) the last day of each Interest Period shall be a Banking Day and if the last day of an Interest Period selected by the applicable Borrower is not a Banking Day the applicable Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next following the last day of the Interest Period selected unless such next following Banking Day falls in the next calendar month in which event the applicable Borrower shall be deemed to have selected an Interest Period the last day of which is the Banking Day next preceding the last day of the Interest Period selected by such Borrower; and (iii) the last day of all Interest Periods for Loans outstanding under a given Credit Facility shall expire on or prior to the Maturity Date applicable thereto, subject, however, in the case of Letters of Credit to the provisions of Section 7.2.
Investment means (a) any purchase or other acquisition of shares or other securities (other than Approved Securities) of any person, (b) any loan or advance to or for the benefit of any person, or (c) any capital contribution to any other person.
Judgment Conversion Date has the meaning set out in Section 14.4(1).
Judgment Currency has the meaning set out in Section 14.4(1).
Lead Arrangers means, collectively, The Toronto-Dominion Bank and The Bank of Nova Scotia carrying on business under the trade name Scotia Capital.
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Lender BA Suspension Notice has the meaning set out in Section 13.2.
Lender Claiming Additional Compensation has the meaning set out in Section 2.23(1).
Lender Distress Event means, in respect of a given Lender, such Lender or its Lender Parent is subject to a forced liquidation, merger, sale or other change of control supported in whole or in part by guarantees or other support (including, without limitation, the nationalization or assumption of ownership or operating control by the Government of the United States of America, Canada or any other Governmental Authority) or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Lender or Lender Parent or their respective assets to be, insolvent, bankrupt or deficient in meeting any capital adequacy or liquidity standard of any such Governmental Authority.
Lender Financial Instrument means a Financial Instrument entered into between a Lender or a Hedging Affiliate and a Borrower or a Guarantor.
Lender Financial Instrument Obligations means, collectively, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, mature or not) of the Borrowers and the Guarantors under, pursuant or relating to any and all Lender Financial Instruments.
Lender Insolvency Event means, in respect of a given Lender, such Lender or its Lender Parent:
(a) | is dissolved (other than pursuant to a consolidation, amalgamation or merger); |
(b) | becomes insolvent, is deemed insolvent by applicable law or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; |
(c) | makes a general assignment, arrangement or composition with or for the benefit of its creditors; |
(d) | (i) institutes, or has instituted against it by a regulator, supervisor or any similar Governmental Authority with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organization or the jurisdiction of its head or home office, (A) a proceeding pursuant to which such Governmental Authority takes control of such Lenders or Lender Parents assets, (B) a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors rights, or (C) a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar Governmental Authority; or (ii) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency or winding-up law or other similar law affecting creditors rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (i) above and either (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; |
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(e) | has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); |
(f) | seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or a substantial portion of all of its assets; |
(g) | has a secured party take possession of all or a substantial portion of all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case, within 15 days thereafter; |
(h) | causes or is subject to any event with respect to it which, under the applicable law of any jurisdiction, has an analogous effect to any of the events specified in subparagraphs (a) to (g) above, inclusive; or |
(i) | takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing. |
Lender Parent means any person that directly or indirectly controls a Lender and, for the purposes of this definition, control shall have the same meaning as set forth in the definition of Affiliate contained herein.
Lenders means the financial institutions named on Schedule A annexed hereto, together with such other persons as become parties hereto and, in the context of provisions hereunder relating to:
(a) | the Syndicated Facility and Loans thereunder, means the Syndicated Facility Lenders; |
(b) | the Canadian Operating Facility and Loans thereunder, means the Canadian Operating Facility Lender; and |
(c) | the Australian Operating Facility and Loans thereunder, means the Australian Operating Facility Lender, |
and Lender means any one of them, as applicable and as the context requires.
Lenders Counsel means the firm of Borden Ladner Gervais LLP or such other firm of legal counsel as the Agent may from time to time designate.
Letter of Credit or LC means a letter of credit in form satisfactory to and issued by a Fronting Lender for the account of Syndicated Facility Lenders or by the Agent as attorney-in-fact on behalf of each of the Syndicated Facility Lenders, in each case acting at the request of and in accordance with the instructions of the Canadian Borrower, to make payment in accordance with the terms and conditions thereof of an amount to or to the order of a third party.
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Libor Loan means an Advance in, or Conversion into, United States Dollars made by the applicable Lenders to the Canadian Borrower with respect to which the Canadian Borrower has specified that interest is to be calculated by reference to the Libor Rate, and each Rollover in respect thereof.
Libor Rate means, for each Interest Period applicable to a Libor Loan, the rate of interest per annum (rounded upward to the nearest whole multiple of 1/100th of 1.00%), expressed on the basis of a year of 360 days, determined by the Agent or the Canadian Operating Facility Lender, as applicable, at approximately 11:00 a.m. (London, England time) on the second Banking Day prior to the first day of such Interest Period by reference to the rate set by ICE Benchmark Administration for deposits in United States Dollars (as set forth by any service selected by the Agent or the Canadian Operating Facility Lender, as applicable, that has been nominated by ICE Benchmark Administration as an authorized information vendor for the purpose of displaying such rates) for a period equal to the Interest Period in question; provided, however, that, to the extent that such rate is not ascertainable pursuant to the foregoing provisions of this definition, the Libor Rate shall be the rate per annum determined by the Agent or the Canadian Operating Facility Lender, as applicable, to be the average of the rates per annum at which deposits of United States Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Agent or the Canadian Operating Facility Lender, as applicable (or an Affiliate thereof, if the Agent or the Canadian Operating Facility Lender, as applicable, does not offer such deposits) at approximately 11:00 a.m. (London, England time) on the second Banking Day prior to the first day of such Interest Period. In addition, if the rate determined above shall ever be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Loan means a Canadian Prime Rate Loan, U.S. Base Rate Loan, Libor Loan, BBSY Loan, Australian Overdraft Loan, Bankers Acceptance or BA Equivalent Advance, Letter of Credit or Australian Letter of Credit outstanding hereunder.
Majority of the Lenders means:
(a) | during the continuance of a Default or an Event of Default, those Lenders the Rateable Portions of all Outstanding Principal of which are, in the aggregate, at least 662⁄3% of all Outstanding Principal; and |
(b) | at any other time, those Lenders the Commitments of which are, in the aggregate, at least 662⁄3% of the Commitments of all Lenders hereunder. |
Material Acquisition means an acquisition by a Borrower or a Guarantor of assets or stock of another person in a single transaction or in a series of transactions with a value that is greater than 10% of Consolidated Net Tangible Assets (calculated prior to completion of such acquisition).
Material Adverse Change means any event, circumstance, occurrence or change which results in, or which would reasonably be expected to result in, a Material Adverse Effect.
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Material Adverse Effect means a material adverse effect on:
(a) | the financial condition of the Canadian Borrower and its Subsidiaries on a consolidated basis and taken as a whole; |
(b) | the ability of a Borrower or any of the Guarantors to observe or perform its obligations under the Documents to which it is a party or the validity or enforceability of such Documents or any material provision thereof; or |
(c) | the property, business or operations of the Canadian Borrower and its Subsidiaries on a consolidated basis and taken as a whole. |
Material Subsidiary means, in each case, calculated as at each Quarter End for the previous 12 months, any Subsidiary of the Canadian Borrower (other than a Project Finance SPV) which, determined on an unconsolidated basis (a) has assets greater than 5% of the consolidated assets of the Canadian Borrower or (b) has earned revenues greater than 5% of the consolidated revenues of the Canadian Borrower. For certainty, no Project Finance SPV shall be a Material Subsidiary for the purposes of this Agreement.
Maturity Date means:
(a) | in respect of the Syndicated Facility and the Obligations owing to a given Lender under or pursuant to the Syndicated Facility, the Syndicated Facility Maturity Date; |
(b) | in respect of the Canadian Operating Facility and the Obligations owing under or pursuant to the Canadian Operating Facility, the Canadian Operating Facility Maturity Date; and |
(c) | in respect of the Australian Operating Facility and the Obligations owing under or pursuant to the Australian Operating Facility, the Australian Operating Facility Maturity Date. |
Maximum Liability means, in respect of an Australian Letter of Credit, from time to time and at any time, the maximum amount available to be drawn (exclusive of interest and fees) under such Australian Letter of Credit.
Moodys means Moodys Investors Services, Inc. and any successors thereto.
Net Funded Debt means all obligations, liabilities and indebtedness of the Canadian Borrower, on a consolidated basis which would, in accordance with generally accepted accounting principles, be classified upon a consolidated balance sheet of Canadian Borrower as indebtedness for borrowed money and, whether or not so classified, shall include (without duplication):
(a) | indebtedness for borrowed money; |
(b) | obligations for the repayment of: (i) bankers acceptances (including payment and reimbursement obligations in respect thereof), or (ii) letters of credit and letters of guarantee supporting obligations which would otherwise constitute Net Funded Debt within the meaning of this definition or indemnities issued in connection therewith; |
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(c) | obligations with respect to the reimbursement of drawings under all other letters of credit and letters of guarantee; |
(d) | obligations under Guarantees, indemnities, assurances, legally binding comfort letters, the face value of financial letters of credit or other contingent obligations for the repayment indebtedness or other obligations of any other person which would otherwise constitute Net Funded Debt within the meaning of this definition and all other obligations incurred for the purpose of or having the effect of providing financial assistance to another person for the repayment of such indebtedness or such other Debt obligations, including, without limitation, endorsements of bills of exchange (other than for collection or deposit in the ordinary course of business); |
(e) | (i) all indebtedness representing the deferred purchase price of any property to the extent that such indebtedness is or remains unpaid after the expiry of the customary time period for payment (excluding current accounts payable to trade creditors in the ordinary course of business, so long as the same are not outstanding longer than is customary in the Canadian Borrowers or the applicable Subsidiarys business), provided however that such time period shall in no event exceed 90 days, (ii) all obligations created or arising under any conditional sales agreement or other title retention agreement and (iii) obligations created or arising under any Capital Lease (to the extent of the amount required to be accounted for as a Capital Lease under generally accepted accounting principles) except for those obligations relating to the Capital Leases that were or, in the case of leases entered into after June 1, 2011, would have been, characterized as operating leases under generally accepted accounting principles immediately prior to the adoption of International Financial Report Standards; |
(f) | all other long term obligations (including the current portion thereof) upon which interest charges are customarily paid prior to default; and |
(g) | Prepaid Obligations, |
less, in each case, unencumbered cash (excluding, for certainty, unencumbered cash held or placed on deposit by a Project Finance SPV) and shall exclude each of the following, determined (as required) in accordance with generally accepted accounting principles:
(h) | Non-Recourse Debt of Subsidiaries which are not Guarantors; |
(i) | Convertible Securities issued by a Borrower or a Guarantor; |
(j) | Performance Letters of Credit; |
(k) | Financial Instrument Obligations; |
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(l) | accounts payable to trade creditors and accrued liabilities incurred in the ordinary course of business; |
(m) | current taxes payable and future taxes; |
(n) | dividends or other equity distributions payable; |
(o) | accrued interest not yet due and payable; and |
(p) | Debt of any Project Finance SPV. |
Net Funded Debt to EBITDA Ratio means, as at a Quarter End, the ratio of (a) Net Funded Debt as at such Quarter End to (b) EBITDA for the 12 months ending at such Quarter End.
Net Income means, in respect of any period for which it is being determined, the combined net income of the Canadian Borrower and the Guarantors determined on an unconsolidated basis in accordance with generally accepted accounting principles.
Non-Acceptance Lender means (a) a Lender which ceases to accept bankers acceptances in the ordinary course of its business or (b) in respect of Lenders other than Schedule I Lenders, a Lender who, by notice in writing to the Agent and the Canadian Borrower, elects thereafter to make BA Equivalent Advances in lieu of accepting Bankers Acceptances.
Non-Defaulting Lender has the meaning set out in Section 16.2(4).
Non-Guarantor EBITDA means, in respect of any period for which it is being determined, in respect of any Non-Guarantor Subsidiary (excluding any Project Finance SPV), on an unconsolidated basis, the net income of such Non-Guarantor Subsidiary on an unconsolidated basis in accordance with generally accepted accounting principles, for such period, plus (in each case, on an unconsolidated basis of such Non-Guarantor Subsidiary and without duplication):
(a) | interest expense of such Non-Guarantor Subsidiary determined on an unconsolidated basis in accordance with generally accepted accounting principles as the same would be set forth or reflected in an unconsolidated statement of income of such Non-Guarantor Subsidiary, to the extent deducted in the calculation of net income; |
(b) | all amounts deducted in the calculation of net income in respect of the provision for income taxes (in accordance with generally accepted accounting principles); |
(c) | all amounts deducted in the calculation of net income in respect of non-cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities; and |
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(d) | all amounts deducted in the calculation of net income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges, less (in each case, on an unconsolidated basis), with respect to such Non-Guarantor Subsidiary: |
(e) | earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of such Non-Guarantor Subsidiary (on an unconsolidated basis), in each case, to the extent included in the calculation of net income; |
(f) | all cash payments (excluding any cash payments related to a Project Finance SPV) during such period relating to non-cash charges which were added back in determining Non-Guarantor EBITDA in any prior period; and |
(g) | for certainty, any net income from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances. |
Non-Guarantor Subsidiary means a Subsidiary that (a) is not a Guarantor or (b) has been designated, in compliance with the provisions hereof, as a Non-Guarantor Subsidiary.
Non-LC Lender means a Syndicated Facility Lender (a) which does not issue letters of credit in the ordinary course of its business or which is prohibited by applicable laws from issuing letters of credit and (b) which has notified the Agent and the Canadian Borrower that it shall be a Non-LC Lender hereunder.
Non-Recourse Assets means the assets created, developed, constructed or acquired with or in respect of which Non-Recourse Debt has been incurred and any and all receivables, inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with the assets created, developed, constructed or acquired (and, for certainty, shall include the shares or other ownership interests of or investments in a single purpose entity or a Non-Guarantor Subsidiary which holds only such assets and other rights and collateral arising from or connected therewith) and to which recourse of the lender of such Non-Recourse Debt (or any agent, trustee, receiver or other person acting on behalf of such lender) in respect of such indebtedness is limited in all circumstances (other than in respect of false or misleading representations or warranties).
Non-Recourse Debt means any indebtedness in respect of any amounts borrowed, Purchase Money Obligations, obligations secured by a Security Interest existing on property owned subject to a Security Interest (whether or not the obligations secured thereby shall have been assumed) and guarantees, indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent obligations in respect of obligations of another person for indebtedness of that other person in respect of any amounts borrowed by them and any increases in or extensions, renewals or refundings of any such indebtedness, liabilities and obligations, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness, liabilities and obligations or any judgment in respect thereof is limited in all circumstances (other than in respect of false or misleading representations or warranties) to persons other than a Borrower or any Guarantor.
Obligations means, at any time and from time to time, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, matured or not) of the Borrowers and their Subsidiaries to the Lenders or the Agent under, pursuant or relating to the Documents or the Credit Facilities and whether the same are from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and including, without limitation, all principal, interest, fees, legal and other costs, charges and expenses, and other amounts payable by the Borrowers under this Agreement.
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OECD Countries means, collectively, the member countries of the Convention on the Organization for Economic Co-operation and Development.
Officers Certificate means a certificate or notice (other than a Compliance Certificate) signed by any one of the president, chief financial officer, a vice president, treasurer, assistant treasurer, controller, corporate secretary or assistant secretary of a Borrower or a Subsidiary, as the case may be, (including, in the case of a partnership a certificate or notice signed by such an officer of a general partner of such partnership); provided, however, that Drawdown Notices, Conversion Notices, Rollover Notices and Repayment Notices shall be executed on behalf of the applicable Borrower by any one of the foregoing persons or such other persons as may from time to time be designated by written notice from the applicable Borrower to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable.
Order has the meaning set out in Section 7.10(5).
Original Credit Agreement has the meaning ascribed thereto in the second recital hereof.
Outstanding BAs Collateral has the meaning set out in Section 2.17(3).
Outstanding Principal means, at any time, the aggregate of (i) the principal amount of all outstanding Canadian Prime Rate Loans, (ii) the Equivalent Amount in Canadian Dollars of the principal amount of all outstanding U.S. Base Rate Loans, BBSY Loans, Australian Overdraft Loans and Libor Loans, (iii) the amounts payable at maturity of all outstanding Bankers Acceptances and BA Equivalent Advances, (iv) the maximum amount available to be drawn under all outstanding Letters of Credit denominated in Canadian Dollars, (v) the Equivalent Amount in Canadian Dollars of the maximum amount available to be drawn under all outstanding Letters of Credit denominated in United States Dollars, Pounds Sterling, Euros or Australian Dollars and (vi) the Equivalent Amount in Canadian Dollars of the aggregate Maximum Liability of all outstanding Australian Letters of Credit.
Parent Guarantee means the guarantee executed and delivered by the Canadian Borrower under and pursuant to this Agreement substantially in the form of Schedule H-2 annexed hereto, as amended and supplemented to the date hereof and with such additional modifications, insertions and amendments as may be required by the Agent and agreed to by the Canadian Borrower, each acting reasonably.
Performance Letters of Credit means letters of credit or letters of guarantee which are not direct credit substitutes (as determined by the Agent, acting reasonably) within the meaning of the Capital Adequacy Requirements.
Permitted Contest means action taken by or on behalf of a Borrower or a Subsidiary (excluding any Project Finance SPV) in good faith by appropriate proceedings diligently pursued to contest a Tax, claim or Security Interest, provided that the person to which the Tax, claim or Security Interest being contested is relevant (and, in the case of a Subsidiary of the Canadian Borrower, the Canadian Borrower on a consolidated basis) has established reasonable reserves therefor if and to the extent required by generally accepted accounting principles.
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Permitted Debt means the following:
(a) | the Obligations; |
(b) | Financial Instrument Obligations under and pursuant to Permitted Hedging; |
(c) | obligations in respect of Bank Products; |
(d) | any unsecured and unsubordinated Debt owing by a Guarantor to a Borrower or another Guarantor or by a Borrower to a Guarantor; |
(e) | Non-Recourse Debt incurred by Material Subsidiaries (excluding, for certainty, the Australian Borrower) which are not Guarantors; provided that the amount of such Non-Recourse Debt does not, in the aggregate at any time, exceed 10% of Consolidated Net Tangible Assets; |
(f) | Debt incurred by a Borrower or a Guarantor on Approved Debt Terms prior to April 24, 2018; |
(g) | Debt incurred on Approved Debt Terms (or any refinancing of such Debt on Approved Debt Terms) by a Borrower or a Guarantor provided that (i) no Default or Event of Default has occurred and is continuing immediately prior to the incurrence of such Debt and (ii) immediately after the incurrence of such Debt and the application of the proceeds thereof, no Default or Event of Default shall have occurred and be continuing and, for certainty, the Canadian Borrower shall be in compliance with the financial covenants provided for in Section 10.3 hereof as at the immediately preceding Quarter End (assuming that such Debt was incurred on such Quarter End) and the Canadian Borrower shall have delivered a Compliance Certificate to the Agent certifying the same (which Permitted Debt shall include, for certainty, any Debt previously incurred by the Borrower or a Guarantor on Approved Debt Terms in accordance with this subparagraph (g)); |
(h) | (i) Purchase Money Obligations, (ii) obligations created or arising under Capital Leases and (iii) any other Debt; provided that the amount of such obligations (excluding the amount of the obligations relating to the Capital Leases that were or, in the case of leases entered into after June 1, 2011, would have been, characterized as operating leases under generally accepted accounting principles immediately prior to the adoption of International Financing Reporting Standards) do not, in the aggregate at any time, exceed 5% of Consolidated Net Tangible Assets; |
(i) | Convertible Securities issued by a Borrower or a Guarantor; and |
(j) | Debt consisting of Financial Assistance permitted under Section 10.2(f); |
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Permitted Disposition means, in respect of a Borrower, any of the Guarantors or any of the Material Subsidiaries, any of the following:
(a) | a sale or disposition by such Borrower, such Guarantor or such Material Subsidiary of inventory (including, for certainty, property produced for sale) in the ordinary course of business; |
(b) | a sale or disposition by such Borrower, such Guarantor or such Material Subsidiary in the ordinary course of business and in accordance with sound industry practice of tangible personal property that is obsolete, no longer useful for its intended purpose or being replaced in the ordinary course of business; |
(c) | a sale or disposition of any property or assets by (i) a Borrower to another Borrower or a Guarantor, (ii) a Guarantor to a Borrower or another Guarantor or (iii) a Material Subsidiary that is not also a Guarantor to a Borrower, a Guarantor or another Material Subsidiary; and |
(d) | a sale or disposition by a Borrower, a Guarantor or any Material Subsidiary of its interest in machinery, equipment or other tangible personal property for which Purchase Money Obligations were incurred and (i) such Purchase Money Obligations are fully repaid concurrently with such sale or disposition and (ii) such sale or disposition is made in the ordinary course of business at fair market value to a person at arms length from the Canadian Borrower and its Subsidiaries. |
Permitted Encumbrances means as at any particular time any of the following encumbrances on the assets, property or undertakings or any part of the assets, property or undertakings of a Borrower, any Guarantor or any Material Subsidiary:
(a) | liens for taxes, assessments or governmental charges not at the time due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest; |
(b) | deemed liens and trusts arising by operation of law or pledges of deposits in connection with workers compensation, employment insurance and other social security legislation, in each case, which secure obligations not at the time due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest; |
(c) | liens under or pursuant to any judgment or award rendered, or claim filed, against a Borrower, a Guarantor or a Material Subsidiary, the time for the appeal or petition for rehearing of which shall not have expired, or which such Borrower, Guarantor or Material Subsidiary (as applicable) shall be contesting at the time by a Permitted Contest or which such Borrower, Guarantor or Material Subsidiary (as applicable) shall in good faith be prosecuting an appeal or proceeding for review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured; |
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(d) | undetermined or inchoate liens, charges, privileges, statutory liens, adverse claims or encumbrances of any nature whatsoever arising or potentially arising under statutory provisions incidental to construction or current operations which have not at such time been filed pursuant to law against a Borrower, a Guarantor or a Material Subsidiary or which relate to obligations not due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest; |
(e) | easements, rights of way, servitudes, usufructs or other similar rights in land (including, without in any way limiting the generality of the foregoing, rights of way and servitudes for railways, sewers, drains, gas and oil and other pipelines, gas and water mains, electric light and power and telecommunication, telephone or telegraph or cable television conduits, poles, wires and cables) granted to or reserved or taken by other persons which individually or in the aggregate do not materially impair its use in the operation of the business of the Canadian Borrower and its Subsidiaries, taken as a whole; |
(f) | the rights reserved to or vested in Governmental Authorities by statutory provisions or by the terms of leases, licenses, franchises, grants or permits, which affect any land, to terminate the leases, licenses, franchises, grants or permits or to require annual or other periodic payments as a condition of the continuance thereof; |
(g) | liens or covenants restricting or prohibiting access to or from lands abutting on controlled access highways or covenants affecting the use to which lands may be put; provided, however, such liens or covenants do not materially impair the use of the lands in the operations of a Borrower, a Guarantors or a Material Subsidiary; |
(h) | any carriers, warehousemans, builders, mechanics, garagemans, labourers, employees or materialmans lien or other similar lien arising in the ordinary course of business or out of the construction or improvement of any land or arising out of the furnishing of materials or supplies, provided that such lien secures monies not at the time overdue, or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest; |
(i) | in respect of any land, any defects or irregularities in the title to such land which are of a minor nature and which, in the aggregate, will not materially impair the use of such land for the purposes for which such land is held; |
(j) | security given by a Borrower, a Guarantor or a Material Subsidiary to a public utility or any municipality or governmental or other public authority when required by such utility or municipality or other authority in connection with the operations of such Borrower, Guarantor or Material Subsidiary (as applicable), all in the ordinary course of its business which individually or in the aggregate do not materially impair its use in the operation of the business of the Canadian Borrower and its Subsidiaries, taken as a whole; |
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(k) | the reservation in any original grants from the Crown of any land or interests therein and statutory exceptions and reservations to title and reservations of mineral rights in any grants from the Crown or from any other predecessors in title; |
(l) | Security Interests in favour of the Lenders or the Agent on behalf of the Lenders but only to the extent they secure the cash collateral provisions; |
(m) | any operating lease entered into in the ordinary course of business; |
(n) | pledges of cash or Approved Securities and bankers liens, rights of set-off and other similar liens existing solely with respect to such cash and Approved Securities on deposit in one or more accounts maintained by a Borrower, any of the Guarantors or any of the Material Subsidiaries, in each case, granted in the ordinary course of business in favour of a Lender or Lenders, with which such accounts are maintained, securing amounts owing to such lender with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements or securing Permitted Hedging; |
(o) | Security Interests securing a Purchase Money Obligation, provided that such Security Interests shall attach only to the property acquired in connection with which such Purchase Money Obligation was incurred (and proceeds thereof) and provided further that such Purchase Money Obligation is Permitted Debt; |
(p) | Security Interests securing (i) the Permitted Debt referenced in subparagraph (h) in the definition thereof; (ii) the Permitted Debt referenced in subparagraph (e) in the definition thereof; and (iii) all other Permitted Debt but only to the extent such Security Interests arise in connection with rights of set-off; |
(q) | landlords liens or any other rights of distress reserved in or exercisable under any lease of real property for rent and for compliance with the terms of such lease; provided that such lien does not attach generally to all or substantially all of the undertaking, assets and property of a Borrower, any Guarantor or any Material Subsidiary; |
(r) | liens or deposits to secure performance of (i) bids, tenders, contracts (other than contracts for the payment of money), (ii) statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business or (iii) leases of real property entered into in the ordinary course of business, in each case, to which a Borrower, a Guarantor or a Material Subsidiary is a party; |
(s) | Security Interests resulting from the deposit of cash or Approved Securities or Security Interests on other assets as security when a Borrower, a Guarantor or a Material Subsidiary is required by a Governmental Authority or by normal business practice to provide such deposits or security in connection with contracts, licenses or tenders or similar matters in the ordinary course of business and for the purpose of carrying on the same, or to secure workers compensation, surety or appeal bonds or to secure costs of litigation when required by Applicable Law; |
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(t) | rights and interests created by notice by any Department of Highways or similar authorities with respect to proposed highways and which do not materially impair the operation of the business of a Borrower, a Guarantor or a Material Subsidiary; |
(u) | lis pendens that may be registered against any real property or interest therein of a Borrower, a Guarantor or a Material Subsidiary in respect of any action or proceeding against such Borrower, such Guarantor or such Material Subsidiary or in which it is a defendant but with respect to which action or proceeding no judgment, award or attachment against such Borrower, such Guarantor or such Material Subsidiary has been granted or made and which such Borrower, such Guarantor or such Material Subsidiary is defending in good faith; and |
(v) | any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Security Interest referred to in the preceding subparagraphs (a) to (u) inclusive of this definition, so long as any such extension, renewal or replacement of such Security Interest is limited to all or any part of the same property that secured the Security Interest extended, renewed or replaced (plus improvements on such property) and the indebtedness or obligation secured thereby is not increased, |
provided that, without affecting the character or status of any of the above described Security Interests as being permitted hereunder, nothing in this definition shall in and of itself cause the Loans or the other Obligations hereunder to be subordinated in priority of payment to any such Permitted Encumbrance or cause any Security Interests in favour of the Lenders or the Agent on behalf of the Lenders to rank subordinate to any such Permitted Encumbrance.
Permitted Hedging means Financial Instruments entered into by a Borrower or a Guarantor which are entered into in the ordinary course of business and for hedging purposes and not for speculative purposes; provided that, such Financial Instruments are consistent with the Canadian Borrowers board-approved hedging policy.
Permitted Replacement means the replacement of those directors who have died or have been found to be of unsound mind by a court of competent jurisdiction.
Petroleum Substances means crude oil, crude bitumen, synthetic crude oil, petroleum, natural gas, natural gas liquids, related hydrocarbons and any and all other substances, whether liquid, solid or gaseous, whether hydrocarbons or not, produced or producible in association with any of the foregoing, including hydrogen sulphide and sulphur.
POA Fronted Lender has the meaning set out in Section 7.4(4).
POA Fronting Lender has the meaning set out in Section 7.4(4)
POA LC means a Letter of Credit issued by the Syndicated Facility Lenders (each as to their Rateable Portion thereof) under the Syndicated Facility and executed by the Agent in the name and on behalf of, as attorney-in-fact for, the Syndicated Facility Lenders, with each such Letter of Credit to include the provisions and to be substantially in the form annexed hereto as Schedule I.
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Pounds Sterling or £ means the lawful money of the United Kingdom of Great Britain and Northern Ireland.
Power of Attorney means a power of attorney provided by the Canadian Borrower to a Lender with respect to Bankers Acceptances in accordance with and pursuant to Section 6.4 hereof.
Prepaid Obligations means take or pay, forward sale, prepaid or similar liabilities of a person whereby such person is obligated to settle, at some future date, an obligation in respect of Petroleum Substances, whether by deliveries (accelerated or otherwise) of Petroleum Substances, the payment of money or otherwise, including the transfer of any Petroleum Substances, whether in place or when produced, for a period of time until, or of an amount such that, the lender or purchaser will realize therefrom a specified amount of money (however determined, including by reference to interest rates or other factors which may not be fixed) or a specified amount of such products or any interest in property of the character commonly referred to as a production payment and all such obligations for which such person is liable without having received and retained a payment therefor or having assumed such obligation.
Project Finance SPV means any Subsidiary of the Canadian Borrower who carries on the Business, the only assets of which are those used or intended for use in connection with or created or generated by, or derived from, such Business of such Subsidiary.
Purchase Money Obligation means any monetary obligation created or assumed as part of the purchase price of real or personal property (including a lease of such property), whether or not secured, any extensions, renewals or refundings of any such obligation, provided that the principal amount of such obligation outstanding on the date of such extension, renewal or refunding is not increased and further provided that any security given in respect of such obligation shall not extend to any property other than the property acquired in connection with which such obligation was created or assumed and fixed improvements, if any, erected or constructed thereon and the proceeds thereof.
Quarter End means March 31, June 30, September 30 and December 31 in each year.
Rateable and Rateably means, at any date of determination, the proportion that (a) the Equivalent Amount in Canadian Dollars of the amount of the Obligations, Bank Product Obligations and Financial Instrument Obligations under Lender Financial Instruments of any Lender and any of their Bank Product Affiliates and Hedging Affiliates bears to (b) the Equivalent Amount in Canadian Dollars of the aggregate amount of the Obligations, Bank Product Obligations and Financial Instrument Obligations under Lender Financial Instruments of all Lenders, Bank Product Affiliates and Hedging Affiliates, as determined at the Adjustment Time.
Rateable Portion, as regards any Lender, with regard to any amount of money, means (subject to Section 6.5 in respect of the rounding of allocations of Bankers Acceptances):
(a) | in respect of the Syndicated Facility and Drawdowns, Conversions, Rollovers and Loans and other amounts payable thereunder, the product obtained by multiplying that amount by the quotient obtained by dividing (i) that Syndicated Facility Lenders Syndicated Facility Commitment by (ii) the aggregate of all of the Syndicated Facility Lenders Syndicated Facility Commitments; |
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(b) | in respect of the Canadian Operating Facility and Drawdowns, Conversions, Rollovers and Loans and other amounts payable thereunder, the product obtained by multiplying that amount by the quotient obtained by dividing (i) that Lenders Canadian Operating Facility Commitment by (ii) the aggregate of all of the Lenders Canadian Operating Facility Commitments; and |
(c) | in respect of the Australian Operating Facility and Drawdowns, Conversions and Loans and other amounts payable thereunder, the product obtained by multiplying that amount by the quotient obtained by dividing (i) that Lenders Australian Operating Facility Commitment by (ii) the aggregate of all of the Lenders Australian Operating Facility Commitments, |
provided that, for certainty, with respect to a given Lender and the payment of all Obligations owing to such Lender (i) on the Maturity Date applicable to such Lender or (ii) pursuant to Section 2.23, the amount of such payment shall be deemed to be such Lenders Rateable Portion thereof.
Realization Proceeds has the meaning set out in Section 12.7.
Related Party means any person which is any one or more of the following:
(a) | an Affiliate of the Canadian Borrower or any Subsidiary; |
(b) | a unitholder, shareholder or partner of the Canadian Borrower or any Subsidiary which, together with all Affiliates of such person, owns or controls, directly or indirectly, more than 10% of the units, shares, capital or other ownership interests (however designated) of the Canadian Borrower or any Subsidiary, or an Affiliate of any such unitholder, shareholder or partner; |
(c) | an officer, director or trustee of any of the foregoing; and |
(d) | a person which is not at arms length from the Canadian Borrower and its Subsidiaries. |
Release means any release, spill, emission, leak, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or sub surface strata.
Repayment Notice means a notice substantially in the form annexed hereto as Schedule F to be given to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, by a Borrower pursuant hereto.
Requested Lenders has the meaning set out in Section 2.20.
Required Permits means all Governmental Authorizations which are necessary at any given time for the Borrowers, each of the Guarantors and each of the Material Subsidiaries to own and operate its property, assets, rights and interests or to carry on its business and affairs.
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Rollover means:
(a) | with respect to any Libor Loan and BBSY Loan, the continuation of all or a portion of such Loan (subject to the provisions hereof) for an additional Interest Period subsequent to the initial or any subsequent Interest Period applicable thereto; |
(b) | with respect to Bankers Acceptances, the issuance of new Bankers Acceptances or the making of new BA Equivalent Advances (subject to the provisions hereof) in respect of all or any portion of Bankers Acceptances (or BA Equivalent Advances made in lieu thereof) maturing at the end of the Interest Period applicable thereto, all in accordance with Article 6 hereof; and |
(c) | with respect to Letters of Credit, the extension or replacement of an existing Letter of Credit, provided the beneficiary thereof (including any successors or permitted assigns thereof) remains the same, the maximum amount available to be drawn thereunder is not increased, the currency in which the same is denominated remains the same and the terms upon which the same may be drawn remain the same; |
in each case, under the same Credit Facility under which the maturing Loan was made.
Rollover Date means the date of commencement of a new Interest Period applicable to a Loan and which shall be a Banking Day.
Rollover Notice means a notice substantially in the form annexed hereto as Schedule G to be given to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable by a Borrower pursuant hereto.
S&P means the Standard & Poors Rating Group (a division of The McGraw Hill Companies, Inc.) and any successors thereto.
Sanctioned Person means a person that is, or is directly or indirectly owned or controlled by a person that is, listed on the SDN List or on a list maintained pursuant to the Sanctioned Person Legislation.
Sanctioned Person Legislation means (a) the United Nations Al-Qaida and Taliban Regulations (Canada), (b) the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (Canada) and (c) the Criminal Code (Canada).
Sanctions Regulations means any sanctions laws, regulations, executive orders, and other official government pronouncement or action that establishes economic sanctions administered or enforced by (a) the United States of America or Canada and (b) in the respect of the Canadian Borrower and each Subsidiary, any other applicable country where it carries on business.
Schedule I Lender means a Lender which is a Canadian chartered bank listed on Schedule I to the Bank Act (Canada).
Schedule II Lender means a Lender which is a Canadian chartered bank listed on Schedule II to the Bank Act (Canada).
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Schedule III Lender means a Lender which is an authorized foreign bank listed on Schedule III to the Bank Act (Canada).
SDN List means the List of Specially Designated National and Blocked Persons maintained by the US Treasury Department.
Security Interest means mortgages, charges, pledges, hypothecs, assignments by way of security, conditional sales or other title retentions, security created under the Bank Act (Canada), liens, encumbrances, security interests or other interests in property, howsoever created or arising, whether fixed or floating, perfected or not, which secure payment or performance of an obligation and, including, in any event:
(a) | deposits or transfers of cash, marketable securities or other financial assets under any agreement or arrangement whereby such cash, securities or assets may be withdrawn, returned or transferred only upon fulfilment of any condition as to the discharge of any other indebtedness or other obligation to any creditor; |
(b) | (i) rights of set-off or (ii) any other right of or arrangement of any kind with any creditor, which in any case are made, created or entered into, as the case may be, for the purpose of or having the effect (directly or indirectly) of (A) securing Debt, (B) preferring some holders of Debt over other holders of Debt or (C) having the claims of any creditor be satisfied prior to the claims of other creditors with or from the proceeds of any properties, assets or revenues of any kind now owned or later acquired (other than, with respect to (C) only, rights of set-off granted or arising in the ordinary course of business); |
(c) | the rights of lessors under Capital Leases and any other lease financing, excluding, for greater certainty, operating leases; and |
(d) | absolute assignments of accounts receivable. |
Subsidiary means, with respect to any person (X):
(a) | any corporation of which at least a majority of the outstanding shares having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time shares of any other class or classes of such corporation might have voting power by reason of the happening of any contingency, unless the contingency has occurred and then only for as long as it continues) is at the time directly, indirectly or beneficially owned or controlled by X or one or more of its Subsidiaries, or X and one or more of its Subsidiaries; |
(b) | any partnership of which, at the time, X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries: (i) directly, indirectly or beneficially own or control more than 50% of the income, capital, beneficial or ownership interests (however designated) thereof; and (ii) is a general partner, in the case of limited partnerships, or is a partner or has authority to bind the partnership, in all other cases; or |
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(c) | any other person of which at least a majority of the income, capital, beneficial or ownership interests (however designated) are at the time directly, indirectly or beneficially owned or controlled by X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries, |
provided that, unless otherwise expressly provided or the context otherwise requires, references herein to Subsidiary or Subsidiaries shall be and shall be deemed to be references to Subsidiaries of the Canadian Borrower.
Subsidiary Guarantees means, collectively, the guarantees executed and delivered, or required to be executed and delivered, by the Guarantors under and pursuant to this Agreement substantially in the form of Schedule H-1 annexed hereto with such modifications and insertions as may be required by the Agent and agreed to by the Borrower, each acting reasonably.
Successor Agent has the meaning set out in Section 15.10.
Syndicated Facility means the credit facility in the maximum principal amount of Cdn.$705,000,000 or the Equivalent Amount in any other currency to be made available to the Canadian Borrower by the Syndicated Facility Lenders in accordance with the provisions hereof, subject to any increase in accordance with Section 2.24 and any reduction in accordance with the provisions hereof.
Syndicated Facility Commitment means the commitment by each Lender under the Syndicated Facility to provide the amount of Canadian Dollars (or the Equivalent Amount thereof) set forth opposite its name in Schedule A annexed hereto, subject to any reduction in accordance with the provisions hereof.
Syndicated Facility Extending Lender has the meaning set out in Section 2.20(3).
Syndicated Facility Extension Date has the meaning set out in Section 2.20(2).
Syndicated Facility Extension Request has the meaning set out in Section 2.20(1).
Syndicated Facility Lenders means, collectively, the Lenders which have a Syndicated Facility Commitment.
Syndicated Facility Maturity Date means, in respect of Obligations outstanding to a given Syndicated Facility Lender, June 30, 2023 or such later date to which the same may be extended in accordance with Section 2.20.
Syndicated Facility Non-Extending Lender has the meaning set out in Section 2.20(3).
Syndicated Facility Notice of Non-Extension has the meaning set out in Section 2.20(3).
Taxes means all taxes, levies, imposts, stamp taxes, duties, fees, deductions, withholdings, charges, compulsory loans or restrictions or conditions resulting in a charge which are imposed, levied, collected, withheld or assessed by any country or political subdivision or taxing authority thereof now or at any time in the future, together with interest thereon and penalties, charges or other amounts with respect thereto, if any, and Tax and Taxation shall be construed accordingly; provided that Taxes shall not include any US federal withholding tax imposed by FATCA.
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Uniform Customs has the meaning set out in Section 7.10(7).
United States Dollars and U.S.$ means the lawful money of the United States of America.
U.S. Base Rate means, for any day, the greatest of:
(a) | the rate of interest per annum established from time to time by the Agent or the Canadian Operating Facility Lender, as applicable, as the reference rate of interest for the determination of interest rates that the Agent or the Canadian Operating Facility Lender, as applicable, will charge to customers of varying degrees of creditworthiness in Canada for United States Dollar demand loans in Canada; |
(b) | the rate of interest per annum for such day or, if such day is not a Banking Day, on the immediately preceding Banking Day, equal to the sum of the Federal Funds Rate (expressed for such purpose as a yearly rate per annum in accordance with Section 5.6), plus {Spread redacted}% per annum; and |
(c) | the Libor Rate for a period of 1 month on such day (or in respect of any day that is not a Banking Day, such Libor Rate in effect on the immediately preceding Banking Day) plus {Spread redacted}% per annum, |
provided that if all such rates are equal or if such Federal Funds Rate and such Libor Rate are unavailable for any reason on the date of determination, then the U.S. Base Rate shall be the rate specified in (a) above.
U.S. Base Rate Loan means an Advance in, or Conversion into, United States Dollars made by the applicable Lenders to the Canadian Borrower with respect to which the Canadian Borrower has specified or a provision hereof requires that interest is to be calculated by reference to the U.S. Base Rate.
Voting Shares means capital stock of any class of any corporation which carries voting rights to elect the board of directors thereof under any circumstances, provided that, for purposes hereof, shares which carry the right to so vote conditionally upon the happening of an event shall not be considered Voting Shares until the occurrence of such event.
Wholly-Owned Subsidiary means, with respect to any person (X):
(a) | a corporation, all of the issued and outstanding shares in the capital of which are beneficially held by: |
(i) | X; |
(ii) | X and one or more corporations, all of the issued and outstanding shares in the capital of which are held by X; or |
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(iii) | two or more corporations, all of the issued and outstanding shares in the capital of which are held by X; |
(b) | a corporation which is a Wholly-Owned Subsidiary of a corporation that is a Wholly-Owned Subsidiary of X; or |
(c) | a partnership, all of the partners of which are X and/or Wholly-Owned Subsidiaries of X, |
provided that (i) unless otherwise expressly provided or the context otherwise requires, references herein to Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries shall be and shall be deemed to be references to Wholly-Owned Subsidiaries of the Canadian Borrower and (ii) Enerflex Middle East LLC shall for all purposes hereof be a Wholly-Owned Subsidiary of the Canadian Borrower (but only while Enerflex Middle East LLC shall remain a Guarantor).
Write-Down and Conversion Powers means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the Bail-In Legislation Schedule.
1.2 | Headings; Articles and Sections |
The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms this Agreement, hereof, hereunder and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.
1.3 | Number; persons; including |
Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa, words importing persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and corporations and vice versa and words and terms denoting inclusiveness (such as include or includes or including), whether or not so stated, are not limited by their context or by the words or phrases which precede or succeed them.
1.4 | Accounting Principles |
Except as otherwise herein provided, wherever in this Agreement reference is made to generally accepted accounting principles, such reference shall be deemed to be to the recommendations at the relevant time of the Canadian Institute of Chartered Accountants, or any successor institute, applicable on a consolidated basis (unless otherwise specifically provided or contemplated herein to be applicable on an unconsolidated basis) as at the date on which such calculation is made or required to be made in accordance with generally accepted accounting principles. In the event of a change in generally accepted accounting principles, the Canadian
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Borrowers and the Agent shall negotiate in good faith to revise (if appropriate) the financial covenants to reflect generally accepted accounting principles as then in effect, in which case all calculations thereafter made for the purpose of determining compliance with the financial covenants contained herein shall be made on a basis consistent with generally accepted accounting principles in existence as at the date of such revision.
1.5 | References to Agreements and Enactments |
Reference herein to any agreement, instrument, licence or other document shall be deemed to include reference to such agreement, instrument, licence or other document as the same may from time to time be amended, modified, supplemented or restated in accordance with the provisions of this Agreement if and to the extent such provisions are applicable; and reference herein to any enactment shall be deemed to include reference to such enactment as re-enacted, amended or extended from time to time and to any successor enactment.
1.6 | Per Annum Calculations |
Unless otherwise stated, wherever in this Agreement reference is made to a rate per annum or a similar expression is used, such rate shall be calculated on the basis of a year of 365 days.
1.7 | Schedules |
The following are the Schedules annexed hereto and incorporated by reference and deemed to be part hereof:
Schedule A | - | Lenders and Commitments | ||||
Schedule B | - | Assignment Agreement | ||||
Schedule C | - | Compliance Certificate | ||||
Schedule D | - | Conversion Notice | ||||
Schedule E | - | Drawdown Notice | ||||
Schedule F | - | Repayment Notice | ||||
Schedule G | - | Rollover Notice | ||||
Schedules H-1 and H-2 | - | Form of Subsidiary Guarantee and Parent Guarantee | ||||
Schedule I | - | Form of POA LC | ||||
Schedule J | - | Guarantors at Closing | ||||
Schedule K | - | Material Subsidiaries at Closing | ||||
Schedule L | - | Form of Australian Letter of Credit | ||||
Schedule M | - | Form of Political Risk Insurance Policy. |
1.8 | Amendment and Restatement |
(1) On the date on which all of the conditions set forth in Section 3.2 have been satisfied (or waived in writing by all of the Lenders in accordance with Section 3.3):
(a) | the Existing Credit Agreement shall be and is hereby amended and restated in the form of this Agreement; and |
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(b) | all Loans (as that term is defined in the Existing Credit Agreement) including, for certainty, Bankers Acceptances, BA Equivalent Advances and Letters of Credit (as such terms are defined in the Existing Credit Agreement) and other amounts outstanding under the Existing Credit Agreement prior to the date hereof shall continue to be outstanding under this Agreement and shall be deemed to be Loans and other Obligations owing by the applicable Borrower to the applicable Lenders under this Agreement; the Lenders hereby agree to take all steps and actions and execute and deliver all agreements, instruments and other documents as may be required by the Agent (including the assignment of interests in, or the purchase of participations in, such outstanding Loans) to give effect to the foregoing and to ensure that the aggregate Obligations owing to each Lender are outstanding in proportion to each Lenders Rateable Portion of all outstanding Obligations after giving effect to the foregoing. |
(c) | Notwithstanding the foregoing, it is hereby acknowledged that, on the date hereof, Libor Loans and Bankers Acceptances accepted by the Lenders under the Syndicated Facility provided for in the Existing Credit Agreement and each having terms to maturity ending on or after the date hereof may be outstanding (collectively, the Outstanding Libor Loans and BAs). Notwithstanding any provision of the Existing Credit Agreement or this Agreement, the right, title, benefit and interest of each Lender in or to any Outstanding Libor Loans and BAs shall remain with reference to each Lenders pro rata share thereof based on their Syndicated Facility Commitments prior to the amendment and restatement of the Existing Credit Agreement in the form of this Agreement. From time to time, as the Outstanding Libor Loans and Assignor BAs mature and Rollovers and Conversions are made by the Canadian Borrower in respect thereof, each Lender shall participate in the Loans effecting such Rollovers and Conversions to the full extent of its Syndicated Facility Commitment hereunder. |
(2) Notwithstanding the foregoing or any other term hereof, all of the covenants, representations and warranties on the part of a Borrower or the Borrowers under the Existing Credit Agreement and all of the claims and causes of action arising against a Borrower or the Borrowers in connection therewith, in respect of all matters, events, circumstances and obligations arising or existing prior to the date hereof shall continue, survive and shall not be merged in the execution of this Agreement or any other Documents or any advance or provision of any Loan hereunder.
ARTICLE 2THE CREDIT FACILITIES
2.1 | The Credit Facilities |
Subject to the terms and conditions hereof, each of the Lenders under a Credit Facility shall make available to the applicable Borrower such Lenders Rateable Portion of such Credit Facility. Subject to Section 2.18, the Outstanding Principal under a given Credit Facility shall not exceed the maximum principal amount of such Credit Facility.
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2.2 | Types of Availments; Overdraft Loans; Australian LCs |
(1) The Canadian Borrower may make Drawdowns, Conversions and Rollovers under either of the Syndicated Facility or the Canadian Operating Facility of Canadian Prime Rate Loans and Bankers Acceptances in Canadian Dollars and may make Drawdowns, Conversions and Rollovers under either of the Syndicated Facility or the Canadian Operating Facility of U.S. Base Rate Loans and Libor Loans in United States Dollars. In addition, the Canadian Borrower may make Drawdowns and Rollovers under the Syndicated Facility of Letters of Credit denominated in Canadian Dollars, United States Dollars, Australian Dollars, Euros and Pounds Sterling and each other currency agreed to by the Syndicated Facility Lenders (in which case, the Syndicated Facility Lenders and the Canadian Borrower, acting reasonably, shall agree upon the mechanics for completing Drawdowns and Rollovers of Letters of Credit in such other currency and the repayment mechanisms in connection therewith); provided that the Outstanding Principal of Letters of Credit outstanding under the Syndicated Facility shall not exceed Cdn.$130,000,000. Lastly, the Australian Borrower may make Drawdowns of, Conversions into, and Rollovers of, BBSY Loans under the Australian Operating Facility in Australian Dollars. The applicable Borrower shall have the option, subject to the terms and conditions hereof, to determine which types of Loans shall be drawn down and in which combinations or proportions.
(2) In addition to the foregoing, overdrafts arising from clearance of cheques or drafts drawn on the Canadian Dollar accounts and United States Dollar accounts of the Canadian Borrower maintained with the Canadian Operating Facility Lender, and designated by the Canadian Operating Facility Lender for such purpose, shall be deemed to be outstanding as Canadian Prime Rate Loans and U.S. Base Rate Loans, respectively, under the Canadian Operating Facility (each, a Canadian Overdraft Loan) and all references to Canadian Prime Rate Loans and U.S. Base Rate Loans (as applicable) shall include Canadian Overdraft Loans. For certainty, notwithstanding Section 2.7 or 2.15, no Drawdown Notice or Repayment Notice need be delivered by the Canadian Borrower in respect of Canadian Overdraft Loans.
(3) In addition to the foregoing, the Australian Borrower may withdraw funds from the overdraft account maintained with the Australian Operating Facility Lender that has been designated by the Australian Operating Facility Lender for such purpose (Australian Overdraft Account), which shall be deemed to be outstanding as Australian overdraft loans under the Australian Operating Facility (each, an Australian Overdraft Loan). For certainty, notwithstanding Section 2.7 or 2.15, no Drawdown Notice or Repayment Notice need be delivered by the Australian Borrower in respect of Australian Overdraft Loans. In respect of such Australian Overdraft Loans, the Australian Borrower must pay the Australian Operating Facility Lenders normal account service fees for accounts and loans, and any such fees may be debited to (a) the Australian Designated Account and (b) to the extent there are insufficient funds in the Australian Designated Account, the Australian Overdraft Account, at such times as the Australian Operating Facility Lender determines.
(4) The Australian Borrower may, in Australian Dollars, make Drawdowns of Australian Letters of Credit in accordance with Section 2.26.
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2.3 | Purpose |
Each of the Credit Facilities is being made available for the general corporate purposes of the applicable Borrower including working capital requirements, the issuance of letters of credit, capital expenditures, the repayment of debt and non-hostile acquisitions.
2.4 | Availability and Nature of the Credit Facilities |
(1) Subject to the terms and conditions hereof, the applicable Borrower may make Drawdowns under the applicable Credit Facility in respect of the Commitments of a given Lender prior to, and only prior to, the Maturity Date applicable to such Lender.
(2) Prior to the Maturity Date applicable to a Lender, each Credit Facility shall be a revolving credit facility and the applicable Borrower may increase or decrease Loans under such Credit Facility by making Drawdowns, repayments and further Drawdowns.
(3) For certainty, in no event shall a Lender be required to fund, participate in, or otherwise provide any portion of a Loan which has a maturity or expiry date, or which has an Interest Period which will expire, after the Maturity Date applicable to such Lender. In no event shall a Borrower request, or be entitled to obtain, a Loan which has a maturity or expiry date, or which has an Interest Period which will expire after the earliest Maturity Date then applicable to a Lender.
2.5 | Minimum Drawdowns |
(1) Each Drawdown under the Syndicated Facility of the following types of Loans shall be in the following amounts indicated:
(a) | Bankers Acceptances in minimum aggregate amounts of Cdn.$5,000,000 at maturity and Drawdowns in excess thereof in integral multiples of Cdn.$100,000; |
(b) | Libor Loans in minimum principal amounts of U.S.$5,000,000 and Drawdowns in excess thereof in integral multiples of U.S.$100,000; |
(c) | Canadian Prime Rate Loans in minimum principal amounts of Cdn.$1,000,000 and Drawdowns in excess thereof in integral multiples of Cdn.$100,000; and |
(d) | U.S. Base Rate Loans in minimum principal amounts of U.S.$1,000,000 and Drawdowns in excess thereof in integral multiples of U.S.$100,000. |
(2) Each Drawdown under the Canadian Operating Facility of the following types of Loans shall be in the following amounts indicated:
(a) | Bankers Acceptances in minimum aggregate amounts of Cdn.$500,000 at maturity and Drawdowns in excess thereof in integral multiples of Cdn.$100,000; and |
(b) | Libor Loans in minimum principal amounts of U.S.$500,000 and Drawdowns in excess thereof in integral multiples of U.S.$100,000. |
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(3) Subject to Section 2.2(3), each Drawdown under the Australian Operating Facility of BBSY Loans shall be in the minimum aggregate amounts of the Equivalent Amount in Australian Dollars of Cdn.$500,000 at maturity and Drawdowns in excess thereof in integral multiples of the Equivalent Amount in Australian Dollars of Cdn.$100,000.
2.6 | Libor Loan and BBSY Loan Availability |
Drawdowns of, Conversions into and Rollovers of (as applicable) requested Libor Loans and BBSY Loans may only be made upon the Agents, the Canadian Operating Facility Lenders or the Australian Operating Facility Lenders, as applicable, prior favourable determination with respect to the matters referred to in Section 13.1.
2.7 | Notice Periods for Drawdowns, Conversions and Rollovers |
(1) Subject to the provisions hereof, the Canadian Borrower may make a Drawdown, Conversion or Rollover under the Syndicated Facility by delivering a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be (executed in accordance with the definition of Officers Certificate), with respect to a specified type of Loan to the Agent not later than:
(a) | 10:00 a.m. (Calgary time) three Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or the Rollover of Libor Loans; |
(b) | 10:00 a.m. (Calgary time) two Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or Rollover of Bankers Acceptances; |
(c) | 10:00 a.m. (Calgary time) one Banking Day prior to the proposed Drawdown Date or Conversion Date, as the case may be, for Drawdowns of or Conversions into Canadian Prime Rate Loans and/or U.S. Base Rate Loans; and |
(d) | 10:00 a.m. (Calgary time) three Banking Days prior to the proposed Drawdown Date or Rollover Date, as the case may be, for the Drawdown or Rollover of Letters of Credit. |
(2) Subject to the provisions hereof, including Section 2.2(2), the Canadian Borrower may make a Drawdown, Conversion or Rollover under the Canadian Operating Facility by delivering a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be (executed in accordance with the definition of Officers Certificate), with respect to a specified type of Loan to the Canadian Operating Facility Lender not later than:
(a) | 10:00 a.m. (Calgary time) three Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or the Rollover of Libor Loans; |
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(b) | 10:00 a.m. (Calgary time) one Banking Day prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into or Rollover of Bankers Acceptances; and |
(c) | 10:00 a.m. (Calgary time) on the proposed Drawdown Date or Conversion Date, as the case may be, for Drawdowns of or Conversions into Canadian Prime Rate Loans and/or U.S. Base Rate Loans. |
(3) Subject to the provisions hereof including Section 2.2(3), the Australian Borrower may make a Drawdown or Rollover under the Australian Operating Facility (and may make a Conversion of an Australian Overdraft Loan into a BBSY Loan) by delivering a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be (executed in accordance with the definition of Officers Certificate), with respect to a specified type of Loan to the Australian Operating Facility Lender not later than 10:00 a.m. (Perth time) three Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, for the Drawdown of, Conversion into, or the Rollover of, BBSY Loans.
2.8 | Conversion Option |
Subject to the provisions of this Agreement and except for Letters of Credit and BBSY Loans, a Borrower may convert the whole or any part of any type of Loan under a Credit Facility into any other type of permitted Loan under the same Credit Facility by giving the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, a Conversion Notice in accordance herewith; provided that:
(a) | Conversions of Libor Loans and Bankers Acceptances may only be made on the last day of the Interest Period applicable thereto; |
(b) | a Borrower may not convert a portion only or the whole of an outstanding Loan unless both the unconverted portion and converted portion of such Loan are equal to or exceed, in the relevant currency of each such portion, the minimum amounts required for Drawdowns of Loans of the same type as that portion (as set forth in Section 2.5); |
(c) | in respect of Conversions of a Loan denominated in one currency to a Loan denominated in another currency, a Borrower shall at the time of the Conversion repay the Loan or portion thereof being converted in the currency in which it was denominated; |
(d) | a Conversion shall not result in an increase in Outstanding Principal; increases in Outstanding Principal may only be effected by Drawdowns; |
(e) | in respect of the Conversion of any Australian Overdraft Loans into BBSY Loans, such Conversion shall be effected by the repayment of such Australian Overdraft Loans, or portion thereof, and readvance to the Australian Borrower of BBSY Loans; and |
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(f) | notwithstanding the foregoing, a Borrower shall be permitted to request Drawdowns below the minimum amounts provided for herein to the extent necessary to allow such Borrower to meet the minimum amount requirements for a requested Conversion. |
2.9 | Libor Loan and BBSY Loan Rollovers; Selection of Libor and BBSY Interest Periods |
(1) At or before 10:00 a.m. (Calgary time) three Banking Days prior to the expiration of each Interest Period of each Libor Loan, the Canadian Borrower shall, unless it has delivered a Conversion Notice pursuant to Section 2.8 and/or a Repayment Notice pursuant to Section 2.15 (together with a Rollover Notice if a portion only is to be converted or repaid; provided that a portion of a Libor Loan may be continued only if the portion which is to remain outstanding is equal to or exceeds the minimum amount required hereunder for Drawdowns of Libor Loans) with respect to the aggregate amount of such Loan, deliver a Rollover Notice to the Agent or the Canadian Operating Facility Lender, as applicable, selecting the next Interest Period applicable to the Libor Loan which new Interest Period shall commence on and include the last day of such prior Interest Period. If the Canadian Borrower fails to deliver a Rollover Notice to the Agent or the Canadian Operating Facility Lender, as applicable, as provided in this Section, the Canadian Borrower shall be deemed to have given a Conversion Notice to the Agent or the Canadian Operating Facility Lender, as applicable, electing to convert the entire amount of the maturing Libor Loan into a U.S. Base Rate Loan.
(2) At or before 10:00 a.m. (Perth time) three Banking Days prior to the expiration of each Interest Period of each BBSY Loan, the Australian Borrower shall, unless it has delivered a Repayment Notice pursuant to Section 2.15 (together with a Rollover Notice if a portion only is to be repaid; provided that a portion of a BBSY Loan may be continued only if the portion which is to remain outstanding is equal to or exceeds the minimum amount required hereunder for Drawdowns of BBSY Loans) with respect to the aggregate amount of such Loan, deliver a Rollover Notice to the Australian Operating Facility Lender selecting the next Interest Period applicable to the BBSY Loan which new Interest Period shall commence on and include the last day of such prior Interest Period. If the Australian Borrower fails to deliver a Rollover Notice to the Australian Operating Facility Lender as provided in this Section, then the applicable interest rate on such BBSY Loan payable under Section 5.4 shall be deemed to be a rate per annum equal to the BBR in effect from time to time with a deemed interest period of one month plus the Applicable Pricing Rate and references to BBSY in respect of BBSY Loans shall be deemed to be references to BBR with a deemed interest period of one month.
2.10 | Rollovers and Conversions not Repayments |
Any amount converted shall be a Loan of the type converted to upon such Conversion taking place, and any amount rolled over shall continue to be the same type of Loan under the same Credit Facility as before the Rollover, but such Conversion or Rollover (to the extent of the amount converted or rolled over) shall not of itself constitute a repayment or a fresh utilization of any part of the amount available under the relevant Credit Facility.
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2.11 | Agents Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans and Libor Loans |
Upon receipt of a Drawdown Notice, Rollover Notice or Conversion Notice with respect to a Canadian Prime Rate Loan, U.S. Base Rate Loan or Libor Loan, the Agent shall forthwith notify the relevant Lenders of the requested type of Loan, the proposed Drawdown Date, Rollover Date or Conversion Date, each Lenders Rateable Portion of such Loan and, if applicable, the account of the Agent to which each Lenders Rateable Portion is to be credited.
2.12 | Lenders and Agents Obligations with Respect to Canadian Prime Rate Loans, U.S. Base Rate Loans, Libor Loans and BBSY Loans; |
(1) The applicable Lenders shall, for same day value not later than 12:00 p.m. (Toronto time) on the Drawdown Date specified by the Canadian Borrower in a Drawdown Notice with respect to a Canadian Prime Rate Loan, a U.S. Base Rate Loan and a Libor Loan under the Syndicated Facility, credit the Agents account specified in the Agents notice given under Section 2.11 with such Lenders Rateable Portion of each such requested Loan and for same day value on the same date the Agent shall, to the extent such funds have been received by the Agent, pay to the Canadian Borrower the full amount of the amounts so credited in accordance with any payment instructions set forth in the applicable Drawdown Notice.
(2) On the Drawdown Date specified by the Canadian Borrower in a Drawdown Notice with respect to a Canadian Prime Rate Loan, a U.S. Base Rate Loan and a Libor Loan under the Canadian Operating Facility, for same day value the Canadian Operating Facility Lender shall pay to the Canadian Borrower the full amount of the requested Drawdown in accordance with any payment instructions set forth in the applicable Drawdown Notice.
(3) On the Drawdown Date specified by the Australian Borrower in a Drawdown Notice with respect to a BBSY Loan under the Australian Operating Facility, for same day value the Australian Operating Facility Lender shall pay to the Australian Borrower the full amount of the requested Drawdown in accordance with any payment instructions set forth in the applicable Drawdown Notice.
2.13 Irrevocability
A Drawdown Notice, Rollover Notice, Conversion Notice or Repayment Notice given by a Borrower hereunder shall be irrevocable and, subject to any options the Lenders may have hereunder in regard thereto and such Borrowers rights hereunder in regard thereto, shall oblige such Borrower to take the action contemplated on the date specified therein.
2.14 | Optional Cancellation or Reduction of Credit Facilities |
The Canadian Borrower (on behalf of itself and the Australian Borrower) may, at any time, upon giving at least 3 Banking Days prior written notice to, in respect of a cancellation or reduction of the Syndicated Facility, the Agent, in respect of a cancellation or reduction of the Canadian Operating Facility, the Canadian Operating Facility Lender, or, in respect of a cancellation or reduction of the Australian Operating Facility, the Australian Operating Facility Lender, cancel in full or, from time to time, permanently reduce in part the unutilized portion of a
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Credit Facility; provided, however, that any such reduction shall be in a minimum amount of Cdn.$5,000,000 and reductions in excess thereof shall be in integral multiples of Cdn.$1,000,000 (or, in respect of the Australian Operating Facility such reduction shall be in a minimum amount of the Equivalent Amount in Australian Dollars of Cdn.$5,000,000 and reduction in excess thereof shall be in integral multiples of the Equivalent Amount in Australian Dollars of AUD$1,000,000). If a Credit Facility is so reduced, the Commitments of each of the Lenders under such Credit Facility shall be reduced pro rata in the same proportion that the amount of the reduction in the Credit Facility bears to the amount of such Credit Facility in effect immediately prior to such reduction.
2.15 | Optional Repayment of Credit Facilities |
A Borrower may at any time and from time to time repay, without penalty, to the Agent for the account of the Lenders, or in connection with the Canadian Operating Facility, the Canadian Operating Facility Lender, or in connection with the Australian Operating Facility, the Australian Operating Facility Lender or, in the case of Letters of Credit or Australian Letters of Credit, return the same to the Agent or the Australian Operating Facility Lender, as applicable, for cancellation or provide for the funding of, the whole or any part of any Loan owing by it together with accrued interest thereon to the date of such repayment provided that:
(a) | such Borrower shall give a Repayment Notice (executed in accordance with the definition of Officers Certificate) to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, prior to the date of the proposed repayment not later than the time by which prior notice would be required to be given under Section 2.7 for a Drawdown of the type of Loan proposed to be repaid; provided that the applicable Borrower may repay a Canadian Overdraft Loan or an Australian Overdraft Loan without any prior notice; |
(b) | repayments pursuant to this Section may only be made on a Banking Day; |
(c) | subject to the following provisions and Section 2.17, each such repayment may only be made on the last day of the applicable Interest Period with regard to a Libor Loan and a BBSY Loan that is being repaid; |
(d) | a Bankers Acceptance may only be repaid on its maturity unless collateralized in accordance with Section 2.17(3); |
(e) | unexpired Letters of Credit and Australian Letters of Credit may only be prepaid by the return thereof to the Agent or the Australian Operating Facility Lender, as applicable, for cancellation or providing funding therefor in accordance with Section 2.17(2); |
(f) | except in the case of (i) Letters of Credit and Australian Letters of Credit (ii) Canadian Prime Rate Loans and U.S. Base Rate Loans under the Canadian Operating Facility and (iii) Australian Overdraft Loans under the Australian Operating Facility, each such repayment shall be in a minimum amount of the lesser of: (i) the minimum amount required pursuant to Section 2.5 for Drawdowns of the type of Loan proposed to be repaid and (ii) the Outstanding Principal of all Loans outstanding under the Credit Facilities immediately prior to such repayment; any repayment in excess of such amount shall be in integral multiples of the amounts required pursuant to Section 2.5 for multiples in excess of the minimum amounts for Drawdowns; and |
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(g) | except in the case of (i) Letters of Credit and Australian Letters of Credit (ii) Canadian Prime Rate Loans and U.S. Base Rate Loans under the Canadian Operating Facility and (iii) Australian Overdraft Loans under the Australian Operating Facility, a Borrower may not repay a portion only of an outstanding Loan unless the unpaid portion is equal to or exceeds, in the relevant currency, the minimum amount required pursuant to Section 2.5 for Drawdowns of the type of Loan proposed to be repaid. |
2.16 | Mandatory Repayment and Reduction of Credit Facilities |
Subject to Section 12.2 and Article 8, each Borrower shall repay or pay, as the case may be, to the Agent, on behalf of the Lenders, or, in connection with the Canadian Operating Facility, to the Canadian Operating Facility Lender, or, in connection with the Australian Operating Facility, to the Australian Operating Facility Lender, all Loans and other Obligations outstanding under each Credit Facility on or before the Maturity Date applicable to each Credit Facility and applicable to each Lender. Notwithstanding the foregoing, the Australian Borrower shall repay or pay, as the case may be, to the Australian Operating Facility Lender, all Australian Overdraft Loans and all accrued interest thereon within 4 Banking Days of receipt by the Australian Borrower of a demand for payment by the Australian Operating Facility Lender.
2.17 | Additional Repayment Terms |
(1) If any Libor Loan or BBSY Loan is repaid on other than the last day of the applicable Interest Period, the applicable Borrower shall, within three Banking Days after notice is given by the Agent, the Canadian Operating Facility Lender, or the Australian Operating Facility Lender, as applicable, pay to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, for the account of the applicable Lenders all costs, losses, premiums and expenses incurred by such Lenders by reason of the liquidation or re-deployment of deposits or other funds, or for any other reason whatsoever, resulting in each case from the repayment of such Loan or any part thereof on other than the last day of the applicable Interest Period. Any such Lender, upon becoming entitled to be paid such costs, losses, premiums and expenses, shall deliver to the applicable Borrower and, in the case of a Syndicated Facility Lender, the Agent, a certificate of such Lender certifying as to such amounts and, in the absence of manifest error, such certificate shall be conclusive and binding for all purposes.
(2) With respect to the funding of the repayment of unexpired Letters of Credit and Australian Letters of Credit, it is agreed that the applicable Borrower shall provide for the funding in full of the repayment of unexpired Letters of Credit or Australian Letters of Credit, as applicable, by paying to and depositing with the Agent or the Australian Operating Facility Lender, as applicable, cash collateral for each such unexpired Letter of Credit or Australian Letter of Credit, as applicable, equal to the maximum undrawn face amount thereof and any accrued but unpaid fees (including fronting and issuance fees), in each case, in the respective currency which
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the relevant Letter of Credit or Australian Letters of Credit, as applicable, is denominated; such cash collateral deposited by a Borrower shall be held by the Agent or the Australian Operating Facility Lender, as applicable, in an interest bearing cash collateral account with interest to be credited to the applicable Borrower at rates prevailing at the time of deposit for similar accounts with the Agent or the Australian Operating Facility Lender, as applicable. Such cash collateral accounts shall be assigned to the Agent or the Australian Operating Facility Lender, as applicable, as security for the obligations of the applicable Borrower in relation to such Letters of Credit or Australian Letters of Credit, as applicable, and the Security Interest of the Agent or the Australian Operating Facility Lender (or be subject to such set-off or other arrangements permitted hereunder and satisfactory to the Australian Operating Facility Lender), as applicable, thereby created in such cash collateral shall rank in priority to all other Security Interests and adverse claims against such cash collateral other than those Security Interests described in paragraphs (a) and (b) of the definition of Permitted Encumbrances. Such cash collateral shall be applied to satisfy the obligations of the applicable Borrower for such Letters of Credit or Australian Letters of Credit, as applicable, as payments are made thereunder and the Agent and the Australian Operating Facility Lender, as applicable, are hereby irrevocably directed by the applicable Borrower to so apply any such cash collateral. Amounts held in such cash collateral accounts may not be withdrawn by the applicable Borrower without the consent of the Agent or the Australian Operating Facility Lender, as applicable; however, interest on such deposited amounts shall be for the account of the applicable Borrower and may be withdrawn by the applicable Borrower so long as no Default or Event of Default is then continuing. If after expiry of the Letters of Credit for which such funds are held and application by the Agent or the Australian Operating Facility Lender, as applicable, of the amounts in such cash collateral accounts to satisfy the obligations of the applicable Borrower hereunder with respect to the Letters of Credit or Australian Letters of Credit, as applicable, being repaid, any excess remains, such excess shall be promptly paid by the Agent or the Australian Operating Facility Lender, as applicable, to the applicable Borrower so long as no Default or Event of Default is then continuing.
In lieu of providing cash collateral as aforesaid, the applicable Borrower may provide to the Agent or the Australian Operating Facility Lender, as applicable, irrevocable standby letter or letters of credit in an aggregate amount equal to the aggregate maximum undrawn face amount of all unexpired Letters of Credit or Australian Letters of Credit, as applicable, being repaid and any accrued but unpaid fees (including fronting and issuance fees) and for a term which expires not sooner than 10 Banking Days after the expiry of the Letters of Credit or Australian Letters of Credit, as applicable, in respect of which such letter(s) of credit are provided; such letters of credit shall be denominated and payable in the currency of the relevant unexpired Letters of Credit or Australian Letters of Credit, as applicable, and shall be issued by a financial institution and on terms and conditions acceptable to each of the Agent and the Fronting Lenders or the Australian Operating Facility Lender, as applicable, each in its sole discretion. The Agent and the Australian Operating Facility Lender, as applicable, are hereby irrevocably authorized and directed to draw upon such letters of credit and apply the proceeds of the same to satisfy the obligations of the applicable Borrower for such unexpired Letters of Credit or Australian Letters of Credit, as applicable, as payments are made by the Agent, the Fronting Lenders and the Syndicated Facility Lenders or the Australian Operating Facility Lender, as applicable, thereunder.
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(3) With respect to a repayment of unmatured Bankers Acceptances it is agreed that the Canadian Borrower shall provide for the funding in full of the unmatured Bankers Acceptances to be repaid by paying to and depositing with the Agent or the Canadian Operating Facility Lender, as applicable, cash collateral (the Cash Collateral) for each such unmatured Bankers Acceptances equal to the face amount payable at maturity thereof; such Cash Collateral deposited by the Canadian Borrower shall be invested by the Agent or the Canadian Operating Facility Lender, as applicable, in Approved Securities as may be directed in writing by the Canadian Borrower from time to time (the Collateral Investments), provided that the Canadian Borrower shall direct said investments so that they mature in amounts sufficient to permit payment of the Obligations for maturing Bankers Acceptances on the maturity dates thereof, with interest thereon to be credited to the Canadian Borrower. In the event that the Agent or the Canadian Operating Facility Lender, as applicable, is not provided with instructions from the Canadian Borrower to make Collateral Investments as provided herein, the Agent or the Canadian Operating Facility Lender, as applicable, shall hold such Cash Collateral in an interest bearing cash collateral account (the Cash Collateral Account) at rates prevailing at the time of deposit for similar accounts with the Agent or the Canadian Operating Facility Lender, as applicable. The (a) Cash Collateral, (b) Cash Collateral Accounts, (c) Collateral Investments, (d) any accounts receivable, claims, instruments or securities evidencing or relating to the foregoing, and (e) any proceeds of any of the foregoing (collectively the Outstanding BAs Collateral) shall be assigned to the Agent or the Canadian Operating Facility Lender, as applicable, as security for the obligations of the Canadian Borrower in relation to such Bankers Acceptances and the Security Interest of the Agent or the Canadian Operating Facility Lender, as applicable, thereby created in such Outstanding BAs Collateral shall rank in priority to all other Security Interests and adverse claims against such Outstanding BAs Collateral other than those Security Interests described in paragraphs (a) and (b) of the definition of Permitted Encumbrances. Such Outstanding BAs Collateral shall be applied to satisfy the obligations of the Canadian Borrower for such Bankers Acceptances as they mature and the Agent and the Canadian Operating Facility Lender, as applicable, are hereby irrevocably directed by the Canadian Borrower to apply any such Outstanding BAs Collateral to such maturing Bankers Acceptances. The Outstanding BAs Collateral created herein shall not be released to the Canadian Borrower without the consent of the Agent or the Canadian Operating Facility Lender, as applicable; however, interest on such deposited amounts shall be for the account of the Canadian Borrower and may be withdrawn by the Canadian Borrower so long as no Default or Event of Default is then continuing. If, after maturity of the Bankers Acceptances for which such Outstanding BAs Collateral is held and application by the Agent or the Canadian Operating Facility Lender, as applicable, of the Outstanding BAs Collateral to satisfy the obligations of the Canadian Borrower hereunder with respect to the Bankers Acceptances being repaid, any interest or other proceeds of the Outstanding BAs Collateral remains, such interest or other proceeds shall be promptly paid and transferred by the Agent or the Canadian Operating Facility Lender, as applicable to the Canadian Borrower so long as no Default or Event of Default is then continuing.
2.18 | Currency Excess |
(1) If the Agent, or, in the case of the Canadian Operating Facility, the Canadian Operating Facility Lender, or in the case of the Australian Operating Facility, the Australian Operating Facility Lender shall determine, acting reasonably, that the aggregate Outstanding Principal of the outstanding Loans under a given Credit Facility exceeds the maximum principal amount of such Credit Facility (the amount of such excess is herein called the Currency Excess), then, upon written request by the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable (which request shall detail the applicable
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Currency Excess), the applicable Borrower shall repay (a) in respect of the Syndicated Facility and the Canadian Operating Facility an amount of Canadian Prime Rate Loans or U.S. Base Rate Loans and (b) in respect of the Australian Operating Facility, an amount of Australian Overdraft Loans, within (i) if the Currency Excess exceeds Cdn.$1,000,000 (or the Equivalent Amount in any other applicable currency), 5 Banking Days, and (ii) in all other cases, 20 Banking Days after receipt of such request, such that, except as otherwise contemplated in Section 2.18(2), the Equivalent Amount in Canadian Dollars of such repayments is, in the aggregate, at least equal to the Currency Excess; provided that the amount actually payable by such Borrower in respect of such Currency Excess on a given day shall not exceed the actual Currency Excess on such day and provided further that no such payment shall result in the permanent reduction of the Commitments under any Credit Facility.
(2) If, in respect of any Currency Excess, the repayments made by the applicable Borrower have not completely removed such Currency Excess (the remainder thereof being herein called the Currency Excess Deficiency), the applicable Borrower shall within the aforementioned 5 or 20 Banking Days, as the case may be, after receipt of the aforementioned request of the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, place an amount equal to the Currency Excess Deficiency on deposit with the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, in an interest bearing account with interest at rates prevailing at the time of deposit for the account of applicable Borrower, to be assigned to the Agent on behalf of the Syndicated Facility Lenders, to the Canadian Operating Facility Lender or to the Australian Operating Facility Lender, as applicable, by instrument satisfactory to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, and, if applicable, to be applied to maturing Bankers Acceptances, BBSY Loans or Libor Loans (converted if necessary at the exchange rate for determining the Equivalent Amount on the date of such application). The Agent, the Canadian Operating Facility Lender and the Australian Operating Facility Lender, as applicable, are hereby irrevocably directed by the applicable Borrower to apply any such sums on deposit to maturing Loans as provided in the preceding sentence. In lieu of providing funds for the Currency Excess Deficiency, as provided in the preceding provisions of this Section, the applicable Borrower may within the said period of 5 or 20 Banking Days, as the case may be, provide to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, an irrevocable standby letter of credit in an amount equal to the Currency Excess Deficiency and for a term which expires not sooner than 10 Banking Days after the date of maturity or expiry, as the case may be, of the relevant Bankers Acceptances, Libor Loans, BBSY Loans, Letters of Credit or Australian Letters of Credit, as the case may be; such letter of credit for the Currency Excess Deficiency shall be issued by a financial institution, and shall be on terms and conditions, acceptable to the Agent, the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, each in its sole discretion. The Agent, the Canadian Operating Facility Lender and the Australian Operating Facility Lender are each hereby authorized and directed to draw upon such letter of credit and apply the proceeds of the same to Bankers Acceptances, BBSY Loans, Libor Loans, Letters of Credit or Australian Letters of Credit as they mature. Upon the Currency Excess Deficiency being eliminated as aforesaid or by virtue of subsequent changes in the exchange rate for determining the Equivalent Amount, then, provided no Default or Event of Default is then continuing, such funds on deposit, together with interest thereon, or such letters of credit shall be returned to the applicable Borrower, in the case of funds on deposit, or shall be cancelled or reduced in amount, in the case of letters of credit.
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2.19 | Hedging with Lenders and Hedging Affiliates |
If a Lender or Hedging Affiliate enters into a Financial Instrument with a Borrower or a Guarantor which such Lender or Hedging Affiliate (as the case may be) believes, acting reasonably, in good faith and without any actual notice or knowledge to the contrary, is Permitted Hedging, then each such Lender Financial Instrument and the Lender Financial Instrument Obligations under such Financial Instrument shall be guaranteed by the Parent Guarantee and the Subsidiary Guarantees (except the guarantee entered into by such Borrower or Guarantor and those Subsidiary Guarantees which by their terms would not guarantee the Lender Financial Instrument in question) equally and rateably with the Obligations and the Bank Product Obligations, regardless of whether such Borrower or Guarantor has complied herewith (but, for certainty, without in any manner lessening or relieving such Borrower or Guarantor from its obligation to comply therewith).
2.20 | Extension of Syndicated Facility Maturity Date |
(1) In this Section:
Syndicated Facility Extension Request means a written request by the Canadian Borrower to the Syndicated Facility Lenders to extend the Syndicated Facility Maturity Date applicable to such Lenders by one or more years (or any portion thereof), which request shall include an Officers Certificate certifying that no Default or Event of Default has occurred and is continuing; and
Requested Lenders means those Syndicated Facility Lenders which are not then Syndicated Facility Non-Extending Lenders.
(2) The Canadian Borrower may, once in each calendar year, by delivering to the Agent an executed Syndicated Facility Extension Request, request the Requested Lenders to extend the Syndicated Facility Maturity Date applicable to such Lenders by one or more years (or any portion thereof); provided that: (a) such request may not be made more than 90 days or less than 60 days before June 30 in each calendar year (each, a Syndicated Facility Extension Date); and (b) the Syndicated Facility Maturity Date, if extended in accordance herewith and therewith, shall not be later than four (4) years after the effectiveness of such extension.
(3) Upon receipt from the Canadian Borrower of an executed Syndicated Facility Extension Request, the Agent shall promptly deliver to each Requested Lender a copy of such request, and each Requested Lender shall, within 30 days after receipt of the Syndicated Facility Extension Request by the Agent, provide to the Agent and the Canadian Borrower either (a) written notice that such Requested Lender (each, a Syndicated Facility Extending Lender) agrees, subject to Section 2.20(4) below, to the requested extension of the current Syndicated Facility Maturity Date applicable to it or (b) written notice (each, a Syndicated Facility Notice of Non-Extension) that such Requested Lender (each, a Syndicated Facility Non-Extending Lender) does not agree to such requested extension; provided that, if any Requested Lender shall fail to so notify the Agent and the Canadian Borrower, then such Requested Lender shall be deemed to have delivered a Syndicated Facility Notice of Non-Extension and shall be deemed to be a Syndicated Facility Non-Extending Lender. The determination of each Syndicated Facility Lender whether or not to extend the Syndicated Facility Maturity Date applicable to it shall be made by each individual Syndicated Facility Lender in its sole discretion.
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(4) If the Syndicated Facility Extending Lenders have Syndicated Facility Commitments which, in aggregate, represent more than 662⁄3% of all outstanding Syndicated Facility Commitments, the Syndicated Facility Maturity Date shall be extended in accordance with the Syndicated Facility Extension Request for each of the Syndicated Facility Extending Lenders. If the Syndicated Facility Extending Lenders do not have Syndicated Facility Commitments which, in aggregate, represent more than 662⁄3% of all outstanding Syndicated Facility Commitments, the Syndicated Facility Maturity Date shall not be extended for any of the Requested Lenders. For certainty, the Syndicated Facility Maturity Date for a Syndicated Facility Non-Extending Lender shall not be extended, regardless of whether or not the Syndicated Facility Maturity Date is extended for the Syndicated Facility Extending Lenders as aforesaid.
(5) This Section shall apply from time to time to facilitate successive extensions and requests for extension of the Syndicated Facility Maturity Date. If, as of the applicable Syndicated Facility Extension Date (before an agreement of the Syndicated Facility Extending Lenders to the extension thereof in accordance with the foregoing provisions of this Section 2.20), a Default or Event of Default exists, the Syndicated Facility Maturity Date shall not be extended, notwithstanding any other provision hereof to the contrary, for a Syndicated Facility Extending Lender unless (a) such Syndicated Facility Extending Lender has waived such Default or Event of Default in writing and (b) Syndicated Facility Extending Lenders having Syndicated Facility Commitments which, in aggregate, represent more than 662⁄3% of all outstanding Syndicated Facility Commitments have waived such Default or Event of Default in writing.
(6) A Syndicated Facility Non-Extending Lender may, with the prior written consent of the Canadian Borrower, become a Syndicated Facility Extending Lender with respect to any prior extension of the Syndicated Facility Maturity Date by providing written notice to the Agent revoking the Syndicated Facility Notice of Non-Extension provided by such Syndicated Facility Lender; such revocation shall be effective from and after receipt by the Agent of such notice from such Syndicated Facility Lender together with a copy of the Canadian Borrowers consent in relation thereto.
2.21 | Extension of Canadian Operating Facility Maturity Date |
(1) In this Section Canadian Operating Facility Extension Request means a written request by the Canadian Borrower to the Canadian Operating Facility Lender to extend the Canadian Operating Facility Maturity Date by one or more years (or any portion thereof), which request shall include an Officers Certificate certifying that no Default or Event of Default has occurred and is continuing.
(2) The Canadian Borrower may, once in each calendar year, by delivering to the Canadian Operating Facility Lender an executed Canadian Operating Facility Extension Request, request the Canadian Operating Facility Lender to extend the Canadian Operating Facility Maturity Date by one or more years (or any portion thereof); provided that: (a) such request may not be made more than 90 days or less than 60 days before June 30 in each calendar year (each, a Canadian Operating Facility Extension Date); and (b) the Canadian Operating Facility Maturity Date, if extended in accordance herewith and therewith, shall not be later than four (4) years after the effectiveness of such extension.
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(3) Upon receipt from the Canadian Borrower of an executed Canadian Operating Facility Extension Request, the Canadian Operating Facility Lender shall, within 30 days after receipt of the Canadian Operating Facility Extension Request, provide to the Agent and the Canadian Borrower either (a) written notice that the Canadian Operating Facility Lender agrees to the requested extension of the current Canadian Operating Facility Maturity Date in which case the Canadian Operating Facility Maturity Date shall be extended in accordance with the Canadian Operating Facility Extension Request or (b) written notice that the Canadian Operating Facility Lender does not agree to such requested extension, in which case the Canadian Operating Facility Maturity Date shall not be extended; provided that, if the Canadian Operating Facility Lender shall fail to so notify the Agent and the Canadian Borrower, then the Canadian Operating Facility Lender shall be deemed to have denied the request to extend the Canadian Operating Facility Maturity Date. The determination of the Canadian Operating Facility Lender whether or not to extend the Canadian Operating Facility Maturity Date shall be made by the Canadian Operating Facility Lender in its sole discretion.
(4) This Section shall apply from time to time to facilitate successive extensions and requests for extension of the Canadian Operating Facility Maturity Date. If, as of the applicable Canadian Operating Facility Extension Date (before an agreement of the Canadian Operating Facility Lender to the extension thereof in accordance with the foregoing provisions of this Section 2.21), a Default or Event of Default exists, the Canadian Operating Facility Maturity Date shall not be extended, notwithstanding any other provision hereof to the contrary unless the Canadian Operating Facility Lender has waived such Default or Event of Default in writing.
2.22 | Extension of Australian Operating Facility Maturity Date |
(1) In this Section Australian Operating Facility Extension Request means a written request by either the Canadian Borrower, on behalf of the Australian Borrower, or the Australian Borrower to the Australian Operating Facility Lender (with a copy to the Agent) to extend the Australian Operating Facility Maturity Date by one or more years (or any portion thereof), which request shall include an Officers Certificate certifying that no Default or Event of Default has occurred and is continuing.
(2) The Canadian Borrower, on behalf of the Australian Borrower, or the Australian Borrower may, once in each calendar year, by delivering to the Australian Operating Facility Lender (with a copy to the Agent) an executed Australian Operating Facility Extension Request, request the Australian Operating Facility Lender to extend the Australian Operating Facility Maturity Date by one or more years (or any portion thereof); provided that: (a) such request may not be made more than 90 days or less than 60 days before June 30 in each calendar year (each, an Australian Operating Facility Extension Date); and (b) the Australian Operating Facility Maturity Date, if extended in accordance herewith and therewith, shall not be later than four (4) years after the effectiveness of such extension.
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(3) The Australian Operating Facility Lender shall, within 30 days after receipt of the Australian Operating Facility Extension Request, provide to the Canadian Borrower, on behalf of the Australian Borrower, or the Australian Borrower, as applicable, (with a copy to the Agent) either (a) written notice that the Australian Operating Facility Lender agrees to the requested extension of the current Australian Operating Facility Maturity Date in which case the Australian Operating Facility Maturity Date shall be extended in accordance with the Australian Operating Facility Extension Request or (b) written notice that the Australian Operating Facility Lender does not agree to such requested extension, in which case the Australian Operating Facility Maturity Date shall not be extended; provided that, if the Australian Operating Facility Lender shall fail to so notify the Canadian Borrower, on behalf of the Australian Borrower, or the Australian Borrower, as applicable, then the Australian Operating Facility Lender shall be deemed to have denied the request to extend the Australian Operating Facility Maturity Date. The determination of the Australian Operating Facility Lender whether or not to extend the Australian Operating Facility Maturity Date shall be made by the Australian Operating Facility Lender in its sole discretion.
(4) This Section shall apply from time to time to facilitate successive extensions and requests for extension of the Australian Operating Facility Maturity Date. If, as of the applicable Australian Operating Facility Extension Date (before an agreement of the Australian Operating Facility Lender to the extension thereof in accordance with the foregoing provisions of this Section 2.22), a Default or Event of Default exists, the Australian Operating Facility Maturity Date shall not be extended, notwithstanding any other provision hereof to the contrary unless the Australian Operating Facility Lender has waived such Default or Event of Default in writing.
2.23 | Replacement of Lenders |
(1) Each of the Borrowers shall have the right, at its option, to (i) replace Lenders under the applicable Credit Facilities (by causing them to assign their rights and interests under such Credit Facilities to additional financial institutions which have agreed to become Lenders or by increasing the Commitments of existing Lenders under such Credit Facilities with, in the latter case, the consent of such increasing Lenders, or any combination thereof), (ii) repay the Obligations outstanding to certain Lenders under the applicable Credit Facilities and cancelling their Commitments (without corresponding repayment to other Lenders), or (iii) any combination of the foregoing, with respect to the following Lenders:
(a) | Syndicated Facility Non-Extending Lenders, provided that the Syndicated Facility Maturity Date has been extended in accordance with the most recent Syndicated Facility Extension Request delivered by the Canadian Borrower pursuant to Section 2.20(2); |
(b) | Lenders which have claimed Additional Compensation in accordance with the provisions hereof (each, a Lender Claiming Additional Compensation); and |
(c) | Lenders which have not agreed to consent under, waiver of or proposed amendment to the provisions of the Documents (each, a Dissenting Lender) requested by a Borrower; provided that the applicable Borrower shall not be entitled to replace or repay a Dissenting Lender unless, after doing so, the requested consent, waiver or amendment would be approved in accordance with this Agreement; |
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provided that the Borrowers shall not be entitled to replace or repay a Dissenting Lender unless it is concurrently repaying or replacing all Dissenting Lenders in connection with the relevant extension, consent, waiver or amendment and further provided that increases in the Commitments of existing Lenders and the addition of new financial institutions as Lenders shall require the consent of each of the Agent (such consent not to be unreasonably withheld or delayed) and, in the case of the Syndicated Facility, each Fronting Lender (such consent in each Fronting Lenders sole discretion).
(2) In order to give effect to the provisions of Section 2.23(1) (but subject to such provisions), the relevant Borrower may, from time to time:
(a) | require any Syndicated Facility Non-Extending Lender, Lender Claiming Additional Compensation or Dissenting Lender to assign all of its rights, benefits and interests under the Documents, its Commitments and its Rateable Portion of all Loans and other Obligations (collectively, the Assigned Interests) to (a) any other Lenders which have agreed to increase their Commitments and purchase the Assigned Interests or (b) to third party lenders selected by the relevant Borrower. The relevant Borrower shall provide the Agent, each Fronting Lender, in respect of the Canadian Operating Facility, the Canadian Operating Facility Lender, and, in respect of the Australian Operating Facility, the Australian Operating Facility Lender, with 10 Banking Days prior written notice of its desire to proceed under this Section. The assignment of the Assigned Interests shall be effective upon: (a) execution and delivery of assignment documentation satisfactory to the relevant Syndicated Facility Non-Extending Lender, Lender Claiming Additional Compensation or Dissenting Lender, as the case may be, the assignee, the relevant Borrower and the Agent (each acting reasonably); (b) upon payment to the relevant Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, by the relevant assignee of an amount equal to such Lenders Rateable Portion of all Loans being assigned and all accrued but unpaid interest and fees hereunder in respect of those portions of the Loans and Commitments being assigned; (c) upon payment by the relevant assignee to the Agent (for the applicable Agents own account) of the transfer fee contemplated in Section 16.6; and (d) upon provision satisfactory to the Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, (acting reasonably) being made for (i) payment at maturity of outstanding Bankers Acceptances accepted by it, (ii) indemnity in respect of its share of outstanding Letters of Credit or, with respect to outstanding Fronted LCs, release by the relevant Fronting Lenders of its obligations in respect thereof and (iii) any costs, losses, premiums or expenses incurred by such Lender by reason of the liquidation or re-deployment of deposits or other funds in respect of Libor Loans or BBSY Loans outstanding hereunder. Upon such assignment and transfer, the assigning Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, shall have no further right, interest, benefit or obligation in respect of the Assigned Interests (except as provided in Section 7.8(3)) and the assignee thereof shall succeed to the position of such Lender as if the same was an original party hereto in the place and stead of such Syndicated Facility Non-Extending Lender, Dissenting |
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Lender or Lender Claiming Additional Compensation, as the case may be, and such assignee shall be deemed to be a Syndicated Facility Extending Lender for all purposes of this Agreement where the assignor is a Syndicated Facility Non-Extending Lender; for such purpose, the assignee shall execute and deliver an Assignment Agreement and such other documentation as may be reasonably required by the Agent, Fronting Lenders and the relevant Borrower to confirm its agreement to be bound by the provisions hereof as a Lender and to give effect to the foregoing; and |
(b) | to the extent that the relevant Borrower has not caused any Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, to assign its rights, benefits and interests to another Lender or other financial institution as provided in paragraph (a) above, repay to such Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, at any time while such Lender continues to be a Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, all such Lenders Rateable Portion of all Loans outstanding under the Credit Facilities, together with all accrued but unpaid interest and fees thereon and with respect to its Commitments, without making corresponding repayment to the other Lenders and, upon such repayment and provision satisfactory to the relevant Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, (acting reasonably) being made for (i) payment at maturity of all outstanding Bankers Acceptances accepted by such Lender, (ii) indemnity in respect of its share of outstanding Letters of Credit or, with respect to outstanding Fronted LCs, release by the relevant Fronting Lenders of its obligations in respect thereof and (iii) any costs, losses, premiums or expenses incurred by such Lender by reason of a liquidation or re-deployment of deposits or other funds in respect of Libor Loans or BBSY Loans outstanding hereunder, the applicable Borrower may cancel such Lenders Commitments. Upon completion of the foregoing, such Syndicated Facility Non-Extending Lender, Dissenting Lender or Lender Claiming Additional Compensation, as the case may be, shall have no further right, interest, benefit or obligation in respect of the Credit Facilities (except as provided in Section 7.8(3)) and each Credit Facility shall be reduced by the amount of such Lenders cancelled Commitment thereunder. |
2.24 | Permitted Increase in Syndicated Facility |
The Canadian Borrower may, at any time and from time to time, increase the maximum amount of the Syndicated Facility by (i) adding additional financial institutions as Syndicated Facility Lenders, (ii) increasing the Syndicated Facility Commitments of existing Lenders with the consent of such existing Lenders or (iii) any combination thereof. The right to increase the maximum principal amount of the Syndicated Facility as aforesaid shall be subject to the following (for each such increase):
(a) | no Default or Event of Default shall have occurred and be continuing and the Canadian Borrower shall have delivered to the Agent a certificate of an officer of the Canadian |
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Borrower confirming the same and confirming (i) its corporate authorization to make such increase, (ii) the truth and accuracy in all material respects of its representations and warranties contained in Section 9.1 hereof as of such date, other than any such representations and warranties which expressly speak as of an earlier date and (iii) that no consents, approvals or authorizations are required for such increase (except as have been unconditionally obtained and are in full force and effect, unamended), each as at the effective date of such increase; |
(b) | unless the Canadian Borrower shall have delivered to the Agent certified copies of the corporate authorization of the Canadian Borrower and each Guarantor authorizing such increase, the Canadian Borrower shall have delivered to the Agent an opinion of its legal counsel and counsel to the Guarantors in form and substance as may be required by the Agent, acting reasonably (and such opinion shall, inter alia, opine as to the corporate authorization of the Canadian Borrower to effect such increase); |
(c) | the aggregate of all increases pursuant to this Section shall not exceed Cdn.$150,000,000 (or the Equivalent Amount thereof); |
(d) | the Agent and each Fronting Lender shall have consented to increases in the Commitments of a Lender and any additional financial institution becoming a Lender, such consent of the Agent and each Fronting Lender not to be unreasonably withheld or delayed (it being understood that the withholding of consent by a Fronting Lender due to (i) such Fronting Lenders concern over the credit quality of a Lender whose Commitment is being increased or a financial institution becoming a Lender or (ii) exposure limits of such Fronting Lender related to a Lender whose Commitment is being increased or a financial institution becoming a Lender shall, in each case, be deemed to be reasonable); and |
(e) | the Canadian Borrower and the increasing existing Lender or the financial institution being added, as the case may be, shall execute and deliver such documentation as is required by the Agent, acting reasonably, to effect the increase in question (including the partial assignment of Loans or purchase of participations from Lenders to the extent necessary to ensure that, after giving effect to such increase, each Lender holds its Rateable Portion of each outstanding Loan under the Syndicated Credit Facility) and, if applicable, to add any such new financial institution as a Lender under the Documents. |
2.25 | Designation of Non-Guarantor Subsidiaries |
(1) The Canadian Borrower shall from time to time, by notice in writing to the Agent, the Canadian Operating Facility Lender and the Australian Operating Facility Lender, be entitled to designate effective on the date set out in such notice that a Guarantor (other than the Australian Borrower) shall be a Non-Guarantor Subsidiary; provided that, without affecting the then existing status of Non-Guarantor Subsidiaries, the Canadian Borrower shall not be entitled to designate that a Guarantor shall be a Non-Guarantor Subsidiary if:
(a) | a Default or an Event of Default has occurred and is continuing; |
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(b) | a Default or an Event of Default would result from or exist immediately after such a designation; or |
(c) | for certainty, if, immediately after such designation, the Canadian Borrower would not be in compliance with any of the terms and conditions hereof including, without limitation, the financial covenants set out in Section 10.3 or the positive covenant set out in Section 10.1(q). |
(2) The Canadian Borrower shall, concurrently with delivery of a notice pursuant to Section 2.25(1), deliver to the Agent, the Canadian Operating Facility Lender and the Australian Operating Facility Lender an Officers Certificate addressed to the Agent and the Lenders certifying that the Canadian Borrower is entitled to make the designation referenced in such notice.
2.26 | Australian Letters of Credit |
(1) The Australian Operating Facility Lender agrees that it shall, subject to Section 3.1, on each Drawdown Date in connection with a Drawdown request for an Australian Letter of Credit, issue an Australian Letter of Credit having a Maximum Liability equal to the amount of the proposed Drawdown specified in the relevant Drawdown Notice and being otherwise in accordance with the Drawdown Notice.
(2) Each Australian Letter of Credit issued by the Australian Operating Facility Lender must be in the form or substantially in the form set out in Schedule L or as otherwise agreed between the Australian Borrower and the Australian Operating Facility Lender.
(3) The Australian Borrower irrevocably authorizes the Australian Operating Facility Lender to immediately pay any amount demanded at any time under an Australian Letter of Credit issued by the Australian Operating Facility Lender. The Australian Operating Facility Lender:
(a) | need not first refer to the Australian Borrower or obtain its authority for the payment; |
(b) | need not enquire whether the demand has been properly made; and |
(c) | may meet any demand even though the Australian Borrower disputes the validity of the demand. |
(4) The Australian LC Sub-Facility Limit automatically reduces by an amount equal to the Maximum Liability of any outstanding Australian Letter of Credit until such Australian Letter of Credit has expired, been exhausted (provided that the Australian Operating Facility Lender has received the amount set out in Section 2.26(6) from the Australian Borrower in respect of such Letter of Credit), been cancelled or returned to the Australian Operating Facility Lender or been defeased by the provision of cash collateral in accordance with the provisions hereof. Notwithstanding the foregoing, the amount of any outstanding Loans under the Australian Operating Facility shall not exceed the Australian Operating Facility Commitment without the prior written consent of the Australian Operating Facility Lender.
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(5) The Australian Borrower agrees not to request the issue of Australian Letters of Credit which, if issued, could result in the total of the Maximum Liability under all unexpired Letters of Credit on any day exceeding the Australian LC Sub-Facility Limit for that day.
(6) The Australian Borrower agrees to pay, within 4 Banking Days of demand from the Australian Operating Facility Lender, an amount equal to the amount paid by the Australian Operating Facility Lender under an Australian Letter of Credit.
(7) The Australian Borrower shall indemnify and save harmless the Australian Operating Facility Lender against all claims, losses, costs, expenses or damages to the Australian Operating Facility Lender arising out of or in connection with any Australian Letter of Credit, the issuance thereof, any payment thereunder or any action taken by the Australian Operating Facility Lender or any other person in connection therewith in accordance with the terms of this Agreement including all reasonable properly documented costs relating to any legal process or proceeding instituted by any party restraining or seeking to restrain the issuer of an Australian Letter of Credit or the Australian Operating Facility Lender from accepting or paying any draft or any amount under any such Australian Letter of Credit, except as a result of the Australian Operating Facility Lenders gross negligence, wilful misconduct or material breach of this Agreement. The Australian Borrower agrees to pay amounts due under this indemnity on demand from the Australian Operating Facility Lender.
(8) The rights of the Australian Operating Facility Lender and the Australian Borrowers obligations are not affected by anything that might otherwise affect them under law or otherwise, including, without limitation:
(a) | any inaccuracy, insufficiency, forgery or alteration in any certificate, Australian Letter of Credit or other document which purports to be made, issued or delivered under this Agreement or under any Australian Letter of Credit; |
(b) | the fact that the Australian Operating Facility Lender releases any person (other than the Australian Borrower) or gives the Australian Borrower (or any other person) a concession, such as more time to pay, or compounds or compromises with them (whether or not an additional burden is imposed at the same time); |
(c) | acquiescence or delay by one or both of the Australian Operating Facility Lender or any other person; |
(d) | any variation or novation of a right of the Australian Operating Facility Lender or another person; or |
(e) | the fact that the obligations of any person other than the Australian Borrower may not be enforceable. |
(9) The Australian Borrower shall pay to the Australian Operating Facility Lender in respect of Australian Letters of Credit issued hereunder, an issuance fee quarterly in arrears (on the first day of January, April, July and October in each year, on the date of cancellation of the Australian Operating Facility and on the Australian Operating Facility Maturity Date) calculated at a rate per annum equal to the Applicable Pricing Rate on the Maximum Liability from time to time
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of each issued Australian Letter of Credit, calculated disregarding any amount paid out by the Australian Operating Facility Lender under the Australian Letter of Credit until the Australian Borrower pays in full in respect of that amount under clause 2.26(6). To the extent any Australian Letters of Credit for which issuance fees have been paid in advance are presented, cancelled, terminated or reduced prior to their original expiry date, the Australian Operating Facility Lender, shall reimburse the Australian Borrower for the amount of any applicable overpayment of any such issuance fees in connection with any such presentment, cancellation, termination or reduction.
ARTICLE 3CONDITIONS PRECEDENT TO DRAWDOWNS
3.1 | Conditions for Drawdowns |
On or before each Drawdown hereunder the following conditions shall be satisfied:
(a) | the Agent, or in respect of a Drawdown under the Australian Operating Facility, the Australian Operating Facility Lender, or, in the case of a Drawdown under the Canadian Operating Facility, the Canadian Operating Facility Lender, shall have received a complete Drawdown Notice, delivered in accordance with the requirements hereof, from the applicable Borrower requesting the Drawdown; |
(b) | the representations and warranties set forth in Section 9.1 shall be true and accurate in all respects on and as of the date of the requested Drawdown other than those representations and warranties expressly stated to be made as of an earlier date; |
(c) | no Default or Event of Default shall have occurred and be continuing nor shall the Drawdown result in the occurrence of a Default or Event of Default; and |
(d) | after giving effect to the proposed Drawdown, the Outstanding Principal of all Loans outstanding under the relevant Credit Facility shall not exceed the maximum principal amount of such Credit Facility and, in respect of the sub-facilities provided for under the Australian Operating Facility, the total principal amount outstanding under such sub-facility shall not exceed the maximum amount of such sub-facility. |
3.2 | Additional Conditions For Amendment and Restatement |
This Agreement shall be effective upon, and the Existing Credit Agreement shall be amended and restated as herein provided upon, the following conditions being satisfied:
(a) | all fees which are due and payable under the Agency Fee Agreement to the Agent for its own account shall have been paid to the Agent by the Canadian Borrower (the Agency Fee Agreement Fees); |
(b) | all fees and expenses previously agreed to in writing between the Canadian Borrower and each of (i) the Lead Arrangers, (ii) the Agent, (iii) the Lenders or (iv) any Lender or Lenders that are due and payable (other than the Agency Fee Agreement Fees) shall be paid by the Canadian Borrower to the Lead Arrangers, the Agent or the applicable Lender or Lenders, as applicable; |
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(c) | the Borrowers and each Guarantor at closing shall have delivered to the Agent, if applicable, a current certificate of status, compliance or good standing, as the case may be, in respect of its jurisdiction of incorporation, certified copies of its constating documents, by-laws, shareholder agreements, other organizational documents (or, for those entities that have previously provided such certified documents, certification that no change or amendments thereto have occurred or been made since previously delivered), as applicable, and the resolutions authorizing the Documents to which it is a party and the transactions thereunder and an Officers Certificate as to the incumbency of the officers thereof signing the Documents to which it is a party; |
(d) | the Agent and the Lenders shall have received legal opinions from legal counsel to each Borrower and each Guarantor from legal counsel in each applicable jurisdiction, in form and substance as may be required by the Lenders acting reasonably; |
(e) | no Default or Event of Default shall have occurred and be continuing and the Canadian Borrower shall have delivered to the Agent and the Lenders an Officers Certificate certifying the same to the Agent and the Lenders; |
(f) | the Documents (including, without limitation, (i) a confirmation of guarantee from each Guarantor that has a Subsidiary Guarantee that is outstanding as of the date of this Agreement and (ii) any Subsidiary Guarantees required to be delivered in order for the Canadian Borrower to comply with its obligations under Section 10.1(q)) shall have been fully executed and delivered, each in form and substance satisfactory to the Lenders (acting reasonably); |
(g) | the Canadian Borrower shall have delivered to the Agent an Officers Certificate attaching an updated corporate organization chart of the Canadian Borrower and its Subsidiaries; |
(h) | if not already delivered, the Canadian Borrower shall have delivered the Compliance Certificate and reporting required pursuant to Sections 10.1(e)(i), (ii) and (iv) of this Agreement in respect of the December 31, 2018 fiscal year end of the Canadian Borrower; and |
(i) | the Agent and the Lenders shall have received all such other documentation and information reasonably requested from each Borrower and their Subsidiaries in order to comply with any applicable know your customer, proceeds of crime and anti-money laundering rules and regulations including, without limitation, for any Lender that is a Covered Financial Institution if the Canadian Borrower or any Subsidiary qualifies as a legal entity customer under the Beneficial Ownership Regulation, a Beneficial Ownership Certification in relation to the Canadian Borrower or such Subsidiary not less than 5 days prior to the date hereof. |
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3.3 | Waiver |
The conditions set forth in Sections 3.1 and 3.2 are inserted for the sole benefit of the Lenders and the Agent and may be waived by the Lenders, in whole or in part (with or without terms or conditions) without prejudicing the right of the Lenders or Agent at any time to assert such waived conditions in respect of any subsequent Drawdown until such waived conditions are satisfied by the Canadian Borrower.
ARTICLE 4EVIDENCE OF DRAWDOWNS
4.1 | Account of Record |
(1) The Agent shall open and maintain books of account evidencing all Loans and all other amounts owing by the Canadian Borrower to the Syndicated Facility Lenders hereunder. The Agent shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Canadian Borrower under the Syndicated Facility. The information entered in the foregoing accounts, absent manifest error, shall constitute prima facie evidence of the obligations of the Canadian Borrower to the Syndicated Facility Lenders hereunder with respect to all Loans and all other amounts owing by the Canadian Borrower to the Syndicated Facility Lenders hereunder. After a request by the Canadian Borrower, the Agent shall promptly advise the Canadian Borrower of such entries made in the Agents books of account.
(2) The Canadian Operating Facility Lender shall open and maintain books of account evidencing all Loans and all other amounts owing by the Canadian Borrower to the Canadian Operating Facility Lender hereunder. The Canadian Operating Facility Lender shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Canadian Borrower under the Canadian Operating Facility. The information entered in the foregoing accounts, absent manifest error, shall constitute prima facie evidence of the obligations of the Canadian Borrower to the Canadian Operating Facility Lender hereunder with respect to all Loans and all other amounts owing by the Canadian Borrower to the Canadian Operating Facility Lender hereunder. After a request by the Canadian Borrower, the Canadian Operating Facility Lender shall promptly advise the Canadian Borrower of such entries made in the Canadian Operating Facility Lenders books of account.
(3) The Australian Operating Facility Lender shall open and maintain books of account evidencing all Loans and all other amounts owing by the Australian Borrower to the Australian Operating Facility Lender in respect of the Australian Operating Facility hereunder. The Australian Operating Facility Lender shall enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Australian Borrower under the Australian Operating Facility. The information entered in the foregoing accounts, absent manifest error, shall constitute prima facie evidence of the obligations of the Australian Borrower to the Australian Operating Facility Lender hereunder with respect to all Loans and all other amounts owing by the Australian Borrower under the Australian Operating Facility. After a request by the Australian Borrower or the Agent, the Australian Operating Facility Lender shall promptly advise the Australian Borrower or the Agent, as applicable, of such entries made in the Australian Operating Facility Lenders books of account.
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ARTICLE 5PAYMENTS OF INTEREST AND FEES
5.1 | Interest on Canadian Prime Rate Loans |
The Canadian Borrower shall pay interest on each Canadian Prime Rate Loan owing by it during each Interest Period applicable thereto in Canadian Dollars at a rate per annum equal to the Canadian Prime Rate in effect from time to time during such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent or the Canadian Operating Facility Lender, as applicable, of the Canadian Prime Rate applicable from time to time during an Interest Period, in the absence of manifest error, shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Canadian Prime Rate Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the Canadian Prime Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Canadian Borrower.
5.2 | Interest on U.S. Base Rate Loans |
The Canadian Borrower shall pay interest on each U.S. Base Rate Loan owing by it during each Interest Period applicable thereto in United States Dollars at a rate per annum equal to the U.S. Base Rate in effect from time to time during such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent or the Canadian Operating Facility Lender, as applicable, of the U.S. Base Rate applicable from time to time during an Interest Period, in the absence of manifest error, shall be prima facie evidence thereof. Such interest shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the U.S. Base Rate Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the U.S. Base Rate shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Canadian Borrower.
5.3 | Interest on Libor Loans |
The Canadian Borrower shall pay interest on each Libor Loan owing by it during each Interest Period applicable thereto in United States Dollars at a rate per annum, calculated on the basis of a 360 day year, equal to the Libor Rate with respect to such Interest Period plus the Applicable Pricing Rate. Each determination by the Agent or the Canadian Operating Facility Lender, as applicable, of the Libor Rate applicable to an Interest Period, in the absence of manifest error, shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the preceding Rollover Date, Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Libor Loan outstanding during such period and on the basis of the actual number of days elapsed divided by 360.
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5.4 | Interest on BBSY Loans |
The Australian Borrower shall pay interest on each BBSY Loan owing by it during each Interest Period applicable thereto in Australian Dollars at a rate per annum equal to the BBSY in effect from time to time during such Interest Period plus the Applicable Pricing Rate. Each determination by the Australian Operating Facility Lender of the BBSY applicable from time to time during an Interest Period, in the absence of manifest error, shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the Conversion Date or Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the BBSY Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 360 days. Changes in the BBSY shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Australian Borrower.
5.5 | Interest on Australian Overdraft Loans |
The Australian Borrower shall pay interest on each Australian Overdraft Loan owing by it in Australian Dollars at a rate per annum equal to the BLR in effect from time to time. Each determination by the Australian Operating Facility Lender of the BLR applicable from time to time, in the absence of manifest error, shall be prima facie evidence thereof. Such interest shall accrue daily and shall be payable in arrears on each Interest Payment Date for such Loan for the period from and including the Drawdown Date or the Interest Payment Date, as the case may be, for such Loan to and including the day preceding such Interest Payment Date and shall be calculated on the principal amount of the Australian Overdraft Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days. Changes in the BLR shall cause an immediate adjustment of the interest rate applicable to such Loans without the necessity of any notice to the Australian Borrower. Interest payable pursuant to this Section 5.5 may, to the extent not otherwise paid on the relevant Interest Payment Date, be debited to (a) the Australian Designated Account and (b) to the extent there are insufficient funds in the Australian Designated Account, the Australian Overdraft Account.
5.6 | Interest Act (Canada); Conversion of 360 Day Rates |
(1) Whenever a rate of interest or other rate per annum hereunder is expressed or calculated on the basis of a year (the deemed year) which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year.
(2) Whenever a rate of interest or other rate per annum hereunder is expressed or calculated on the basis of a year of 360 or 365 days, such rate of interest or other rate shall be expressed as a rate per annum, calculated on the basis of a 365 or 366 day year, as applicable, by multiplying such rate of interest or other rate by 365 or 366, as applicable, and dividing it by 360 or 365, as applicable.
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(3) Each Borrower confirms that it fully understands and is able to calculate the rates of interest applicable to the Credit Facilities based on the methodology for calculating per annum rates provided for in this Agreement. The Agent agrees that, if requested in writing by any Borrower, it will calculate the nominal and effective per annum rate of interest on any Loan outstanding at the time of such request and provide such information to such Borrower within a reasonable time following such request; provided that any error in any such calculation, or any failure to provide such information on request, shall not relieve any Borrower of any of its obligations under this Agreement or any other Document, nor result in any liability to the Agent or any Lender. Each Borrower hereby irrevocably agrees not to plead or assert, whether by way of defence or otherwise, in any proceeding relating to the Documents, that the interest payable under this Agreement and the calculation thereof has not been adequately disclosed to any Borrower, whether pursuant to section 4 of the Interest Act (Canada) or any other applicable law or legal principle.
5.7 | Nominal Rates; No Deemed Reinvestment |
The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; all interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after maturity, default and judgment. The rates of interest specified in this Agreement are intended to be nominal rates and not effective rates. Interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation.
5.8 | Standby Fees |
(1) Subject to Section 16.2(3), the Canadian Borrower shall pay to the Agent for the account of the Syndicated Facility Lenders a standby fee in Canadian Dollars in respect of the Syndicated Facility calculated at a rate per annum equal to the Applicable Pricing Rate on the amount, if any, by which the amount of the Outstanding Principal under the Syndicated Facility for each day in the period of determination is less than the maximum principal amount for such Credit Facility for each such day. Fees determined in accordance with this Section shall accrue daily from and after the date hereof and be payable by the Canadian Borrower quarterly in arrears and on cancellation in full of the Syndicated Facility and on the Syndicated Facility Maturity Date.
(2) Subject to Section 16.2(3), the Canadian Borrower shall pay to the Canadian Operating Facility Lender for its own account a standby fee in Canadian Dollars in respect of the Canadian Operating Facility calculated at a rate per annum equal to the Applicable Pricing Rate on the amount, if any, by which the amount of the Outstanding Principal under the Canadian Operating Facility for each day in the period of determination is less than the maximum principal amount for such Credit Facility for each such day. Fees determined in accordance with this Section shall accrue daily from and after the date hereof and be payable by the Canadian Borrower quarterly in arrears and on cancellation in full of the Canadian Operating Facility and on the Canadian Operating Facility Maturity Date.
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(3) Subject to Section 16.2(3), the Australian Borrower shall pay to the Australian Operating Facility Lender for its own account a standby fee in Australian Dollars in respect of Australian Operating Facility calculated at a rate per annum equal to the Applicable Pricing Rate on the amount, if any, by which the amount of the Outstanding Principal under the Australian Operating Facility for each day in the period of determination is less than the maximum principal amount for each such day of such Credit Facility. Fees determined in accordance with this Section shall accrue daily from and after the date hereof and be payable by the Australian Borrower quarterly in arrears and on cancellation in full of the Australian Operating Facility and on the Australian Operating Facility Maturity Date.
(4) As of: (i) the fifth day of January, April, July and October in each year, (ii) the date of any cancellation in full of a Credit Facility and (iii) the Maturity Date applicable to a Credit Facility the Agent, or in the case of the Canadian Operating Facility, the Canadian Operating Facility Lender, or, in the case of the Australian Operating Facility, the Australian Operating Facility Lender, shall determine the standby fees under this Section in respect of the applicable Credit Facility for the period from and including the date hereof or the date of the immediately preceding determination, as the case may be, to but excluding that date of determination and shall deliver to the applicable Borrower a written request for payment of the standby fees so determined, as detailed therein which request shall constitute prima facie evidence of the amount owing. The applicable Borrower shall pay to the Agent, for the account of the Syndicated Facility Lenders, or shall pay to the Canadian Operating Facility Lender, for its own account, or shall pay to the Australian Operating Facility Lender, for its own account, the standby fees referred to above within 5 Banking Days after receipt of each such written request.
(5) For certainty, no standby fees shall be payable by a Borrower in respect of a given Credit Facility for any period of time after the Maturity Date applicable to such Credit Facility.
5.9 | Agents Fees |
From and after the date hereof, the Canadian Borrower shall pay to the Agent, for its own account, until the Syndicated Facility has been fully cancelled and all Obligations thereunder have been paid in full, other than, in each case, the provisions of this Agreement (and the obligations related hereto) which by their terms survive the termination and cancellation of the Syndicated Facility, the non-refundable agency fees in the amounts specified in the Agency Fee Agreement.
5.10 | Interest on Overdue Amounts |
Notwithstanding any other provision hereof, in the event that any amount due hereunder (including, without limitation, any interest payment) is not paid when due (whether by acceleration or otherwise), the applicable Borrower shall pay interest on such unpaid amount (including, without limitation, interest on interest), if and to the fullest extent permitted by applicable law, from the date that such amount is due until the date that such amount is paid in full (but excluding the date of such payment if the payment is received for value at the required place of payment on the date of such payment), and such interest shall accrue daily, be calculated and compounded monthly and be payable on demand, after as well as before maturity, default and judgment, at a rate per annum that is equal to (i) in respect of amounts due in Canadian Dollars, the rate of interest then payable on Canadian Prime Rate Loans plus {Spread redacted}% per annum, (ii) in respect of amounts due in United States Dollars, the rate of interest then payable on U.S. Base Rate Loans plus {Spread redacted}% per annum, (iii) in respect of amounts due in Pounds Sterling or Euros, the rate of interest then payable on Canadian Prime Rate Loans plus {Spread redacted}% per annum and (iv) in respect of amounts due in Australian Dollars, the rate of interest then payable on Australian Overdraft Loans plus {Spread redacted}% per annum.
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5.11 | Waiver |
To the extent permitted by applicable law, the covenant of the Borrowers to pay interest at the rates provided herein shall not merge in any judgment relating to any obligation of either Borrower to the Lenders or the Agent and any provision of the Interest Act (Canada) or Judgment Interest Act (Alberta) which restricts any rate of interest set forth herein shall be inapplicable to this Agreement and is hereby waived by the Borrowers.
5.12 | Maximum Rate Permitted by Law |
No interest or fee to be paid hereunder shall be paid at a rate exceeding the maximum rate permitted by applicable law. In the event that such interest or fee exceeds such maximum rate, such interest or fees shall be reduced or refunded, as the case may be, so as to be payable at the highest rate recoverable under applicable law.
ARTICLE 6BANKERS ACCEPTANCES
6.1 | Bankers Acceptances |
The Canadian Borrower may give the Agent notice that Bankers Acceptances will be required under the Syndicated Facility pursuant to a Drawdown, Rollover or Conversion and may give the Canadian Operating Facility Lender notice that Bankers Acceptances will be required under the Canadian Operating Facility pursuant to a Drawdown, Rollover or Conversion.
6.2 | Fees |
Upon the acceptance by a Lender of a Bankers Acceptance, the Canadian Borrower shall pay to the Agent, for the account of such Lender, or shall pay the Canadian Operating Facility Lender, as applicable, a fee in Canadian Dollars equal to the Applicable Pricing Rate calculated on the principal amount at maturity of such Bankers Acceptance and for the period of time from and including the date of acceptance to but excluding the maturity date of such Bankers Acceptance and calculated on the basis of the number of days elapsed in a year of 365 days.
6.3 | Form and Execution of Bankers Acceptances |
The following provisions shall apply to each Bankers Acceptance hereunder:
(a) | the face amount at maturity of each draft drawn by the Canadian Borrower to be accepted as a Bankers Acceptance shall be Cdn.$100,000 and integral multiples thereof; |
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(b) | the term to maturity of each draft drawn by the Canadian Borrower to be accepted as a Bankers Acceptance shall, subject to market availability as determined by the applicable Lenders, be 1, 2, 3 or 6 months (or such other longer or shorter term as agreed by the applicable Lenders), as selected by the Canadian Borrower in the relevant Drawdown, Rollover or Conversion Notice, and each Bankers Acceptance shall be payable and mature on the last day of the Interest Period selected by the Canadian Borrower for such Bankers Acceptance (which, for certainty, pursuant to the definition of Interest Period shall be on or prior to the Maturity Date of the Credit Facility under which the Bankers Acceptances are proposed to be issued); |
(c) | each draft drawn by the Canadian Borrower and presented for acceptance by a Lender shall be drawn on the standard form of such Lender in effect at the time; provided, however, that the Agent may require the applicable Lenders to use a generic form of Bankers Acceptance, in a form satisfactory to each such Lender, acting reasonably, provided by the Agent for such purpose in place of such Lenders own forms; |
(d) | subject to Section 6.3(e) below, Bankers Acceptances shall be signed by duly authorized signatories of the Canadian Borrower or, in the alternative, the signatures of such signatories may be mechanically reproduced in facsimile thereon and Bankers Acceptances bearing such facsimile signatures shall be binding on the Canadian Borrower as if they had been manually executed and delivered by such officers on behalf of the Canadian Borrower; notwithstanding that any person whose manual or facsimile signature appears on any Bankers Acceptance may no longer be an authorized signatory for the Canadian Borrower on the date of issuance of a Bankers Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers Acceptance shall be binding on the Canadian Borrower; and |
(e) | in lieu of signing Bankers Acceptances in accordance with Section 6.3(d) above, the Canadian Borrower may provide a Power of Attorney to a Lender; for so long as a Power of Attorney is in force with respect to a given Lender, such Lender shall execute and deliver Bankers Acceptances on behalf of the Canadian Borrower in accordance with the provisions thereof and, for certainty, all references herein to drafts drawn by the Canadian Borrower, Bankers Acceptances executed by the Canadian Borrower or similar expressions shall be deemed to include Bankers Acceptances executed in accordance with a Power of Attorney, unless the context otherwise requires. |
6.4 | Power of Attorney; Provision of Bankers Acceptances to Lenders |
(1) Unless revoked with respect to a given Lender in accordance herewith, the Canadian Borrower hereby appoints each Syndicated Facility Lender that issues Bankers Acceptances and the Canadian Operating Facility Lender, acting by any authorized signatory of the Lender in question, the attorney of the Canadian Borrower:
(a) | to sign for and on behalf and in the name of the Canadian Borrower as drawer, drafts in such Lenders standard form which are depository bills as defined in the Depository Bills and Notes Act (Canada) (the DBNA), payable to a clearing house (as defined in the DBNA) including, without limitation, The Canadian Depository For Securities Limited or its nominee, CDS & Co. (the clearing house); |
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(b) | for drafts which are not depository bills, to sign for and on behalf and in the name of the Canadian Borrower as drawer and to endorse on its behalf, Bankers Acceptances drawn on the Lender payable to the order of the undersigned or payable to the order of such Lender; |
(c) | to fill in the amount, date and maturity date of such Bankers Acceptances; and |
(d) | to deposit and/or deliver such Bankers Acceptances which have been accepted by such Lender, |
provided that such acts in each case are to be undertaken by the Lender in question strictly in accordance with instructions given to such Lender by the Canadian Borrower as provided in this Section. For certainty, signatures of any authorized signatory of a Lender may be mechanically reproduced in facsimile on Bankers Acceptances in accordance herewith and such facsimile signatures shall be binding and effective as if they had been manually executed by such authorized signatory of such Lender.
Instructions from the Canadian Borrower to a Lender relating to the execution, completion, endorsement, deposit and/or delivery by that Lender on behalf of the Canadian Borrower of Bankers Acceptances which the Canadian Borrower wishes to submit to the Lender for acceptance by the Lender shall be communicated by the Canadian Borrower in writing to the Agent or the Canadian Operating Facility Lender, as applicable, by delivery to the Agent or the Canadian Operating Facility Lender, as applicable, of Drawdown Notices, Conversion Notices and Rollover Notices, as the case may be, in accordance with this Agreement which, in the case Bankers Acceptances under the Syndicated Facility, in turn, shall be communicated by the Agent, on behalf of the Canadian Borrower, to the Lender.
The communication in writing by the Canadian Borrower, or on behalf of the Canadian Borrower by the Agent, to the Lender of the instructions set out in the Drawdown Notices, Conversion Notices and Rollover Notices referred to above shall constitute (a) the authorization and instruction of the Canadian Borrower to the Lender to sign for and on behalf and in the name of the Canadian Borrower as drawer the requested Bankers Acceptances and to complete and/or endorse Bankers Acceptances in accordance with such information as set out above and (b) the request of the Canadian Borrower to the Lender to accept such Bankers Acceptances and deposit the same with the clearing house or deliver the same, as the case may be, in each case in accordance with this Agreement and such instructions. The Canadian Borrower acknowledges that a Lender shall not be obligated to accept any such Bankers Acceptances except in accordance with the provisions of this Agreement.
A Lender shall be and it is hereby authorized to act on behalf of the Canadian Borrower upon and in compliance with instructions communicated to that Lender as provided herein if the Lender reasonably believes such instructions to be genuine. If a Lender accepts Bankers Acceptances pursuant to any such instructions, that Lender shall confirm particulars of
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such instructions and, in the case of Bankers Acceptances under the Syndicated Facility, advise the Agent that it has complied therewith by notice in writing addressed to the Agent and served personally or sent by telecopier in accordance with the provisions hereof. and, in the case of Bankers Acceptances under the Canadian Operating Facility, advise the Canadian Borrower that it has complied therewith by notice in writing addressed to the Canadian Borrower and served personally or sent by telecopier in accordance with the provisions hereof. A Lenders actions in compliance with such instructions, confirmed and advised to the Agent or the Canadian Borrower, as applicable, by such notice, shall be conclusively deemed to have been in accordance with the instructions of the Canadian Borrower.
This Power of Attorney may be revoked by the Canadian Borrower with respect to any particular Lender at any time upon not less than 5 Banking Days prior written notice served upon the Lender in question and, in the case of the Syndicated Facility, the Agent, provided that no such revocation shall reduce, limit or otherwise affect the obligations of the Canadian Borrower in respect of any Bankers Acceptance executed, completed, endorsed, deposited and/or delivered in accordance herewith prior to the time at which such revocation becomes effective.
(2) Unless the Canadian Borrower has provided Powers of Attorney to the applicable Lenders, to facilitate Drawdowns, Rollovers or Conversions of Bankers Acceptances, the Canadian Borrower shall, upon execution of this Agreement and thereafter from time to time as required by the Lenders, provide to the Agent, for delivery to each Syndicated Facility Lender, and the Canadian Operating Facility Lender drafts drawn in blank by the Canadian Borrower (pre-endorsed and otherwise in fully negotiable form, if applicable) in quantities sufficient for each such Lender to fulfil its obligations hereunder. Any such pre-signed drafts which are delivered by the Canadian Borrower to the Agent or a Lender shall be held in safekeeping by the Agent or such Lender, as the case may be, with the same degree of care as if they were the Agents or such Lenders property, and shall only be dealt with by the Lenders and the Agent in accordance herewith. No Lender shall be responsible or liable for its failure to make its share of any Drawdown, Rollover or Conversion of Bankers Acceptances required hereunder if the cause of such failure is, in whole or in part, due to the failure of the Canadian Borrower to provide such pre signed drafts to the Agent (for delivery to such Lender) on a timely basis.
(3) By 10:00 a.m. (Calgary time) on the applicable Drawdown Date, Conversion Date or Rollover Date, the Canadian Borrower shall (a) either deliver to each applicable Lender in Toronto, or, if previously delivered, be deemed to have authorized each such Lender to complete and accept, or (b) where the Canadian Borrower has previously executed and delivered a Power of Attorney to such Lender, be deemed to have authorized each such Lender to sign on behalf of the Canadian Borrower, complete and accept, drafts drawn by the Canadian Borrower on such Lender in a principal amount at maturity equal to such Lenders share of the Bankers Acceptances specified by the Canadian Borrower in the relevant Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be, as notified to the applicable Lenders by the Agent.
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6.5 | Mechanics of Issuance |
(1) Upon receipt by the Agent of a Drawdown Notice, Conversion Notice or Rollover Notice from the Canadian Borrower requesting the issuance of Bankers Acceptances under the Syndicated Facility, the Agent shall promptly notify the Syndicated Facility Lenders thereof and advise each applicable Lender of the aggregate face amount of Bankers Acceptances to be accepted by such Lender, the date of issue and the Interest Period for such Loan, the apportionment among the Syndicated Facility Lenders of the face amounts of Bankers Acceptances to be accepted by each Syndicated Facility Lender shall be determined by the Agent by reference and in proportion to the respective Commitments of each Syndicated Facility Lender, provided that, when such apportionment cannot be evenly made, the Agent shall round allocations amongst such Lenders consistent with the Agents normal money market practices.
(2) On each Drawdown Date, Rollover Date or Conversion Date involving the issuance of Bankers Acceptances being so purchased by the Syndicated Facility Lenders:
(a) | before 9:00 a.m. (Calgary time) on such date, the Agent shall determine the CDOR Rate and shall obtain quotations from each Schedule II Lender or Schedule III Lender of the Discount Rate then applicable to bankers acceptances accepted by such Schedule II Lender or Schedule III Lender in respect of an issue of bankers acceptances in a comparable amount and with comparable maturity to the Bankers Acceptances proposed to be issued on such date; |
(b) | on or about 9:00 a.m. (Calgary time) on such date, the Agent shall determine the BA Discount Rate applicable to each applicable Lender and shall advise each such Lender of the BA Discount Rate applicable to it; |
(c) | each applicable Lender shall complete and accept, in accordance with the Drawdown Notice, Conversion Notice or Rollover Notice delivered by the Canadian Borrower and advised by the Agent in connection with such issue, its share of the Bankers Acceptances to be issued on such date and shall purchase such Bankers Acceptances for its own account at a purchase price which reflects the BA Discount Rate applicable to such issue; and |
(d) | in the case of a Drawdown, each applicable Lender shall by 12:00 p.m. (Toronto time), for same day value on the Drawdown Date, remit the Discount Proceeds or advance the BA Equivalent Advance, as the case may be, payable by such Lender (net of the acceptance fee payable to such Lender pursuant to Section 6.2) to the Agent for the account of the Canadian Borrower; the Agent shall, to the extent such proceeds have been received from the Lenders, make such funds available to the Canadian Borrower for same day value on such date. |
(3) On each Drawdown Date, Rollover Date or Conversion Date involving the issuance of Bankers Acceptances being so purchased by the Canadian Operating Facility Lender:
(a) | on or about 9:00 a.m. (Calgary time) on such date, the Canadian Operating Facility Lender shall determine the BA Discount Rate applicable to it; |
(b) | the Canadian Operating Facility Lender shall complete and accept, in accordance with the Drawdown Notice, Conversion Notice or Rollover Notice delivered by the Canadian Borrower, the Bankers Acceptances to be issued on such date and shall purchase such Bankers Acceptances for its own account at a purchase price which reflects the BA Discount Rate applicable to such issue; and |
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(c) | in the case of a Drawdown, the Canadian Operating Facility Lender shall make the Discount Proceeds (net of the acceptance fee payable to the Canadian Operating Facility Lender pursuant to Section 6.2) available to the Canadian Borrower for same day value. |
(4) Each Syndicated Facility Lender and the Canadian Operating Facility Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers Acceptances accepted and purchased by it for its own account.
6.6 | Rollover, Conversion or Payment on Maturity |
In anticipation of the maturity of Bankers Acceptances, the Canadian Borrower shall, subject to and in accordance with the requirements hereof, do one or a combination of the following with respect to the aggregate face amount at maturity of all such Bankers Acceptances:
(a) | (i) deliver to the Agent or the Canadian Operating Facility Lender, as applicable, a Rollover Notice that the Canadian Borrower intends to draw and present for acceptance on the maturity date new Bankers Acceptances (issued under the same Credit Facility as the maturing Bankers Acceptances) in an aggregate face amount up to the aggregate amount of the maturing Bankers Acceptances and (ii) on the maturity date pay to the Agent for the account of the applicable Lenders or to the Canadian Operating Facility Lender, as applicable, an additional amount equal to the difference between the aggregate face amount of the maturing Bankers Acceptances and the Discount Proceeds otherwise payable in respect of such new Bankers Acceptances together with the acceptance fees to which the applicable Lenders are entitled pursuant to Section 6.2; |
(b) | (i) deliver to the Agent or the Canadian Operating Facility Lender, as applicable, a Conversion Notice requesting a Conversion of the maturing Bankers Acceptances to another type of Loan under the same Credit Facility as the maturing Bankers Acceptances and (ii) on the maturity date pay to the Agent for the account of the applicable Lenders or to the Canadian Operating Facility Lender, as applicable, an amount equal to the difference, if any, between the aggregate face amount of the maturing Bankers Acceptances and the amount of the Loans into which Conversion is requested; or |
(c) | on the maturity date of the maturing Bankers Acceptances, pay to the Agent for the account of the applicable Lenders or the Canadian Operating Facility Lender, as applicable, an amount equal to the aggregate face amount of such Bankers Acceptances. |
If the Canadian Borrower fails to so notify the Agent or the Canadian Operating Facility Lender, as applicable, or make such payments on maturity, the Agent or the Canadian Operating Facility Lender, as applicable, shall effect a Conversion into a Canadian Prime Rate Loan under the same Credit Facility as the maturing Bankers Acceptances of the entire amount of such maturing Bankers Acceptances as if a Conversion Notice had been given by the Canadian Borrower to the Agent to that effect.
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6.7 | Restriction on Rollovers and Conversions |
Subject to the other provisions hereof, Conversions and Rollovers of Bankers Acceptances may only occur on the maturity date thereof.
6.8 | Rollovers |
In order to satisfy the continuing liability of the Canadian Borrower to a Lender for the face amount of maturing Bankers Acceptances accepted by such Lender, the Lender shall receive and retain for its own account the Discount Proceeds of new Bankers Acceptances issued on a Rollover, and, without duplication of the payment required to be made under Section 6.6(a)(ii), the Canadian Borrower shall on the maturity date of the Bankers Acceptances being rolled over pay to the Agent for the account of the applicable Lenders or the Canadian Operating Facility Lender, as applicable, an amount equal to the difference between the face amount of the maturing Bankers Acceptances and the Discount Proceeds from the new Bankers Acceptances, together with the acceptance fees to which the Lenders are entitled pursuant to Section 6.2.
6.9 | Conversion into Bankers Acceptances |
In respect of Conversions into Bankers Acceptances, in order to satisfy the continuing liability of the Canadian Borrower to the applicable Lenders for the amount of the converted Loan, each applicable Lender shall receive and retain for its own account the Discount Proceeds of the Bankers Acceptances issued upon such Conversion, and the Canadian Borrower shall on the Conversion Date pay to the Agent for the account of the applicable Lenders or to the Canadian Operating Facility Lender, as applicable, an amount equal to the difference between the principal amount of the converted Loan and the aggregate Discount Proceeds from the Bankers Acceptances issued on such Conversion, together with the acceptance fees to which the applicable Lenders are entitled pursuant to Section 6.2.
6.10 | Conversion from Bankers Acceptances |
In order to satisfy the continuing liability of the Canadian Borrower to the applicable Lenders for an amount equal to the aggregate face amount of the maturing Bankers Acceptances converted to another type of Loan, the Agent or the Canadian Operating Facility Lender, as applicable, shall record the obligation of the Canadian Borrower to the applicable Lenders as a Loan of the type into which such continuing liability has been converted.
6.11 | BA Equivalent Advances |
Notwithstanding the foregoing provisions of this Article, a Non-Acceptance Lender shall, in lieu of accepting Bankers Acceptances, make a BA Equivalent Advance. The amount of each BA Equivalent Advance shall be equal to the Discount Proceeds which would be realized from a hypothetical sale of those Bankers Acceptances which, but for this Section, such Lender would otherwise be required to accept as part of such a Drawdown, Conversion or Rollover of Bankers Acceptances. To determine the amount of such Discount Proceeds, the hypothetical sale shall be deemed to take place at the BA Discount Rate for such Loan. Any BA Equivalent Advance shall be made on the relevant Drawdown Date, Rollover Date or Conversion Date as the case may be and shall remain outstanding for the term of the relevant Bankers Acceptances.
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Concurrent with the making of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the acceptance fee calculated in accordance with Section 6.2 which, but for this Section, such Lender would otherwise be entitled to receive as part of such Loan. Subject to Section 6.6, upon the maturity date for such BA Equivalent Advance, the Canadian Borrower shall pay to each Non-Acceptance Lender an amount equal to the face amount at maturity of the Bankers Acceptances which, but for this Section, such Lender would otherwise be required to accept as part of such a Drawdown, Conversion or Rollover of Bankers Acceptances as repayment of the amount of its BA Equivalent Advance plus payment of the interest accrued and payable thereon to such maturity date.
All references herein to Loans and Bankers Acceptances shall, unless otherwise expressly provided herein or unless the context otherwise requires, be deemed to include BA Equivalent Advances made by a Non-Acceptance Lender as part of a Drawdown, Conversion or Rollover of Bankers Acceptances.
6.12 | Termination of Bankers Acceptances |
If at any time a Syndicated Facility Lender or the Canadian Operating Facility Lender ceases to accept bankers acceptances in the ordinary course of its business, such Lender shall be deemed to be a Non-Acceptance Lender and shall make BA Equivalent Advances in lieu of accepting Bankers Acceptances under this Agreement.
ARTICLE 7LETTERS OF CREDIT
7.1 | Availability |
Subject to the provisions hereof, the Canadian Borrower may require that Letters of Credit be issued under the Syndicated Facility in accordance with the Drawdown Notices and Rollover Notices of the Canadian Borrower; provided that the aggregate Outstanding Principal represented by all outstanding Letters of Credit under the Syndicated Facility shall not exceed Cdn.$130,000,000. The issuance of Letters of Credit shall constitute Drawdowns or Rollovers (as applicable) hereunder and shall reduce the availability of the Syndicated Facility by the aggregate Outstanding Principal of Letters of Credit under such Credit Facility.
7.2 | Currency, Type, Form and Expiry |
Letters of Credit issued pursuant hereto shall be denominated in Canadian Dollars, United States Dollars, Australian Dollars, Euros and Pounds Sterling and each other currency agreed to by the Lenders (in which case, the Lenders and the Canadian Borrower shall, acting reasonably, agree upon the mechanics for completing Drawdowns and Rollovers of Letters of Credit in such other currency and the repayment mechanisms in connection therewith) and amounts payable thereunder shall be paid in the currency in which the Letter of Credit is denominated. A Letter of Credit issued hereunder shall, at the option of the Canadian Borrower (as specified in the relevant Drawdown Notice or Rollover Notice), be issued (a) as a Fronted LC by the Fronting Lender specified in the relevant Drawdown Notice or Rollover Notice or (b) by the Agent on behalf of the Syndicated Facility Lenders (each as to their Rateable Portion thereof) as a POA LC; provided that a POA LC may only be denominated in Canadian Dollars and only to a beneficiary located in Canada. Letters of Credit shall be in a form satisfactory to the Fronting Lender or the
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Agent (as applicable), acting reasonably, and shall have an expiration not later than the then current Syndicated Facility Maturity Date. On the Syndicated Facility Maturity Date, the Canadian Borrower shall provide or cause to be provided to the Agent cash collateral or letters of credit (or any combination thereof) in accordance with the provisions of Section 2.17(2) in an amount equal to or greater than the aggregate undrawn amount of all unexpired Letters of Credit outstanding under the Syndicated Facility; such cash collateral and letters of credit shall be held by the Agent and be applied in accordance with said Section 2.17(2) in satisfaction of and security for the Obligations of the Canadian Borrower for such unexpired Letters of Credit.
7.3 | No Conversion |
Except as provided in Section 7.7, the Canadian Borrower may not effect a Conversion of a Letter of Credit.
7.4 | POA LC Provisions |
(1) Each POA LC shall be issued by all Syndicated Facility Lenders as a single multi-Lender letter of credit, but the obligation of each Syndicated Facility Lender thereunder shall be several, and not joint, based upon its Rateable Portion in effect on the date of issuance of such POA LC. Each POA LC shall include the provisions contained in and shall be substantially in the form of Schedule I annexed hereto; provided that, without the prior written consent of each Syndicated Facility Lender, no POA LC shall be issued which varies the several and not joint nature of the liability of each Syndicated Facility Lender thereunder.
(2) Each POA LC shall be executed and delivered by the Agent in the name and on behalf of, and as attorney-in-fact for, each Syndicated Facility Lender party to such Letter of Credit. The Agent shall act under each POA LC as the agent of each Syndicated Facility Lender to:
(a) | receive Drafts and other documents presented by the beneficiary under such POA LC; |
(b) | determine whether such Drafts and documents are in compliance with the terms and conditions of such POA LC; and |
(c) | notify such Syndicated Facility Lender and the Canadian Borrower that a valid drawing has been made and the date that the related payment under such POA LC is to be made; provided that the Agent (in such capacity) shall have no obligation or liability for any payment to be made under any POA LC, and each POA LC shall expressly so provide. |
Each Syndicated Facility Lender hereby irrevocably appoints and designates the Agent as its attorney-in-fact, acting through any duly authorized officer of the Agent, to execute and deliver in the name and on behalf of such Syndicated Facility Lender each POA LC to be issued by such Syndicated Facility Lender hereunder. Promptly upon the request of the Agent, each Syndicated Facility Lender will furnish to the Agent such powers of attorney or other evidence as any beneficiary of any POA LC may reasonably request in order to demonstrate that the Agent has the power to act as attorney-in-fact for such Syndicated Facility Lender to execute
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and deliver such POA LC. The Canadian Borrower and the Syndicated Facility Lenders agree that each POA LC shall provide that all Drafts and other documents presented thereunder shall be delivered to the Agent and that all payments thereunder shall be made by the Syndicated Facility Lenders obligated thereon through the Agent at the branch of the Agent specified therein. Each Syndicated Facility Lender shall be severally liable under each POA LC in proportion to its Rateable Portion on the date of issuance of such POA LC and each POA LC shall specify each Syndicated Facility Lenders share of the amount payable thereunder.
(3) The Canadian Borrower and each Syndicated Facility Lender hereby authorize the Agent to review on behalf of each Syndicated Facility Lender each Draft and other document presented under each POA LC. The determination of the Agent as to the conformity of any documents presented under a POA LC to the requirements of such POA LC (which, for greater certainty, shall be in substantial compliance with the requirements of such POA LC), in the absence of the Agents gross negligence or wilful misconduct, shall be conclusive and binding on the Canadian Borrower and each Syndicated Facility Lender. The Agent, within a reasonable time following its receipt thereof, shall examine all documents purporting to represent a demand for payment under any POA LC. The Agent promptly after such examination shall:
(a) | notify each of the Syndicated Facility Lenders obligated under such POA LC and the Canadian Borrower by telephone (confirmed in writing) of such demand for payment and of each Syndicated Facility Lenders share of such payment; |
(b) | deliver to each such Syndicated Facility Lender a copy of each document purporting to represent a demand for payment under such POA LC; and |
(c) | notify each Syndicated Facility Lender and the Canadian Borrower whether said demand for payment was properly made under such POA LC. |
With respect to any drawing determined by the Agent to have been properly made under a POA LC, each Syndicated Facility Lender will make a payment under such POA LC in accordance with its liability under such POA LC and this Agreement, such payment to be made to the relevant Agents Account or such other account of the Agent as shall have been most recently designated by it for such purpose by notice to the Syndicated Facility Lenders. The Agent will make any such payment available to the beneficiary of such POA LC by promptly crediting the amounts so received, in like funds, to the account identified by such beneficiary in connection with such demand for payment. Promptly following any payment by any Syndicated Facility Lender in respect of any POA LC, the Agent will notify the Canadian Borrower of such payment; provided that any failure to give or delay in giving such notice shall not relieve the Canadian Borrower of its obligation to reimburse the Syndicated Facility Lenders with respect to any such payment it being understood however that the Canadian Borrower shall not be deemed to be in default of its payment obligations hereunder with respect to such POA LC where such notice was not given to the Canadian Borrower. The responsibility of the Agent and the Syndicated Facility Lenders in connection with any Draft presented for payment under any POA LC shall, in addition to any payment obligation expressly provided for in such POA LC, be limited to determining that the documents (including each Draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such POA LC. The Agent shall not be required to make any payment under a POA LC in excess of the amount received by it from the Syndicated Facility Lenders for such payment.
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(4) Notwithstanding any other provision of this Agreement, any Syndicated Facility Lender may agree to act as a fronting lender (the POA Fronting Lender) for any other Syndicated Facility Lender, including, without limitation, any Non-LC Lender (the POA Fronted Lender) in respect of the POA Fronted Lenders Rateable Portion of any POA LC provided that (A) such fronting arrangement shall not become effective until after notice thereof is given to the Agent and the Canadian Borrower by both the POA Fronting Lender and the POA Fronted Lender, (B) the POA Fronting Lender must be approved by the Canadian Borrower (such approval not to be unreasonably withheld) unless the POA Fronting Lender is a Fronting Lender, (C) for certainty, no fronting fee shall be payable by the Canadian Borrower in respect of the fronted portion of such POA LC, (D) the fronted portion of such POA LC will be excluded from the Obligations owing to the POA Fronting Lender and will be included in the Obligations owing to the POA Fronted Lender and (E) for certainty, and without limiting the POA Fronting Lenders recourse against the Canadian Borrower, the POA Fronting Lender shall have no recourse against any Syndicated Facility Lender (other than the POA Fronted Lender) in respect of the fronted portion of such POA LC. The terms of any such fronting arrangement may be documented by way of a separate letter agreement between the POA Fronting Lender and the POA Fronted Lender and, for certainty, the financial terms of these fronting arrangements do not need to be disclosed to the Canadian Borrower, the Agent or any of the other Syndicated Facility Lenders. For certainty, Non-LC Lenders may, but shall not be obligated to, enter into any such fronting arrangements with a POA Fronting Lender and in the event any Non-LC Lender fails to enter into any such fronting arrangements, the Canadian Borrower shall not request the issuance of or be entitled to have the Syndicated Facility Lenders issue any POA LC hereunder (except with the prior written consent of each Non-LC Lender as at the date of any such issuance).
7.5 | Fronted LC Provisions |
(1) Each Fronting Lender will exercise and give the same care and attention to each Fronted LC issued by it hereunder as it gives to its other letters of credit and similar obligations, and each Fronting Lenders sole liability to each Syndicated Facility Lender shall be to promptly return to the Agent for the account of the Syndicated Facility Lenders, each Syndicated Facility Lenders Rateable Portion of any payments made to such Fronting Lender by the Canadian Borrower hereunder (other than the fees and amounts payable to such Fronting Lender for its own account) if the Canadian Borrower has made a payment to such Fronting Lender hereunder. Each Syndicated Facility Lender agrees that, in paying any drawing under a Fronted LC, a Fronting Lender shall not have any responsibility to obtain any document (other than as expressly required by such Fronted LC) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of any person delivering any such document. Neither a Fronting Lender nor any of its representatives, officers, employees or agents shall be liable to any Syndicated Facility Lender for:
(a) | any action taken or omitted to be taken in connection herewith at the request or with the approval of the Syndicated Facility Lenders; |
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(b) | any action taken or omitted to be taken in connection with any Fronted LC in the absence of gross negligence or wilful misconduct; or |
(c) | the execution, effectiveness, genuineness, validity, or enforceability of any Fronted LC, or any other document contemplated thereby. |
No Fronting Lender shall incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper person or persons.
(2) The Canadian Borrower and each Syndicated Facility Lender hereby authorize each Fronting Lender to review on behalf of each Syndicated Facility Lender each draft and other document presented under each Fronted LC. The determination of a Fronting Lender as to the conformity of any documents presented under a Fronted LC to the requirements of such Fronted LC (which, for greater certainty, shall be in substantial compliance with the requirements of such Fronted LC), in the absence of such Fronting Lenders gross negligence or wilful misconduct, shall be conclusive and binding on the Canadian Borrower and each Syndicated Facility Lender. A Fronting Lender, within a reasonable time following its receipt thereof, shall examine all documents purporting to represent a demand for payment under any Fronted LC. Such Fronting Lender promptly after such examination shall:
(a) | notify the Agent and the Canadian Borrower by telephone (confirmed in writing) of such demand for payment; |
(b) | deliver to the Agent a copy of each document purporting to represent a demand for payment under such Fronted LC; and |
(c) | notify the Agent and the Canadian Borrower whether said demand for payment was properly made under such Fronted LC. |
7.6 | Records |
The Agent and, if applicable, the applicable Fronting Lender in the case of a Fronted LC, shall maintain records showing the undrawn and unexpired amount of each Letter of Credit outstanding hereunder and each Syndicated Facility Lenders share of such amount and showing for each Letter of Credit issued hereunder:
(a) | the dates of issuance and expiration thereof; |
(b) | the amount thereof; and |
(c) | the date and amount of all payments made thereunder. |
The Agent and, if applicable, the applicable Fronting Lender, shall make copies of such records available to the Canadian Borrower or any Syndicated Facility Lender upon its request.
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7.7 | Reimbursement or Conversion on Presentation; |
On presentation of a Letter of Credit and payment thereunder by the Syndicated Facility Lenders, in the case of a POA LC, or by the applicable Fronting Lender, in the case of a Fronted LC, the Canadian Borrower shall forthwith pay to and reimburse the Agent for the account of the Syndicated Facility Lenders or the relevant Fronting Lender (as applicable) for all amounts paid pursuant to such Letter of Credit; failing such payment, the Canadian Borrower shall be deemed to have effected a Conversion of such Letter of Credit into: (a) a Canadian Prime Rate Loan, in the case of a Letter of Credit denominated in Canadian Dollars, (b) a U.S. Base Rate Loan, in the case of a Letter of Credit denominated in United States Dollars and (c) a Canadian Prime Rate Loan (at the Equivalent Amount), in the case of a Letter of Credit denominated in Pounds Sterling, Euros or Australian Dollars, in each case, under the Syndicated Facility and to the extent of the payment by the Syndicated Facility Lenders or the relevant Fronting Lender (as applicable) thereunder. The receipt by the Agent in accordance with this Section 7.7 of any payment made by the Canadian Borrower for the account of any of the Syndicated Facility Lenders or any Fronting Lender shall, insofar as the Canadian Borrowers obligations to the relevant Lenders are concerned, be deemed also to be receipt by such Lenders and the Canadian Borrower shall have no liability in respect of any failure or delay on the part of the Agent in disbursing and/or accounting to the relevant Lenders in regard thereto.
7.8 | Fronting Lender Indemnity |
(1) If a Fronting Lender makes payment under any Fronted LC and the Canadian Borrower does not fully reimburse such Fronting Lender on or before the date of payment, then Section 7.7 shall apply to deem a Loan to be outstanding to the Canadian Borrower under this Agreement in the manner herein set out. Each Syndicated Facility Lender shall, on request by the such Fronting Lender, immediately pay to such Fronting Lender an amount equal to such Syndicated Facility Lenders Rateable Portion of the amount paid by such Fronting Lender such that each Syndicated Facility Lender is participating in the deemed Loan in accordance with its Rateable Portion and, for certainty, regardless of whether any Default or Event of Default is then outstanding or whether any other condition to the making of a Loan has been satisfied or not.
(2) Each Syndicated Facility Lender shall immediately on demand indemnify a Fronting Lender to the extent of such Syndicated Facility Lenders Rateable Portion of any amount paid or liability incurred by such Fronting Lender under each Fronted LC issued by it to the extent that the Canadian Borrower does not fully reimburse such Fronting Lender therefor.
(3) For certainty, the obligations in this Section 7.8 shall continue as obligations of those Syndicated Facility Lenders who were Lenders at the time when each such Letter of Credit was issued notwithstanding that such Syndicated Facility Lender may assign its rights and obligations hereunder, unless each relevant Fronting Lender specifically releases such Syndicated Facility Lender from such obligations in writing.
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7.9 | Fees and Expenses |
(1) The Canadian Borrower shall pay to the Agent for the account of all Syndicated Facility Lenders in respect of Letters of Credit issued hereunder, an issuance fee quarterly in arrears (on the first day of January, April, July and October in each year, on the date of cancellation of the Syndicated Credit Facility and on the Syndicated Facility Maturity Date) calculated at a rate per annum equal to the Applicable Pricing Rate and on the outstanding undrawn amount of each such Letter of Credit for the number of days which such Letter of Credit will be outstanding in the year of 365 days in which the Letter of Credit is issued; provided that the minimum issuance fee for each such Letter of Credit shall be Cdn.$ {Minimum fee redacted} for Letters of Credit denominated in Canadian Dollars, U.S.$ {Minimum fee redacted} for Letters of Credit denominated in United States Dollars, £{Minimum fee redacted} for Letters of Credit denominated in Pounds Sterling, {Minimum fee redacted} for Letters of Credit denominated in Euros and AUD${Minimum fee redacted} for Letters of Credit denominated in Australian Dollars. To the extent any Letters of Credit for which issuance fees have been paid in advance are presented, cancelled, terminated or reduced prior to their original expiry date, the Agent, on behalf of the applicable Syndicated Facility Lenders, shall reimburse the Canadian Borrower for the amount of any applicable overpayment of any such issuance fees in connection with any such presentment, cancellation, termination or reduction.
(2) The Canadian Borrower shall pay to the Agent for the account of the relevant Fronting Lender, as consideration for the issuance by such Fronting Lender of any Fronted LC, a fronting fee quarterly in arrears (on the first day of January, April, July and October in each year, on the date of cancellation of the Syndicated Credit Facility and on the Syndicated Facility Maturity Date) calculated at a rate of {Rate redacted}% per annum on the outstanding undrawn amount of each such Fronted LC for the number of days which such Fronted LC will be outstanding in the year of 365 days in which the Fronted LC is issued. To the extent any Letters of Credit for which issuance fees have been paid in advance are presented, cancelled, terminated or reduced prior to their original expiry date, the Agent, on behalf of the applicable Syndicated Facility Lenders, shall reimburse the Canadian Borrower for the amount of any applicable overpayment of any such issuance fees in connection with any such presentment, cancellation, termination or reduction.
(3) In addition, with respect to all Letters of Credit, the Canadian Borrower shall from time to time pay to the Agent or each Fronting Lender, as the case may be, its usual and customary fees and charges (at the then prevailing rates) for the amendment, delivery and administration of letters of credit such as the Letters of Credit and shall pay and reimburse the Agent, each Fronting Lender and the Syndicated Facility Lenders for any reasonable properly documented out-of-pocket costs and expenses incurred in connection with any Letter of Credit, including in connection with any payment thereunder.
7.10 | Additional Provisions |
(1) Indemnity and No Lender Liability
The Canadian Borrower shall indemnify and save harmless the Syndicated Facility Lenders, each Fronting Lender and the Agent against all claims, losses, costs, expenses or damages to the Syndicated Facility Lenders, the Fronting Lenders and the Agent arising out of or in connection with any Letter of Credit, the issuance thereof, any payment thereunder or any action taken by the Syndicated Facility Lenders, a Fronting Lender or the Agent or any other person in connection therewith in accordance with the terms of this Agreement including all reasonable
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properly documented costs relating to any legal process or proceeding instituted by any party restraining or seeking to restrain the issuer of a Letter of Credit or the Agent from accepting or paying any Draft or any amount under any such Letter of Credit, except as a result of the Agents, Syndicated Facility Lenders or a Fronting Lenders (as applicable) gross negligence, wilful misconduct or material breach of this Agreement. The Canadian Borrower also agrees that the Syndicated Facility Lenders, the Fronting Lenders and the Agent shall have no liability to it for any reason in respect of or in connection with any Letter of Credit, the issuance thereof, any payment thereunder or any other action taken by the Syndicated Facility Lenders, the Fronting Lenders or the Agent or any other person in connection therewith, except as a result of the Agents, Syndicated Facility Lenders or a Fronting Lenders (as applicable) gross negligence, wilful misconduct or material breach of this Agreement.
(2) No Obligation to Inquire
The Canadian Borrower hereby acknowledges and confirms to each of the Fronting Lenders, the Agent and the Syndicated Facility Lenders that the Fronting Lenders, the Agent and the Syndicated Facility Lenders shall not be obliged to make any inquiry or investigation as to the right of any beneficiary to make any claim or Draft or request any payment under a Letter of Credit and payment pursuant to a Letter of Credit shall not be withheld by reason of any matters in dispute between the beneficiary thereof and the Canadian Borrower. The sole obligation of each Fronting Lender, the Agent and the Syndicated Facility Lenders with respect to Letters of Credit is to cause to be paid a Draft drawn or purporting to be drawn in accordance with the terms of the applicable Letter of Credit and for such purpose each Fronting Lender or the Agent, as the case may be, is only obliged to determine that the Draft purports to comply with the terms and conditions of the relevant Letter of Credit.
The Fronting Lenders, the Agent and the Syndicated Facility Lenders shall not have any responsibility or liability for or any duty to inquire into the form (other than to the extent provided in the preceding paragraph), sufficiency (other than to the extent provided in the preceding paragraph), authorization, execution, signature, endorsement, correctness (other than to the extent provided in the preceding paragraph), genuineness or legal effect of any Draft, certificate or other document presented to it pursuant to a Letter of Credit and the Canadian Borrower unconditionally assumes all risks with respect to the same. The Canadian Borrower agrees that it assumes all risks of the acts or omissions of the beneficiary of any Letter of Credit with respect to the use by such beneficiary of the relevant Letter of Credit. The Canadian Borrower further agrees that neither the Agent nor any Syndicated Facility Lender, including any Fronting Lender, nor any of their respective officers, directors or correspondents will assume liability for, or be responsible for:
(a) | the validity, correctness, genuineness or legal effect of any document or instrument relating to any Letter of Credit, even if such document or instrument should in fact prove to be in any respect invalid, insufficient, inaccurate, fraudulent or forged; |
(b) | the failure of any document or instrument to bear any reference or adequate reference to any Letter of Credit; |
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(c) | any failure to note the amount of any Draft on any Letter of Credit or on any related document or instrument; any failure of the beneficiary of any Letter of Credit to meet the obligations of such beneficiary to the Canadian Borrower or any other person; |
(d) | any errors, inaccuracies, omissions, interruptions or delays in transmission or delivery of any messages, directions or correspondence by mail, facsimile or otherwise, whether or not they are in cipher; |
(e) | any inaccuracies in the translation of any messages, directions or correspondence or for errors in the interpretation of any technical terms; or |
(f) | any failure by the Agent or any Syndicated Facility Lender, including any Fronting Lender, to make payment under any Letter of Credit as a result of any law, control or restriction rightfully or wrongfully exercised or imposed by any domestic or foreign court or government or Governmental Authority or as a result of any other cause beyond the control of the Agent or any Syndicated Facility Lender, including any Fronting Lender, or their respective officers, directors or correspondents. |
(3) Obligations Unconditional
The obligations of the Canadian Borrower hereunder with respect to all Letters of Credit shall be absolute, unconditional and irrevocable and shall not be reduced by any event, circumstance or occurrence, including any lack of validity or enforceability of a Letter of Credit, or any Draft paid or acted upon by a Fronting Lender, the Agent, the Syndicated Facility Lenders or any of their respective correspondents being fraudulent, forged, invalid or insufficient in any respect (except with respect to their gross negligence, wilful misconduct or material breach of agreement or payment under a Letter of Credit other than in substantial compliance herewith), or any set-off, defenses, rights or claims which the Canadian Borrower may have against any beneficiary or transferee of any Letter of Credit. The obligations of the Canadian Borrower hereunder shall remain in full force and effect and shall apply to any alteration to or extension of the expiration date of any Letter of Credit or any Letter of Credit issued to replace, extend or alter any Letter of Credit.
(4) Other Actions
Any action, inaction or omission taken or suffered by a Fronting Lender, the Agent or any Syndicated Facility Lender or by any of their respective correspondents under or in connection with a Letter of Credit or any Draft made thereunder, if in good faith and in conformity with foreign or domestic laws, regulation or customs applicable thereto shall be binding upon the Canadian Borrower and shall not place the relevant Fronting Lender, the Agent, any Syndicated Facility Lender or any of their respective correspondents under any resulting liability to the Canadian Borrower. Without limiting the generality of the foregoing, a Fronting Lender, the Agent, any Syndicated Facility Lender and their respective correspondents may receive, accept or pay as complying with the terms of a Letter of Credit, any Draft thereunder, otherwise in order which may be signed by, or issued to, the administrator or any executor of, or the trustee in bankruptcy of, or the receiver for any property of, or any person or entity acting as a representative
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or in the place of, such beneficiary or its successors and assigns. The Canadian Borrower covenants that it will not take any steps, issue any instructions to a Fronting Lender, the Agent, any Syndicated Facility Lender or any of their respective correspondents or institute any proceedings intended to derogate from the right or ability of a Fronting Lender, the Agent, any Syndicated Facility Lender or their respective correspondents to honour and pay any Letter of Credit or any Drafts.
(5) Payment of Contingent Liabilities
The Canadian Borrower shall pay to the Agent an amount equal to the maximum undrawn face amount available to be drawn under any unexpired Letter of Credit which becomes the subject of any order, judgment, injunction or other such determination (an Order), or any petition, proceeding or other application for any Order by the Canadian Borrower or any other party, restricting payment under and in accordance with such Letter of Credit or extending a Fronting Lenders or Syndicated Facility Lenders liability, as the case may be, under such Letter of Credit beyond the expiration date stated therein; payment in respect of each such Letter of Credit shall be due forthwith upon demand in the currency in which such Letter of Credit is denominated.
Any amount paid to the Agent pursuant to the preceding paragraph shall be held by the Agent in interest bearing cash collateral accounts (with interest payable for the account of the Canadian Borrower at the rates and in accordance with the then prevailing practices of the Agent for accounts of such type) as continuing security for the Obligations and shall, prior to an Event of Default be applied by the Agent against the Obligations for, or (at the option of the Agent) be applied in payment of, such Letter of Credit if payment is required thereunder; after an Event of Default the Agent may apply such amounts, firstly, against any Obligations in respect of the relevant Letter of Credit, and, after satisfaction of such Obligations or expiry of such Letter of Credit, against any other Obligations as it sees fit or as is directed by the Syndicated Facility Lenders.
The Agent shall release to the Canadian Borrower any amount remaining in the cash collateral accounts after applying the amounts necessary to discharge the Obligations relating to such Letter of Credit, upon the later of:
(a) | the date on which any final and non-appealable order, judgment or other determination has been rendered or issued either terminating any applicable Order or permanently enjoining the relevant Fronting Lender or Syndicated Facility Lenders, as the case may be, from paying under such Letter of Credit; |
(b) | the earlier of: |
(i) | the date on which either the original counterpart of such Letter of Credit is returned to the relevant Fronting Lender or Agent, as the case may be, for cancellation or such Fronting Lender or Syndicated Facility Lenders, as the case may be, is or are released by the beneficiary thereof from any other obligation in respect of such Letter of Credit; and |
(ii) | the expiry of such Letter of Credit; and |
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(c) | if an Event of Default has occurred, the payment and satisfaction of all Obligations and the cancellation or termination of the Credit Facilities other than the provisions of this Agreement (and the obligations related hereto) which by their terms survive the termination and cancellation of the Credit Facilities. |
(6) No Consequential Damages
Notwithstanding any other provision of the Documents to the contrary, the Fronting Lenders, the Agent and the Syndicated Facility Lenders shall not be liable to the Canadian Borrower for any consequential, indirect, punitive or exemplary damages with respect to action taken or omitted to be taken by any of them under or in respect of any Letter of Credit.
(7) Uniform Customs and Practice
The Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce (the Uniform Customs) shall in all respects apply to each Letter of Credit unless expressly provided to the contrary therein and shall be deemed for such purpose to be a part of this Agreement as if fully incorporated herein. In the event of any conflict or inconsistency between the Uniform Customs and the governing law of this Agreement, the Uniform Customs shall, to the extent permitted by applicable law, prevail to the extent necessary to remove the conflict or inconsistency.
7.11 | Certain Notices to the Agent with Respect to Letters of Credit |
(1) A Fronting Lender (if other than the Agent) shall forthwith advise the Agent of any payment under, or cancellation of (whether full or partial), any Letter of Credit issued by such Fronting Lender pursuant hereto.
(2) For certainty, all Rollover Notices requesting a Rollover of a Letter of Credit shall be delivered to the Agent (rather than directly to a Fronting Lender) and, in addition to the other provisions hereof applicable to such a Rollover, no Rollover of a Letter of Credit shall be made unless a Rollover Notice is given to the Agent in accordance with Section 2.7(1)(d).
ARTICLE 8PLACE AND APPLICATION OF PAYMENTS
8.1 | Place of Payment of Principal, Interest and Fees; Payments to Agent, Canadian Operating Facility Lender and Australian Operating Facility Lender |
All payments of principal, interest, fees and other amounts to be made by the applicable Borrower to the Agent, the Canadian Operating Facility Lender, the Australian Operating Facility Lender and the Lenders pursuant to this Agreement shall be made to the Agent (for, as applicable, the account of the relevant Lenders or its own account), the Canadian Operating Facility Lender or the Australian Operating Facility Lender, as applicable, in the currency in which the Loan is outstanding for value on the day such amount is due, and if such day is not a Banking Day on the Banking Day next following, by deposit or transfer thereof to the applicable Agents Accounts or applicable account of the Australian Operating Facility Lender or Canadian Operating Facility Lender, as applicable, or at such other place as the Canadian Borrower and the Agent, the
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Canadian Borrower and the Canadian Operating Facility Lender or the Australian Borrower and the Australian Operating Facility Lender, as applicable, may from time to time agree. Notwithstanding anything to the contrary expressed or implied in this Agreement, the receipt by the Agent in accordance with this Agreement of any payment made by the Canadian Borrower for the account of any of the Syndicated Facility Lenders shall, insofar as the Canadian Borrowers obligations to the Syndicated Facility Lenders are concerned, be deemed also to be receipt by such Lenders and the Canadian Borrower shall have no liability in respect of any failure or delay on the part of the Agent in disbursing and/or accounting to the relevant Lenders in regard thereto.
8.2 | Designated Accounts of the Lenders |
All payments of principal, interest, fees or other amounts to be made by the Agent to the applicable Lenders pursuant to this Agreement shall be made for value on the day required hereunder, provided the Agent receives funds from the Canadian Borrower for value on such day, and if such funds are not so received from such Borrower or if such day is not a Banking Day, on the Banking Day next following, by deposit or transfer thereof at the time specified herein to the account of each applicable Lender designated by such Lender to the Agent for such purpose or to such other place or account as the applicable Lenders may from time to time notify the Agent.
8.3 | Funds |
Each amount advanced, disbursed or paid hereunder shall be advanced, disbursed or paid, as the case may be, in such form of funds as may from time to time be customarily used in Calgary, Alberta, Toronto, Ontario, New York, New York and, if applicable, Perth, Australia in the settlement of banking transactions similar to the banking transactions required to give effect to the provisions of this Agreement on the day such advance, disbursement or payment is to be made.
8.4 | Application of Payments |
Except as otherwise agreed in writing by the Lenders, if any Event of Default shall occur and be continuing, all payments made by either of the Borrowers to the Agent and the Lenders shall be applied in the following order:
(a) | to amounts due hereunder as fees other than acceptance fees for Bankers Acceptances or issuance fees for Letters of Credit and Australian Letters of Credit; |
(b) | to amounts due hereunder as costs and expenses; |
(c) | to amounts due hereunder as default interest; |
(d) | to amounts due hereunder as interest or acceptance fees for Bankers Acceptances or issuance fees for Letters of Credit and Australian Letters of Credit; and |
(e) | to amounts due hereunder as principal (including reimbursement obligations in respect of Bankers Acceptances and Letters of Credit and Australian Letters of Credit). |
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8.5 | Payments Clear of Taxes |
(1) Any and all payments by each of the Borrowers to the Agent or the Lenders hereunder shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future Taxes and all liabilities with respect thereto imposed, levied, collected, withheld or assessed by any Governmental Authority or under the laws of any international tax authority imposed on the Agent or the Lenders, or by or on behalf of the foregoing; provided that, nothing in this Section 8.5(1) shall make a Borrower liable for or require it to pay an additional amount in respect of any taxes imposed on or measured by the recipients overall net income or capital or franchise taxes, any U.S. federal withholding tax imposed by FATCA, any Canadian taxes imposed on a payment by or on account of any obligation of the Borrower hereunder (i) to a person with which the Borrower does not deal at arms length (for the purposes of the Income Tax Act (Canada)) at the time of making such payment or (ii) in respect of a debt or other obligation to pay an amount to a person with whom the Borrower is not dealing at arms length (for the purposes of the Income Tax Act (Canada)) at the time of such payment, or any Canadian taxes imposed on Lender by reason of such Lender being a specified shareholder of the Borrower, or not dealing at arms length with a specified shareholder of Borrower (in each case, as defined in subsection 18(5) of the Income Tax Act (Canada)) (collectively, Excluded Taxes). In addition, each of the Borrowers agrees to pay any present or future stamp, transfer, registration, excise, issues, documentary or other taxes, charges or similar levies which arise from any payment made under this Agreement or the Loans or in respect of the execution, delivery or registration or the compliance with this Agreement or the other Documents contemplated hereunder other than taxes imposed on or measured by the recipients overall net income or capital or franchise taxes or any U.S. federal withholding tax imposed by FATCA. Each of the Borrowers shall indemnify and hold harmless the Agent and the Lenders for the full amount of all of the foregoing Taxes or other amounts paid or payable by the Agents or the Lenders and any liability (including penalties, interest, additions to tax and reasonable properly documented out-of-pocket expenses) resulting therefrom or with respect thereto which arise from any payment made under or pursuant to this Agreement or the Loans or in respect of the execution, delivery or registration of, or compliance with, this Agreement or the other Documents other than taxes imposed on or measured by the recipients overall net income or capital or franchise taxes or any U.S. federal withholding tax imposed by FATCA, or other Excluded Taxes.
(2) If either of the Borrowers shall be required by law to deduct or withhold any amount from any payment or other amount required to be paid to the Agent or the Lenders hereunder, or if any liability therefor shall be imposed or shall arise from or in respect of any sum payable hereunder, then the sum payable to the Agent or the Lenders hereunder shall be increased as may be necessary so that after making all required deductions, withholdings, and additional income tax payments attributable thereto (including deductions, withholdings or income tax payable for additional sums payable under this provision) the Agent or the Lenders, as the case may be, receive an amount equal to the amount they would have received had no such deductions or withholdings been made or if such additional taxes had not been imposed; in addition, the applicable Borrower shall pay the full amount deducted or withheld for such liabilities to the relevant taxation authority or other authority in accordance with applicable law, such payment to be made (if the liability is imposed on such Borrower) for its own account or (if the liability is imposed on the Agent or the Lenders) on behalf of and in the name of the Agent or the Lenders, as the case may be; provided that, nothing in this Section 8.5(2) shall make a Borrower liable for or require it to pay any
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additional amount in respect of taxes imposed on or measured by the recipients overall net income or capital or franchise taxes or in respect of any U.S. federal withholding tax imposed by FATCA. If the liability is imposed on the Agent or the Lenders, the applicable Borrower shall deliver to the Agent or the Lenders evidence satisfactory to the Agent or the Lenders, acting reasonably, of the payment to the relevant taxation authority or other authority of the full amount deducted or withheld.
(3) Each Lender shall use reasonable efforts to contest (to the extent contestation is reasonable) such imposition or assertion of such Taxes and shall reimburse to the applicable Borrower the amount of any reduction of Taxes, to the extent of amounts that have been paid by such Borrower in respect of such Taxes in accordance with this Agreement, as a result of such contestation and each Lender shall use reasonable efforts to obtain tax refunds, exemptions and/or credits in respect of any such Taxes in respect of which such Borrower is required to pay any additional amounts and shall reimburse such Borrower in respect of the amounts paid by it with such amount of the refund, credit, relief or exemption as will leave the Lender (after such reimbursement) in no more and no less favourable position than it would have been in had there been no such withholding taxes, provided that, no Lender shall have any obligation to expend its own funds, suffer any economic hardship or take any action detrimental to its interests (as determined by the relevant Lender in its sole discretion, acting reasonably) in connection therewith unless it shall have received from such Borrower payment therefor or an indemnity with respect thereto, satisfactory to it.
(4) If a payment made to a Lender under any Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowers and the Agent at the time or times prescribed by law and at such time or times requested by a Borrower or the Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation requested by a Borrower or the Agent as may be necessary for the Borrowers and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lenders obligations under FATCA or to determine the amount to deduct and withhold from such payment. Each Lender shall promptly advise the Canadian Borrower and the Agent when it becomes aware of any non-compliance.
8.6 | Set-Off |
(1) In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of an Event of Default which remains unremedied (whether or not the Loans have been accelerated hereunder), the Agent and each Lender shall have the right (and are hereby authorized by the Borrowers) at any time and from time to time to combine all or any of each Borrowers accounts with the Agent or the Lender, as the case may be, and to set-off and to appropriate and to apply any and all deposits (general or special, term or demand) including, but not limited to, indebtedness evidenced by certificates of deposit whether matured or unmatured, and any other indebtedness at any time held by such Borrower or owing by such Lender or the Agent, as the case may be, to or for the credit or account of such Borrower against and towards the satisfaction of any Obligations owing by such Borrower, and may do so notwithstanding that the balances of such accounts and the liabilities are expressed in different currencies, and the Agent and each Lender are hereby authorized to effect any necessary currency conversions at the 4:30 p.m. (Toronto time) spot rate of exchange announced by the Bank of Canada on the Banking Day before the day of conversion.
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(2) The Agent or the applicable Lender, as the case may be, shall notify the applicable Borrower of any such set-off from such Borrowers accounts within a reasonable period of time thereafter, although the Agent or the Lender, as the case may be, shall not be liable to either Borrower for its failure to so notify.
ARTICLE 9REPRESENTATIONS AND WARRANTIES
9.1 | Representations and Warranties |
The Canadian Borrower represents and warrants as follows to the Agent and to each of the Lenders and acknowledges and confirms that the Agent and each of the Lenders is relying upon such representations and warranties:
(a) | Existence and Good Standing |
Each Borrower, each Guarantor and each Material Subsidiary is a corporation validly existing and in good standing under the laws of its jurisdiction of organization or is a limited liability company, partnership or trust validly existing under the laws of its jurisdiction of organization; each is duly registered in all other jurisdictions where the nature of its property or character of its business requires registration, except for jurisdictions where the failure to be so registered or qualified would not have a Material Adverse Effect, and has all necessary power and authority to own its properties and carry on its business as presently carried on or as contemplated by the Documents.
(b) | Authority |
Each Borrower and each Guarantor has full power, legal right and authority to enter into the Documents to which it is a party and do all such acts and things as are required by such Documents to be done, observed or performed, in accordance with the terms thereof.
(c) | Valid Authorization and Execution |
Each Borrower and each Guarantor has taken all necessary corporate, partnership, trust and other action (as applicable) of its directors, shareholders, partners, trustees and other persons (as applicable) to authorize the execution, delivery and performance of the Documents to which it is a party and to observe and perform the provisions thereof in accordance with the terms therein contained.
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(d) | Validity of Agreement Non-Conflict |
None of the authorization, execution or delivery of this Agreement or the other Documents or performance of any obligation pursuant hereto or thereto requires or will require, pursuant to applicable law now in effect, any approval or consent of any Governmental Authority having jurisdiction (except such as has already been obtained and are in full force and effect and the approval of the Bank of Thailand in connection with payments by any Guarantor formed under the laws of Thailand under the Subsidiary Guarantee of such Guarantor) nor is in conflict with or contravention of (i) either Borrowers or any of the Guarantors articles, by-laws or other constating documents or any resolutions of directors or shareholders or the provisions of its partnership agreement or declaration of trust or trust indenture (as applicable) or (ii) the provisions of any other indenture, instrument, undertaking or other agreement to which either of the Borrowers or any of the Guarantors is a party or by which they or their properties or assets are bound, the contravention of which would have or would reasonably be expected to have a Material Adverse Effect. The Documents when executed and delivered will constitute valid and legally binding obligations of each of the Borrowers and each of the Guarantors which is a party thereto enforceable against each such party in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors rights and general equitable principles, including the principle that equitable remedies, such as specific performance and injunction, may be granted only in the discretion of the court.
(e) | Ownership of Property |
Each Borrower, each of the Guarantors and each of the Material Subsidiaries has good and marketable title to its property, assets and undertaking, subject to Permitted Encumbrances and to minor defects of title which, individually and in the aggregate, do not materially affect their respective rights of ownership therein or the value thereof, except where the failure to have such good and marketable title would not reasonably be expected to have a Material Adverse Effect.
The Canadian Borrower is not aware of any claim, event, occurrence or right granted to any other person, of any kind whatsoever, that has resulted in or would result in loss of all or any part of the interest of either Borrower, any Guarantor or any Material Subsidiary in any part of their respective property, other than a loss that would not have or would not reasonably be expected to have a Material Adverse Effect.
(f) | Debt |
Neither Borrower, any of the Guarantors nor any of the Material Subsidiaries has outstanding or is currently liable for any Debt except for Permitted Debt.
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(g) | Encumbrances |
None of the property or assets of the Borrowers, any of the Guarantors or any of the Material Subsidiaries is subject to any Security Interest on or in respect of such property or assets except for Permitted Encumbrances.
(h) | No Omissions |
Each Borrower, each of the Guarantors and each of the Material Subsidiaries has made available to the Agent all material information necessary to make any representations, warranties and statements contained in this Agreement not misleading in any material respect in light of the circumstances in which they are given.
(i) | Non-Default |
No Default or Event of Default has occurred or is continuing.
(j) | Financial Condition |
(i) | The audited and unaudited consolidated financial statements of the Canadian Borrower delivered to the Lenders and the Agent pursuant hereto present fairly, in all material respects, the consolidated financial condition of the Canadian Borrower as at the date thereof and the results of the consolidated operations thereof for the fiscal year or fiscal quarter (as applicable) then ending, all in accordance with generally accepted accounting principles consistently applied. |
(ii) | Except as has been disclosed to the Agent and the Australian Operating Facility Lender by written notice in accordance with the provisions of this Agreement, no filing of a report of a material change as required to be filed by a Borrower or any Subsidiary (except a Project Finance SPV) with any securities commission or exchange or with any Governmental Authority having jurisdiction over the issuance and sale of securities of a Borrower or any Subsidiary (except a Project Finance SPV) has been made which material change has had or would reasonably be expected to have a Material Adverse Effect. |
(k) | Information Provided |
(i) | All information, materials and documents, including all cash flow projections, economic models, capital and operating budgets and other information and data: |
(A) | prepared and provided to the Agent by a Borrower or any Subsidiary in respect of the transactions contemplated by this Agreement, or as required by the terms of this Agreement, were in the case of financial projections, prepared in good faith based upon reasonable assumptions at the date of preparation and in all other cases, true, complete and correct in all material respects as of the respective dates thereof; and |
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(B) | prepared by persons other than a Borrower or a Subsidiary and provided to the Agent or the Lenders by the Canadian Borrower or any Subsidiary in respect of the transactions contemplated by this Agreement, or as required by the terms of this Agreement, were, to the best of the knowledge of the Canadian Borrower, in the case of financial projections, prepared in good faith based upon reasonable assumptions at the date of preparation and in all other cases, true, complete and correct in all material respects as of the respective dates thereof. |
(ii) | The information included in the Beneficial Ownership Certificate most recently delivered by the Canadian Borrower to each Lender that is a Covered Financial Institution is true and correct in all respects. |
(l) | Absence of Litigation |
There are no actions, suits or proceedings pending or, to the knowledge of the Canadian Borrower, threatened against or affecting either Borrower, any Guarantor or any Material Subsidiary, their property or any of their undertakings and assets, at law, in equity or before any arbitrator or before or by any Governmental Authority having jurisdiction in the premises in respect of which there is a reasonable likelihood of a determination adverse to either Borrower, any other Guarantor or any Material Subsidiary and which, if determined adversely, would have or would reasonably be expected to have a Material Adverse Effect.
(m) | Compliance with Applicable Laws, Court Orders and Agreements |
Each Borrower, each of the Guarantors and each of the Material Subsidiaries and their respective property, businesses and operations are in compliance with all Applicable Laws (including, without limitation, all applicable Environmental Laws), all applicable directives, judgments, decrees, injunctions and orders rendered by any Governmental Authority or court of competent jurisdiction binding on it, its articles, by laws and other constating documents, all agreements or instruments to which it is a party or by which its property or assets are bound, and any employee benefit plans, except to the extent that failure to so comply would not have and would not reasonably be expected to have a Material Adverse Effect.
(n) | Required Permits in Effect |
All Required Permits for each Borrower, all Guarantors and all Material Subsidiaries are in full force and effect, except to the extent that the failure to have or maintain the same in full force and effect would not, when taken in the aggregate, have or reasonably be expected to have a Material Adverse Effect.
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(o) | Remittances Up to Date |
All of the material remittances required to be made by each Borrower, the Guarantors and the Material Subsidiaries to Governmental Authorities have been made and are currently up to date and there are no outstanding arrears, other than where failure to make such remittances would not reasonably be expected to have a Material Adverse Effect.
(p) | Environmental |
(i) | To the best of the knowledge and belief of the Canadian Borrower, after due inquiry, each Borrower, the Guarantors, the Material Subsidiaries and their respective properties, assets and undertakings taken as a whole comply in all respects and the businesses, activities and operations of same and the use of such properties, assets and undertakings and the processes and undertakings performed thereon comply in all respects with all Environmental Laws except to the extent that failure to so comply would not have and would not reasonably be expected to have a Material Adverse Effect; further, the Canadian Borrower does not know, and has no reasonable grounds to know, of any facts which result in or constitute or are likely to give rise to non-compliance with any Environmental Laws, which facts or non-compliance have or would reasonably be expected to have a Material Adverse Effect. |
(ii) | The Borrowers, the Guarantors and the Material Subsidiaries have not received written notice and, except as previously disclosed to the Agent in writing, the Canadian Borrower has no knowledge after due inquiry, of any facts which would reasonably be expected to give rise to any notice of non-compliance with any Environmental Laws, which non-compliance has had or would reasonably be expected to have a Material Adverse Effect and neither Borrower, any Guarantor nor any Material Subsidiary has received any notice that either Borrower, any of the Guarantors or any Material Subsidiary is a potentially responsible party for a federal, provincial, regional, municipal or local clean up or corrective action in connection with their respective properties, assets and undertakings where such clean up or corrective action has had or would reasonably be expected to have a Material Adverse Effect. |
(q) | Taxes |
Each Borrower, each of the Guarantors and each of the Material Subsidiaries has duly filed on a timely basis all tax returns required to be filed and has paid all material Taxes which are due and payable, and has paid all material assessments and reassessments, and all other material Taxes, governmental charges, governmental royalties, penalties, interest and fines claimed against them, other than those which are being contested by them by Permitted Contest; each such person has made adequate provision for, and all required instalment payments have
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been made in respect of, Taxes payable for the current period for which returns are not yet required to be filed; there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return by any such person or the payment of any Taxes; there are no actions or proceedings being taken by any taxation authority in any jurisdictions where either Borrower, any Guarantor or any Material Subsidiary carries on business to enforce the payment of any Taxes by it other than those which are being contested by it by Permitted Contest.
(r) | Guarantors and Material Subsidiaries |
As at the date hereof, all of the Guarantors are listed on Schedule J annexed hereto and all Material Subsidiaries (which are not also Guarantors) are listed on Schedule K annexed hereto.
(s) | Intellectual Property |
Each Borrower, the Guarantors and the Material Subsidiaries have or have the legal right to use all Intellectual Property necessary for the operation and conduct of their business, affairs, operations and processes, except to the extent that the failure to have the same would not have or reasonably be expected to have a Material Adverse Effect and, to the best of their knowledge and belief, no person has asserted any claim or taken any step or proceedings to prohibit or limit the use of such Intellectual Property by either Borrower, any of the Guarantors or any of the Material Subsidiaries, in respect of which claim, step or proceedings there is a reasonable likelihood of a determination adverse to either Borrower, any other Guarantor or any Material Subsidiary and which, if determined adversely, would have or would reasonably be expected to have a Material Adverse Effect.
(t) | Insurance |
Each Borrower, each Guarantor and each Material Subsidiary maintains, with financially sound and reputable insurers, insurance with respect to its respective properties and businesses and against such casualties and contingencies and in such types and amounts as are in accordance with customary business practices for corporations of the size and type of business and operations as each Borrower, each such Guarantor and each such Material Subsidiary.
(u) | Sanctions |
Neither the Canadian Borrower nor any of its Subsidiaries, nor, to its knowledge, any other person who receives the proceeds of any advance under the Credit Facilities, is a Sanctioned Person or, to its knowledge, is otherwise a prohibited party under Sanctions Regulations.
The Canadian Borrower and each of its Subsidiaries is in compliance with all Sanctions Regulations applicable to it.
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9.2 | Deemed Repetition |
On the date of delivery by a Borrower of a Drawdown Notice to the Agent or the Australian Operating Facility Lender and again on the date of any Drawdown made by a Borrower pursuant thereto:
(a) | except those representations and warranties which are stated to be made as at a specific date or which the applicable Borrower has notified the Agent or the Australian Operating Facility Lender in writing cannot be repeated for such Drawdown and in respect of which the applicable Lenders have waived in writing (with or without terms or conditions) the application of the condition precedent in Section 3.1(b) for such Drawdown, each of the representations and warranties contained in Section 9.1 shall be deemed to be repeated; and |
(b) | the Canadian Borrower shall be deemed to have represented to the Agent and the Lenders that, except as has otherwise been notified to the Agent or the Australian Operating Facility Lender, as applicable, in writing and has been waived in accordance herewith, no event has occurred and remains outstanding which would constitute a Default or an Event of Default nor will any such event occur as a result of the aforementioned Drawdown. |
9.3 | Other Documents |
All representations, warranties and statements of each Borrower or any Guarantor contained in this Agreement, any Subsidiary Guarantee, the Parent Guarantee or any certificate delivered hereunder by a Borrower or a Guarantor shall be deemed to constitute representations and warranties made by the Canadian Borrower to the Agent and the Lenders under Section 9.1 of this Agreement.
9.4 | Effective Time of Repetition |
All representations and warranties, when repeated or deemed to be repeated hereunder, shall be construed with reference to the facts and circumstances existing at the time of repetition, unless they are stated herein to be made as at the date hereof or as at another date.
9.5 | Nature of Representations and Warranties |
The representations and warranties set out in this Agreement or deemed to be made pursuant hereto shall survive the execution and delivery of this Agreement and the making of each Drawdown, notwithstanding any investigations or examinations which may be made by the Agent, the Lenders or Lenders Counsel. Such representations and warranties shall survive until this Agreement has been terminated, provided that the representations and warranties relating to environmental matters shall survive the termination of this Agreement.
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ARTICLE 10GENERAL COVENANTS
10.1 | Affirmative Covenants of the Canadian Borrower |
So long as any Obligation is outstanding (other than those obligations which by their terms survive the termination and cancellation of this Agreement and the Credit Facilities) or any Credit Facility is available hereunder, the Canadian Borrower covenants and agrees with each of the Lenders and the Agent that, unless (subject to Section 16.10) a Majority of the Lenders otherwise consent in writing:
(a) | Punctual Payment and Performance |
It shall duly and punctually pay, and shall cause the Australian Borrower to duly and punctually pay, the principal of all Loans, all interest thereon and all fees and other amounts required to be paid by the Borrowers hereunder in the manner specified hereunder and the Canadian Borrower shall perform and observe all of its obligations under this Agreement and under any other Document to which it is a party and shall cause the Australian Borrower and each of the Guarantors to perform and observe all of their obligations under any Documents to which each is a party.
(b) | Books and Records |
It shall, and shall cause each of its Subsidiaries (except each Project Finance SPV), to keep proper books of record and account in which complete and correct entries, in all material respects, will be made of its transactions in accordance with generally accepted accounting principles.
(c) | Maintenance and Operation |
It shall do or cause to be done, and will cause each Subsidiary (except each Project Finance SPV) to do or cause to be done, all things necessary or required to have all its properties, assets and operations owned, operated and maintained in accordance with diligent and prudent industry practice and Applicable Laws except to the extent that the failure to do or cause to be done the same would not have and would not reasonably be expected to have a Material Adverse Effect.
(d) | Maintain Existence; Compliance with Legislation Generally; Required Permits |
Except as otherwise permitted by Section 10.2(c) and 10.2(j), the Canadian Borrower shall, and shall cause the Australian Borrower, each of the other Guarantors and the Material Subsidiaries, to preserve and maintain its corporate, partnership, trust or other existence (as the case may be) as a corporation, partnership, trust or limited liability company existing under the laws of its applicable jurisdiction of organization. The Canadian Borrower shall do or cause to be done, and shall cause the Australian Borrower, each of the other Guarantors and the Material Subsidiaries to do or cause to be done, all acts necessary or desirable to comply with all Applicable Laws, except (other than in the case of laws relating to
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corruption and bribery) where such failure to comply does not and would not reasonably be expected to have a Material Adverse Effect, and to preserve and keep in full force and effect all Required Permits and all other franchises, licences, rights, privileges, permits and Governmental Authorizations necessary to enable the Borrowers, each of the Guarantors and each of the Material Subsidiaries to operate and conduct their respective businesses in accordance with prudent industry practice, except to the extent that the failure to have any of the same does not and would not reasonably be expected to have a Material Adverse Effect.
(e) | Budgets, Financial Statements and Other Information |
The Canadian Borrower shall deliver to the Agent with sufficient copies for each of the Lenders:
(i) | Annual Consolidated Business Plan / Financial Forecasts as soon as available and, in any event, within 90 days after the end of each of its fiscal years, copies of (A) its annual consolidated business plan for the next fiscal year which shall include, without limitation its annual consolidated capital budget (which segregates those capital expenditures attributed to maintenance and to growth) for the next fiscal year and its annual operating budget for the next fiscal year (approved by its board of directors) and (B) financial forecasts for the next fiscal year including pro forma consolidated financial statements for the Canadian Borrower prepared on a quarterly basis for such period (including a pro forma balance sheet, pro forma statement of income and pro forma statement of cash flows) and a pro forma calculation of the financial covenants contained in Section 10.3; |
(ii) | Annual Financials as soon as available and, in any event, within 90 days after the end of each of its fiscal years, copies of the Canadian Borrowers audited annual financial statements on a consolidated basis consisting of a balance sheet, statement of income, statement of cash flows and statement of shareholders equity for each such year, together with the notes thereto in the case of the audited annual financial statements, all prepared in accordance with generally accepted accounting principles consistently applied, together with a report and an audit opinion of the Canadian Borrowers auditors thereon in the case of audited annual financial statements of the Canadian Borrower; |
(iii) | Quarterly Financials as soon as available and, in any event within 60 days after the end of each of its first, second and third fiscal quarters, copies of each of the Canadian Borrowers unaudited quarterly financial statements on a consolidated basis, in each case consisting of a balance sheet, statement of income, statement of cash flows and statement of shareholders equity for each such period all in reasonable detail and stating in comparative form the figures for the corresponding date and period in the previous fiscal year, all prepared in accordance with generally accepted accounting principles consistently applied; |
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(iv) | Compliance Certificate concurrently with furnishing the financial statements pursuant to Sections 10.1(e)(ii) and (iii), a Compliance Certificate signed by any one of the president, chief financial officer, vice president finance or treasurer of the Canadian Borrower and stating that, inter alia, the representations and warranties in Section 9.1 are true and accurate in all respects (or, if applicable, specifying those that are not) (unless stated to be made as at the date hereof or another date, in which case such representations and warranties shall be true and correct as of the date made), that no Default or Event of Default has occurred and is continuing (or, if applicable, specifying those defaults or events notified in accordance with Section 10.1(h) below) and demonstrating compliance with the financial covenants contained in Section 10.3; |
(v) | Financial Instruments To the extent the Canadian Borrower ceases to include, in the notes to its financial statements referenced above, a table (and related information) reporting on Financial Instruments, the Canadian Borrower shall provide a table (and related information), in substantially the same form as previously included in its financial statements, to the Agent concurrently with furnishing the financial statements pursuant to Sections 10.1(e)(ii) and (iii); and |
(vi) | Other such other information, reports, certificates, projections of income and cash flow or other matters affecting the business, affairs, financial condition, property or assets of the Canadian Borrower or its Subsidiaries as the Agent or any Lender may reasonably request including, without limitation, promptly after any request therefor by a Lender that is a Covered Financial Institution, all information and documentation reasonably requested by the Agent or any Lender for purposes of compliance with the Beneficial Ownership Regulation. |
(f) | Rights of Inspection |
At any reasonable time and from time to time upon reasonable prior notice, but not more frequently than once per calendar quarter for so long as no Default or Event of Default has occurred and is continuing, the Canadian Borrower shall permit, and shall cause its Subsidiaries (except each Project Finance SPV) to permit, the Agent and any Lender or any representative thereof (at the expense of the Canadian Borrower during the continuance of a Default or Event of Default and, otherwise, at the expense of the Agent or such Lender, as applicable) to (i) examine and make copies of and abstracts from the records and books of account of the Canadian Borrower or any of its Subsidiaries (except each Project Finance SPV), (ii) visit and inspect the premises and properties of the Canadian Borrower or any of its Subsidiaries (except each Project Finance SPV) (in each case at the risk of the Canadian Borrower, except for the gross negligence or wilful misconduct of the inspecting party or the failure of any such inspecting party to comply with Applicable Law and the Canadian Borrowers, or any Subsidiarys health and safety requirements, as advised to such inspecting party), and (iii) discuss the affairs, operations, finances and accounts of the Canadian Borrower or any of its Subsidiaries with any of the officers of the Canadian Borrower or any of its Subsidiaries (except each Project Finance SPV).
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(g) | Notice of Material Litigation |
The Canadian Borrower shall promptly give written notice to the Agent of any litigation, proceeding or dispute affecting either Borrower, any of the Guarantors or any of the Material Subsidiaries in respect of a demand or claim in respect of which there is a reasonable likelihood of an adverse determination and which if adversely determined would reasonably be expected to result in a liability, obligation or judgment in excess of 5% of Consolidated Net Tangible Assets (in aggregate at any point in time) or to have a Material Adverse Effect, and shall from time to time furnish to the Agent all reasonable information requested by the Agent concerning the status of any such litigation, proceeding or dispute.
(h) | Notice of Default or Event of Default |
The Canadian Borrower shall deliver to the Agent, as soon as reasonably practicable, and in any event no later than 3 Banking Days after becoming aware of a Default or the occurrence of an Event of Default, an Officers Certificate describing in detail such Default or such Event of Default and specifying the steps, if any, being taken to cure or remedy the same.
(i) | Notice of Material Adverse Effect or Material Adverse Change |
The Canadian Borrower shall, as soon as reasonably practicable, promptly notify the Agent of any event, circumstance or condition that has had or is reasonably likely to have a Material Adverse Effect or cause a Material Adverse Change.
(j) | Notice of New Material Subsidiaries |
The Canadian Borrower shall promptly give written notice to the Agent of the acquisition, creation or existence of each new Material Subsidiary.
(k) | Securities Disclosure |
The Canadian Borrower shall promptly furnish to the Agent copies of all registration materials, reports, material change reports, circulars, notices and other non-confidential information that the Canadian Borrower was required by applicable law to file and has filed with any securities commission or stock exchange, has furnished to its shareholders or publicly disclosed (whether by way by advertisement or otherwise), except for insider reports and other filings which are of an administrative nature and do not contain any material information with respect to the business, affairs or financial condition of the Canadian Borrower and its Subsidiaries (except each Project Finance SPV). The Canadian Borrower shall be deemed to have satisfied its obligations under this Section 10.1(k) if and to the extent the registration materials, material change reports, circulars, reports, notices and other non-confidential information, as the case may be, shall have been filed with the Canadian Securities Administrators (and are accessible to the Agent) in the SEDAR filing system at www.sedar.com.
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(l) | Payment of Royalties, Taxes, Withholdings, etc. |
The Canadian Borrower shall, and shall cause the Australian Borrower, the other Guarantors and the Material Subsidiaries to, from time to time, pay or cause to be paid all material royalties, rents, Taxes, rates, levies or assessments, ordinary or extraordinary, governmental fees or dues, and to make and remit all withholdings, lawfully levied, assessed or imposed upon the Borrowers, the Guarantors and the Material Subsidiaries or any of the assets of the Borrowers, the Guarantors and the Material Subsidiaries as and when the same become due and payable, except when and so long as the validity of any such royalties, rents, Taxes, rates, levies, assessments, fees, dues or withholdings is being contested by the Borrowers, the Guarantors or the Material Subsidiaries by a Permitted Contest or the failure to pay or cause to be paid the same would not have or reasonably be expected to have a Material Adverse Effect.
(m) | Payment of Preferred Claims |
The Canadian Borrower shall, and shall cause the Australian Borrower, the other Guarantors and the Material Subsidiaries to, from time to time pay when due or cause to be paid when due all amounts related to wages, workers compensation obligations, government royalties or pension fund obligations and any other amount which may result in a lien, charge, Security Interest or similar encumbrance against the assets of such Borrower, such Guarantor or such Material Subsidiary arising under statute or regulation, except when and so long as the validity of any such amounts or other obligations is being contested by the Borrowers, the Guarantors or the Material Subsidiaries by a Permitted Contest or the failure to pay or cause to be paid the same would not have or reasonably be expected to have a Material Adverse Effect
(n) | Environmental Covenants |
(i) | Without limiting the generality of Section 10.1(d) above, the Canadian Borrower shall, and shall cause the Australian Borrower, the other Guarantors and the Material Subsidiaries to, conduct their business and operations so as to comply at all times with all Environmental Laws if the consequence of a failure to comply, either alone or in conjunction with any other such non compliances, would have or would reasonably be expected to have a Material Adverse Effect. |
(ii) | If either Borrower, any of the Guarantors or any of the Material Subsidiaries shall: |
(A) | receive or give any notice that a violation of any Environmental Law has or may have been committed or is about to be committed by the same, and if such violation has or would reasonably be expected to have a Material Adverse Effect; |
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(B) | receive any notice that a complaint, proceeding or order has been filed or is about to be filed against the same alleging a violation of any Environmental Law, and if such violation would reasonably be expected to have a Material Adverse Effect; or |
(C) | receive any notice requiring a Borrower, a Guarantor or a Material Subsidiary, as the case may be, to take any action in connection with the release of Hazardous Materials into the environment or alleging that such Borrower, such Guarantor or such Material Subsidiary may be liable or responsible for costs associated with a response to or to clean up a Release of Hazardous Materials into the environment or any damages caused thereby in excess of 5% of Consolidated Net Tangible Assets (in aggregate at any point in time), or if such action or liability has or would reasonably be expected to have a Material Adverse Effect, |
the Canadian Borrower shall promptly provide the Agent with a copy of such notice and shall, or shall cause such Guarantor or Material Subsidiary to, furnish to the Agent from time to time all reasonable information requested by the Agent relating to the same.
(o) | Use of Loans |
The Canadian Borrower shall, and shall cause the Australian Borrower to, use all Loans and the proceeds thereof solely for the purposes set forth in Section 2.3 hereof.
(p) | Required Insurance |
The Canadian Borrower shall, and shall cause the Australian Borrower, the other Guarantors and the Material Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and business and against such casualties and contingencies and in such types and such amounts as shall be in accordance with customary business practices for corporations of the size and type of business and operations as the Canadian Borrower and its Subsidiaries, to the extent such insurance is available on reasonable commercial terms.
(q) | Assets and Revenues Coverage |
The Canadian Borrower shall ensure that the Canadian Borrower and the Guarantors which are Eligible Contract Participants (i) own not less than {Percentage redacted}% of the consolidated assets of the Canadian Borrower (as set forth on the consolidated balance sheet of the Canadian Borrower, in accordance with generally accepted accounting principles), excluding the assets of the Project
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Finance SPVs, as at each Quarter End and (ii) have earned revenues that represent not less than {Percentage redacted}% of the consolidated revenues of the Canadian Borrower (as set forth on the consolidated income statement of the Canadian Borrower, in accordance with generally accepted accounting principles), excluding the revenues of the Project Finance SPVs, over the previous 12 months, as calculated at each Quarter End.
Notwithstanding the foregoing, the calculation of the {Percentage redacted}% test for the purposes of determining compliance with this Section 10.1(q) for any period shall not include any assets of any Guarantor, or revenues attributable to any Guarantor, formed under the laws of Thailand until such Guarantor has received the approval in principal from Governmental Authorities in Thailand required in connection with payments under the Subsidiary Guarantee of such Guarantor to any foreign beneficiary thereunder.
(r) | Sanctions |
The Canadian Borrower shall provide the Agent with notice of any material (a) trade, commerce or other commercial dealing by a Borrower or a Subsidiary with any Sanctioned Person or (b) violation of Sanctions Regulations, in each case, of which it is aware; for the purpose of this covenant, material shall mean that such dealing or violation accounts for or is in respect of greater than 10% of the Consolidated Net Tangible Assets or consolidated revenues of the Canadian Borrower.
10.2 | Negative Covenants of the Canadian Borrower |
So long as any Obligation is outstanding (other than those obligations which by their terms survive the termination and cancellation of this Agreement and the Credit Facilities) or either any Credit Facility is available hereunder, the Canadian Borrower covenants and agrees with each of the Lenders and the Agent that, unless (subject to Section 16.10) a Majority of the Lenders otherwise consent in writing:
(a) | Change of Business |
The Canadian Borrower shall not, and shall not permit the Australian Borrower, any other Guarantor or any Material Subsidiary to, change in any material respect its Business.
(b) | Negative Pledge |
The Canadian Borrower shall not, and shall not permit the Australian Borrower, any other Guarantor or any Material Subsidiary to, create, issue, incur, assume or permit to exist any Security Interests on any of its or their property, undertakings or assets other than Permitted Encumbrances.
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(c) | No Dissolution |
The Canadian Borrower shall not, and shall not permit the Australian Borrower, any other Guarantor or any Material Subsidiary to, liquidate, dissolve or wind up or take any steps or proceedings in connection therewith except (i) in the case of Guarantors, where the successor thereto or transferee thereof is a Borrower or another Guarantor or (ii) in the case of Material Subsidiaries, where the successor thereto or transferee thereof is a Borrower, a Guarantor or another Material Subsidiary.
(d) | Limit on Sale of Assets |
Except for Permitted Dispositions, the Canadian Borrower shall not, and shall not permit any Subsidiary (except each Project Finance SPV) to, sell, transfer or otherwise dispose of any of their respective property or assets (i) during the continuance of a Default or Event of Default or (ii) in any calendar year, whether in one or a series of transactions, which, in aggregate, have a fair market value in excess of 5% of Consolidated Net Tangible Assets.
(e) | Limitation on Debt |
The Canadian Borrower shall not have or incur, or permit the Australian Borrower, any other Guarantor or any Material Subsidiary to have or incur, any Debt other than Permitted Debt.
(f) | Limit on Investments and Financial Assistance |
The Canadian Borrower shall not, and shall not permit the Australian Borrower, any Guarantor or any Material Subsidiary to (i) make Investments in any person other than a Borrower or a Guarantor or (ii) provide any Financial Assistance to or for the benefit of any person other than a Borrower or a Guarantor, other than (A) amounts in relation to the Project Finance SPVs up to a maximum aggregate amount at any time of U.S.$100,000,000 (or the Equivalent Amount thereof measured as at the time of the making of any such Investment or provision of such Financial Assistance) plus 100% of the net proceeds of any equity offerings received by a Borrower, a Guarantor or a Material Subsidiary from a person other than a Borrower, a Guarantor or a Material Subsidiary, (B) amounts not in excess, in the aggregate, in any calendar year, of 5% of Consolidated Net Tangible Assets plus 100% of the net proceeds to such Borrower, such Guarantor or Material Subsidiary from any equity offerings and (C) an Investment in a person that will become a Guarantor by delivering a Subsidiary Guarantee concurrently with or immediately following the making of the Investment.
(g) | Limits on Distributions |
The Canadian Borrower shall not make any Distributions during the continuance of a Default or Event of Default or which, immediately following such Distribution, would have or would reasonably be expected to result in a Default or Event of Default.
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(h) | No Financial Instruments Other Than Permitted Hedging |
The Canadian Borrower shall not and shall not permit any Subsidiary (except each Project Finance SPV) to enter into, transact or have outstanding any Financial Instruments or Financial Instrument Obligations other than Permitted Hedging.
(i) | Non Arms Length Transactions |
Except in respect of transactions between or among a Borrower and/or one or more of the Guarantors and/or the Material Subsidiaries, the Canadian Borrower shall not, nor shall it permit the Australian Borrower, any other Guarantor or any Material Subsidiary to, enter into any contract, agreement or transaction whatsoever, including for the sale, purchase, lease or other dealing in any property or the provision of any services (other than office and administration services provided in the ordinary course of business), with any Related Party except upon fair and reasonable terms, which terms are not less favourable to a Borrower, a Guarantor or a Material Subsidiary, as applicable, than it would obtain in an arms length transaction.
(j) | No Merger, Amalgamation, etc. |
Except as permitted under Section 10.2(c) or Section 10.2(d), the Canadian Borrower shall not, and shall not permit the Australian Borrower, any other Guarantor or Material Subsidiary to, merge with, amalgamate with or consolidate with any other person, or convey, sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets to any other person (whether by way of reconstruction, reorganization, recapitalization, arrangement, consolidation, amalgamation, merger, transfer, sale or otherwise) unless:
(i) | the Agent has been provided with 21 days prior notice thereof; |
(ii) | in the case of any such transaction involving the Canadian Borrower, the successor formed by such consolidation or amalgamation or the survivor of such merger or the person that acquires by conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Canadian Borrower as an entirety, as the case may be, shall be a solvent corporation, limited liability company, partnership or trust organized and existing under the laws of the Canada (or any province or territory therein) or such other jurisdiction acceptable to the Agent, acting reasonably; |
(iii) | in the case of any such transaction involving the Australian Borrower, the successor formed by such consolidation or amalgamation or the survivor of such merger or the person that acquires by conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of the Australian Borrower as an entirety, as the case may be, shall be a solvent corporation, limited liability company, partnership or trust organized and existing under the laws of the Commonwealth of Australia (or any territory therein) or such other jurisdiction acceptable to the Agent and the Australian Operating Facility Lender, each acting reasonably; |
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(iv) | in the case of any such transaction involving a Guarantor, the successor formed by such consolidation or amalgamation or the survivor of such merger or the person that acquires by conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of such Guarantor as an entirety, as the case may be, shall be a solvent corporation, limited liability company, partnership or trust organized and existing under the laws of a jurisdiction approved pursuant to the definition of Guarantor contained herein; |
(v) | in the case of any such transaction involving any other Material Subsidiary, the successor formed by such consolidation or amalgamation or the survivor of such merger or the person that acquires by conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of such Material Subsidiary as an entirety, as the case may be, shall be a solvent corporation, limited liability company, partnership or trust organized and existing under the jurisdiction of its organization or creation; |
(vi) | in the case of such transaction involving a Borrower or a Guarantor, as provided for in subparagraphs (ii), (iii) and (iv) above (A) such successor corporation, limited liability company, partnership or trust shall have executed and delivered to the Agent an agreement or agreements assuming the due and punctual performance and observance of each covenant, obligation and condition of each respective Document by which the Borrower or such Guarantor was bound and (B) shall have caused to be delivered to the Agent and the Lenders an opinion of independent counsel to the effect that (1) all agreements or instruments effecting such assumption are enforceable in accordance with their terms and (2) as a result of such transaction, no Borrower or Guarantor that continues to exist has been released from its obligations under the Documents (such opinion to be acceptable to the Agent, acting reasonably); provided that agreements or instruments of assumption shall not be required if such assumption occurs by operation of law, and the Canadian Borrower delivers an opinion of such counsel to that effect (such opinion to be acceptable to the Agent, acting reasonably); |
(vii) | in all cases, immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and |
(viii) | in all cases, the transaction shall not result in a Change of Control. |
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No such conveyance, transfer, sale, lease or other disposition of all or substantially all of the assets of a Borrower or a Guarantor shall have the effect of releasing such Borrower or Guarantor or any successor person from its liability under this Agreement or any other Document.
(k) | Hostile Acquisitions |
The Canadian Borrower shall not, and shall not permit the Australian Borrower to, utilize the proceeds of any Drawdown, or any Loans, under any Credit Facility to, or to provide funds to any Subsidiary, Affiliate or other person to, finance a hostile takeover.
(l) | Sanctions |
The Canadian Borrower shall not and shall not permit any Subsidiary to (a) engage in any transaction with a person that is listed on the SDN List or on a list maintained pursuant to the Sanctioned Person Legislation, (b) knowingly engage in any transaction with a person that is directly or indirectly owned or controlled by a person that is listed on the SDN List or on a list maintained pursuant to Sanctioned Person Legislation or (c) become designated as a Sanctioned Person.
The Canadian Borrower shall not and shall not permit any Subsidiary to engage in any transaction or dealing that would be in violation of applicable Sanctions Regulations except where to do so does not and would not reasonably be expected to have a Material Adverse Effect.
The Borrowers shall not and shall not permit any Subsidiary to (i) directly or, to its knowledge, indirectly, use the proceeds from any Credit Facility to fund any activities or business of or with any person that is listed on the SDN List or on a list maintained pursuant to the Sanctioned Person Legislation, or (ii) knowingly, directly or indirectly, use the proceeds from any Credit Facility to fund any activities or business of or with any person that is directly or indirectly owned or controlled by a person that is listed on the SDN List or on a list maintained pursuant to the Sanctioned Person Legislation. The Borrowers shall not knowingly use the proceeds from any Credit Facility in violation of any applicable Sanctions Regulations.
10.3 | Financial Covenants |
So long as any Obligation is outstanding (other than those obligations which by their terms survive the termination and cancellation of this Agreement and the Credit Facilities) or any Credit Facility is available hereunder, the Canadian Borrower covenants and agrees with each of the Lenders and the Agent that, unless (subject to Section 16.10) a Majority of the Lenders otherwise consent in writing:
(a) | Maximum Net Funded Debt to EBITDA Ratio |
As at each Quarter End, the Canadian Borrower shall not permit the Net Funded
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Debt to EBITDA Ratio to exceed 3.00:1.00, such ratio to be calculated on a rolling four-quarter basis.
Notwithstanding the foregoing, for the four Quarter Ends following the completion of a Material Acquisition, the Canadian Borrower shall not permit the Net Funded Debt to EBITDA Ratio to exceed 3.50:1.00 (the Acquisition Leverage Step Up) provided that (i) without taking into account the Material Acquisition, the Net Funded Debt to EBITDA Ratio shall not have exceeded 3.00:1.00 as at each such Quarter Ends and (ii) if the Canadian Borrower has previously invoked the Acquisition Leverage Step Up, the Canadian Borrower shall only be entitled to again invoke the Acquisition Leverage Step Up if the Net Funded Debt to EBITDA Ratio shall not have exceeded 3.00:1.00 for the two Quarter Ends preceding the subsequent Material Acquisition in question.
(b) | Minimum Interest Coverage Ratio |
As at each Quarter End, the Canadian Borrower shall not permit the Interest Coverage Ratio to be less than 3.00:1.00, such ratio to be calculated on a rolling four-quarter basis.
10.4 | Agent May Perform Covenants |
If, following the expiry of any cure periods provided for in Section 12.1, the Canadian Borrower fails to perform any covenants on its part herein contained, the Agent may give notice to the Canadian Borrower of such failure and if such covenant remains unperformed, the Agent may, in its discretion but need not, perform any such covenant capable of being performed by the Agent and if the covenant requires the payment or expenditure of money, the Agent may, upon having received approval of all Lenders, make such payments or expenditure and all sums so expended shall be forthwith payable by the Canadian Borrower to the Agent on behalf of the Lenders and shall bear interest at the applicable interest rate provided in Section 5.10. No such performance, payment or expenditure by the Agent shall be deemed to relieve the Canadian Borrower of any default hereunder or under the other Documents.
ARTICLE 11GUARANTEES
11.1 | Guarantees |
(1) Subject to the Canadian Borrowers rights under Section 2.25, the Canadian Borrower shall cause certain of its Subsidiaries (each of whose jurisdiction of incorporation, formation, organization, amalgamation or continuation, or in which it exists or subsists, is any of an OECD Country (which includes, for greater certainty, Mexico, Barbados, Oman, Kuwait, Bahrain, Colombia, Peru, Brazil, Thailand, Malaysia, Singapore and Indonesia or any province, territory, state or district of any of the foregoing)), excluding the Project Finance SPVs, to execute and deliver a Subsidiary Guarantee in the form of Schedule H-1 annexed hereto, in each case with such modifications and insertions as may be required by the Agent and agreed to by the Canadian Borrower, each acting reasonably, including modifications necessary to have such guarantees be in compliance with the Applicable Laws of the governing jurisdiction of such Subsidiary (together with a certified copy of such Subsidiarys constating or other organizational documents and a legal opinion in form and substance satisfactory to the Agent, acting reasonably) in order to comply with the positive covenant set out in Section 10.1(q).
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(2) Subject to Section 2.25, upon a Subsidiary executing and delivering a Subsidiary Guarantee pursuant to Section 11.1(1), such Subsidiary shall be a Guarantor for all purposes hereof and the other Documents.
(3) The Canadian Borrower shall execute and deliver the Parent Guarantee in the form Schedule H-2 annexed hereto with such modifications and insertions as may be required by the Agent and agreed to by the Canadian Borrower, each acting reasonably.
11.2 | Forms |
The form of Subsidiary Guarantee and Parent Guarantee have been or shall be prepared based upon the laws of Canada and Alberta applicable thereto in effect at the date hereof. The Agent shall have the right to require that any such Subsidiary Guarantee or Parent Guarantee be amended to reflect any changes in such laws, whether arising as a result of statutory amendments, court decisions or otherwise, in order to ensure that all Obligations are fully guaranteed by the Guarantors (and the Obligations of the Australian Borrower are fully guaranteed by the Canadian Borrower) except that in no event shall the Agent require that the foregoing be effected if the result thereof would be to grant the Agent or the Lenders greater rights than is otherwise contemplated herein or therein.
11.3 | Dealing with Guarantees |
The Agent, with the consent of all of the Lenders, may grant extensions of time or other indulgences, take and give up securities, accept compositions, grant releases and otherwise deal with the Borrowers and other parties and with security as the Agent may see fit, without prejudice to or in any way limiting the liability of the Borrowers under this Agreement or the other Documents.
11.4 | Release of Guarantees |
The Guarantors shall not be released from the Subsidiary Guarantees (and the Canadian Borrower shall not be released from the Parent Guarantee) or any part thereof, other than to the extent that a Guarantor has been designated as a Non-Guarantor Subsidiary in compliance with the terms hereof (in which case the Subsidiary Guarantee of such former Guarantor shall automatically cease to apply to the subject matter thereof for the benefit of the Agent and the Lenders), except by a written release signed by the Agent with the prior written consent of the Lenders. If all of the Obligations, Bank Product Obligations and Lender Financial Instrument Obligations (other than those obligations which by their terms survive the termination and cancellation of this Agreement and the Credit Facilities) have been repaid, paid, satisfied and discharged, as the case may be, in full and the Credit Facilities have been fully cancelled, then the Agent shall cause it and the Lenders interest in the Subsidiary Guarantees and the Parent Guarantee to be released.
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11.5 | Transfer of Subsidiary Guarantees |
If The Toronto-Dominion Bank, in its capacity as Agent, or any successor thereto, in its capacity as Agent ceases to be the Agent (the Departing Agent), the Departing Agent shall transfer and assign all of its right, title and interest in its capacity as Agent in and to the Subsidiary Guarantees and the Parent Guarantee to the Successor Agent.
11.6 | Hedging Affiliates and Bank Product Affiliates |
Each Lender hereby confirms to and agrees with the Agent and the other Lenders as follows:
(a) | such Lender is, for the purpose of guaranteeing the Lender Financial Instrument Obligations owing to or in favour of its Hedging Affiliates and the Bank Product Obligations owing to or in favor of its Bank Product Affiliates pursuant to the Subsidiary Guarantees, executing and delivering this Agreement both on its own behalf and as agent for and on behalf of such Hedging Affiliates and Bank Product Affiliates; |
(b) | the Agent shall be and is hereby authorized by each such Hedging Affiliate and Bank Product Affiliate (i) to hold the Subsidiary Guarantee on behalf of such Hedging Affiliate and Bank Product Affiliate as guarantees for the Lender Financial Instrument Obligations and Bank Product Obligations owing to or in favour of it in accordance with the provisions of the Documents and (ii) to act in accordance with the provisions of the Documents (including on the instructions or at the direction of the Majority of the Lenders) in all respects with respect to the Subsidiary Guarantees; and |
(c) | (i) the Lender Financial Instruments of any such Hedging Affiliate or the Lender Financial Instrument Obligations owing to or in favour of any such Hedging Affiliate and (ii) the Bank Products of any such Bank Product Affiliate or the Bank Product Obligations owing to or in favor of any such Bank Product Affiliate shall not be included or taken into account for the purposes of Section 16.10 or (for certainty) in any determination of the Majority of the Lenders or the Lenders which shall be determined solely based upon the Commitments of the Lenders hereunder or the Outstanding Principal owing to the Lenders. |
11.7 | Guarantees for Hedging with Former Lenders |
If a Lender ceases to be a Lender under this Agreement (a Former Lender), all Lender Financial Instrument Obligations owing to such Former Lender and its Hedging Affiliates under Lender Financial Instruments entered into while such Former Lender was a Lender shall remain guaranteed by the Subsidiary Guarantees (equally and rateably) to the extent that such Lender Financial Instrument Obligations were guaranteed by the Subsidiary Guarantees prior to such Lender becoming a Former Lender and, subject to the following provisions of this Section 11.7 and unless the context otherwise requires, all references herein to Lender Financial Instrument Obligations shall include such obligations to a Former Lender and its Hedging Affiliates and all references herein to Lender Financial Instruments shall include such Financial
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Instruments with a Former Lender and its Hedging Affiliates. For certainty, any Financial Instrument Obligations under Financial Instruments entered into with a Former Lender or an Affiliate thereof after the Former Lender has ceased to be a Lender shall not be guaranteed by the Subsidiary Guarantees. Notwithstanding the foregoing, no Former Lender or any Affiliate thereof shall have any right to cause or require the enforcement of the Subsidiary Guarantees or any right to participate in any decisions relating to the Subsidiary Guarantees, including any decisions relating to the enforcement or manner of enforcement of the Subsidiary Guarantees or decisions relating to any amendment to, waiver under, release of or other dealing with all or any part of the Subsidiary Guarantees; for certainty, the sole right of a Former Lender and its Affiliates with respect to the Subsidiary Guarantees is to share, on a pari passu basis, in any proceeds of realization and enforcement of the Subsidiary Guarantees.
ARTICLE 12EVENTS OF DEFAULT AND ACCELERATION
12.1 | Events of Default |
The occurrence of any one or more of the following events (each such event being herein referred to as an Event of Default) shall constitute a default under this Agreement:
(a) | Principal Default: if a Borrower fails to pay the principal of any Loan hereunder when due and payable; |
(b) | Other Payment Default: if a Borrower fails to pay: |
(i) | any interest (including, if applicable, default interest) accrued on any Loan; |
(ii) | any acceptance fee with respect to a Bankers Acceptance or issuance fee with respect to a Letter of Credit; or |
(iii) | any other amount not specifically referred to in paragraph (a) above or in this paragraph (b) payable by a Borrower hereunder; |
in each case when due and payable, and such default is not remedied within 5 Banking Days of such amount being due and payable;
(c) | Certain Covenant Defaults: if the Canadian Borrower fails to observe or perform any covenant in: |
(i) | Sections 10.2(b) to (h), inclusive, Section 10.2(l) or Section 10.1(r) and shall fail to remedy or cure the same within 5 Banking Days; or |
(ii) | Section 10.3 or Section 11.1; |
(d) | Breach of Other Covenants: if a Borrower or a Guarantor fails to observe or perform any covenant or obligation herein or in any other Document required on its part to be observed or performed (other than a covenant or condition whose breach or default in performance is specifically dealt with elsewhere in this Section) and, after notice has been given by the Agent to the Canadian Borrower specifying such default and requiring the applicable Borrower or Guarantor to remedy or cure the same, such Borrower or such Guarantor shall fail to remedy such default within a period of 30 days after the giving of such notice; |
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(e) | Incorrect Representations: if any representation or warranty made by a Borrower or any Guarantor herein or in any other Document shall prove to have been incorrect or misleading in any respect on and as of the date made and the facts or circumstances which make such representation or warranty incorrect or misleading are not remedied and the representation or warranty in question remains incorrect or misleading more than 30 days after the Agent notifies the Canadian Borrower of the same; |
(f) | Involuntary Insolvency: if a decree or order of a court of competent jurisdiction is entered adjudging a Borrower, a Guarantor or a Material Subsidiary a bankrupt or insolvent under the Companies Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Winding-up and Restructuring Act (Canada) or any other bankruptcy, insolvency or analogous laws or ordering the winding up or liquidation of its affairs or, in the case of the Australian Borrower or a Guarantor or a Material Subsidiary organized under the laws of Australia, it is unable to pay its debts when they fall due or it is (or states that it is) an insolvent under administration or insolvent (each as defined in the Australian Corporations Act) or, as a result of the operation of Section 459F(1) of the Australian Corporations Act, it is taken to have failed to comply with a statutory demand; provided that any plan of arrangement under the Business Corporations Act (Ontario), the Business Corporations Act (Alberta) or the Canada Business Corporations Act or any analogous statute, whether foreign or domestic, consummated in compliance with Section 10.2(j) shall not constitute an Event of Default under this Section 12.1(f); |
(g) | Idem: if any case, proceeding or other action shall be instituted in any court of competent jurisdiction against a Borrower, a Guarantor or a Material Subsidiary, seeking in respect of it an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition, proposal or arrangement with creditors, a readjustment of debts, the appointment of trustee in bankruptcy, receiver, receiver and manager, interim receiver, custodian, sequestrator, (or in the case of the Australian Borrower or a Guarantor or a Material Subsidiary organized under the laws of Australia, an administrator or other controller (as defined in the Australian Corporations Act) or other person with similar powers with respect to a Borrower, a Guarantor or a Material Subsidiary) or all or substantially all of its assets, or any other like relief in respect of a Borrower, a Guarantor or a Material Subsidiary under any bankruptcy or insolvency law and such case, proceeding or other action results in an entry of an order for such relief or any such adjudication or appointment, which is not stayed or dismissed within 30 days; provided that any plan of arrangement under the Business Corporations Act (Ontario), the Business Corporations Act (Alberta) or the Canada Business Corporations Act or any analogous statute, whether foreign or domestic, consummated in compliance with Section 10.2(j) shall not constitute an Event of Default under this Section 12.1(g); |
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(h) | Voluntary Insolvency: if a Borrower, a Guarantor or a Material Subsidiary makes any assignment in bankruptcy or makes any other assignment for the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada) or any comparable law, seeks relief under the Companies Creditors Arrangement Act (Canada), the Winding-up and Restructuring Act (Canada) or any other bankruptcy, insolvency or analogous law, files a petition or proposal to take advantage of any act of insolvency, consents to or acquiesces in the appointment of a trustee in bankruptcy, receiver, receiver and manager, interim receiver, custodian, sequestrator (or in the case of the Australian Borrower or a Guarantor or a Material Subsidiary organized under the laws of Australia, an administrator or other controller (as defined in the Australian Corporations Act)) or other person with similar powers of itself or all or substantially all of its assets, or files a petition or otherwise commences any proceeding seeking any reorganization, arrangement (where a Borrower, a Guarantor or a Material Subsidiary is the subject of such arrangement), composition, administration or readjustment under any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors rights or consents to, or acquiesces in, the filing of such assignment, proposal, relief, petition, proposal, appointment or proceeding; provided that any plan of arrangement under the Business Corporations Act (Ontario), the Business Corporations Act (Alberta) or the Canada Business Corporations Act or any analogous statute, whether foreign or domestic, consummated in compliance with Section 10.2(j) shall not constitute an Event of Default under this Section 12.1(h); |
(i) | Dissolution: except as permitted by Sections 10.2(c) or 10.2(j), if proceedings are commenced for the dissolution, liquidation or winding up of a Borrower, any Guarantor or any Material Subsidiary unless such proceedings are being actively and diligently contested in good faith to the satisfaction of the Majority of the Lenders; |
(j) | Security Realization: if creditors of either Borrower, any Guarantors or any Material Subsidiaries having a Security Interest against or in respect of the property and assets thereof, or any part thereof, realize upon or enforce any such security against such property and assets or any part thereof having an aggregate fair market value in excess of 5% of Consolidated Net Tangible Assets and such realization or enforcement shall continue in effect and not be released, discharged or stayed within the lesser of 30 days and the period of time prescribed under Applicable Laws for the completion of the sale of or realization against the assets subject to such seizure or attachment; |
(k) | Seizure: if property and assets of the Borrowers, the Guarantors and the Material Subsidiaries or any part thereof having an aggregate fair market value in excess of 5% of Consolidated Net Tangible Assets are seized or otherwise attached by anyone pursuant to any legal process or other means, including, without limitation, distress, execution or any other step or proceeding with similar effect and such attachment, step or other proceeding shall continue in effect and not be released, discharged or stayed within the lesser of 30 days and the period of time prescribed under Applicable Laws for the completion of the sale of or realization against the assets subject to such seizure or attachment; |
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(l) | Judgment: if one or more final judgments, decrees or orders (after available appeals have been exhausted) for an aggregate amount in excess of 5% of Consolidated Net Tangible Assets shall be awarded against a Borrower, any Guarantor or any Material Subsidiary and such Borrower, any such Guarantor or any such Material Subsidiary, as applicable, has not provided security (to the Agent, the applicable court that rendered such judgment, the judgment creditor or an agent or trustee for one of the foregoing) for any of such judgments, decrees or orders or caused such judgment decree or order to be satisfied or stayed within 30 days of such judgment, decree or order being awarded; |
(m) | Payment Cross Default: if a Borrower, any of the Guarantors or any Material Subsidiary (or any combination thereof) defaults in the payment when due (whether at maturity, upon acceleration, or otherwise) of Debt or Financial Instrument Obligations in aggregate in excess of 5% of Consolidated Net Tangible Assets unless such default has been remedied or waived in accordance with the provisions of the relevant indentures, credit agreements, instruments or other agreement evidencing such Debt or Financial Instrument Obligations; |
(n) | Event Cross Default: if a default, event of default or other similar condition or event (however described) in respect of a Borrower, any of the Guarantors or any of the Material Subsidiaries (or any combination thereof) occurs or exists (and is continuing) under any indentures, credit agreements, agreements or other instruments evidencing or relating to Debt or Financial Instrument Obligations (individually or collectively) in an aggregate amount in excess of 5% of Consolidated Net Tangible Assets and such default, event or condition has resulted in such Funded Debt or Financial Instrument Obligations becoming, or becoming capable at such time of being declared, due and payable thereunder before it would otherwise have been due and payable; |
(o) | Cease to Carry on Business: if a Borrower or any Guarantor ceases to carry on business other than as expressly permitted pursuant to Sections 10.2(c) and 10.2(j); |
(p) | Change of Control: |
(i) | if a Change of Control referenced in subparagraph (a) of the definition thereof occurs; or |
(ii) | if a Change of Control referenced in subparagraph (b) of the definition thereof occurs and, in the opinion of the Lenders (acting reasonably) such Change of Control would reasonably be expected to have a Material Adverse Effect; |
(q) | Lender Financial Instruments: if a Financial Instrument Demand for Payment has been delivered to the Canadian Borrower and the Canadian Borrower fails to make payment thereunder within (i) in respect of amounts of Cdn.$500,000 (or the Equivalent Amount thereof) or more, 5 Banking Days and (ii) in respect of amounts of less than Cdn.$500,000 (or the Equivalent Amount thereof), 10 Banking Days; or |
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(r) | Invalidity: if, other than as a result of an act or omission of the Agent or any Lender, any Document or any material provision thereof shall at any time for any reason cease to be in full force and effect, be declared to be void or voidable (and the same is not forthwith effectively rectified or replaced by the Canadian Borrower) or shall be repudiated, or the validity or enforceability thereof shall at any time be contested by a Borrower or any Guarantor, or a Borrower or any Guarantor shall deny that it has any or any further liability or obligation thereunder, or at any time it shall be unlawful or impossible for them to perform any of their respective obligations. |
12.2 | Acceleration |
If any Event of Default shall occur and for so long as it is continuing:
(a) | the entire principal amount of all Loans then outstanding from the Borrowers and all accrued and unpaid interest thereon, |
(b) | an amount equal to the face amount at maturity of all Bankers Acceptances issued by the Canadian Borrower which are unmatured, |
(c) | an amount equal to the maximum amount then available to be drawn under all unexpired Letters of Credit and Australian Letters of Credit, and |
(d) | all other Obligations outstanding hereunder, |
shall, at the option of the Agent in accordance with Section 15.11 or upon the request of a Majority of the Lenders, become immediately due and payable upon written notice to that effect from the Agent to the Canadian Borrower (on behalf of the Canadian Borrower and the Australian Borrower), all without any other notice and without presentment, protest, demand, notice of dishonour or any other demand whatsoever (all of which are hereby expressly waived by the Borrowers). In such event and if the Borrowers do not immediately pay all such amounts upon receipt of such notice, either the Lenders (in accordance with the proviso in Section 15.11(a)) or the Agent on their behalf may, in their discretion, exercise any right or recourse and/or proceed by any action, suit, remedy or proceeding against the Borrowers authorized or permitted by law for the recovery of all the indebtedness and liabilities of the Borrowers to the Lenders and proceed to exercise any and all rights hereunder and under the other Documents and no such remedy for the enforcement of the rights of the Lenders shall be exclusive of or dependent on any other remedy but any one or more of such remedies may from time to time be exercised independently or in combination.
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12.3 | Conversion on Default |
Upon the occurrence and during the continuance of an Event of Default, the Agent, on behalf of the Lenders, or the Canadian Operating Facility Lender, as applicable, may convert, at the Equivalent Amount, if applicable, (a) any outstanding Loan (other than a Letter of Credit) under the Syndicated Facility to either a Canadian Prime Rate Loan or a U.S. Base Loan (at the Equivalent Amount, if applicable) and (b) any outstanding Loan under the Canadian Operating Facility to a Canadian Prime Rate Loan or U.S. Base Rate Loan. Interest shall accrue on each such Loan at the rate specified in Article 5 with interest on all overdue interest at the same rate, such interest to be calculated daily and payable on demand.
12.4 | Remedies Cumulative and Waivers |
For greater certainty, it is expressly understood and agreed that the rights and remedies of the Lenders and the Agent hereunder or under any other Document are cumulative and are in addition to and not in substitution for any rights or remedies provided by law or by equity; and any single or partial exercise by the Lenders or by the Agent of any right or remedy for a default or breach of any term, covenant, condition or agreement contained in this Agreement or other Document shall not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies to which any one or more of the Lenders and the Agent may be lawfully entitled for such default or breach. Any waiver by, as applicable, the Majority of the Lenders, the Lenders or the Agent of the strict observance, performance or compliance with any term, covenant, condition or other matter contained herein and any indulgence granted, either expressly or by course of conduct, by, as applicable, the Majority of the Lenders, the Lenders or the Agent shall be effective only in the specific instance and for the purpose for which it was given and shall be deemed not to be a waiver of any rights and remedies of the Lenders or the Agent under this Agreement or any other Document as a result of any other default or breach hereunder or thereunder.
12.5 | Termination of Lenders Obligations |
The occurrence of a Default or Event of Default shall relieve the Lenders of all obligations to provide any further Drawdowns, Rollovers or Conversions to each Borrower hereunder (but only for so long as such Default or Event of Default is continuing); provided that the foregoing shall not prevent the Lenders or the Agent from disbursing money or effecting any Conversion which, by the terms hereof, they are entitled to effect, or any Conversion or Rollover requested by a Borrower and acceptable to the Lenders and the Agent.
12.6 | Acceleration of All Lender Obligations |
(1) If a Lender or a Hedging Affiliate has delivered a Financial Instrument Demand for Payment to the Canadian Borrower or a Subsidiary, then it shall promptly notify the Agent and other Lenders thereof.
(2) If an Acceleration Notice has been delivered to a Borrower, then, to the extent that it is not already the case, all Obligations, all Financial Instrument Obligations under Lender Financial Instruments and all Bank Product Obligations shall be immediately due and payable and each Lender, Hedging Affiliate, Bank Product Affiliate and the Agent shall (and shall be entitled to) promptly, and in any event within 3 Banking Days of receipt of notice of the foregoing, deliver such other Demands for Payment and notices as may be necessary to ensure that all Obligations, Financial Instrument Obligations under Lender Financial Instruments and Bank Product Obligations are thereafter due and payable under this Agreement, the Bank Products and the Lender Financial Instruments.
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(3) Each agreement, indenture, instrument or other document evidencing or relating to a Bank Product or Lender Financial Instrument shall, notwithstanding any provision thereof to the contrary, be deemed to be hereby amended to allow and permit the Lender which is a party thereto to comply with the provisions of this Section 12.6.
12.7 | Application and Sharing of Payments Following Acceleration |
Except as otherwise agreed to by all of the Lenders in their sole discretion, all monies and property received by the Lenders for application in respect of the Obligations, the Bank Product Obligations and the Financial Instrument Obligations under Lender Financial Instruments subsequent to the Adjustment Time and all monies received as a result of a realization upon the Subsidiary Guarantees and the Parent Guarantee (collectively, the Realization Proceeds) shall be applied and distributed to the Lenders and the Agent in the order and manner set forth below:
(a) | firstly, distributed proportionately to the Lenders and the Agent in accordance with amounts owing to each Lender and the Agent on account of the reasonable properly documented costs and expenses of enforcement and realization upon the Subsidiary Guarantees and the Parent Guarantee; and |
(b) | secondly, distributed Rateably to the Lenders, the Bank Product Affiliates and Hedging Affiliates on account of the Obligations, the Bank Product Obligations and the Financial Instrument Obligations under Lender Financial Instruments; |
and the balance of the Realization Proceeds (if any) shall be paid to the Borrowers or otherwise as may be required by law.
12.8 | Calculations as at the Adjustment Time |
For the purposes of this Agreement, if a Financial Instrument Demand for Repayment has been delivered, then any amount which is payable by the Canadian Borrower or a Subsidiary (except a Project Finance SPV) under such Lender Financial Instrument in settlement of obligations arising thereunder as a result of the early termination of the Lender Financial Instrument shall be deemed to have become payable at the time of delivery of such Financial Instrument Demand for Repayment notwithstanding that the amount payable by the Canadian Borrower or a Subsidiary is to be subsequently calculated and notice thereof given to the Canadian Borrower or such Subsidiary in accordance with such Lender Financial Instrument.
12.9 | Sharing Repayments |
Each Lender agrees that, subsequent to the Adjustment Time, it will at any time and from time to time upon the request of the Agent purchase undivided participations in the Obligations owing under the Syndicated Facility and make any other adjustments which may be necessary or appropriate in order that Obligations under the Syndicated Facility which remain outstanding to each Lender are thereafter outstanding proportionately to the aggregate outstanding Obligations under the Syndicated Facility owing to all Lenders. The Borrowers agree to do, or
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cause to be done (whether by a Borrower or its Subsidiaries, but excluding any Project Finance SPV), all things reasonably necessary or appropriate to give effect to any and all purchases and other adjustments by and between the Lenders pursuant to this Section. For certainty, subject to the Adjustment Time, all Realization Proceeds will be distributed pursuant to Section 12.7.
12.10 | Pro Rata Obligations |
After all Obligations are declared by the Agent to be due and payable pursuant to Section 12.2, each Syndicated Facility Lender and the Canadian Operating Facility Lender agrees that (a) it will at any time or from time to time thereafter at the request of the Agent as required by any other Syndicated Facility Lender or the Canadian Operating Facility Lender, as the case may be, purchase at par on a non-recourse basis a participation in the Outstanding Principal owing to each of the other Lenders under the Syndicated Facility and the Canadian Operating Facility and make any other adjustments as are necessary or appropriate, in order that the Outstanding Principal owing to each of the Lenders under the Syndicated Facility and the Canadian Operating Facility, as adjusted pursuant to this Section 12.10, will be in the same proportion as each Lenders individual aggregate Commitments under the Syndicated Facility and the Canadian Operating Facility were to the overall aggregate Commitments of all Lenders under the Syndicated Facility and the Canadian Operating Facility immediately prior to the Event of Default resulting in such declaration and (b) the amount of any repayment made by or on behalf of the Canadian Borrower and the Subsidiaries under the Documents or any proceeds received by the Agent or the Lenders in connection therewith will be applied by the Agent in a manner such that to the extent possible the amount of the Outstanding Principal owing to each Lender under the Syndicated Facility and the Canadian Operating Facility after giving effect to such application will be in the same proportion as each Lenders individual aggregate Commitments under the Syndicated Facility and the Canadian Operating Facility were to the overall aggregate Commitments of all Lenders under the Syndicated Facility and the Canadian Operating Facility immediately prior to the Event of Default resulting in such declaration.
ARTICLE 13CHANGE OF CIRCUMSTANCES
13.1 | Market Disruption Respecting LIBOR Loans and BBSY Loans |
(1) In the event that at any time subsequent to the giving of a Drawdown Notice, Rollover Notice or Conversion Notice to the Agent or the Canadian Operating Facility Lender, as applicable, by the Canadian Borrower with regard to any requested Libor Loan a Lender (acting reasonably) makes a determination, which shall be conclusive and binding upon the Canadian Borrower, that:
(a) | by reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining the rate of interest with respect to, or deposits are not available in sufficient amounts in the ordinary course of business at the rate determined hereunder to fund, a requested Libor Loan during the ensuing Interest Period selected; |
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(b) | the making or continuing of the requested Libor Loan by such Lender has been made impracticable by the occurrence of an event which materially adversely affects the London interbank market generally; or |
(c) | the Libor Rate shall no longer represent the effective cost to such Lender of United States Dollar deposits in such market for the relevant Interest Period, |
then such Lender shall give notice thereof to the Agent and the Canadian Borrower as soon as possible after such determination, but in any event before the aforementioned time, (and the Agent shall, in turn, give notice thereof to the other applicable Lenders) and the Canadian Borrower shall, within one Banking Day after receipt of such notice and in replacement of the Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, previously given by the Canadian Borrower, give the Agent or the Canadian Operating Facility Lender, as applicable, a Drawdown Notice or a Conversion Notice, as the case may be, which specifies the Drawdown of any other Loan or the Conversion of the relevant Libor Loan on the last day of the applicable Interest Period into any other Loan which would not be affected by the notice from such Lender pursuant to this Section 13.1(1). In the event the Canadian Borrower fails to give, if applicable, a valid replacement Conversion Notice with respect to the maturing Libor Loans which were the subject of a Rollover Notice, such maturing Libor Loans, shall be converted on the last day of the applicable Interest Period, as applicable, into U.S. Base Rate Loans as if a Conversion Notice had been given to the Agent or the Canadian Operating Facility Lender, as applicable, by the Canadian Borrower pursuant to the provisions hereof. In the event the Canadian Borrower fails to give, if applicable, a valid replacement Drawdown Notice with respect to a Drawdown originally requested by way of a Libor Loan, then the Canadian Borrower shall be deemed to have requested a Drawdown by way of a U.S. Base Rate Loan in the amount specified in the original Drawdown Notice, in each case, on the originally requested Drawdown Date, the applicable Lenders (subject to the other provisions hereof) shall make available the requested amount by way of a U.S. Base Rate Loan. In the event that a Lender gives the aforementioned notice, such Lender shall provide notice to the Canadian Borrower and the Agent promptly following its determination that the circumstances prompting the delivery of such notice no longer affects its ability to offer Libor Loans and the Agent shall in turn promptly give notice thereof to the other applicable Lenders, following which the Canadian Borrower shall be free to avail itself of Drawdowns of Libor Loans in accordance with the terms hereof.
(2) Notwithstanding anything to the contrary in this Agreement or any other Document, if the Agent or the Canadian Operating Facility Lender (or in the case of clause (c) below, the Canadian Borrower) determines (which determination shall be conclusive absent manifest error), or if the Canadian Borrower or the Majority of the Lenders notify the Agent and the Canadian Operating Facility Lender (with, in the case of the Majority of the Lenders, a copy to Canadian Borrower) that the Canadian Borrower or the Majority of the Lenders (as applicable) have determined, that:
(a) | adequate and reasonable means do not exist for ascertaining the Libor Rate for any requested Interest Period because the rate set by ICE Benchmark Administration is not available or published on a current basis and such circumstances are unlikely to be temporary; |
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(b) | the ICE Benchmark Administration or a Governmental Authority having jurisdiction over the Agent or the Canadian Operating Facility Lender has made a public statement identifying a specific date after which the Libor Rate shall no longer be made available or used for determining the interest rate of loans (such specific date, the Scheduled Unavailability Date); or |
(c) | the Libor Rate is no longer the market standard benchmark rate for United States Dollar denominated loans; |
then, reasonably promptly after such determination by the Agent or the Canadian Operating Facility Lender, as applicable, or receipt by the Agent and the Canadian Operating Facility Lender of such notice, as applicable, the Agent (on behalf of itself and the Canadian Operating Facility Lender) and the Canadian Borrower may negotiate an amendment to this Agreement to replace Libor Loans with loans using an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), (any such proposed rate, a Libor Successor Rate), together with any required conforming changes to this Agreement.
If no Libor Successor Rate has been determined and:
(i) | the circumstances under subparagraph (a) above exist; |
(ii) | the Scheduled Unavailability Date has occurred; or |
(iii) | 60 days have passed since the determination by the Agent or the Canadian Operating Facility Lender, as applicable, or receipt of notice by the Agent and the Canadian Operating Facility Lender from the Canadian Borrower, as applicable, that the circumstance described under subparagraph (c) above exist, |
the Agent will promptly so notify the Canadian Borrower and each Lender and, thereafter, (i) the obligation of the Lenders to make or maintain Libor Loans shall be suspended and (ii) the Libor Rate component shall no longer be utilized in determining the U.S. Base Rate. Upon receipt of such notice, the Canadian Borrower may revoke any pending request for a Drawdown of, Conversion into or Rollover of Libor Loans or, failing that, will be deemed to have converted any such notice in to a Drawdown Notice, Conversion Notice or Rollover Notice, as applicable, requesting U.S. Base Rate Loans in the amount specified therein.
(3) In the event that at any time subsequent to the giving of a Drawdown Notice, Conversion Notice or Rollover Notice to the Australian Operating Facility Lender by the Australian Borrower with regard to any requested BBSY Loan the Australian Operating Facility Lender (acting reasonably) makes a determination, which shall be conclusive and binding upon the Australian Borrower, that:
(a) | by reason of circumstances affecting the Australian bank bill market, adequate and fair means do not exist for ascertaining the rate of interest with respect to, or deposits are not available in sufficient amounts in the ordinary course of business at the rate determined hereunder to fund, a requested BBSY Loan during the ensuing Interest Period selected; |
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(b) | the making or continuing of the requested BBSY Loan by the Australian Operating Facility Lender has been made impracticable by the occurrence of an event which materially adversely affects the Australian bank bill market generally; or |
(c) | the BBSY shall no longer represent the effective cost to the Australian Operating Facility Lender of bids for bills in the Australian bank bill market for the relevant Interest Period, |
then the applicable interest rate on such BBSY Loan payable under Section 5.4 shall be deemed to be a rate per annum equal to the BBR in effect from time to time during the relevant Interest Period plus the Applicable Pricing Rate (applicable for BBSY Loans) and references to BBSY in respect of BBSY Loans shall be deemed to be references to BBR.
13.2 | Market Disruption Respecting Bankers Acceptances |
If:
(a) | the Agent (acting reasonably) or the Canadian Operating Facility Lender (acting reasonably), as applicable, makes a determination, which determination shall be conclusive and binding upon the Canadian Borrower, and notifies the Canadian Borrower, that there no longer exists an active market for bankers acceptances accepted by the Syndicated Facility Lenders or the Canadian Operating Facility Lender, respectively; or |
(b) | the Agent is advised by a Syndicated Facility Lender by written notice (each, a Lender BA Suspension Notice) that such Lender has determined (in its sole discretion, acting in good faith), or the Canadian Operating Facility Lender has determined (in its sole discretion, acting in good faith), that the BA Discount Rate will not or does not accurately reflect the cost of funds of such Lender or the discount rate which would be applicable to a sale of Bankers Acceptances accepted by such Lender in the market; |
then:
(c) | the right of the Canadian Borrower to request Bankers Acceptances or BA Equivalent Advances from any applicable Lender shall be suspended until the Agent or the Canadian Operating Facility Lender, as applicable, determines that the circumstances causing such suspension no longer exist, and so notifies the Canadian Borrower and the applicable Lenders; |
(d) | any outstanding Drawdown Notice requesting a Loan by way of Bankers Acceptances or BA Equivalent Advances shall be deemed to be a Drawdown Notice requesting a Loan by way of Canadian Prime Rate Loans in the amount specified in the original Drawdown Notice; |
(e) | any outstanding Conversion Notice requesting a Conversion of a Loan by way of Bankers Acceptances or BA Equivalent Advances shall be deemed to be a Conversion Notice requesting a Conversion of such Loan into a Loan by way of Canadian Prime Rate Loans; and |
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(f) | any outstanding Rollover Notice requesting a Rollover of a Loan by way of Bankers Acceptances or BA Equivalent Advances, shall be deemed to be a Conversion Notice requesting a Conversion of such Loans into a Loan by way of Canadian Prime Rate Loans. |
The Agent or the Canadian Operating Facility Lender, as applicable, shall promptly notify the Canadian Borrower (and, in respect of the Syndicated Facility, the applicable Lenders) of any suspension of the Canadian Borrowers right to request the Bankers Acceptances or BA Equivalent Advances and of any termination of any such suspension. A Lender BA Suspension Notice shall be effective upon receipt of the same by the Agent if received prior to 2:00 p.m. (Toronto time) on a Banking Day and if not, then on the next following Banking Day, except in connection with an outstanding Drawdown Notice, Conversion Notice or Rollover Notice, in which case the applicable Lender BA Suspension Notice shall only be effective with respect to such outstanding Drawdown Notice, Conversion Notice or Rollover Notice if received by the Agent prior to 2:00 p.m. (Toronto time) two Banking Days prior to the proposed Drawdown Date, Conversion Date or Rollover Date (as applicable) applicable to such outstanding Drawdown Notice, Conversion Notice or Rollover Notice, as applicable.
In the event that a Lender gives a Lender BA Suspension Notice, such Lender shall provide notice to the Canadian Borrower and the Agent promptly following its determination that the circumstances prompting the delivery of such notice no longer affects its ability to sell Bankers Acceptances and the Agent shall in turn promptly give notice thereof to the other applicable Lenders, following which the Canadian Borrower shall be free to request Bankers Acceptances or BA Equivalent Advances in accordance with the terms hereof.
13.3 | Change in Law |
(1) If the adoption of any applicable law, regulation, treaty or official directive (whether or not having the force of law but nevertheless binding on a Lender) or any change therein or in the interpretation or application thereof by any court or by any Governmental Authority or any other entity charged with the interpretation or administration thereof or compliance by a Lender with any request or direction (whether or not having the force of law but nevertheless binding on such Lender) of any such authority or entity in each case after the date hereof:
(a) | subjects such Lender to, or causes the withdrawal or termination of a previously granted exemption with respect to, any Taxes (other than Taxes on such Lenders overall income or capital or franchise taxes), or changes the basis of taxation of payments due to such Lender, or increases any existing Taxes (other than Taxes on such Lenders overall income or capital or franchise taxes) on payments of principal, interest or other amounts payable by a Borrower to such Lender under this Agreement; |
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(b) | imposes, modifies or deems applicable any reserve, liquidity, special deposit, regulatory or similar requirement against assets or liabilities held by, or deposits in or for the account of, or loans by such Lender, or any acquisition of funds for loans or commitments to fund loans or obligations in respect of undrawn, committed lines of credit or in respect of Bankers Acceptances accepted by such Lender; |
(c) | imposes on such Lender or requires there to be maintained by such Lender any additional capital adequacy or additional capital requirements (including, without limitation, a requirement which affects such Lenders allocation of capital resources to its obligations) in respect of any Loan or obligation of such Lender hereunder, or any other condition with respect to this Agreement; or |
(d) | directly or indirectly affects the cost to such Lender of making available, funding or maintaining any Loan or otherwise imposes on such Lender any other condition or requirement affecting this Agreement or any Loan or any obligation of such Lender hereunder; |
and the result of (a), (b), (c) or (d) above, in the sole determination of such Lender acting in good faith, is:
(e) | to increase the cost to such Lender of performing its obligations hereunder with respect to any Loan; |
(f) | to reduce any amount received or receivable by such Lender hereunder or its effective return hereunder or on its capital in respect of any Loan or any Credit Facility; |
(g) | to reduce the standby fees payable pursuant to Section 5.8; or |
(h) | to cause such Lender to make any payment with respect to or to forego any return on or calculated by reference to, any amount received or receivable by such Lender hereunder with respect to any Loan or any Credit Facility; |
such Lender shall determine that amount of money which shall compensate the Lender for such increase in cost, payments to be made or reduction in income or return or interest foregone (herein referred to as Additional Compensation). Upon a Lender having determined that it is entitled to Additional Compensation in accordance with the provisions of this Section, the Lender shall promptly so notify the Canadian Borrower (on behalf of the Canadian Borrower and the Australian Borrower) and the Agent. The relevant Lender shall provide the Canadian Borrower (on behalf of the Canadian Borrower and the Australian Borrower) and the Agent with a photocopy of the relevant law, rule, guideline, regulation, treaty or official directive (or, if it is impracticable to provide a photocopy, a written summary of the same) and a certificate of a duly authorized officer of such Lender setting forth, in reasonable detail, the Additional Compensation and the basis of calculation therefor, which shall be conclusive evidence of such Additional Compensation in the absence of manifest error. The applicable Borrower shall pay to such Lender within 10 Banking Days of the giving of such notice such Lenders Additional Compensation. Each of the Lenders shall be entitled to be paid such Additional Compensation from time to time to the extent that the provisions of this Section are then applicable notwithstanding that any Lender has previously been paid any Additional Compensation.
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(2) Each Lender agrees that it will not claim Additional Compensation from a Borrower under Section 13.3(1) if it is not generally claiming similar compensation from its other customers in similar circumstances or in respect of any period greater than 3 months prior to the delivery of notice in respect thereof by such Lender, unless, in the latter case, the adoption, change or other event or circumstance giving rise to the claim for Additional Compensation is retroactive or is retroactive in effect.
(3) Notwithstanding anything herein to the contrary, (i) any provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and all regulations, requests, rules, guidelines or directives thereunder or issued in connection therewith, in each case not announced or known and implemented before the date of this Agreement that are applicable to a Lender making a claim for compensation under Section 13.3 and (ii) all regulations, requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States, Canadian or other regulatory authorities, in each case pursuant to Basel III and in each case only in the form adopted by the Governmental Authorities asserting relevant jurisdiction over the Lender seeking compensation under Section 13.3, but excluding any amounts that have arisen as a result of any transitional rules or directives relating to Basel III to which a Lender making a claim for compensation under Section 13.3 is already subject, shall in each case be deemed to be a change in law for the purposes of this Section 13.3, regardless of the date enacted, adopted or issued.
13.4 | Prepayment of Portion |
In addition to the other rights and options of the Borrowers hereunder and notwithstanding any contrary provisions hereof, if a Lender gives the notice provided for in Section 13.3 with respect to any Loan (an Affected Loan), the applicable Borrower may, upon 2 Banking Days notice to that effect given to such Lender and the Agent (which notice shall be irrevocable), prepay in full without penalty such Lenders Rateable Portion of the Affected Loan outstanding together with accrued and unpaid interest on the principal amount so prepaid up to the date of such prepayment, such Additional Compensation as may be applicable to the date of such payment and all costs, losses and expenses incurred by such Lender by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Affected Loan or any part thereof on other than the last day of the applicable Interest Period, and upon such payment being made that Lenders obligations to make such Affected Loans to such Borrower under this Agreement shall terminate.
13.5 | Illegality |
If a Lender determines, in good faith, that the adoption of any applicable law, regulation, treaty or official directive (whether or not having the force of law but nevertheless binding on such Lender) or any change therein or in the interpretation or application thereof by any court or by any Governmental Authority or any other entity charged with the interpretation or administration thereof or compliance by a Lender or its Lender Parent with any request or direction (whether or not having the force of law) of any such authority or entity, now or hereafter makes it unlawful or impossible for any Lender to, or for its Lender Parent to permit such Lender to, make, fund or maintain a Loan under any Credit Facility under which it is a Lender or to give effect to its obligations in respect of such a Loan, such Lender may, by written notice thereof to the Canadian
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Borrower (on behalf of the Canadian Borrower and the Australian Borrower) and to the Agent declare its obligations under this Agreement in respect of such Loan to be terminated whereupon the same shall forthwith terminate, and the applicable Borrower shall, within the time required by such law (or at the end of such longer period as such Lender at its discretion has agreed), either (a) effect a Conversion of such Loan in accordance with the provisions hereof (if such Conversion would resolve the unlawfulness or impossibility), (b) prepay the principal of such Loan (including by providing cash collateral in respect of outstanding Letters of Credit and Australian Letters of Credit in accordance with the provisions hereof) together with accrued interest, such Additional Compensation as may be applicable with respect to such Loan to the date of such payment and all costs, losses and expenses incurred by the Lenders by reason of the liquidation or re-deployment of deposits or other funds or for any other reason whatsoever resulting from the repayment of such Loan or any part thereof on other than the last day of the applicable Interest Period or (c) in the case of a Letter of Credit or Australian Letter of Credit, take any other necessary steps and actions with respect thereto in order to avoid the unlawfulness or impossibility. If any such change shall only affect a portion of such Lenders obligations under this Agreement which is, in the opinion of such Lender and the Agent, acting reasonably, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Agent, the other Lenders or the Borrowers hereunder, such Lender shall only declare its obligations under that portion so terminated.
13.6 | Mitigation Obligations |
If any Lender requires Additional Compensation, requires a Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 8.5, or terminates its obligations hereunder pursuant to Section 13.5, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its obligations hereunder to another of its offices, branches or affiliates, if, in the judgement of such Lender, such designation or assignment (a) would eliminate or reduce any Additional Compensation payable hereunder or any additional amount payable in accordance with Section 8.5 or eliminate the event giving rise to the termination of such Lenders obligations pursuant to Section 13.5, as the case may be, in the future and (b) would not subject such Lender to any unreimbursed cost or expenses and would not otherwise be disadvantageous to the Lender. Each Borrower agrees to pay all properly documented reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
ARTICLE 14COSTS, EXPENSES AND INDEMNIFICATION
14.1 | Costs and Expenses |
Each Borrower shall pay promptly upon notice from the Agent all reasonable properly documented out-of-pocket costs and expenses of the Lenders and the Agent in connection with the Documents and the establishment and syndication of the applicable Credit Facilities, including in connection with preparation, printing, execution and delivery of this Agreement and the other Documents whether or not any Drawdown has been made hereunder, and also including, without limitation, the reasonable properly documented fees and out-of-pocket costs and expenses of Lenders Counsel with respect thereto (limited to one set of Lenders counsel per jurisdiction except as expressly set out below) and with respect to advising the Agent and the Lenders as to
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their rights and responsibilities under this Agreement and the other Documents. Except for ordinary expenses of the Lenders and the Agent relating to the day to day administration of this Agreement, the Borrowers further agree to pay within 30 days of demand by the Agent all reasonable properly documented out-of-pocket costs and expenses in connection with the preparation or review of waivers, consents and amendments pertaining to this Agreement, and in connection with the establishment of the validity and enforceability of this Agreement and the preservation or enforcement of rights of the Lenders and the Agent under this Agreement and other Documents, including, without limitation, all reasonable properly documented out-of-pocket costs and expenses sustained by the Lenders and the Agent as a result of any failure by a Borrower to perform or observe any of its obligations hereunder or in connection with any action, suit or proceeding (whether or not an Indemnified Party is a party or subject thereto), together with interest thereon from and after such 30th day if such payment is not made by such time. The legal costs of the Agent and the Lenders payable by the Borrowers pursuant to this Section shall be limited to one set of Lenders counsel per jurisdiction (provided the Canadian Borrower acknowledges that the Lenders retained an additional set of counsel in the United States of America in connection with the settlement of the provisions of this Agreement related to Sanctions Regulations and the Canadian Borrower shall be responsible for all reasonable properly documented out of pocket fees and expenses of the Agent related to such counsel).
14.2 General Indemnity
In addition to any liability of the Borrowers to any Lender or the Agent under any other provision hereof, each Borrower shall indemnify each Indemnified Party and hold each Indemnified Party harmless against any losses, claims, costs, damages or liabilities (including, without limitation, any expense or cost incurred in the liquidation and re-deployment of funds acquired to fund or maintain any portion of a Loan and reasonable properly documented out-of-pocket expenses and reasonable legal fees on a solicitor and his own client basis) incurred by the same as a result of or in connection with the Credit Facilities or the Documents, including, without limitation, as a result of or in connection with:
(a) | any cost or expense incurred by reason of the liquidation or re-deployment in whole or in part of deposits or other funds required by any Lender to fund any Bankers Acceptance or to fund or maintain any Loan as a result of a Borrowers failure to complete a Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by it in any notice given hereunder; |
(b) | subject to permitted or deemed Rollovers and Conversions, the Canadian Borrowers failure to provide for the payment to the Agent, for the account of the Lenders, or to the Canadian Operating Facility Lender, as applicable, of the full principal amount of each Bankers Acceptance on its maturity date; |
(c) | a Borrowers failure to pay any other amount, including without limitation any interest or fee, due hereunder on its due date after the expiration of any applicable grace or notice periods (subject, however, to the interest obligations of the Borrowers hereunder for overdue amounts); |
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(d) | the Canadian Borrowers repayment or prepayment of a Libor Loan otherwise than on the last day of its Interest Period; |
(e) | the prepayment of any outstanding Bankers Acceptance before the maturity date of such Bankers Acceptance; |
(f) | a Borrowers failure to give any notice required to be given by it to the Agent, the Canadian Operating Facility Lender, the Australian Operating Facility Lender or the Lenders hereunder; |
(g) | the failure of a Borrower to make any other payment due hereunder; |
(h) | any inaccuracy or incompleteness of the Canadian Borrowers representations and warranties contained in Article 9; |
(i) | any failure of the Canadian Borrower to observe or fulfil its obligations under Article 10; |
(j) | any failure of the Canadian Borrower to observe or fulfil any other Obligation not specifically referred to above; or |
(k) | the occurrence of any Default or Event of Default in respect of a Borrower, |
provided that this Section shall not apply to (i) any losses, claims, costs, damages or liabilities that arise by reason of the gross negligence or wilful misconduct of the Indemnified Party claiming indemnity hereunder or the material breach of a Document by such Indemnified Party or (ii) claims brought by a Borrower or an Indemnified Party against an Indemnified Party (only) or by an Indemnified Party against a Borrower or a Guarantor. The provisions of this Section shall survive repayment of the Obligations.
14.3 Environmental Indemnity
Each Borrower shall indemnify and hold harmless the Indemnified Parties forthwith on demand by the Agent from and against any and all claims, suits, actions, debts, damages, costs, losses, liabilities, penalties, obligations, judgments, charges, expenses and disbursements (including without limitation, all reasonable legal fees and disbursements on a solicitor and his own client basis) of any nature whatsoever, suffered or incurred by the Indemnified Parties or any of them in connection with any Credit Facility, whether as beneficiaries under the Documents, as successors in interest of the Borrowers or any of their Subsidiaries, or voluntary transfer in lieu of foreclosure, or otherwise howsoever, with respect to any Environmental Claims relating to the property of a Borrower or any of their Subsidiaries arising under any Environmental Laws as a result of the past, present or future operations of the Borrowers or any of their Subsidiaries (or any predecessor in interest to the Borrowers or their Subsidiaries) relating to the property of the Borrowers or their Subsidiaries, or the past, present or future condition of any part of the property of the Borrowers or their Subsidiaries owned, operated or leased by the Borrowers or their Subsidiaries (or any such predecessor in interest), including any liabilities arising as a result of any indemnity covering Environmental Claims given to any person by the Lenders or the Agent or a receiver, receiver manager or similar person appointed hereunder or under applicable law
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(collectively, the Indemnified Third Party); but excluding any Environmental Claims or liabilities relating thereto to the extent that such Environmental Claims or liabilities (a) arise by reason of the gross negligence or wilful misconduct of the Indemnified Party or the Indemnified Third Party claiming indemnity hereunder or the material breach of a Document by such Indemnified Party or Indemnified Third Party or (b) are in connection with a claim brought by a Borrower, an Indemnified Party or and Indemnified Third Party against an Indemnified Party or Indemnified Third Party (only) or by an Indemnified Party or Indemnified Third Party against a Borrower. The provisions of this Section shall survive the repayment of the Obligations.
For the purposes of providing the benefit of the indemnities contained in Sections 14.2 and 14.3 in favour of the Indemnified Parties and Indemnified Third Parties which are not a party hereto, the applicable Lender or the Agent, as the case may be, shall, in addition to contracting on its own behalf, be deemed to be contracting as agent and trustee for and on behalf of such persons.
14.4 | Judgment Currency |
(1) If for the purpose of obtaining or enforcing judgment against a Borrower in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section referred to as the Judgment Currency) an amount due in Canadian Dollars, United States Dollars, Pounds Sterling, Euros or Australian Dollars under this Agreement, the conversion shall be made at the rate of exchange prevailing on the Banking Day immediately preceding:
(a) | the date of actual payment of the amount due, in the case of any proceeding in the courts of any jurisdiction that will give effect to such conversion being made on such date; or |
(b) | the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section being hereinafter in this Section referred to as the Judgment Conversion Date). |
(2) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 14.4(1)(b), there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable Borrower shall pay such additional amount (if any) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of Canadian Dollars, United States Dollars, Pounds Sterling, Euros or Australian Dollars, as the case may be, which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date.
(3) Any amount due from a Borrower under the provisions of Section 14.4(2) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement.
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(4) The term rate of exchange in this Section 14.4 means the 4:30 p.m. (Toronto time) rate of exchange for Canadian interbank transactions in Canadian Dollars, United States Dollars, Pounds Sterling, Euros or Australian Dollars, as the case may be, in the Judgment Currency published by the Bank of Canada for the Banking Day immediately preceding the day in question or, if such rate is not so published by the Bank of Canada, such term shall mean the Equivalent Amount of the Judgement Currency.
ARTICLE 15THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITIES
15.1 | Authorization and Action |
(1) Each Lender hereby irrevocably appoints and authorizes the Agent to be its agent in its name and on its behalf to exercise such rights or powers granted to the Agent or the Lenders under this Agreement to the extent specifically provided herein and on the terms hereof, together with such powers as are reasonably incidental thereto and the Agent hereby accepts such appointment and authorization. As to any matters not expressly provided for by this Agreement, the Agent shall not be required to exercise any discretion or take any action, but, subject to Section 16.10, shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority of the Lenders and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to take any action which exposes the Agent to liability in such capacity or which could result in the Agents incurring any costs and expenses, without provision being made for indemnity of the Agent by the Lenders against any loss, liability, cost or expense incurred, or to be incurred or which is contrary to this Agreement or applicable law.
(2) The Lenders agree that all decisions as to actions to be or not to be taken, as to consents or waivers to be given or not to be given, as to determinations to be made and otherwise in connection with this Agreement and the Documents, shall be made upon the decision of the Majority of the Lenders except in respect of a decision or determination where it is specifically provided in this Agreement that all Lenders, all of the Lenders or the Lenders or words to similar effect, or the Agent alone, is to be responsible for same. Each of the Lenders shall be bound by and agrees to abide by and adopt all decisions made as aforesaid and covenants in all communications with the Borrowers to act in concert and to join in the action, consent, waiver, determination or other matter decided as aforesaid.
15.2 | Procedure for Making Loans |
(1) With respect to the Syndicated Facility, the Agent shall make Loans available to the Canadian Borrower as required hereunder by debiting the account of the Agent to which the Lenders Rateable Portions of such Loans have been credited in accordance with Section 2.12 (or causing such account to be debited) and, in the absence of other arrangements agreed to by the Agent and the Canadian Borrower in writing, by crediting the account of the Canadian Borrower or, at the expense of the Canadian Borrower, transferring (or causing to be transferred) like funds in accordance with the instructions of the Canadian Borrower as set forth in the Drawdown Notice, Rollover Notice or Conversion Notice, as the case may be, in respect of each Loan; provided that the obligation of the Agent hereunder to effect such a transfer shall be limited to taking such steps
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as are commercially reasonable to implement such instructions, which steps once taken shall constitute conclusive and binding evidence that such funds were advanced hereunder in accordance with the provisions relating thereto and the Agent shall not be liable for any damages, claims or costs which may be suffered by the Canadian Borrower and occasioned by the failure of such Loan to reach the designated destination.
(2) With respect to the Syndicated Facility, unless the Agent has been notified by a Lender at least one Banking Day prior to the Drawdown Date, Rollover Date or Conversion Date, as the case may be, requested by the Canadian Borrower that such Lender will not make available to the Agent its Rateable Portion of such Loan, the Agent may assume that such Lender has made or will make such portion of the Loan available to the Agent on the Drawdown Date, Rollover Date or Conversion Date, as the case may be, in accordance with the provisions hereof and the Agent may, but shall be in no way obligated to, in reliance upon such assumption, make available to the Canadian Borrower on such date a corresponding amount. If and to the extent such Lender shall not have so made its Rateable Portion of a Loan available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such Lenders Rateable Portion of the Loan and all reasonable costs and expenses incurred by the Agent in connection therewith together with interest thereon (at the rate payable hereunder by the Canadian Borrower in respect of such Loan or, in the case of funds made available in anticipation of a Lender remitting proceeds of a Bankers Acceptance, at the rate of interest per annum applicable to Canadian Prime Rate Loans) for each day from the date such amount is made available to the Canadian Borrower until the date such amount is paid to the Agent; provided, however, that notwithstanding such obligation if such Lender fails to so pay, the Canadian Borrower covenants and agrees that, without prejudice to any rights the Canadian Borrower may have against such Lender, it shall repay such amount to the Agent forthwith after demand therefor by the Agent. The amount payable to the Agent pursuant hereto shall be set forth in a certificate delivered by the Agent to such Lender and the Canadian Borrower (which certificate shall contain reasonable details of how the amount payable is calculated) and shall be prima facie evidence thereof, in the absence of manifest error. If such Lender makes the payment to the Agent required herein, the amount so paid shall constitute such Lenders Rateable Portion of the Loan for purposes of this Agreement. The failure of any Lender to make its Rateable Portion of any Loan shall not relieve any other Lender of its obligation, if any, hereunder to make its Rateable Portion of such Loan on the Drawdown Date, Rollover Date or Conversion Date, as the case may be, but no Lender shall be responsible for the failure of any other Lender to make the Rateable Portion of any Loan to be made by such other Lender on the date of any Drawdown, Rollover or Conversion, as the case may be.
15.3 | Remittance of Payments |
Except for amounts payable to the Agent for its own account, forthwith after receipt of any repayment pursuant hereto or payment of interest or fees pursuant to Article 5 or payment pursuant to Article 8, the Agent shall remit to each applicable Lender its Rateable Portion of such payment; provided that, if the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits to a Lender its Rateable Portion of such payment and the Canadian Borrower fails to make such payment, each of the Lenders on receipt of such remittance from the Agent agrees to repay to the Agent forthwith on demand an amount equal to the remittance together with all reasonable costs and expenses incurred by the Agent in connection therewith and interest thereon at the rate and calculated in the manner applicable to the
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Loan in respect of which such payment is made, or, in the case of a remittance in respect of Bankers Acceptances, at the rate of interest applicable to Canadian Prime Rate Loans for each day from the date such amount is remitted to the Lenders without prejudice to any right such Lender may have against the Canadian Borrower. The exact amount of the repayment required to be made by the Lenders pursuant hereto shall be as set forth in a certificate delivered by the Agent to each Lender, which certificate shall be conclusive and binding for all purposes in the absence of manifest error.
15.4 | Redistribution of Payment |
Each Lender agrees that:
(a) | if the Lender exercises any security against or right of counter claim, set-off or bankers lien or similar right with respect to the property of a Borrower or any Subsidiary (other than a Project Finance SPV) or if under any applicable bankruptcy, insolvency or other similar law it receives a secured claim and collateral for which it is, or is entitled to exercise any set-off against, a debt owed by it to a Borrower or any Subsidiary (other than a Project Finance SPV), the Lender shall apportion the amount thereof proportionately between: |
(i) | such Lenders Rateable Portion of all outstanding Obligations owing by a Borrower (including the face amounts at maturity of Bankers Acceptances accepted by the Lenders), which amounts shall be applied in accordance with Section 15.4(b); and |
(ii) | amounts otherwise owed to such Lender by a Borrower and their Subsidiaries (other than a Project Finance SPV), |
provided that (i) any cash collateral account held by such Lender as collateral for a letter of credit or bankers acceptance issued or accepted by such Lender on behalf of a Borrower or a Subsidiary may be applied by such Lender to such amounts owed by such Borrower or a Subsidiary, as the case may be, to such Lender pursuant to such letter of credit or in respect of any such bankers acceptance without apportionment and (ii) these provisions do not apply to a right or claim which arises or exists in respect of a loan or other debt in respect of which the relevant Lender holds a Security Interest which is a Permitted Encumbrance;
(b) | if, in the aforementioned circumstances, the Lender, through the exercise of a right, or the receipt of a secured claim described in Section 15.4(a) above or otherwise, receives payment of a proportion of the aggregate amount of Obligations due to it hereunder which is greater than the proportion received by any other Lender in respect of the aggregate Obligations due to the Lenders (having regard to the respective Rateable Portions of the Lenders), the Lender receiving such proportionately greater payment shall purchase, on a non-recourse basis at par, and make payment for a participation (which shall be deemed to have been done simultaneously with receipt of such payment) in the outstanding Loans of the other Lender or Lenders so that their respective receipts shall be pro rata to their |
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respective Rateable Portions; provided, however, that if all or part of such proportionately greater payment received by such purchasing Lender shall be recovered by or on behalf of a Borrower or any trustee, liquidator, receiver or receiver manager or person with analogous powers from the purchasing Lender, such purchase shall be rescinded and the purchase price paid for such participation shall be returned to the extent of such recovery, but without interest unless the purchasing Lender is required to pay interest on such amount, in which case each selling Lender shall reimburse the purchasing Lender pro rata in relation to the amounts received by it. Such Lender shall exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claims; and |
(c) | if the Lender does, or is required to do, any act or thing permitted by Section 15.4(a) or (b) above, it shall promptly provide full particulars thereof to the Agent. |
15.5 | Duties and Obligations |
Neither the Agent nor any of its directors, officers, agents or employees (and, for purposes hereof, the Agent shall be deemed to be contracting as agent and trustee for and on behalf of such persons) shall be liable to the Lenders for any action taken or omitted to be taken by it or them under or in connection with this Agreement except for its or their own gross negligence or wilful misconduct. Without limiting the generality of the foregoing, the Agent:
(a) | may assume that there has been no assignment or transfer by any means by the Lenders of their rights hereunder, unless and until the Agent receives written notice of the assignment thereof from such Lender and the Agent receives from the assignee an executed Assignment Agreement providing, inter alia, that such assignee is bound hereby as it would have been if it had been an original Lender party hereto; |
(b) | may consult with legal counsel (including receiving the opinions of either Borrowers counsel and Lenders Counsel required hereunder), independent public or chartered accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; |
(c) | shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable, telecopier or telex) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any representation or warranty of a Borrower made or deemed to be made hereunder; |
(d) | may assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary; |
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(e) | may rely as to any matters of fact which might reasonably be expected to be within the knowledge of any person upon a certificate signed by or on behalf of such person; |
(f) | shall not be bound to disclose to any other person any information relating to a Borrower, any of their Subsidiaries or any other person if such disclosure would or might in its opinion constitute a breach of any applicable law, be in default of the provisions hereof or be otherwise actionable at the suit of any other person; and |
(g) | may refrain from exercising any right, power or discretion vested in it which would or might in its reasonable opinion be contrary to any applicable law or any directive or otherwise render it liable to any person, and may do anything which is in its reasonable opinion necessary to comply with such applicable law. |
Further, the Agent (i) does not make any warranty or representation to any Lender nor shall it be responsible to any Lender for the accuracy or completeness of the representations and warranties of either Borrower herein or the data made available to any of the Lenders in connection with the negotiation of this Agreement, or for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (ii) shall not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of either Borrower or to inspect the property (including the books and records) of either Borrower or any of their Subsidiaries; and (iii) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any instrument or document furnished pursuant hereto.
15.6 | Prompt Notice to the Lenders |
Notwithstanding any other provision herein, the Agent agrees to provide to the Lenders, with copies where appropriate, all information, notices and reports required to be given to the Agent by the Borrowers, promptly upon receipt of same, excepting therefrom information and notices relating solely to the role of Agent hereunder.
15.7 | Agents and Lenders Authorities |
With respect to its Commitments and the Drawdowns, Rollovers, Conversions and Loans made by it as a Lender, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent. Subject to the express provisions hereof relating to the rights and obligations of the Agent and the Lenders in such capacities, the Agent and each Lender may accept deposits from, lend money to, and generally engage in any kind of business with the Borrowers and their Subsidiaries or any corporation or other entity owned or controlled by any of them and any person which may do business with any of them without any duties to account therefor to the Agent or the other Lenders and, in the case of the Agent, all as if it was not the Agent hereunder.
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15.8 | Lender Credit Decision |
It is understood and agreed by each Lender that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of the Borrowers and their Subsidiaries. Each Lender represents to the Agent that it is engaged in the business of making and evaluating the risks associated with commercial revolving loans or term loans, or both, to corporations similar to the Borrowers, that it can bear the economic risks related to the transaction contemplated hereby, that it has had access to all information deemed necessary by it in making such decision (provided that this representation shall not impair its rights against the Borrowers) and that it is entering into this Agreement in the ordinary course of its commercial lending business. Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely, on the Agent (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Borrowers or any other person under or in connection with this Agreement or the transactions herein contemplated (whether or not such information has been or is hereafter distributed to such Lender by the Agent), or (ii) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrowers or any of their Subsidiaries. Each Lender acknowledges that a copy of this Agreement has been made available to it for review and each Lender acknowledges that it is satisfied with the form and substance of this Agreement. Each Lender hereby covenants and agrees that, subject to Section 15.4, it will not make any arrangements with the Borrowers for the satisfaction of any Loans or other Obligations without the consent of all the other Lenders.
15.9 | Indemnification of Agent |
The Lenders hereby agree to indemnify the Agent (to the extent not reimbursed by the Borrowers), on a pro rata basis in accordance with their respective Commitments as a proportion of the aggregate of all outstanding Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under or in respect of this Agreement in its capacity as Agent; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs expenses or disbursements resulting from the Agents gross negligence or wilful misconduct. If a Borrower subsequently repays all or a portion of such amounts to the Agent, the Agent shall reimburse the Lenders their pro rata shares (according to the amounts paid by them in respect thereof) of the amounts received from a Borrower. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its portion (determined as above) of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers.
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15.10 | Successor Agent |
The Agent may, as hereinafter provided, resign at any time by giving 45 days prior written notice thereof to the Lenders and the Canadian Borrower. Upon any such resignation, the Lenders shall, after soliciting the views of the Canadian Borrower, have the right to appoint another Lender as a successor agent (the Successor Agent) who shall be acceptable to the Canadian Borrower, acting reasonably. If no Successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within 30 days after the retiring Agents giving of notice of resignation, then the retiring Agent shall, on behalf of the Lenders, appoint a Successor Agent who shall be a Lender acceptable to the Canadian Borrower, acting reasonably. Upon the acceptance of any appointment as Agent hereunder by a Successor Agent, such Successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall thereupon be discharged from its further duties and obligations as Agent under this Agreement. After any retiring Agents resignation hereunder as Agent, the provisions of this Article shall continue to enure to its benefit as to any actions taken or omitted to be taken by it as Agent or in its capacity as Agent while it was Agent hereunder.
15.11 | Taking and Enforcement of Remedies |
Each of the Lenders hereby acknowledges that, to the extent permitted by applicable law, the remedies provided hereunder to the Lenders are for the benefit of the Lenders collectively and acting together and not severally and further acknowledges that its rights hereunder are to be exercised not severally, but collectively by the Agent upon the decision of the Majority of the Lenders regardless of whether acceleration was made pursuant to Section 12.2. Notwithstanding any of the provisions contained herein, each of the Lenders hereby covenants and agrees that it shall not be entitled to individually take any action with respect to any Credit Facility, including, without limitation, any acceleration under Section 12.2, but that any such action shall be taken only by the Agent with the prior written agreement or instructions of the Majority of the Lenders; provided that, notwithstanding the foregoing, if (a) the Agent, having been adequately indemnified against costs and expenses of so doing by the Lenders, shall fail to carry out any such instructions of a Majority of the Lenders, any Lender may do so on behalf of all Lenders and shall, in so doing, be entitled to the benefit of all protections given the Agent hereunder or elsewhere, and (b) in the absence of instructions from the Majority of the Lenders and where in the sole opinion of the Agent the exigencies of the situation warrant such action, the Agent may without notice to or consent of the Lenders or any of them take such action on behalf of the Lenders as it deems appropriate or desirable in the interests of the Lenders. Each of the Lenders hereby further covenants and agrees that upon any such written consent being given by the Majority of the Lenders, or upon a Lender or the Agent taking action as aforesaid, it shall cooperate fully with the Lender or the Agent to the extent requested by the Lender or the Agent in the collective realization including, without limitation, and, if applicable, the appointment of a receiver, or receiver and manager to act for their collective benefit. Each Lender covenants and agrees to do all acts and things and to make, execute and deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the intent and purpose of this Section; and each of the Lenders hereby covenants and agrees that, subject to Section 5.9, Section 15.4 and Section 10.2(b) it has not heretofore and shall not seek, take, accept or receive any security for any of the obligations and liabilities of the Borrowers hereunder or under any other document, instrument, writing or agreement ancillary hereto and shall not enter into any agreement with any of the parties hereto or thereto relating in any manner whatsoever to the Credit Facilities, unless all of the Lenders shall at the same time obtain the benefit of any such security or agreement.
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With respect to any enforcement, realization or the taking of any rights or remedies to enforce the rights of the Lenders hereunder, the Agent shall be a trustee for each Lender, and all monies received from time to time by the Agent in respect of the foregoing shall be held in trust and shall be trust assets within the meaning of applicable bankruptcy or insolvency legislation and shall be considered for the purposes of such legislation to be held separate and apart from the other assets of the Agent, and each Lender shall be entitled to their Rateable Portion of such monies. In its capacity as trustee, the Agent shall be obliged to exercise only the degree of care it would exercise in the conduct and management of its own business and in accordance with its usual practice concurrently employed or hereafter instituted for other substantial commercial loans.
15.12 | Reliance Upon Agent |
The Borrowers shall be entitled to rely upon any certificate, notice or other document or other advice, statement or instruction provided to it by the Agent pursuant to this Agreement, and the Borrowers shall generally be entitled to deal with the Agent with respect to matters under this Agreement which the Agent is authorized to deal with without any obligation whatsoever to satisfy itself as to the authority of the Agent to act on behalf of the Lenders and without any liability whatsoever to the Lenders for relying upon any certificate, notice or other document or other advice, statement or instruction provided to it by the Agent, notwithstanding any lack of authority of the Agent to provide the same.
15.13 | No Liability of Agent |
The Agent shall have no responsibility or liability to the Borrowers on account of the failure of any Lender to perform its obligations hereunder (unless such failure was caused, in whole or in part, by the Agents failure to observe or perform its obligations hereunder), or to any Lender on account of the failure of the Borrowers or any Lender to perform its obligations hereunder.
15.14 | The Agent and Defaulting Lenders |
(1) Each Defaulting Lender shall, to the extent permitted by Applicable Law, be required to provide to the Agent cash in an amount, as shall be determined from time to time by the Agent in its discretion, equal to all obligations of such Defaulting Lender that are owing or, in the case of contingent obligations under any outstanding Fronted LCs (after giving effect to the reallocation provisions in Section 16.2) may be owing to the Agent pursuant to this Agreement, or to any Fronting Lender hereunder including such Defaulting Lenders obligation to pay its Rateable Portion of any indemnification or expense reimbursement amounts not paid by the Borrowers. Such cash shall be held by the Agent in one or more cash collateral accounts, which accounts shall be in the name of the Agent and shall not be required to be interest bearing. The Agent shall be entitled to apply the foregoing cash in accordance with Section 15.14(3).
(2) In addition to the indemnity and reimbursement obligations noted in Section 15.9, the Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrowers and without limiting the obligations of the Borrowers hereunder) rateably according to their respective Rateable Portions (and in calculating the Rateable Portion of a Lender, ignoring the Commitments of Defaulting Lenders) any amount that a Defaulting Lender fails to pay the Agent and which is due and owing to the Agent pursuant to Section 15.9. Each Defaulting Lender agrees to indemnify each other Lender for any amounts paid by such Lender and which would otherwise be payable by the Defaulting Lender.
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(3) The Agent shall be entitled to set-off and/or withhold any Defaulting Lenders Rateable Portion of all payments received from the Borrowers against such Defaulting Lenders obligations to fund payments and Loans required to be made by it and to purchase participations required to be purchased by it in each case under this Agreement and the other Documents (provided that, notwithstanding the exercise of such set-off or withholding, the Borrowers shall have been deemed to have made such payment to such Defaulting Lender for the purposes of this Agreement and the other Documents). To the extent permitted by law, the Agent shall be entitled to withhold and deposit in one or more non-interest bearing cash collateral accounts in the name of the Agent all amounts (whether principal, interest, fees or otherwise) received by the Agent and due to a Defaulting Lender pursuant to this Agreement, which amounts shall be used by the Agent:
(a) | first, to reimburse the Agent for any amounts owing to it by the Defaulting Lender pursuant to any Document; |
(b) | second, to repay on a pro rata basis any (i) Loans made by a Lender pursuant to Section 16.2(4) in order to fund a shortfall created by a Defaulting Lender and, upon receipt of such repayment, each such Lender shall be deemed to have assigned to the Defaulting Lender such incremental portion of such Loans; |
(c) | third, to cash collateralize all other contingent obligations of such Defaulting Lender to the Agent, in its capacity as Agent, or any Fronting Lender owing pursuant to this Agreement in such amount as shall be determined from time to time by the Agent in its discretion, including such Defaulting Lenders obligation to pay its Rateable Portion of any indemnification or expense reimbursement amounts not paid by the Borrowers; and |
(d) | fourth, to fund from time to time the Defaulting Lenders Rateable Portion of Loans. |
(4) For greater certainty and in addition to the foregoing, neither the Agent nor any of its Affiliates nor any of their respective shareholders, officers, directors, employees, agents or representatives shall be liable to any Lender (including, without limitation, a Defaulting Lender ) for any action taken or omitted to be taken by it in connection with amounts payable by the Borrowers to a Defaulting Lender and received and deposited by the Agent in a cash collateral account and applied in accordance with the provisions of this Agreement, save and except for the gross negligence or wilful misconduct of the Agent as determined by a final non-appealable judgement of a court of competent jurisdiction.
15.15 | Article for Benefit of Agent and Lenders |
The provisions of this Article 15 which relate to the rights and obligations of the Lenders to each other or to the rights and obligations between the Agent and the Lenders shall be for the exclusive benefit of the Agent and the Lenders, and, except to the extent provided in Sections 15.1, 15.2, 15.6, 15.10, 15.11, 15.12, 15.13, 15.14 and this Section 15.15, the Borrowers shall not have any rights or obligations thereunder or be entitled to rely for any purpose upon such provisions. Any Lender may waive in writing any right or rights which it may have against the Agent or the other Lenders hereunder without the consent of or notice to the Borrowers.
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ARTICLE 16GENERAL
16.1 | Exchange and Confidentiality of Information |
(1) The Borrowers agree that the Agent and each Lender may provide any assignee or participant or any bona fide prospective assignee or participant pursuant to Sections 16.6 or 16.7 with any information concerning the Borrowers and their Subsidiaries provided such party agrees in writing with the Agent or such Lender for the benefit of the Borrowers to be bound by a like duty of confidentiality to that contained in this Section.
(2) Each of the Agent and the Lenders acknowledges the confidential nature of the financial, operational and other information and data provided and to be provided to them by a Borrower pursuant hereto (the Information) and agrees to keep such information confidential and to take such steps as are necessary to prevent the disclosure thereof provided, however, that:
(a) | the Agent and the Lenders may disclose all or any part of the Information if, in their reasonable opinion, such disclosure is required (i) by their respective auditors, or (ii) in connection with any actual or threatened judicial, administrative or governmental proceedings including, without limitation, proceedings initiated under or in respect of this Agreement; |
(b) | the Agent and the Lenders shall incur no liability in respect of any Information disclosed with the written consent of the applicable Borrower or required to be disclosed by any applicable law or regulation, or by applicable order, policy or directive having the force of law, to the extent of such requirement; |
(c) | the Agent and each Lender may disclose the Information to any Governmental Authority (including any self-regulatory agency or authority) having jurisdiction over it (i) upon the request thereof or (ii) where it considers such disclosure to be required, acting reasonably; |
(d) | the Agent and each Lender may provide any Affiliate thereof with the Information to the extent reasonably required to be disclosed thereto; provided that each such Affiliate shall be under a like duty of confidentiality to that contained in this Section 16.1 and further provided that the Agent or the Lender, as the case may be, providing the Information shall be responsible for any breach by its Affiliate of the aforementioned like duty of confidentiality; |
(e) | the Agent and the Lenders may provide Lenders Counsel and their other agents and professional advisors with any Information; provided that such persons shall be under a like duty of confidentiality to that contained in this Section; |
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(f) | the Agent and each of the Lenders shall incur no liability in respect of any Information: (i) which is or becomes readily available to the public (other than by a breach hereof) or which has been made readily available to the public by a Borrower or its Subsidiaries, (ii) which the Agent or the relevant Lender can show was, prior to receipt thereof from such Borrower, lawfully in the Agents or Lenders possession and not then subject to any obligation on its part to such Borrower to maintain confidentiality, or (iii) which the Agent or the relevant Lender received from a third party who was not, to the knowledge of the Agent or such Lender, under a duty of confidentiality to such Borrower at the time the information was so received; |
(g) | the Agent and the Lenders may disclose the Information to other financial institutions in connection with the syndication by the Agent or Lenders of the Credit Facilities or the granting by a Lender of a participation in the Credit Facilities where such financial institution agrees to be under a like duty of confidentiality to that contained in this Section; and |
(h) | the Agent and the Lenders may disclose all or any part of the Information so as to enable the Agent and the applicable Lenders to initiate any lawsuit against a Borrower or to defend any lawsuit commenced by a Borrower the issues of which touch on the Information, but only to the extent such disclosure is necessary to the initiation or defense of such lawsuit. |
16.2 | Nature of Obligation under this Agreement; Defaulting Lenders |
(1) The obligations of each Lender and of the Agent under this Agreement are several. The failure of any Lender to carry out its obligations hereunder shall not relieve the other Lenders, the Agent or either Borrower of any of their respective obligations hereunder.
(2) Subject to and without derogating from the operation of Section 15.14 and this Section 16.2, neither the Agent nor any Lender shall be responsible for the obligations of any other Lender hereunder.
(3) Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) | the standby fees payable pursuant to Section 5.8 shall cease to accrue on the unused portion of the Commitment of such Defaulting Lender; |
(b) | a Defaulting Lender shall not be included in determining whether, and the Commitment and the Rateable Portion of the Outstanding Principal of such Defaulting Lender shall not be included in determining whether all Lenders or the Majority of the Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 16.10), provided that any waiver or amendment requiring the consent of all Lenders or each affected Lender that (i) affects such Defaulting Lender in a manner that differs in any material respect from its application to other affected Lenders, (ii) increases the Commitment of such Defaulting Lender, (iii) extends the Maturity Date applicable to such Defaulting Lender, (iv) decreases the Applicable Pricing Rate applicable to such Defaulting Lender or (v) postpones, reduces or waives any principal payment due to such Defaulting Lender hereunder shall in each case require the consent of such Defaulting Lender; and |
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(c) | for the avoidance of doubt, the Borrowers shall retain and reserve its other rights and remedies respecting each Defaulting Lender. |
(4) If the Agent has actual knowledge that a Lender is a Defaulting Lender at the time that the Agent receives a Drawdown Notice or a Rollover Notice that relates to a Fronted LC, or a Conversion Notice (or deemed notice) that will result in a currency conversion, then each other Lender (each a Non-Defaulting Lender) shall fund its Rateable Portion of such affected Loan (and, in calculating such Rateable Portion, the applicable Agent shall ignore the Commitments of each such Defaulting Lender); provided that, for certainty, no Lender shall be obligated by this Section to make or provide Loans in excess of its Commitment. If the Agent acquires actual knowledge that a Lender is a Defaulting Lender at any time after the applicable Agent receives a Drawdown Notice or a Rollover Notice that relates to a Fronted LC or a Conversion Notice (or deemed notice) that will result in a currency conversion, then the Agent shall promptly notify the Canadian Borrower that such Lender is a Defaulting Lender (and such Lender shall be deemed to have consented to such disclosure). Each Defaulting Lender agrees to indemnify each other Lender for any amounts paid by such Lender under this Section 16.2(4) and which would otherwise have been paid by the Defaulting Lender if its Commitment had been included in determining the Rateable Portions of such affected Loans.
(5) If any Fronted LC is outstanding at the time that a Lender becomes a Defaulting Lender then:
(a) | all or any part of such Defaulting Lenders Rateable Portion of such Fronted LC shall be re-allocated among the Non-Defaulting Lenders in accordance with their respective Rateable Portions; provided that such re-allocation may only be effected if and to the extent that (i) such re-allocation would not cause any Non-Defaulting Lenders Rateable Portion of all Loans to exceed its applicable Commitment(s) and (ii) the conditions precedent in Section 3.1 are satisfied at such time; |
(b) | if the re-allocation described in clause (a) above cannot be effected, or can only partially be effected, then such Defaulting Lender shall, within one Banking Day following notice by the Agent, provide cash collateral for such Defaulting Lenders Rateable Portion of such Fronted LC (after giving effect to any partial re-allocation pursuant to clause (a) above) in accordance with the procedures set forth in Section 15.14 for so long as such Fronted LC is outstanding; and |
(c) | if the Rateable Portions of the Non-Defaulting Lenders are re-allocated pursuant to this Section 16.2(5), then the issuance fees payable to the Lenders pursuant to Section 7.9 shall be adjusted to give effect to such re-allocations in accordance with each such Non-Defaulting Lenders Rateable Portions. |
(6) So long as any Lender is a Defaulting Lender, no Fronting Lender shall be required to issue, amend or increase any Fronted LC unless such Fronting Lender is satisfied that the related
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exposure will be 100% covered by the Commitments of the Non-Defaulting Lenders and/or cash collateralized in accordance with Section 15.14, and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 16.2(4) or 16.2(5)(a) as applicable (and the Defaulting Lenders shall not participate therein).
(7) If any Lender shall cease to be a Defaulting Lender, then, upon becoming aware of the same, the Agent shall notify the Non-Defaulting Lenders and (in accordance with the written direction of the Agent) such Lender (which has ceased to be a Defaulting Lender) shall purchase, and the Non-Defaulting Lenders shall on a rateable basis sell and assign to such Lender, portions of such Loans equal in total to such Lenders Rateable Portion thereof without regard to Section 15.2(4).
(8) Each Defaulting Lender hereby indemnifies the Borrowers for any losses, claims, costs, damages or liabilities (including reasonable out-of-pocket expenses and reasonable legal fees on a solicitor and his own client basis) incurred by the Borrowers as a result of such Defaulting Lender failing to comply with the terms of this Agreement including any failure to fund its portion of any Loans required to be made by it hereunder.
(9) The Borrowers shall have the right, at its option, to (i) replace Defaulting Lenders under the Credit Facilities (by causing them to assign their rights and interests under the Credit Facilities to additional financial institutions which have agreed to become Lenders or by increasing the Commitments of existing Lenders under the Credit Facilities with, in the latter case, the consent of such increasing Lenders, or any combination thereof), (ii) repay the Obligations outstanding to Defaulting Lenders under the Credit Facilities and cancelling their Commitments (without corresponding repayment to other Lenders), or (iii) any combination of the foregoing; provided that increases in the Commitments of existing Lenders and the addition of new financial institutions as Lenders shall require the consent of the Agent and each Fronting Lender, such consents not to be unreasonably withheld or delayed (except for consent of the Fronting Lenders which shall be in each Fronting Lenders sole discretion).
(10) In order to give effect to the provisions of Section 16.2(9)(but subject to such provisions), the relevant Borrower may, from time to time:
(a) | require any Defaulting Lender to assign all of its rights, benefits and interests under the Documents, its Commitments and its Rateable Portion of all Loans and other Obligations (collectively, the Defaulting Lenders Assigned Interests) to (i) any other Lenders which have agreed to increase their Commitments and purchase the Defaulting Lenders Assigned Interests, and (ii) to third party financial institutions selected by such Borrower. The relevant Borrower shall provide the Agent and each Fronting Lender with 10 Banking Days prior written notice of its desire to proceed under this Section. The assignment of the Defaulting Lenders Assigned Interests shall be effective upon: (w) execution and delivery of assignment documentation satisfactory to the relevant Defaulting Lender the assignee, the relevant Borrower and the Agent (each acting reasonably); (x) upon payment to the relevant Defaulting Lender, by the relevant assignee of an amount equal to such Lenders Rateable Portion of all Loans being assigned and all accrued but unpaid |
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interest and fees hereunder in respect of those portions of the Loans and Commitments being assigned; (y) upon payment by the relevant assignee to the applicable Agent (for the applicable Agents own account) of the transfer fee contemplated in Section 16.6; and (z) upon provision satisfactory to the Defaulting Lender (acting reasonably) being made for (I) payment at maturity of outstanding Bankers Acceptances accepted by it and (II) indemnity in respect of its share of outstanding Letters of Credit or, with respect to outstanding Fronted LCs, release by the relevant Fronting Lenders of its obligations in respect thereof. Upon such assignment and transfer, the assigning Defaulting Lender shall have no further right, interest, benefit or obligation in respect of the Defaulting Lenders Assigned Interests (except as provided in Section 7.8(3)) and the assignee thereof shall succeed to the position of such Lender as if the same was an original party hereto in the place and stead of such Defaulting Lender; for such purpose, the assignee shall execute and deliver an Assignment Agreement and such other documentation as may be reasonably required by the Agent, the Fronting Lenders and the relevant Borrower to confirm its agreement to be bound by the provisions hereof as a Lender and to give effect to the foregoing; and |
(b) | to the extent that a Borrower has not caused any Defaulting Lender to assign its rights, benefits and interests to another Lender or other financial institution as provided in paragraph (a) above, repay to such Defaulting Lender at any time while such Lender continues to be a Defaulting Lender, all such Lenders Rateable Portion of all Loans outstanding under the Credit Facilities, together with all accrued but unpaid interest and fees thereon and with respect to its Commitments, without making corresponding repayment to the other Lenders and, upon such repayment and provision satisfactory to the relevant Defaulting Lender, (acting reasonably) being made for (i) payment at maturity of all outstanding Bankers Acceptances accepted by such Lender and (ii) indemnity in respect of its share of outstanding Letters of Credit or, with respect to outstanding Fronted LCs, release by the relevant Fronting Lenders of its obligations in respect thereof, the relevant Borrower may cancel such Lenders Commitments. Upon completion of the foregoing, such Defaulting Lender shall have no further right, interest, benefit or obligation in respect of the Credit Facilities (except as provided in Section 7.8(3)) and each Credit Facility shall be reduced by the amount of such Lenders cancelled Commitment thereunder. |
16.3 | Notices |
Any demand, notice or communication to be made or given hereunder shall be in writing and may be made or given by personal delivery or by transmittal by telecopy or other electronic means of communication addressed to the respective parties as follows:
To the Canadian Borrower:
Enerflex Ltd.
Suite 904, 1331 Macleod Trail S.W
Calgary, Alberta T2G 0K3
Attention: Vice President and Chief Financial Officer
Facsimile: {Redacted}
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To the Australian Borrower:
Enerflex Australasia Holdings Pty Ltd
82-86 James Street
Northbridge, Western Australia 6003
Australia
Attention: General Manager, Finance and Administration
Facsimile: {Redacted}
To the Agent:
for Drawdown Notices, Conversion Notices, Rollover Notices and Repayment Notices, to
The Toronto Dominion Bank, as Agent
TD North Tower
77 King Street West, 25th Floor
Toronto, Ontario M5K 1A2
Attention: Vice President, Loan Syndications - Agency
Facsimile: {Redacted}
for all other notices, to:
The Toronto Dominion Bank, as Agent
TD Bank Tower
66 Wellington Street West, 9th Floor
Toronto, Ontario M5K 1A2
Attention:Vice President, Loan Syndications - Agency
Facsimile:{Redacted}
with a copy to:
The Toronto-Dominion Bank
Commercial National Accounts
Suite 1100, 421-7th Avenue S.W.
Calgary, AB T2P 4K9
Attention: Client Services Officer
Facsimile: {Redacted}
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To the Australian Operating Facility Lender:
HSBC Bank Australia Limited
Level 1, 188-190 St Georges Terrace
Perth, Western Australia 6000
Attention: {Name Redacted}
Facsimile: {Redacted}
To the Canadian Operating Facility Lender:
The Toronto-Dominion Bank
Suite 1100, 421-7th Avenue S.W.
Calgary, AB T2P 4K9
Attention: Client Services Officer
Facsimile: {Redacted}
To each Lender: As set forth in the most recent administrative questionnaire or other written notification provided to the Agent by such Lender
or to such other address or telecopy number as any party may from time to time notify the others in accordance with this Section. Any demand, notice or communication made or given by personal delivery or by telecopier or other electronic means of communication during normal business hours at the place of receipt on a Banking Day shall be conclusively deemed to have been made or given at the time of actual delivery or transmittal, as the case may be, on such Banking Day. Any demand, notice or communication made or given by personal delivery or by telecopier or other electronic means of communication after normal business hours at the place of receipt or otherwise than on a Banking Day shall be conclusively deemed to have been made or given at 9:00 a.m. (Calgary time) on the first Banking Day following actual delivery or transmittal, as the case may be.
16.4 | Governing Law |
This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein, without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Borrowers may be found.
16.5 | Benefit of the Agreement |
This Agreement shall enure to the benefit of and be binding upon the Borrowers, the Lenders, the Agent and their respective successors and permitted assigns.
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16.6 | Assignment |
Any Lender may, with the prior written consent of each of the relevant Borrower, the Fronting Lenders (which consent of the Fronting Lenders shall only be required in connection with a sale, assignment, transfer or grant in respect of the Syndicated Facility) and the Agent (except that the consent of a Borrower shall not be required during the continuance of an Event of Default), which consents shall not be unreasonably withheld (except for consent of the Fronting Lenders which shall be in each Fronting Lenders sole discretion), sell, assign, transfer or grant an interest in its Commitments (in a minimum amount of Cdn.$5,000,000 or the Equivalent Amount thereof), its Rateable Portion of the Loans and its rights under the Documents; provided that without the consent of the relevant Borrower, each Fronting Lender and the Agent, no Lender shall sell, assign, transfer or grant an interest in any Commitment, Loan or Document if the effect of the same would be to have a Lender with aggregate Commitments of less than Cdn.$5,000,000 (or the Equivalent Amount thereof); and further provided that, it shall be a precondition to any such sale, assignment, transfer or grant that the contemplated assignee Lender shall have paid to the Agent, for the Agents own account, a transfer fee of Cdn.${Fee Redacted}. Subject to Section 7.8(3), upon any such sale, assignment, transfer or grant, the granting Lender shall have no further obligation hereunder with respect to such interest except in case of a grant to an Affiliate of the granting Lender, in which case such Lender shall remain obligated hereunder with respect to such interest. Upon any such sale, assignment, transfer or grant, the granting Lender, the new Lender, the Agent and the Borrowers shall execute and deliver an Assignment Agreement. The Borrowers shall not assign their rights or obligations hereunder without the prior written consent of all of the Lenders.
16.7 | Participations |
Any Lender may, without the consent of either Borrower, grant one or more participations in its Commitments and its Rateable Portion of the Loans to other persons, provided that the granting of such a participation: (a) shall be at the Lenders own cost, (b) shall not affect the obligations of such Lender hereunder nor shall it increase the costs to the Borrowers hereunder or under any of the other Documents, and (c) shall not provide the participant with any right to approve the provision by the Lender of any consent, waiver or approval hereunder or require a Borrower to deal directly with such participant.
16.8 | Severability |
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
16.9 | Whole Agreement |
This Agreement and the other Documents constitute the whole and entire agreement between the parties hereto regarding the subject matter hereof and thereof and cancel and supersede any prior agreements (including, without limitation, any commitment letters), undertakings, declarations, commitments, representations, written or oral, in respect thereof.
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16.10 | Amendments and Waivers |
Any provision of this Agreement may be amended only if the Borrowers and the Majority of the Lenders so agree in writing and, except as otherwise specifically provided herein, may be waived only if the Majority of the Lenders (excluding any Defaulting Lenders) so agree in writing, but:
(a) | an amendment or waiver which changes or relates to (i) the amount of the Loans available hereunder (except as provided for in Section 2.24) (or decreases in the period of notice for Drawdowns, Conversions, Rollovers or voluntary prepayment of Loans) or any Lenders Commitment, (ii) decreases in the rates of or deferral of the dates of payment of interest, Bankers Acceptance or Letter of Credit fees, (iii) decreases in the amount of or deferral of the dates of payment of fees hereunder (other than fees payable for the account of Agent), (iv) the definition of Majority of the Lenders, (v) any provision hereof contemplating or requiring consent, approval or agreement of all Lenders, all of the Lenders, the Lenders or similar expressions or permitting waiver of conditions or covenants or agreements by all Lenders, all of the Lenders, the Lenders or similar expressions, (vi) Sections 2.4, 2.20 to 2.24, inclusive or the definition of Event of Default, (vii) the release or discharge of, or any material amendment or waiver of, any Subsidiary Guarantee, (viii) the conditions precedent to Drawdowns, or (ix) this Section, shall require the agreement or waiver of all the Lenders (excluding any Defaulting Lenders) and also (in the case of an amendment) of the other parties hereto; and |
(b) | an amendment or waiver which changes or relates to the rights and/or obligations of the Agent or a Fronting Lender shall also require the agreement of the Agent or Fronting Lender (as the case may be) thereto. |
Any such waiver and any consent by the Agent, any Lender, the Majority of the Lenders or all of the Lenders under any provision of this Agreement must be in writing and may be given subject to any conditions thought fit by the person giving that waiver or consent. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.
16.11 | Further Assurances |
The Borrowers, the Lenders and the Agent shall promptly cure any default by it in the execution and delivery of this Agreement, the other Documents or any of the agreements provided for hereunder to which it is a party. The Borrowers, at their expense, shall promptly execute and deliver to the Agent, upon request by the Agent (acting reasonably), all such other and further deeds, agreements, opinions, certificates, instruments, affidavits, registration materials and other documents reasonably necessary for the Borrowers compliance with, or accomplishment of the covenants and agreements of the Borrowers hereunder or more fully to state the obligations of the Borrowers as set out herein or to make any registration, recording, file any notice or obtain any consent, all as may be reasonably necessary or appropriate in connection therewith.
16.12 | Attornment |
The parties hereto each hereby attorn and submit to the non-exclusive jurisdiction of the courts of the Province of Alberta in regard to legal proceedings relating to the Documents. For the purpose of all such legal proceedings, this Agreement shall be deemed to have been performed in the Province of Alberta and the courts of the Province of Alberta shall have jurisdiction to
- 155 -
entertain any action arising under this Agreement. Notwithstanding the foregoing, nothing in this Section shall be construed nor operate to limit the right of any party hereto to commence any action relating hereto in any other jurisdiction, nor to limit the right of the courts of any other jurisdiction to take jurisdiction over any action or matter relating hereto.
16.13 | Time of the Essence |
Time shall be of the essence of this Agreement.
16.14 | Change of Currency |
If any change in the currency of the United Kingdom occurs, this Agreement shall, to the extent the Agent (acting reasonably and after consultation with the Canadian Borrower) specifies to be necessary, be amended to comply with generally accepted conventions and market practice in the London interbank market and otherwise to reflect the change in currency.
16.15 | Credit Agreement Governs |
In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the other Documents, the provisions of this Agreement, to the extent of the conflict or inconsistency, shall govern and prevail.
16.16 | Know Your Customer Laws |
Each Borrower shall promptly provide all information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or the Agent, in order to comply with any applicable know your customer and anti-money laundering rules and regulations, whether now or hereafter in existence. Each of the Borrowers represents and warrants to the Lenders that it is not a charity registered with the Canada Revenue Agency and that it does not solicit charitable financial donations from the public.
16.17 | Counterparts |
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Such executed counterparts may be delivered by facsimile or other electronic transmission and, when so delivered, shall constitute a binding agreement of the parties hereto.
16.18 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions |
Solely to the extent any Lender is an EEA Financial Institution and notwithstanding anything to the contrary in any Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) | the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and |
- 156 -
(b) | the effects of any Bail-in Action on any such liability, including, if applicable: |
(i) | a reduction in full or in part or cancellation of any such liability; |
(ii) | a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Document; or |
(iii) | the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority. |
16.19 | Exiting Fronting Lender and Exiting Lender |
(a) | Wells Fargo Bank, N.A., in its capacity as a Fronting Lender under the Existing Credit Agreement, confirms and agrees that (a) as of the date hereof, it has not issued any Fronted LCs which remain outstanding and (b) it is executing this Agreement solely as an exiting Fronting Lender and, upon satisfaction of the conditions precedent set forth in Section 3.2, shall cease to be a Fronting Lender hereunder and shall no longer be a party to this Agreement, in its capacity as a Fronting Lender (for certainty, it shall be a party to this Agreement as a Lender hereunder). For certainty, notwithstanding that Wells Fargo Bank, N.A. shall cease to be a Fronting Lender, it shall continue to be entitled to all indemnities in favour of Fronting Lenders provided for under the Existing Credit Agreement and to the benefit of any other provisions in the Existing Credit Agreement which continue to survive, in each case, in respect of any matter, claim or liability incurred by it as a Fronting Lender thereunder with respect to each Fronted LC previously issued by it. |
(b) | Bank of America, N.A., Canada Branch agrees that, it is executing this Agreement solely as an exiting Lender and, upon satisfaction of the conditions precedent set forth in Section 3.2, shall cease to be a Lender hereunder, shall not have a Commitment under any of the Credit Facilities and shall no longer be a party to this Agreement. For certainty, notwithstanding that Bank of America, N.A., Canada Branch shall cease to be a Lender, it shall continue to be entitled to all indemnities in favour of Lenders provided for under the Existing Credit Agreement and to the benefit of any other provisions in the Existing Credit Agreement which continue to survive, in each case, in respect of any matter, claim or liability incurred by it as a Lender thereunder. |
[The remainder of this page has been intentionally left blank]
- 157 -
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
ENERFLEX LTD. | ||
By: | (signed) Dimitios James Harbilas | |
Name: Dimitios James Harbilas | ||
Title: Executive Vice President and | ||
Chief Financial Officer | ||
By: | (signed) Marc Edward Rossiter | |
Name: Marc Edward Rossiter | ||
Title: Executive Vice President and | ||
Chief Operating Officer |
Executed by ENERFLEX | ) | |||
AUSTRALASIA HOLDINGS PTY | ) | |||
LTD in accordance with section 127(1) | ) | |||
of the Corporations Act 2001 (Cwlth) by | ) | |||
authority of its directors: | ) | |||
) | ||||
) | ||||
(signed) Philip Antoni John Pyle | ) | (signed) Helmuth Ernest Witulski | ||
Signature of director | ) | Signature of director | ||
) | ||||
Philip Antoni John Pyle | ) | Helmuth Ernest Witulski | ||
Name of director | ) | Name of director |
Enerflex Second Amended and Restated Credit Agreement
LENDERS: | ||
THE TORONTO-DOMINION BANK | ||
By: | (signed) Carolyn Ni | |
Name: Carolyn Ni | ||
Title: Sr. Analyst | ||
Commercial National Accounts | ||
By: | (signed) Kathryn Gislason | |
Name: Kathryn Gislason | ||
Title: Manager of Commercial Credit | ||
Commercial National Accounts |
Enerflex Second Amended and Restated Credit Agreement
THE BANK OF NOVA SCOTIA | ||
By: | (signed) Scarlett Crockatt | |
Name: Scarlett Crockatt | ||
Title: Director | ||
By: | (signed) Kayla Keim | |
Name: Kayla Keim | ||
Title: Associate |
Enerflex Second Amended and Restated Credit Agreement
CANADIAN IMPERIAL BANK OF COMMERCE | ||
By: | (signed) Ryan Shea | |
Name: Ryan Shea | ||
Title: Director | ||
By: | (signed) Joelle Chatwin | |
Name: Joelle Chatwin | ||
Title: Managing Director |
Enerflex Second Amended and Restated Credit Agreement
HSBC BANK CANADA | ||
By: | (signed) Bruce Robinson | |
Name: Bruce Robinson | ||
Title: Vice President | ||
Energy Financing | ||
By: | (signed) Ryan Smith | |
Name: Ryan Smith | ||
Title: Assistant Vice President | ||
Energy Financing |
Enerflex Second Amended and Restated Credit Agreement
HSBC BANK AUSTRALIA LIMITED | ||
By: | (signed) Long Ly | |
Name: Long Ly | ||
Title: Relationship Manager | ||
By: | (signed) Jeremy White | |
Name: Jeremy White | ||
Title: 045256 A | ||
State Manager, Queensland |
Enerflex Second Amended and Restated Credit Agreement
NATIONAL BANK OF CANADA | ||
By: | (signed) David Sellitto | |
Name: David Sellitto | ||
Title: Director | ||
By: | (signed) David Torrey | |
Name: David Torrey | ||
Title: Managing Director |
Enerflex Second Amended and Restated Credit Agreement
BANK OF MONTREAL | ||
By: | (signed) Adam Sisulak | |
Name: Adam Sisulak | ||
Title: Director | ||
BMO Corporate Finance |
By: | (signed) Nicholas Power | |
Name: Nicholas Power | ||
Title: Managing Director | ||
BMO Corporate Finance |
Enerflex Second Amended and Restated Credit Agreement
ATB FINANCIAL | ||
By: | (signed) Amish Patel | |
Name: Amish Patel | ||
Title: Director | ||
By: | (signed) Philip Zhu | |
Name: Philip Zhu | ||
Title: Director |
Enerflex Second Amended and Restated Credit Agreement
EXPORT DEVELOPMENT CANADA |
(signed) Shaun Enright |
Name: Shaun Enright |
Title: Financing Manager |
(signed) David Thompson |
Name: David Thompson |
Title: Financing Manager |
Enerflex Second Amended and Restated Credit Agreement
WELLS FARGO BANK, N.A., CANADIAN BRANCH | ||
(signed) Dennis DaSilva | ||
Name: Dennis DaSilva | ||
Title: Vice President |
(signed) Lindy Couillard |
Name: Lindy Couillard |
Title: Director, Wells Fargo Corporate Banking |
Enerflex Second Amended and Restated Credit Agreement
EXITING FRONTING LENDER:
WELLS FARGO BANK, N.A., solely in its capacity as exiting Fronting Lender | ||
By: | (signed) Robert Corder | |
Name: Robert Corder | ||
Title: Director |
Enerflex Second Amended and Restated Credit Agreement
EXITING LENDER:
BANK OF AMERICA, N.A., CANADA BRANCH, solely in its capacity as exiting Lender | ||
By: | (signed) David Rafferty | |
Name: David Rafferty | ||
Title: Vice President |
Enerflex Second Amended and Restated Credit Agreement
AGENT:
THE TORONTO-DOMINION BANK, in its capacity as the Agent | ||
By: | (signed) Andi Zeneli | |
Name: Andi Zeneli | ||
Title: Vice President | ||
Loan SyndicationsAgency |
Enerflex Second Amended and Restated Credit Agreement
SCHEDULE A
LENDERS AND COMMITMENTS
Lender |
Australian Operating Facility Commitment - Cdn.$ |
Canadian Operating Facility Commitment - Cdn.$ |
Syndicated Facility Commitment - Cdn.$ |
Fronting Limit - Cdn.$ |
||||||||||||
{Commitment figures redacted} |
| |||||||||||||||
Total |
Cdn.$ | 10,000,000 | Cdn.$ | 10,000,000 | Cdn.$ | 705,000,000 | Cdn.$ | 130,000,000 |
Exhibit 10.2
EXECUTION VERSION
ENERFLEX LTD.
4.67% U.S.$105,000,000 Senior Notes, Series A, due December 15, 2024
4.50% Cdn.$15,000,000 Senior Notes, Series B, due December 15, 2024
4.87% U.S.$70,000,000 Senior Notes, Series C, due December 15, 2027
4.79% Cdn.$30,000,000 Senior Notes, Series D, due December 15, 2027
NOTE PURCHASE AGREEMENT
December 15, 2017
Table of Contents
Section | Page | |||||||
1. | AUTHORIZATION OF NOTES |
1 | ||||||
2. | SALE AND PURCHASE OF NOTES |
1 | ||||||
3. | CLOSING |
2 | ||||||
4. | CONDITIONS TO CLOSING |
2 | ||||||
4.1. |
Representations and Warranties | 2 | ||||||
4.2. |
Guarantees | 2 | ||||||
4.3. |
Performance; No Default | 3 | ||||||
4.4. |
Compliance Certificates | 3 | ||||||
4.5. |
Opinions of Counsel | 3 | ||||||
4.6. |
Purchase Permitted by Applicable Law, Etc. | 3 | ||||||
4.7. |
Sale of Other Notes | 4 | ||||||
4.8. |
Payment of Special Counsel Fees | 4 | ||||||
4.9. |
Private Placement Numbers | 4 | ||||||
4.10. |
Changes in Corporate Structure | 4 | ||||||
4.11. |
Funding Instructions | 4 | ||||||
4.12. |
Proceedings and Documents | 4 | ||||||
5. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
5 | ||||||
5.1. |
Existence and Good Standing | 5 | ||||||
5.2. |
Authority | 5 | ||||||
5.3. |
Valid Authorization, Etc. | 5 | ||||||
5.4. |
Validity of Agreement Non-Conflict | 5 | ||||||
5.5. |
Ownership of Property | 6 | ||||||
5.6. |
Encumbrances | 6 | ||||||
5.7. |
Disclosure | 6 | ||||||
5.8. |
Non-Default | 7 | ||||||
5.9. |
Financial Statements; Material Liabilities | 7 | ||||||
5.10. |
Litigation; Observance of Agreements, Statutes and Orders | 7 | ||||||
5.11. |
Compliance with Applicable Laws, Court Orders and Agreements | 7 | ||||||
5.12. |
Required Permits in Effect, Etc. | 7 | ||||||
5.13. |
Remittances Up to Date | 8 | ||||||
5.14. |
Taxes | 8 | ||||||
5.16. |
Intellectual Property | 10 | ||||||
5.17. |
Insurance | 10 | ||||||
5.18. |
Employee Benefit Plans; Non-U.S. Plans | 10 | ||||||
5.19. |
Private Offering by the Company | 11 | ||||||
5.20. |
Use of Proceeds Margin Regulation | 12 |
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5.21. |
Existing Indebtedness; Future Liens | 12 | ||||||
5.22. |
Foreign Assets Control Regulations, Etc. | 13 | ||||||
5.23. |
Status under Certain Statutes | 13 | ||||||
5.24. |
Environmental Matters | 13 | ||||||
5.25. |
Ranking of Obligations | 14 | ||||||
5.26. |
Solvency | 14 | ||||||
5.27. |
Labour Matters | 14 | ||||||
6. | REPRESENTATIONS OF THE PURCHASERS |
14 | ||||||
6.1. |
Purchase for Investment | 14 | ||||||
6.2. |
Source of Funds | 18 | ||||||
7. | INFORMATION AS TO THE COMPANY SUBSIDIARIES |
20 | ||||||
7.1. |
Financial and Business Information | 20 | ||||||
7.2. |
Officers Certificate | 23 | ||||||
7.3. |
Visitation | 23 | ||||||
7.4. |
Limitation on Disclosure Obligation | 24 | ||||||
8. | PAYMENT AND PREPAYMENT OF THE NOTES |
24 | ||||||
8.1. |
Maturity | 24 | ||||||
8.2. |
Optional Prepayments with Make-Whole Amount | 25 | ||||||
8.3. |
Prepayment for Tax Reasons with Modified Make-Whole Amount | 25 | ||||||
8.4. |
Prepayment on Change of Control Without Make-Whole | 27 | ||||||
8.5. |
Allocation of Partial Prepayments | 27 | ||||||
8.6. |
Maturity; Surrender, Etc. | 27 | ||||||
8.7. |
Purchase of Notes | 28 | ||||||
8.8. |
Make-Whole Amount and Modified Make-Whole Amount | 28 | ||||||
9. | AFFIRMATIVE COVENANTS |
30 | ||||||
9.1. |
Insurance | 30 | ||||||
9.2. |
Maintenance and Operations | 30 | ||||||
9.4. |
Books and Records | 31 | ||||||
9.5. |
Priority of Obligations | 31 | ||||||
9.6. |
Subsidiary Guarantees; Release of Guarantees | 31 | ||||||
9.7. |
Subordination Agreements | 33 | ||||||
9.8. |
Payment of Royalties, Taxes, Withholdings, Etc. | 34 | ||||||
9.9. |
Payment of Preferred Claims | 35 | ||||||
9.10. |
Environmental Covenants | 35 | ||||||
9.11. |
Post-Closing Undertaking | 36 | ||||||
10. | NEGATIVE COVENANTS |
36 | ||||||
10.1. |
Transactions with Affiliates | 36 | ||||||
10.2. |
Merger, Consolidation, Etc.; Reorganization | 36 | ||||||
10.3. |
Change of Business | 37 |
- ii -
10.4. |
Economic Sanctions, Etc. | 37 | ||||||
10.5. |
Liens | 38 | ||||||
10.6. |
No Dissolution | 38 | ||||||
10.7. |
Limit on Sale of Assets | 38 | ||||||
10.8. |
Limit on Investments and Financial Assistance | 38 | ||||||
10.9. |
Limits on Distributions | 39 | ||||||
10.10. |
No Financial Instruments Other Than Permitted Hedging | 39 | ||||||
10.11. |
Financial Covenants | 39 | ||||||
10.12. |
Priority Debt | 39 | ||||||
11. | EVENTS OF DEFAULT |
40 | ||||||
12. | REMEDIES ON DEFAULT, ETC. |
42 | ||||||
12.1. |
Acceleration | 42 | ||||||
12.2. |
Other Remedies | 43 | ||||||
12.3. |
Rescission | 43 | ||||||
12.4. |
No Waivers or Election of Remedies, Expenses, Etc. | 43 | ||||||
13. | TAX INDEMNIFICATION |
43 | ||||||
14. | REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES |
47 | ||||||
14.1. |
Registration of Notes | 47 | ||||||
14.2. |
Transfer and Exchange of Notes | 47 | ||||||
14.3. |
Replacement of Notes | 48 | ||||||
15. | PAYMENTS ON NOTES |
48 | ||||||
15.1. |
Place of Payment | 48 | ||||||
15.2. |
Home Office Payment | 48 | ||||||
16. | EXPENSES, ETC. |
49 | ||||||
16.1. |
Transaction Expenses | 49 | ||||||
16.2. |
Certain Taxes | 49 | ||||||
16.3. |
Survival | 50 | ||||||
16.4. |
Currency of Expense Payments | 50 | ||||||
17. | SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT |
50 | ||||||
18. | AMENDMENT AND WAIVER |
50 | ||||||
18.1. |
Requirements | 50 | ||||||
18.2. |
Solicitation of Holders of Notes | 51 | ||||||
18.3. |
Binding Effect, Etc. | 51 | ||||||
18.4. |
Notes Held by Company, Etc. | 52 |
- iii -
19. | NOTICES; ENGLISH LANGUAGE |
52 | ||||||
20. | REPRODUCTION OF DOCUMENTS |
52 | ||||||
21. | CONFIDENTIAL INFORMATION |
53 | ||||||
22. | SUBSTITUTION OF PURCHASER |
54 | ||||||
23. | MISCELLANEOUS |
54 | ||||||
23.1. |
Successors and Assigns | 54 | ||||||
23.2. |
Payments Due on Non-Business Days | 55 | ||||||
23.3. |
Accounting Terms | 55 | ||||||
23.4. |
Severability | 55 | ||||||
23.5. |
Construction, Etc. | 55 | ||||||
23.6. |
Counterparts | 55 | ||||||
23.7. |
Governing Law | 56 | ||||||
23.8. |
Jurisdiction and Process; Waiver of Jury Trial | 56 | ||||||
23.9. |
Obligation to Make Payment in Canadian Dollars or U.S. Dollars | 57 | ||||||
23.10. |
Interest | 58 | ||||||
23.11. |
Determinations Involving Different Currencies | 58 |
- iv -
Schedules and Exhibits
SCHEDULE A | - | INFORMATION RELATING TO PURCHASERS | ||
SCHEDULE B | - | DEFINED TERMS | ||
SCHEDULE C | STANDARD TERMS OF POLITICAL RISK INSURANCE | |||
EXHIBIT 1A | - | FORM OF SERIES A NOTE | ||
EXHIBIT 1B | - | FORM OF SERIES B NOTE | ||
EXHIBIT 1C | - | FORM OF SERIES C NOTE | ||
EXHIBIT 1D |
- | FORM OF SERIES D NOTE | ||
EXHIBIT 4.5(a)(i) | - | Form of Opinion of U.S. Special Counsel for the Company | ||
EXHIBIT 4.5(a)(ii) | - | Form of Opinion of Canadian Counsel for the Company | ||
EXHIBIT 4.5(a)(iii) | - | Form of Opinion of Alberta Counsel for the Company | ||
EXHIBIT 4.5(a)(iv) | - | Form of Opinion of Manitoba Counsel for the Company | ||
EXHIBIT 4.5(b) | - | Form of Opinion of U.S. Special Counsel for the Purchasers | ||
SCHEDULE 4.2 | - | Initial Subsidiary Guarantors | ||
SCHEDULE 5.7 | - | Disclosure Documents | ||
SCHEDULE 5.9 | - | Financial Statements | ||
SCHEDULE 5.15 | - | Organization and Ownership of Shares of Subsidiaries; Affiliates; Guarantors | ||
SCHEDULE 5.21 | - | Existing Debt; Future Liens | ||
SCHEDULE 5.24 | - | Environmental Matters | ||
EXHIBIT 7.2 | - | Form of Compliance Certificate |
- v -
ENERFLEX LTD.
Suite 904, 1331 Macleod Trail SE
Calgary, Alberta, Canada
T2G 0K3
4.67% U.S.$105,000,000 Senior Notes, Series A, due December 15, 2024
4.50% Cdn.$15,000,000 Senior Notes, Series B, due December 15, 2024
4.87% U.S.$70,000,000 Senior Notes, Series C, due December 15, 2027
4.79% Cdn.$30,000,000 Senior Notes, Series D, due December 15, 2027
December 15, 2017
To Each of the Purchasers Listed in Schedule A Hereto:
Ladies and Gentlemen:
Enerflex Ltd., a corporation incorporated under the laws of Canada (the Company), agrees with each of the purchasers whose names appear at the end hereof (each a Purchaser and collectively the Purchasers) as follows:
1. | AUTHORIZATION OF NOTES. |
The Company will authorize the issue and sale of its (a) 4.67% U.S.$105,000,000 Senior Notes, Series A, due December 15, 2024 (the Series A Notes), (b) 4.50% Cdn.$15,000,000 Senior Notes, Series B, due December 15, 2024 (the Series B Notes), (c) 4.87% U.S.$70,000,000 Senior Notes, Series C, due December 15, 2027 (the Series C Notes), and (d) 4.79% Cdn.$30,000,000 Senior Notes due December 15, 2027 (the Series D Notes), (the Series A Notes, Series B Notes, Series C Notes and Series D Notes, collectively, the Notes, such term to include any such notes issued in substitution therefor pursuant to Section 14). The Notes shall be substantially in the forms set out in Exhibits 1A, 1B, 1C and 1D, respectively. Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a Schedule or an Exhibit are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. The Series A Notes, Series B Notes, Series C Notes and Series D Notes are each herein sometimes referred to as Notes of a series.
2. | SALE AND PURCHASE OF NOTES. |
Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount and of the series specified opposite such Purchasers name in Schedule A at the purchase price of 100% of the principal amount thereof. The Purchasers obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.
3. | CLOSING. |
The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Streets, Chicago, Illinois, at 9:00 A.M., Central time, at a closing (the Closing) on December 15, 2017. At the Closing the Company will deliver to each Purchaser the Notes of the series to be purchased by such Purchaser in the form of a single Note of such series (or such greater number of Notes in denominations of at least U.S.$100,000 or Cdn.$100,000, as applicable, as such Purchaser may request) dated the date of the Closing and registered in such Purchasers name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company:
{Wire transfer information redacted}
If at the Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchasers satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.
4. | CONDITIONS TO CLOSING. |
Each Purchasers obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchasers satisfaction, prior to or at the Closing, of the following conditions:
4.1. | Representations and Warranties. |
The representations and warranties of each of the Company and the Subsidiary Guarantors in each Financing Agreement to which it is a party shall be correct when made and at the time of the Closing.
4.2. | Guarantees. |
Each of the Subsidiaries listed on Schedule 4.2 (collectively, the Initial Subsidiary Guarantors) of the Company will have executed and delivered to such Purchaser the Subsidiary Guarantee.
- 2 -
4.3. | Performance; No Default. |
Each of the Company and the Initial Subsidiary Guarantors shall have performed and complied with all agreements and conditions contained in the Financing Agreements required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.20) no Default or Event of Default shall have occurred and be continuing. None of the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Sections 10.2, 10.7, 10.8 or 10.9 had such Sections applied since such date.
4.4. | Compliance Certificates. |
(a) Officers Certificate. The Company shall have delivered to such Purchaser an Officers Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.3 and 4.10 have been fulfilled.
(b) Secretarys or Directors Certificate. The Company shall have delivered to such Purchaser a certificate of (i) an officer of the Company, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to its authorization, execution and delivery of the Financing Agreements to which it is a party, and (ii) an officer of each Initial Subsidiary Guarantor, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to its authorization, execution and delivery of the Financing Agreements to which it is a party.
4.5. | Opinions of Counsel. |
Such Purchaser shall have received opinions in form and substance satisfactory to and addressed to such Purchaser, dated the date of the Closing (a) from Davies Ward Phillips & Vineberg LLP, U.S. special counsel for the Company, Davies Ward Phillips & Vineberg LLP, Canadian counsel for the Company, Burnet, Duckworth & Palmer LLP, Alberta counsel for the Company, and MLT Aikins LLP, Manitoba counsel for the Company, substantially in the respective forms set forth in Exhibits 4.5(a)(i), 4.5(a)(ii), 4.5(a)(iii) and 4.5(a)(iv), and from local counsel in respect of the Subsidiary Guarantors organized in the Netherlands, Australia, Argentina, Mexico, Bahrain, Barbados and Oman; and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinions to the Purchasers), and (b) from Chapman and Cutler LLP, the Purchasers special U.S. counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.5(b), covering such other matters incident to such transactions as such Purchaser may reasonably request.
4.6. | Purchase Permitted by Applicable Law, Etc. |
On the date of the Closing such Purchasers purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officers Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.
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4.7. | Sale of Other Notes. |
Contemporaneously with the Closing the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Schedule A.
4.8. | Payment of Special Counsel Fees. |
Without limiting the provisions of Section 16.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers special counsel referred to in Section 4.5 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.
4.9. | Private Placement Numbers. |
A Private Placement Number issued by Standard & Poors CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for each series of the Notes.
4.10. | Changes in Corporate Structure. |
Neither the Company nor any Initial Subsidiary Guarantor shall have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any amalgamation, merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.9, except as set out in Schedule 5.7.
4.11. | Funding Instructions. |
At least three (3) Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (a) the name and address of the transferee bank, (b) such transferee banks SWIFT number and (c) the account name and number into which the purchase price for the Notes is to be deposited.
4.12. | Proceedings and Documents. |
All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.
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5. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
The Company represents and warrants to each Purchaser that:
5.1. | Existence and Good Standing. |
The Company, each Initial Subsidiary Guarantor and each Material Subsidiary is a corporation validly existing and in good standing under the laws of its jurisdiction of organization or is a limited liability company, partnership or trust validly existing under the laws of its jurisdiction of organization; each is duly registered in all other jurisdictions where the nature of its property or character of its business requires registration, except for jurisdictions where the failure to be so registered or qualified would not have a Material Adverse Effect, and has all necessary power and authority to own its properties and carry on its business as presently carried on or as contemplated by the Financing Agreements.
5.2. | Authority. |
The Company and each Initial Subsidiary Guarantor has full power, legal right and authority to enter into the Financing Agreements to which it is a party and do all such acts and things as are required by such Financing Agreements to be done, observed or performed, in accordance with the terms thereof.
5.3. | Valid Authorization, Etc. |
The Company and each Initial Subsidiary Guarantor has taken all necessary corporate, partnership, trust and other action (as applicable) of its directors, shareholders, partners, trustees and other persons (as applicable) to authorize the execution, delivery and performance of the Financing Agreements to which it is a party and to observe and perform the provisions thereof in accordance with the terms therein contained.
5.4. | Validity of Agreement Non-Conflict. |
None of the authorization, execution or delivery of this Agreement or the other Financing Agreements or performance of any obligation pursuant hereto or thereto requires or will require, pursuant to applicable law now in effect, any approval or consent of any Governmental Authority having jurisdiction (except such as has already been obtained and are in full force and effect) nor is in conflict with or contravention of (i) the Companys or any of the Subsidiary Guarantors articles, by-laws or other constating documents or any resolutions of directors or shareholders or the provisions of its partnership agreement or declaration of trust or trust indenture (as applicable) or (ii) the provisions of any other indenture, instrument, undertaking or other agreement to which any of the Company or any of the Subsidiary Guarantors is a party or by which they or their properties or assets are bound, the contravention of which would have or would reasonably be expected to have a Material Adverse Effect. This Agreement and the other Financing Agreements, when executed and delivered will constitute, valid and legally binding obligations of each of the Company and the Subsidiary Guarantors which is a party thereto enforceable against each such party in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other laws of general application limiting the enforceability of creditors rights and general equitable principles, including the principle that equitable remedies, such as specific performance and injunctions, may be granted only in the discretion of the court.
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5.5. | Ownership of Property. |
The Company, each of the Initial Subsidiary Guarantors and each of the Material Subsidiaries has good and marketable title to its property, assets and undertaking, subject to Permitted Liens, Liens securing Priority Debt permitted hereby and to minor defects of title which, individually and in the aggregate, do not materially affect their respective rights of ownership therein or the value thereof, except where the failure to have such good and marketable title would not reasonably be expected to have a Material Adverse Effect.
The Company is not aware of any claim, event, occurrence or right granted to any other person, of any kind whatsoever, that has resulted in or would result in loss of all or any part of the interest of the Company, any Initial Subsidiary Guarantor or any Material Subsidiary in any part of their respective property, other than a loss that would not have or would not reasonably be expected to have a Material Adverse Effect.
5.6. | Encumbrances. |
None of the property or assets of the Company, any of the Initial Subsidiary Guarantors or any of the Material Subsidiaries is subject to any Lien on or in respect of such property or assets except for Permitted Liens and Liens securing Priority Debt permitted hereby.
5.7. | Disclosure. |
The Company, through its agents, TD Securities (USA) LLC and CIBC World Markets Corp., has delivered to each Purchaser a copy of a Private Placement Memorandum, dated November 10, 2017 (including the documents incorporated by reference therein, the Memorandum), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in Schedule 5.7, and the financial statements listed in Schedule 5.9 (this Agreement, the Memorandum and such documents, certificates or other writings and financial statements delivered to each Purchaser prior to December 1, 2017 being referred to, collectively, as the Disclosure Documents), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Disclosure Documents since December 31, 2016, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company or any Subsidiary that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.
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5.8. | Non-Default. |
No Default or Event of Default has occurred or is continuing.
5.9. | Financial Statements; Material Liabilities. |
Copies of the financial statements of the Company listed on Schedule 5.9 are incorporated by reference in the Memorandum and are publicly available. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with IFRS consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents or Schedule 5.21.
5.10. | Litigation; Observance of Agreements, Statutes and Orders. |
There are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company, any of Initial Subsidiary Guarantors or any Material Subsidiary, their property or any of their undertakings and assets, at law, in equity or before any arbitrator or before or by any Governmental Authority having jurisdiction in the premises in respect of which there is a reasonable likelihood of a determination adverse to the Company, any Initial Subsidiary Guarantor or any Material Subsidiary and which, if determined adversely, would have or would reasonably be expected to have a Material Adverse Effect.
5.11. | Compliance with Applicable Laws, Court Orders and Agreements. |
The Company, each of the Initial Subsidiary Guarantors and each of the Material Subsidiaries and their respective property, businesses and operations are in compliance with all Applicable Laws (including, without limitation, all applicable Environmental Laws), all applicable directives, judgments, decrees, injunctions and orders rendered by any Governmental Authority or court of competent jurisdiction binding on it, its articles, by laws and other constating documents, all agreements or instruments to which it is a party or by which its property or assets are bound, and any employee benefit plans, except to the extent that failure to so comply would not have and would not reasonably be expected to have a Material Adverse Effect.
5.12. | Required Permits in Effect, Etc. |
All Required Permits for the Company, the Initial Subsidiary Guarantors and all Material Subsidiaries are in full force and effect, except to the extent that the failure to have or maintain the same in full force and effect would not, when taken in the aggregate, have or reasonably be expected to have a Material Adverse Effect.
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5.13. | Remittances Up to Date. |
All of the material remittances required to be made by the Company, the Initial Subsidiary Guarantors and the Material Subsidiaries to Governmental Authorities have been made and are currently up to date and there are no outstanding arrears, other than where failure to make such remittances would not reasonably be expected to have a Material Adverse Effect.
5.14. | Taxes. |
(a) The Company, each of the Initial Subsidiary Guarantors and each of the Material Subsidiaries has duly filed on a timely basis all tax returns required to be filed and has paid all material Taxes which are due and payable, and has paid all material assessments and reassessments, and all other material Taxes, governmental charges, governmental royalties, penalties, interest and fines claimed against them, other than those which are being contested by them by Permitted Contest; each such person has made adequate provision for, and all required instalment payments have been made in respect of, Taxes payable for the current period for which returns are not yet required to be filed; there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return by any such person or the payment of any Taxes; there are no actions or proceedings being taken by any Governmental Authority in any jurisdictions where the Company, any Initial Subsidiary Guarantor or any Material Subsidiary carries on business or is required to file a tax return to enforce the payment of any Taxes by it other than those which are being contested by it by Permitted Contest.
(b) As of the date of the Closing, the Company and each Initial Subsidiary Guarantor are permitted to make all payments of interest on, or in respect of, the principal amount of the Non-Canadian Held Notes and interest on such interest, Make-Whole Amount or Modified Make-Whole Amount and interest thereon, and the principal amount of the Non-Canadian Held Notes (in each case, a Payment) to a holder free and clear of and without deduction for or on account of any Taxes imposed under Part XIII of the Tax Act (collectively, Imposed Taxes), and any such amounts as are owing or payable or which become owing or payable by and are paid to a holder will not presently be subject to any Imposed Taxes, provided that at all relevant times:
(i) such holder does not use the Non-Canadian Held Notes in, or hold the Non-Canadian Held Notes in the course of, carrying on business in Canada, and is not deemed to use the Non-Canadian Held Notes in connection with a business carried on in Canada for the purposes of the Tax Act, and if such holder carries on an insurance business in Canada and elsewhere, it establishes that the debt evidenced by the Non-Canadian Held Note is neither designated insurance property (as defined in subsection 138(12) of the Tax Act and Regulation 2401(1) thereunder), nor effectively connected with the insurance business it carries on in Canada,
(ii) the recipient of the Payment is not a specified shareholder of the Company within the meaning of subsection 18(5) of the Tax Act and deals at arms length with the Company and the payor of the payment and any such specified shareholder of the Company or payor for the purposes of the Tax Act; and
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(iii) this representation and warranty does not apply to any Tax that would not have been imposed but for the existence of any present or former connection between such holder (or a fiduciary, settler, beneficiary, member of, shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership or corporation or any Person other than the holder to whom the Notes or any amount payable thereon is attributable for the purposes of such Tax) and Canada, other than the mere holding of the relevant Note or the receipt of payments thereunder or in respect thereof, including, without limitation, such holder (or such other Person described in the above parenthetical) being or having been a citizen or resident thereof, or being or having been present or engaged in trade or business therein or having or having had an establishment, office, fixed base or branch therein.
(c) As of the date of the Closing, the Company and each Initial Subsidiary Guarantor is permitted to make all Payments on or in respect of Canadian Held Notes to a holder of Canadian Held Notes free and clear of and without deduction for or on account of any Imposed Taxes.
(d) For the purposes of this Section 5.14, all Notes that, at any relevant date of determination hereunder, are held by a Person that is resident or deemed to be a resident of Canada for the purposes of Part XIII of the Tax Act as at such date, are herein called Canadian Held Notes, and all Notes that are not Canadian Held Notes are herein called Non-Canadian Held Notes.
5.15. | Organization and Ownership of Shares of Subsidiaries; Affiliates; Guarantors. |
(a) Schedule 5.15 contains (except as noted therein) complete and correct lists (i) of the Companys Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (ii) of the Companys Affiliates, other than Subsidiaries, and (iii) of the Companys directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.15 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.15).
(c) As of the date hereof, all of the Initial Subsidiary Guarantors are listed on Schedule 4.2 (and for certainty, each Subsidiary which is a borrower or a guarantor under the Bank Facilities, and each Subsidiary which is a borrower or a guarantor under the 2011 Note Purchase Agreement, is a Subsidiary Guarantor hereunder) and all Material Subsidiaries (which are not also Subsidiary Guarantors) are listed on Schedule 5.15.
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5.16. | Intellectual Property. |
The Company, the Initial Subsidiary Guarantors and the Material Subsidiaries have or have the legal right to use all Intellectual Property necessary for the operation and conduct of their business, affairs, operations and processes, except to the extent that the failure to have the same would not have or reasonably be expected to have a Material Adverse Effect and, to the best of their knowledge and belief, no person has asserted any claim or taken any step or proceedings to prohibit or limit the use of such Intellectual Property by the Company, any of the Initial Subsidiary Guarantors or any of the Material Subsidiaries, in respect of which claim, step or proceedings there is a reasonable likelihood of a determination adverse to the Company, any Initial Subsidiary Guarantor or any Material Subsidiary and which, if determined adversely, would have or would reasonably be expected to have a Material Adverse Effect.
5.17. | Insurance. |
The Company, each Initial Subsidiary Guarantor and each Material Subsidiary maintains, with financially sound and reputable insurers, insurance with respect to its respective properties and businesses and against such casualties and contingencies and in such types and amounts as are in accordance with customary business practices for corporations of the size and type of business and operations as the Company, each such Initial Subsidiary Guarantor and each such Material Subsidiary.
5.18. | Employee Benefit Plans; Non-U.S. Plans. |
(a) To the extent applicable, the Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of non-compliance as have not resulted in and would not reasonably be expected to result in a Material Adverse Effect. None of the Company or any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect.
(b) To the extent applicable, the present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of ERISA, determined as of the end of such Plans most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plans most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than U.S.$1,000,000 in the case of any single Plan and by more than U.S.$3,000,000 in the aggregate for all Plans. The present value of the accrued benefit liabilities (whether or not vested) under each Non-U.S. Plan that is funded, determined as of the end of the Companys most recently ended fiscal year on the basis of reasonable actuarial assumptions, did not exceed the current value of the assets of such Non-U.S. Plan allocable to such benefit liabilities by more than U.S.$1,000,000. The term benefit liabilities has the meaning specified in section 4001 of ERISA and the terms current value and present value have the meaning specified in section 3 of ERISA.
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(c) To the extent applicable, the Company and its ERISA Affiliates have not incurred (i) withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect or (ii) any obligation in connection with the termination of or withdrawal from any Non-U.S. Plan that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.
(d) To the extent applicable, the expected post-retirement benefit obligation (determined as of the last day of the Companys most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material.
(e) Assuming that each Purchaser that is required to identify plans under Section 6.2 has furnished to the Company a complete and accurate written list of all plans used in connection with the purchase of the Notes or any interest therein, and assuming the Company has not indicated in writing to such Purchaser prior to such proposed purchase (which proposed purchase shall not occur earlier than three (3) Business Days after the date on which the such Purchaser has furnished such disclosure to the Company) that such purchase would be prohibited under section 406 of ERISA, the execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or a transaction in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to each Purchaser in the first sentence of this Section 5.18(e) is made in reliance upon and subject to the accuracy of such Purchasers representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.
(f) All Non-U.S. Plans have been established, operated, administered and maintained in compliance with all laws, regulations and orders applicable thereto, except where failure so to comply would not be reasonably expected to have a Material Adverse Effect. All premiums, contributions and any other amounts required by applicable Non-U.S. Plan documents or applicable laws to be paid or accrued by the Company and its Subsidiaries have been paid or accrued as required, except where failure so to pay or accrue would not be reasonably expected to have a Material Adverse Effect.
5.19. | Private Offering by the Company. |
(a) Neither the Company or anyone acting on its behalf has offered the Notes to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Purchasers and not more than 45 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.
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(b) No form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) was used by the Company nor anyone acting on its behalf, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising in connection with the offer and sale of the Notes pursuant to this Agreement.
(c) No securities similar to the Notes have been offered, issued or sold by the Company nor anyone acting on its behalf within the six month period immediately prior to the date hereof.
5.20. | Use of Proceeds; Margin Regulations. |
The Company will apply the proceeds of the sale of the Notes to repay indebtedness under the Bank Facilities, to pay the fees and expenses of the placement agents in connection with the sale and issuance of the Notes. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CPR 220). Margin stock does not constitute any of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute any of the value of such assets. As used in this Section, the terms margin stock and purpose of buying or carrying shall have the meanings assigned to them in said Regulation U.
5.21. | Existing Indebtedness; Future Liens. |
(a) Except as described therein, Schedule 5.21 sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of November 30, 2017 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guarantees thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of such Debt of the Company or its Subsidiaries. None of the Company or any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
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(b) Except as disclosed in Schedule 5.21, none of the Company or any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
(c) None of the Company or any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company or any Subsidiary Guarantor except as specifically indicated in Schedule 5.21.
5.22. | Foreign Assets Control Regulations, Etc. |
{Redacted Section}
5.23. | Status under Certain Statutes. |
None of the Company or any Subsidiary is subject to regulation under the United States Investment Company Act of 1940, as amended, the United States Public Utility Holding Company Act of 2005, as amended, the United States ICC Termination Act of 1995, as amended, or the United States Federal Power Act, as amended.
5.24. | Environmental Matters. |
(a) To the best of the knowledge and belief of the Company, after due inquiry, the Company, the Initial Subsidiary Guarantors, the Material Subsidiaries and their respective properties, assets and undertakings taken as a whole comply in all respects and the businesses, activities and operations of same and the use of such properties, assets and undertakings and the processes and undertakings performed thereon comply in all respects with all Environmental Laws except to the extent that failure to comply would not have and would not reasonably be expected to have a Material Adverse Effect; further, the Company does not know, and has no reasonable grounds to know, of any facts which result in or constitute or are likely to give rise to non-compliance with any Environmental Laws, which facts or non-compliance have or would reasonably be expected to have a Material Adverse Effect.
(b) The Company, the Initial Subsidiary Guarantors and the Material Subsidiaries have not received written notice and, except as disclosed in Schedule 5.24, the Company has no knowledge after due inquiry, of any facts which would reasonably be expected to give rise to any notice of non-compliance with any Environmental Laws, which non-compliance has had or would reasonably be expected to have a Material Adverse Effect and neither the Company, any Initial Subsidiary Guarantor nor any Material Subsidiary has received any notice that the Company, any of the Initial Subsidiary Guarantors or any Material Subsidiary is a potentially responsible party for a federal, provincial, regional, municipal or local clean up or corrective action in connection with their respective properties, assets and undertakings where such clean up or corrective action has had or would reasonably be expected to have a Material Adverse Effect.
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5.25. | Ranking of Obligations. |
The Companys payment obligations under this Agreement and the Notes will, upon issuance of the Notes, rank at least pari passu, without preference or priority, with its obligations under each Principal Debt Facility and all other unsubordinated Debt of the Company. Each Initial Subsidiary Guarantors payment obligations under its Subsidiary Guarantee will, upon issuance thereof, rank at least pari passu, without preference or priority, with its obligations in respect of each Principal Debt Facility and all other unsubordinated Debt of such Initial Subsidiary Guarantor.
5.26. | Solvency. |
Each of the Company, the Initial Subsidiary Guarantors and the Material Subsidiaries is not insolvent and is able to pay its liabilities as they become due and the realizable value of each of such entitys assets is not less than the aggregate of its liabilities.
5.27. | Labour Matters. |
None of the Company or its Subsidiaries is engaged in any unfair labour practice that would reasonably be expected to cause a Material Adverse Change; and there is no unfair labour practice complaint pending against any of the Company or its Subsidiaries, or threatened against any of them, before any Governmental Authority that if adversely determined would reasonably be expected to cause a Material Adverse Change. No grievance or arbitration arising out of or under any collective bargaining agreement is pending against any of the Company or its Subsidiaries or, to the best of the Companys knowledge, threatened against any of them except such as would not reasonably be expected to cause a Material Adverse Change. No strike, labour dispute, slowdown or stoppage is pending against any of the Company or its Subsidiaries or, to the best of the Companys knowledge, threatened against any of them and no union representation proceeding is pending with respect to any employees of the Company or its Subsidiaries, except (with respect to any matter specified in this sentence, either individually or in the aggregate) such as would not reasonably be expected to cause a Material Adverse Change.
6. | REPRESENTATIONS OF THE PURCHASERS. |
6.1. | Purchase for Investment. |
Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchasers or their property shall at all times be within such Purchasers or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act, or qualified for distribution by a prospectus under applicable Canadian securities laws, and may be transferred or resold (including by pledge or hypothecation) only if registered pursuant to the provisions of the Securities Act and a valid qualification exemption under applicable state or provincial securities or blue sky laws, or if an exemption from registration or qualification is available, except under circumstances where neither such registration nor such an
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exemption is required by law, and may be transferred or resold (including by pledge or hypothecation) in Canada only in compliance with applicable Canadian federal and provincial securities laws and that the Company is not required to register or qualify the Notes in the United States or Canada. Such Purchaser is knowledgeable, sophisticated and experienced in business and financial matters; it has previously invested in securities similar to the Notes (but issued by other Persons); and it (or, if it is purchasing for a managed account, such account on behalf of which such Purchaser is acting) is able to bear the economic risk of its investment in the Notes and is presently able to afford the complete loss of such investment; it (or, if it is purchasing for a managed account, such account on behalf of which such Purchaser is acting) is a resident of Canada or is an Institutional Accredited Investor; and it acknowledges it has been afforded sufficient access to information about the Company and its Subsidiaries and their financial condition and business and the terms and conditions of the offering of the Notes sufficient to enable it to evaluate its investment in the Notes.
Each Purchaser acknowledges that it has been provided with a copy of the Memorandum and has been afforded the full opportunity to review the Memorandum and is solely responsible, at its own expense, for obtaining such tax, investment, legal and other professional advice as it considers appropriate in connection with this Agreement and the purchase of the Notes.
If such Purchaser is a resident of Canada:
(a) it is a resident of any of the province of Ontario, Quebec, Manitoba, Alberta, Saskatchewan or British Columbia and is entitled under applicable Canadian securities laws to purchase the Notes without the benefit of a prospectus qualified under those securities laws; and
(b) it acknowledges that the sale and delivery of the Notes to such Purchaser and (if applicable) to any purchaser on whose behalf such Purchaser is contracting hereunder, is conditional upon such sale being exempt from the prospectus and dealer registration requirements under applicable securities laws in the province of Canada in which such Purchaser is resident.
If such Purchaser is a resident of Canada, each such Purchaser severally represents that:
(a) | it: |
(i) | is an accredited investor as such term is defined in National Instrument 45-106 Prospectus Exemptions (NI 45-106) or Section 73.3 of the Securities Act (Ontario) as applicable as it is either: (1) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act; (2) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a |
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jurisdiction of Canada to carry on business in Canada or a jurisdiction in Canada; (3) a Schedule III bank; (4) a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; or (5) the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada; and |
(ii) | is either (A) purchasing the Notes as principal, or (B) is deemed to be purchasing as principal for the purposes of NI 45-106 as it is a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an advisor or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; |
Each Purchaser acknowledges that the offering and sale of the Notes is being made to Purchasers in the United States, Canada and other countries by the Company, a corporation headquartered in the Province of Alberta, Canada, pursuant to an exemption from the prospectus requirements of the Securities Act (Alberta). Each Purchaser of Notes outside of Canada and not otherwise a resident of Canada, certifies that it is not located in, or a resident of, the Province of Alberta or any other province or territory of Canada, and acknowledges that:
(a) no securities commission or similar regulatory authority has reviewed or passed on the merits of the Notes;
(b) there is no government or other insurance covering the Notes;
(c) there are risks associated with the purchase of the Notes;
(d) there are restrictions on the purchasers ability to resell the Notes and it is the responsibility of the Purchaser to find out what those restrictions are and to comply with them before selling the Notes; and
(e) the Company has advised such Purchaser through this Agreement that it is relying on an exemption from the requirements of the Securities Act (Alberta) to provide the purchaser with a prospectus and to sell securities through a person or company registered to sell securities under the Securities Act (Alberta) and, as a consequence of acquiring Notes pursuant to this exemption, certain protections, rights and remedies provided by the Securities Act (Alberta), including statutory rights of rescission or damages, will not be available to the purchaser.
Each Purchaser acknowledges that the Notes are subject to resale restrictions under applicable securities laws, and it has been advised to consult its own legal advisors with respect to applicable resale restrictions.
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Each Purchaser severally agrees it will comply with all relevant securities legislation concerning any resale of the Notes.
The Purchasers acknowledge that the Notes shall bear a legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ENERFLEX LTD. (THE COMPANY) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY, WHETHER DIRECTLY OR INDIRECTLY, (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATIONS UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 16, 2018.
Each Purchaser severally represents that it is either:
(i) (x) an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and (y) acquiring the Notes for its own account; or
(ii) (x) a qualified institutional buyer (as defined under Rule 144A under the Securities Act) and (z) acquiring the Notes for its own account or for the account of a qualified institutional buyer.
Each Purchaser:
(i) acknowledges that the Notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Act, that such Notes have not been registered under the Act or any applicable state securities laws;
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(ii) acknowledges that it has not purchased the Notes as a result of any general solicitation or general advertising, including, without limitation, advertisements, articles, notices or other communications published on the Internet or in any newspaper, magazine or similar media, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
(iii) understands that if it decides to offer, sell or otherwise transfer the Notes, such securities may be offered, sold or otherwise transferred only (A) to the Company, (B) outside the United States in accordance with Regulation S under the Securities Act, (C) in accordance with an applicable exemption from the registration requirements of the Securities Act, or (D) pursuant to an effective registration statement under the Securities Act, and, in each case in accordance with any applicable state securities laws in the United States or the applicable securities laws of any other jurisdiction.
If a Purchaser is a company, partnership, unincorporated association or other entity, each Purchaser severally represents that it has the legal capacity and competence to enter into this Agreement and that all necessary approvals of directors, shareholders or otherwise have been given and obtained.
Each Purchaser severally represents that it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment.
6.2. | Source of Funds. |
Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a Source) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by it hereunder:
(a) the Source is an insurance company general account (as the term is defined in the United States Department of Labors Prohibited Transaction Exemption (PTE) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the NAIC Annual Statement)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchasers state of domicile; or
(b) the Source is a separate account that is maintained solely in connection with such Purchasers fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
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(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
(d) the Source constitutes assets of an investment fund (within the meaning of Part VI of PTE 84-14 (the QPAM Exemption)) managed by a qualified professional asset manager or QPAM (within the meaning of Part VI of the QPAM Exemption), no employee benefit plans assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be related within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or
(e) the Source constitutes assets of a plan(s) (within the meaning of Part IV(h) of PTE 96-23 (the INHAM Exemption)) managed by an in-house asset manager or INHAM (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of control in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or
(f) the Source is a governmental plan; or
(g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, and each such plan, account or fund has been identified to the Company in writing pursuant to this clause (g); or
(h) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms employee benefit plan, governmental plan, and separate account shall have the respective meanings assigned to such terms in section 3 of ERISA.
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Any Purchaser or transferee that is relying on any of clauses (c), (d), (e) or (g) of this Section 6.2 shall provide the written disclosure required in such clause to the Company at least three Business Days prior to the purchase or transfer of a Note. If the Company indicates in writing to such Purchaser or transferee prior to the proposed purchase or transfer that such purchase or transfer would be prohibited under section 406 of ERISA, then such purchase or transfer shall not be effectuated.
Each Purchaser severally represents that the funds which will be advanced by the Purchaser to the Company hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the PCMLA) and Terrorist Financing Act (Canada) and the Purchaser acknowledges that the Company may in the future be required by law to disclose the Purchasers name and other information relating to its investment and subscription hereunder, on a confidential basis, pursuant to the PCMLA.
To the best of the knowledge of such Purchaser none of the subscription funds to be provided by the Purchaser have been or will be derived from or related to any activity that is deemed criminal under the laws of Canada, the United States of America, or any other jurisdiction; or are being tendered on behalf of a person or entity who has not been identified to such Purchaser. Each Purchaser shall promptly notify the Company if such Purchaser discovers that any of such representations ceases to be true, and will provide the Company with appropriate information in connection therewith.
7. | INFORMATION AS TO THE COMPANY SUBSIDIARIES. |
7.1. | Financial and Business Information. |
The Company shall deliver to each holder of Notes that is an Institutional Investor (and for purposes of this Agreement the information required by this Section 7.1 shall be deemed delivered on the date of delivery of such information in the English language or the date of delivery of an English translation thereof):
(a) Interim Statements of the Consolidated Company promptly after the same are available and in any event within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of
(i) unaudited consolidated balance sheet of the Company as at the end of such period, and
(ii) unaudited consolidated statements of income and retained earnings, and of cash flows, of the Company for such period and for the portion of the fiscal year ending with such quarter,
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setting forth in each case in comparative form the figures for the corresponding period in the previous fiscal year, all in reasonable detail, prepared in accordance with IFRS applicable to interim financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the Company and its results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that the Company shall be deemed to have made such delivery of such financial information if it shall have timely made such financial information available on SEDAR (at the date of this Agreement located on the worldwide web at: http://www.sedar.com) or on its home page on the worldwide web (at the date of this Agreement located at: http://www.enerflex.com) (such availability thereof being referred to as Electronic Delivery) and such certification is in accordance with Multilateral Instrument 52-109 (Certification of Issuers Annual and Interim Filings as adopted by the Canadian Securities Administrator) (MI 52-109);
(b) Annual Statements of the Consolidated Company promptly after the same are available and in any event within 90 days after the end of each fiscal year of the Company, duplicate copies of
(i) a consolidated balance sheet of the Company as at the end of such year, and
(ii) consolidated statements of income and retained earnings, and of cash flows, of the Company for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with IFRS, and accompanied by a report thereon of a firm of independent chartered accountants of recognized international standing, which report shall state that such financial statements present fairly, in all material respects, the consolidated financial position of the Company and its results of operations and cash flows and have been prepared in conformity with IFRS, and that the examination of such accountants in connection with such financial statements has been made in accordance with IFRS, and that such audit provides a reasonable basis for such report in the circumstances, provided that the Company shall be deemed to have made such delivery of such financial information if it shall have timely made Electronic Delivery thereof and such financial information shall have been certified by a Senior Financial Officer in accordance with MI 52-109;
(c) Securities Commission and Other Reports promptly furnish to each holder of the Notes copies of all registration materials, financial statements, reports, material change reports, circulars, notices and other non-confidential information that the Company was required by applicable law to file and has filed with any securities commission or stock exchange, has furnished to its shareholders or publicly disclosed (whether by way by advertisement or otherwise), except for insider reports and other filings which are of an administrative nature and do not contain any material information with respect to the business, affairs or financial condition of the Company and its Subsidiaries. The Company shall be deemed to have satisfied its obligations under this Section 7.1(c) if it shall have timely made Electronic Delivery thereof;
(d) Notice of Material Litigation promptly written notice of any litigation, proceeding or dispute affecting the Company, any of the Subsidiary Guarantors or any of the Material Subsidiaries in respect of a demand or claim in respect of which there is a reasonable likelihood of an adverse determination and which if adversely determined would reasonably be expected to result in a liability, obligation or judgment in excess of {Redacted}% of Consolidated Net Tangible Assets (in aggregate at any point in time) or to have a Material Adverse Effect, and shall from time to time furnish to such holders of Notes all reasonable information requested by such holders concerning the status of any such litigation, proceeding or dispute;
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(e) Notice of Default or Event of Default promptly and in any event within five (5) days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company or any Subsidiary is taking or proposes to take with respect thereto;
(f) Notice of Material Adverse Effect or Material Adverse Change as soon as reasonably practicable, promptly notify the holders of Notes of:
(i) any event, circumstance or condition that has had or is reasonably likely to have a Material Adverse Effect; and
(ii) any Material Adverse Change;
(g) Notice of New Material Subsidiaries promptly of the acquisition, creation or existence of each new Material Subsidiary;
(h) Employee Benefit Matters promptly and in any event within 10 Business Days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect; or
(iv) receipt of notice of the imposition of a Material financial penalty with respect to one or more Non-U.S. Plans (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise, but shall not include liability for contributions required to be made in the ordinary course to any such Non-U.S. Plan); and
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(i) Requested Information with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or its Subsidiaries or relating to their ability to perform their respective obligations under any Financing Agreement as from time to time may be reasonably requested by any such holder of Notes, including information readily available to the Company or any Subsidiary explaining the Companys financial statements if such information has been requested by the SVO in order to assign or maintain a designation of the Notes.
7.2. | Officers Certificate. |
Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer (substantially in the form attached as Exhibit 7.2) setting forth:
(a) Covenant Compliance the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 10.7, 10.8, 10.11 and 10.12, as applicable, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and
(b) Event of Default a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the interim or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default (except as previously reported under Section 7.1(e)) or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company or any Subsidiary shall have taken or proposes to take with respect thereto.
7.3. | Visitation. |
The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:
(a) No Default if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Companys officers/management, and (with the consent of the Company, which consent will not be unreasonably withheld) the Companys independent chartered accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and its Subsidiaries, all at such reasonable times and as often as may be reasonably requested in writing; and
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(b) Default if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company and its Subsidiaries, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company, on its own behalf and on behalf of its Subsidiaries, authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested in writing.
7.4. | Limitation on Disclosure Obligation. |
The Company shall not be required to disclose the following information pursuant to Section 7.1(c), 7.1(f), 7.1(i) or 7.3:
(a) information that the Company determines after consultation with counsel qualified to advise on such matters that, notwithstanding the confidentiality requirements of Section 21, it would be prohibited from disclosing by applicable law or regulations without making public disclosure thereof; or
(b) information that, notwithstanding the confidentiality requirements of Section 21, the Company is prohibited from disclosing by the terms of an obligation of confidentiality contained in any agreement with any non-Affiliate binding upon the Company and not entered into in contemplation of this clause (b), provided that the Company shall use commercially reasonable efforts to obtain consent from the party in whose favour the obligation of confidentiality was made to permit the disclosure of the relevant information and provided further that the Company has received a written opinion of counsel confirming that disclosure of such information without consent from such other contractual party would constitute a breach of such agreement.
Promptly after a request therefor from any holder of Notes that is an Institutional Investor, the Company will provide such holder with a written opinion of counsel (which may be addressed to the Company) relied upon as to any requested information that the Company is prohibited from disclosing to such holder under circumstances described in this Section 7.4.
8. | PAYMENT AND PREPAYMENT OF THE NOTES. |
8.1. | Maturity. |
As provided therein, the entire unpaid principal balance of the Notes shall be due and payable on the stated maturity date thereof.
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8.2. | Optional Prepayments with Make-Whole Amount. |
The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 5% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 10 days and not more than 60 days prior to the date fixed for such prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 18. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two (2) Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
8.3. | Prepayment for Tax Reasons with Modified Make-Whole Amount. |
If at any time as a result of a Change in Tax Law (as defined below) the Company is or becomes obligated to make any Additional Payments (as defined below) in respect of any payment of interest on account of any of the Notes in an aggregate amount for all affected Notes equal to 5% or more of the aggregate amount of such interest payment on account of all of the Notes, the Company may give the holders of all affected Notes irrevocable written notice (each, a Tax Prepayment Notice) of the prepayment of such affected Notes on a specified prepayment date (which shall be a Business Day not less than 30 days nor more than 60 days after the date of such notice) and the circumstances giving rise to the obligation of the Company to make any Additional Payments and the amount thereof and stating that all of the affected Notes shall be prepaid on the date of such prepayment at 100% of the principal amount so prepaid together with interest accrued thereon to the date of such prepayment plus an amount equal to the Modified Make-Whole Amount for each such Note, except in the case of an affected Note if the holder of such Note shall, by written notice given to the Company no more than 20 days after receipt of the Tax Prepayment Notice, reject such prepayment of such Note (each, a Rejection Notice). Such Tax Prepayment Notice shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Modified Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. The form of Rejection Notice shall also accompany the Tax Prepayment Notice and shall state with respect to each Note covered thereby that execution and delivery thereof by the holder of such Note shall operate as a permanent waiver of such holders right to receive the Additional Payments arising as a result of the circumstances described in the Tax Prepayment Notice in respect of all future payments of interest on such Note (but not of such holders right to receive any Additional Payments that arise out of circumstances not described in the Tax Prepayment Notice or which exceed the amount of the Additional Payment described in the Tax
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Prepayment Notice), which waiver shall be binding upon all subsequent transferees of such Note. The Tax Prepayment Notice having been given as aforesaid to each holder of the affected Notes, the principal amount of such Notes together with interest accrued thereon to the date of such prepayment plus the Modified Make-Whole Amount shall become due and payable on such prepayment date, except in the case of Notes the holders of which shall timely give a Rejection Notice as aforesaid. Two (2) Business Days prior to such prepayment, the Company shall deliver to each holder of a Note being so prepaid a certificate of a Senior Financial Officer specifying the calculation of such Modified Make-Whole Amount as of such prepayment date.
No prepayment of the Notes pursuant to this Section 8.3 shall affect the obligation of the Company to pay Additional Payments in respect of any payment made on or prior to the date of such prepayment. For purposes of this Section 8.3, any holder of more than one affected Note may act separately with respect to each affected Note so held (with the effect that a holder of more than one affected Note may accept such offer with respect to one or more affected Notes so held and reject such offer with respect to one or more other affected Notes so held).
The Company may not offer to prepay or prepay Notes pursuant to this Section 8.3 (a) if a Default or Event of Default then exists, (b) until the Company shall have taken commercially reasonable steps to mitigate the requirement to make the related Additional Payments or (c) if the obligation to make such Additional Payments directly results or resulted from actions taken by the Company or any Subsidiary (other than actions required to be taken under applicable law), and any Tax Prepayment Notice given pursuant to this Section 8.3 shall certify to the foregoing and describe such mitigation steps, if any.
For purposes of this Section 8.3: Additional Payments means additional amounts required to be paid to a holder of any Note pursuant to Section 13 by reason of a Change in Tax Law; and a Change in Tax Law means (individually or collectively with one or more prior changes) (i) an amendment to, or change in, any law, treaty, rule or regulation of Canada after the date of the Closing, or an amendment to, or change in, an official interpretation or application of such law, treaty, rule or regulation after the date of the Closing, which amendment or change is in force and continuing and meets the opinion and certification requirements described below or (ii) in the case of any other jurisdiction that becomes a Taxing Jurisdiction after the date of Closing, an amendment to, or change in, any law, treaty, rule or regulation of such jurisdiction, or an amendment to, or change in, an official interpretation or application of such law, treaty, rule or regulation, in any case after such jurisdiction became a Taxing Jurisdiction, which amendment or change is in force and continuing and meets such opinion and certification requirements. No such amendment or change shall constitute a Change in Tax Law unless the same would in the opinion of the Company (which shall be evidenced by an Officers Certificate of the Company and supported by a written opinion of counsel having recognized expertise in the field of taxation in the Taxing Jurisdiction, both of which shall be delivered to all holders of the Notes prior to or concurrently with the Tax Prepayment Notice in respect of such Change in Tax Law) affect the deduction or require the withholding of any Tax imposed by such Taxing Jurisdiction on any payment payable on the Notes.
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8.4. | Prepayment on Change of Control Without Make-Whole. |
The Company shall, within five (5) Business Days after any Responsible Officer has knowledge of the occurrence of a Change of Control, give all holders of Notes written notice thereof (each, a Change of Control Prepayment Notice), which notice shall contain and constitute an offer to prepay the Notes on a specified prepayment date (which shall be a Business Day not less than 30 days nor more than 60 days after the date of such notice) at 100% of the principal amount so prepaid, without any Make-Whole Amount, Modified Make-Whole Amount or other premium, together with interest accrued thereon to the date of such prepayment. Each holder of a Note that wishes to accept such prepayment in respect of all or any of the Notes held by it shall give written notice to that effect to the Company no more than 20 days after receipt of the Change of Control Prepayment Notice (each, a Change of Control Prepayment Acceptance Notice). The form of Change of Control Prepayment Acceptance Notice and a description in reasonable detail of the nature and date of the Change of Control shall accompany the Change of Control Prepayment Notice. Failure to give a Change of Control Prepayment Acceptance Notice with respect to any Note within such 20-day period shall be deemed to be a rejection of the prepayment of such Note or Notes held by such holder. The principal amount of all Notes that are the subject of a Change of Control Prepayment Acceptance Notice together with interest accrued thereon to the date of such prepayment shall become due and payable on such prepayment date.
For purposes of this Section 8.4, any holder of more than one Note may act separately with respect to each Note so held (with the effect that a holder of more than one Note may accept such offer with respect to one or more Notes so held and reject such offer with respect to one or more other Notes so held).
8.5. | Allocation of Partial Prepayments. |
In the case of each partial prepayment of the Notes pursuant to Section 8.2, (a) the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
8.6. | Maturity; Surrender, Etc. |
In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the Make-Whole Amount or Modified Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount or Modified Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
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8.7. | Purchase of Notes. |
The Company will not and will not permit any Affiliate that it controls to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement or (b) pursuant to an offer to purchase made by the Company or such Affiliate pro rata to the holders of all Notes of any series at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 10 Business Days. If the holders of more than 50% of the principal amount of the Notes of such series then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of such series of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 10 Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
8.8. | Make-Whole Amount and Modified Make-Whole Amount. |
The terms Make-Whole Amount and Modified Make-Whole Amount mean, with respect to any Notes, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that neither the Make-Whole Amount nor the Modified Make-Whole Amount may in any event be less than zero. All payments of Make-Whole Amount and Modified Make-Whole Amount in respect of any Note (i) denominated in Canadian Dollars shall be made in Canadian Dollars and (ii) denominated in U.S. Dollars shall be made in U.S. Dollars. For the purposes of determining the Make-Whole Amount or Modified Make-Whole Amount with respect to any Notes, the following terms have the following meanings:
Applicable Percentage in the case of a computation of the Modified Make-Whole Amount for purposes of Section 8.3 means {Redacted}% ({Redacted} basis points), and in the case of a computation of the Make-Whole Amount for any other purpose means {Redacted} % ({Redacted} basis points).
Called Principal means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or 8.3 has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
Discounted Value means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Note is payable) equal to the Reinvestment Yield with respect to such Called Principal.
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Reinvestment Yield means, with respect to the Called Principal of:
(i) any Note denominated in Canadian Dollars, the sum of (x) the Applicable Percentage plus (y) the yield to maturity, as of the third Business Day preceding the Settlement Date with respect to such Called Principal, as provided by two major Canadian investment dealers designated by the Company and acceptable to holders of at least 51% in principal amount of the Canadian Dollar denominated Notes, for a non-callable Government of Canada bond in Canadian Dollars having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by interpolating linearly between (1) the non-callable Government of Canada bond in Canadian Dollars with the duration closest to and greater than the Remaining Average Life of such Called Principal and (2) the non-callable Government of Canada bond in Canadian Dollars with the duration closest to and less than the Remaining Average Life of such Called Principal; and
(ii) any Note denominated in U.S. Dollars, the sum of the (x) Applicable Percentage plus (y) the yield to maturity implied by the Ask Yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as Page PX1 (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (Reported) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the Ask Yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note. If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then Reinvestment Yield means, with respect to the Called Principal of any Note, the sum of (x) the Applicable Percentage plus (y) the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
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Remaining Average Life means, with respect to any Called Principal of any Note, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year), that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
Remaining Scheduled Payments means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2, 8.3 or 12.1.
Settlement Date means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or 8.3 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
9. | AFFIRMATIVE COVENANTS. |
The Company covenants that so long as any of the Notes are outstanding:
9.1. | Insurance. |
The Company will, and will cause the Subsidiary Guarantors and Material Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies and in such types and such amounts as shall be in accordance with customary business practices for corporations of the size and type of business and operations as the Company and its Subsidiaries, to the extent such insurance is available on reasonable commercial terms.
9.2. | Maintenance and Operations. |
The Company shall do or cause to be done, and will cause each Subsidiary to do or cause to be done, all things necessary or required to have all its properties, assets and operations owned, operated and maintained in accordance with diligent and prudent industry practice and Applicable Laws except to the extent that the failure to do or cause to be done the same would not have and would not reasonably be expected to have a Material Adverse Effect.
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9.3. | Maintain Existence; Compliance with Legislation Generally; Required Permits. |
Except as otherwise permitted by Section 10.2 and 10.6, the Company shall, and shall cause each of the Subsidiary Guarantors and the Material Subsidiaries, to preserve and maintain its corporate, partnership, trust or other existence (as the case may be) as a corporation, partnership, trust or limited liability company existing under the laws of its applicable jurisdiction of organization. The Company shall do or cause to be done, and shall cause each of the Subsidiary Guarantors and the Material Subsidiaries to do or cause to be done, all acts necessary or desirable to comply with all Applicable Laws, except (other than in the case of laws relating to corruption and bribery) where such failure to comply does not and would not reasonably be expected to have a Material Adverse Effect, and to preserve and keep in full force and effect all Required Permits and all other franchises, licences, rights, privileges, permits and Governmental Authorizations necessary to enable the Company, each of the Subsidiary Guarantors and each of the Material Subsidiaries to operate and conduct their respective businesses in accordance with prudent industry practice, except to the extent that the failure to have any of the same does not and would not reasonably be expected to have a Material Adverse Effect.
9.4. | Books and Records. |
The Company will, and will cause each Subsidiary, to keep proper books of record and account in which complete and correct entries, in all material respects, will be made of its transactions in accordance with IFRS.
9.5. | Priority of Obligations. |
The Company will ensure that its payment obligations under this Agreement and the Notes at all times will, on and after the date the Notes are issued, rank at least pari passu, without preference or priority, with its obligations under the Principal Debt Facility, and with all other unsecured and unsubordinated Debt of the Company. The Company will further ensure that each Subsidiary Guarantors payment obligations under its Subsidiary Guarantee will, on and after the date the Notes are issued, rank at least pari passu, without preference or priority, with its obligations in respect of the Principal Debt Facility and with all other unsecured and unsubordinated Debt of such Subsidiary Guarantor.
9.6. | Subsidiary Guarantees; Release of Guarantees. |
The Company will cause each Subsidiary of the Company (other than any other Subsidiary which already is a Subsidiary Guarantor) that hereafter becomes a borrower or a guarantor under the Principal Debt Facility concurrently therewith to enter into and become a party to a Subsidiary Guarantee, and to deliver to each holder of a Note the following:
(a) the Subsidiary Guarantee;
(b) a certificate signed by the President, the Chief Financial Officer, a Vice President or another authorized officer of such Subsidiary making representations and warranties to the effect of those contained in Sections 5.1, 5.2, 5.3, 5.4, 5.11, 5.17, 5.25 and 5.26 but with respect to such Subsidiary and its Subsidiary Guarantee, and, if relevant under applicable law to the provision of the Subsidiary Guarantee, a certificate confirming the solvency of the Subsidiary;
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(c) such documents and evidence with respect to such Subsidiary as the Required Holders may reasonably request in order to establish the existence and good standing of such Subsidiary and the authorization of the transactions contemplated by the Subsidiary Guarantee; and
(d) an opinion of independent counsel satisfactory to the Required Holders to the effect that the Subsidiary Guarantee has been duly authorized, executed and delivered and constitutes the legal, valid and binding obligation of such Subsidiary enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors rights generally and by general equitable principles and other customary qualifications.
If:
(i) the lenders under all the Principal Debt Facilities have released or are concurrently unconditionally releasing the Guarantee of a Subsidiary Guarantor without direct or indirect compensation for doing so (or if any such compensation has been or is being provided, equivalent compensation is provided to the holders);
(ii) the lenders under all the Principal Debt Facilities have not advised the Company of their intention not to extend the maturity of all or any part of the Debt under the Principal Debt Facilities;
(iii) immediately prior to such release, and immediately after giving effect thereto, and to such Subsidiary ceasing to be a Subsidiary Guarantor, no Default or Event of Default (including as determined by a Current Financial Covenant Testing) exists or would exist, including under Section 10.12 and no event of default or default (however designated) exists under the Principal Debt Facility; and
(iv) for certainty, after giving effect thereto, and to such Subsidiary ceasing to be a Subsidiary Guarantor:
(A) all Debt that thereby becomes Priority Debt must then be permitted by Section 10.12 as if such Debt were incurred on the date of such release, and
(B) all Liens that immediately prior to such release were permitted pursuant to Section 10.5 must not then be prohibited immediately after such release as if the Debt that such Liens secure were incurred on the date of such release,
then the holders shall, following receipt from the Company of an Officers Certificate certifying the factual matters in the foregoing Sections 9.6(d)(i) through 9.6(d)(iv) inclusive, concurrently release and discharge the Subsidiary Guarantor from its Subsidiary Guarantee.
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(e) The Company shall also from time to time, by notice in writing to the holders of the Notes, be entitled to designate effective on the date set out in such notice that any Subsidiary Guarantor (other than a Subsidiary Guarantor that is required to be a Subsidiary Guarantor pursuant to the foregoing requirements of this Section 9.6) shall be a Non-Guarantor Subsidiary provided that, the Company shall not be entitled to designate that such a Subsidiary Guarantor shall be a Non-Guarantor Subsidiary if:
(i) a Default or an Event of Default has occurred and is continuing;
(ii) a Default or an Event of Default would result from or exist immediately after such a designation; or
(iii) for certainty, if after such designation the Company would not be in compliance with any of the terms and conditions hereof including, without limitation, the financial covenants set out in Section 10.11 (including as determined by a Current Financial Covenant Testing);
provided further that nothing in this Section 9.6(e) shall prohibit the Company from designating that a Subsidiary Guarantor shall be a Non-Guarantor Subsidiary (provided that the foregoing requirements of clauses (i) to (iii) of this paragraph (e) are satisfied) where such Subsidiary Guarantor ceases or will cease to be a borrower or a guarantor under all Principal Debt Facilities on or about the same date that such designation is made.
(f) The Company shall, concurrently with delivery of a notice pursuant to Section 9.6(e), deliver to the holder of the Notes an Officers Certificate certifying that the Company is entitled to make the designation referenced in such notice
9.7. | Subordination Agreements. |
The Company will cause each Person (a Subordinating Person) that hereafter enters into a subordination agreement whereby it subordinates any obligations owed to such Subordinating Person by the Company or any Subsidiary of the Company in favour of any obligations owed by the Company or such Subsidiary under any Principal Debt Facility, to concurrently therewith enter into a subordination agreement on the same terms in favour of the holders of the Notes, and within three (3) Business Days thereafter, the Company shall deliver to each holder of a Note the following:
(a) such subordination agreement;
(b) if the Subordinating Person is the Company or a Subsidiary of the Company, a certificate signed by the President, the Chief Financial Officer, a Vice President or another authorized officer of the Company or such Subsidiary making representations and warranties to the effect of those contained in Sections 5.1, 5.3, 5.4 and 5.11, but with respect to such Subordinating Person and its Subordination Agreement;
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(c) if the Subordinating Person is the Company or a Subsidiary of the Company, such documents and evidence with respect to such Subordinating Person as the Required Holders may reasonably request in order to establish the existence and good standing of such Subordinating Person and the authorization of the transactions contemplated by its subordination agreement; and
(d) if the Subordinating Person is the Company or a Subsidiary of the Company, an opinion of independent counsel satisfactory to the Required Holders to the effect that such subordination agreement has been duly authorized, executed and delivered and constitutes the legal, valid and binding obligation of such Subordinating Person enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors rights generally and by general equitable principles and other customary qualifications.
If:
(i) the lenders under all the Principal Debt Facilities have released or are concurrently unconditionally releasing the Subordination Agreement of a Subsidiary without direct or indirect compensation for doing so (or if any such compensation has been or is being provided, equivalent compensation is provided to the holders);
(ii) the lenders under all the Principal Debt Facilities have not advised the Company of their intention not to extend the maturity of all or any part of the Debt under the Principal Debt Facilities; and
(iii) immediately prior to such release, and immediately after giving effect thereto, no Default or Event of Default (including as determined by a Current Financial Covenant Testing) exists or would exist, and no event of default or default (however designated) exists under the Principal Debt Facility;
notwithstanding that any such Debt or Lien may have existed at Closing then the holders shall, following receipt from the Company of an Officers Certificate certifying the factual matters in the foregoing Sections 9.7(d)(i) through 9.7(d)(iii) inclusive, concurrently release and discharge the Subsidiary from its Subordination Agreement.
9.8. | Payment of Royalties, Taxes, Withholdings, Etc. |
The Company shall, and shall cause the Subsidiary Guarantors and the Material Subsidiaries, from time to time pay or cause to be paid all material royalties, rents, Taxes, rates, levies or assessments, ordinary or extraordinary, governmental fees or dues, and to make and remit all withholdings, lawfully levied, assessed or imposed upon the Company, the Subsidiary Guarantors and the Material Subsidiaries many of the assets of the Company, the Subsidiary Guarantors and the Material Subsidiaries as and when the same become due and payable, except when and so long as the validity of any such royalties, rents, Taxes, rates, levies, assessments, fees, dues or withholdings is being contested by the Company, the Subsidiary Guarantors or the Material Subsidiaries by a Permitted Contest or the failure to pay or cause to be paid the same would not have or reasonably be expected to have a Material Adverse Effect.
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9.9. | Payment of Preferred Claims. |
The Company shall, and shall cause the Subsidiary Guarantors and the Material Subsidiaries to, from time to time pay when due or cause to be paid when due all amounts related to wages, workers compensation obligations, government royalties or pension fund obligations and any other amount which may result in a lien, charge, Lien or similar encumbrance against the assets of the Company, such Subsidiary Guarantor or such Material Subsidiary arising under statute or regulation, except when and so long as the validity of any such amounts or other obligations is being contested by the Company, the Subsidiary Guarantors or the Material Subsidiaries by a Permitted Contest or the failure to pay or cause to be paid the same would not have or reasonably be expected to have a Material Adverse Effect.
9.10. | Environmental Covenants. |
(a) Without limiting the generality of Section 9.3 above, the Company shall, and shall cause the Subsidiary Guarantors and the Material Subsidiaries to, conduct their business and operations so as to comply at all times with all Environmental Laws if the consequence of a failure to comply, either alone or in conjunction with any other such non-compliances, would have or would reasonably be expected to have a Material Adverse Effect.
(b) If the Company, any of the Subsidiary Guarantors or any of the Material Subsidiaries shall:
(i) receive or give any notice that a violation of any Environmental Law has or may have been committed or is about to be committed by the same, and if such violation has or would reasonably be expected to have a Material Adverse Effect;
(ii) receive any notice that a complaint, proceeding or order has been filed or is about to be filed against the same alleging a violation of any Environmental Law, and if such violation would reasonably be expected to have a Material Adverse Effect; or
(iii) receive any notice requiring the Company, a Subsidiary Guarantor or a Material Subsidiary, as the case may be, to take any action in connection with the release of Hazardous Materials into the environment or alleging that the Company, such Subsidiary Guarantor or such Material Subsidiary may be liable or responsible for costs associated with a response to or to clean up a Release of Hazardous Materials into the environment or any damages caused thereby in excess of {Redacted}% of Consolidated Net Tangible Assets (in aggregate at any point in time), or if such action or liability has or would reasonably be expected to have a Material Adverse Effect,
the Company shall promptly provide the holders of the Notes with a copy of such notice and shall, or shall cause such Subsidiary Guarantor or Material Subsidiary to, furnish to the holders of Notes from time to time all reasonable information requested by the Required Holders relating to the same.
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9.11. | Post-Closing Undertaking. |
The Company agrees to use commercially reasonable efforts to correct (a) the Founders Declaration and (b) the Articles of Association of its Subsidiary, Enerflex Middle East SPC Owned By Enerflex Middle East Ltd. (the Bahrain Subsidiary), not later than 90 days following the date of Closing, to correctly identify that the organizational jurisdiction of its sole shareholder, Enerflex Middle East Ltd., is Barbados and not the United States (the Correction). If such Correction is not obtained by such date, such failure will not result in a Default or an Event of Default hereunder; however, in all events, the Company shall continue to diligently pursue such Correction and shall provide the holders with information relating to the status of such Correction upon request. Promptly upon finalizing the Correction, the Company will deliver to each holder of the Notes an updated legal opinion of Bahraini counsel and an officers certificate for the Bahrain Subsidiary, each in substantially the same form delivered in connection with the Closing, except confirming the completion of the Correction and confirming the due registration, capacity and authority of the Bahrain Subsidiary to enter into the Guarantee without reference to the needed Correction. If, at any time, the Company determines that, notwithstanding the use of commercially reasonable efforts, it is impossible to obtain the Correction, it shall promptly notify all holders of the Notes.
10. | NEGATIVE COVENANTS. |
The Company covenants that so long as any of the Notes are outstanding:
10.1. | Transactions with Affiliates. |
Except in respect of transactions between or among the Company and/or one or more of the Subsidiary Guarantors and/or the Material Subsidiaries, the Company shall not, nor shall it permit any Subsidiary Guarantor or any Material Subsidiary to, enter into any contract, agreement or transaction whatsoever, including for the sale, purchase, lease or other dealing in any property or the provision of any services (other than office and administration services provided in the ordinary course of business), with any Affiliate except upon fair and reasonable terms, which terms are not less favourable to the Company, a Subsidiary Guarantor or a Material Subsidiary, as applicable, than it would obtain in an arms length transaction.
10.2. | Merger, Consolidation, Etc.; Reorganization. |
Except as permitted under Section 10.6 or Section 10.7, the Company will not, and will not permit any Subsidiary Guarantor or Material Subsidiary to, consolidate with or merge with or amalgamate with any other Person or convey, transfer or lease all or substantially all of its assets (including by way of a winding up or dissolution) in a single transaction or series of transactions to any Person unless:
(a) in the case of any such transaction involving the Company or a Subsidiary Guarantor, the successor formed by such consolidation or amalgamation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Company or Subsidiary Guarantor as an entirety (including by way
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of a winding up or dissolution), as the case may be, shall be a solvent corporation, limited liability company, partnership or trust organized and existing under the laws of Canada or any province thereof or of the United States or any State thereof (including the District of Columbia) or, in the case of a Subsidiary Guarantor, in the jurisdiction of its organization or creation and (i) such corporation, limited liability company, partnership or trust shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of each respective Financing Agreement by which the Company or Subsidiary Guarantor was bound and (ii) shall have caused to be delivered to each holder of any Notes an opinion of Davies Ward Phillips & Vineberg LLP or other independent counsel licensed in the relevant jurisdictions and reasonably satisfactory to the Required Holders, to the effect that (A) all agreements or instruments effecting such assumption are enforceable in accordance with their terms and (B) as a result of such transaction, none of the Company or any Subsidiary Guarantor that continues to exist has been released from its obligations under the Financing Agreements; provided that agreements or instruments of assumption shall not be required hereunder if such assumption occurs by operation of law, and the Company delivers an opinion of such counsel to that effect;
(b) in the case of any such transactions involving any other Subsidiary, the successor formed by such consolidation or amalgamation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of such Subsidiary as an entirety, as the case may be, shall be a Subsidiary organized and existing under the laws of Canada or any province thereof or of the United States or any State thereof (including the District of Columbia) or the jurisdiction of its organization or creation in any other case; and
(c) in all cases, immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing (including as determined by a Current Financial Covenant Testing).
No such conveyance, transfer or lease of all or substantially all of the assets of the Company or a Subsidiary Guarantor shall have the effect of releasing it or any successor Person that shall theretofore have become such in the manner prescribed in this Section 10.2 from its liability under this Agreement or the Notes or any other Financing Agreement.
10.3. | Change of Business. |
The Company shall not, and shall not permit any Subsidiary Guarantor or any Material Subsidiary to, change in any material respect its Business.
10.4. | Economic Sanctions, Etc. |
The Company will not and will not permit any Controlled Entity to (a) become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or (b) have any investment in or engage in any dealing or transaction with any Person if such investment, dealing or transaction would be in violation of, or result in the imposition of sanctions under, any Sanctions Laws applicable to the Company or such Controlled Entity, except, in the case of this clause (b), to the extent that such violation or sanctions, if imposed, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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10.5. | Liens. |
The Company will not, and will not permit any Subsidiary Guarantor or any Material Subsidiary to, create, issue, incur, assume or permit to exist any Lien on any of its or their property, undertakings or assets, other than Permitted Liens and Liens securing Priority Debt permitted hereby.
Notwithstanding the foregoing, the Company will not, and will not permit any Subsidiary Guarantor or Material Subsidiary to, grant any Lien securing Debt under or pursuant to any Principal Debt Facility unless and until all obligations of the Company under the Notes and of any Subsidiary Guarantor shall concurrently be secured equally and ratably with such Debt under and pursuant to any Principal Debt Facility pursuant to documentation in form and substance reasonably satisfactory to the Required Holders.
10.6. | No Dissolution. |
The Company shall not, and shall not permit any Subsidiary Guarantor or any Material Subsidiary to, liquidate, dissolve or wind up or take any steps or proceedings in connection therewith except (i) in the case of Subsidiary Guarantors, where the successor thereto or transferee thereof is the Company or another Subsidiary Guarantor or (ii) in the case of Material Subsidiaries, where the successor thereto or transferee thereof is the Company, a Subsidiary Guarantor or another Material Subsidiary.
10.7. | Limit on Sale of Assets. |
Except for Permitted Dispositions, the Company shall not, and shall not permit any Subsidiary to, sell, transfer or otherwise dispose of any of their respective property or assets (i) during the continuance of a Default or Event of Default or (ii) in any calendar year, whether in one or a series of transactions, which, in aggregate, have a fair market value in excess of {Redacted}% of Consolidated Net Tangible Assets.
10.8. | Limit on Investments and Financial Assistance. |
The Company shall not, and shall not permit any Subsidiary Guarantor or any Material Subsidiary to (i) make Investments in any person other than the Company or a Subsidiary Guarantor or (ii) provide any Financial Assistance to or for the benefit of any person other than the Company or a Subsidiary Guarantor, other than (A) amounts not in excess, in the aggregate, in any calendar year, of {Redacted}% of Consolidated Net Tangible Assets plus 100% of the net proceeds to the Company, such Subsidiary Guarantor or Material Subsidiary from any equity offerings completed after June 22, 2011 and (B) an Investment in a person that will become a Subsidiary Guarantor by delivering a Subsidiary Guarantee concurrently with or immediately following the making of the Investment.
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10.9. | Limits on Distributions. |
The Company shall not make any Distributions during the continuance of a Default or Event of Default or which, immediately following such Distribution, would have or would reasonably be expected to result in a Default or Event of Default.
10.10. | No Financial Instruments Other Than Permitted Hedging. |
The Company shall not and shall not permit any Subsidiary to enter into, transact or have outstanding any Financial Instruments or Financial Instrument Obligations other than Permitted Hedging.
10.11. | Financial Covenants. |
(a) Maximum Net Funded Debt to EBITDA Ratio
As at each Quarter End, the Company shall not permit the Net Funded Debt to EBITDA Ratio to exceed 3.00:1.00, such ratio to be calculated on a rolling four quarter basis.
Notwithstanding the foregoing, for the four Quarter Ends following the completion of a Material Acquisition, the Company shall not permit the Net Funded Debt to EBITDA Ratio to exceed 3.50:1.00 (the Acquisition Leverage Step Up) provided that (i) without taking into account the Material Acquisition, the Net Funded Debt to EBITDA Ratio shall not have exceeded 3.00:1.00 as at each such Quarter Ends and (ii) if the Company has previously invoked the Acquisition Leverage Step Up, the Company shall only be entitled to again invoke the Acquisition Leverage Step Up if the Net Funded Debt to EBITDA Ratio shall not have exceeded 3.00:1.00 for the two Quarter Ends preceding the subsequent Material Acquisition in question.
(b) Minimum Interest Coverage Ratio
As at each Quarter End, the Company shall not permit the Interest Coverage Ratio to be less than 3.00:1.00, such ratio to be calculated on a rolling four-quarter basis.
10.12. | Priority Debt. |
The Company will ensure that Priority Debt will not at any time exceed {Redacted}% of Consolidated Net Tangible Assets, at such time, excluding for this purpose from Priority Debt, the amount of the obligations relating to the Capital Leases (which but for the adoption of International Financial Reporting Standards would have been classified as operating leases under IFRS in effect as of December 31, 2010).
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11. | EVENTS OF DEFAULT. |
An Event of Default shall exist if any of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole Amount or Modified Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note or any amount payable pursuant to Section 13 for more than five (5) days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any term contained in Sections 7.1(e) or 10.11 and shall fail to remedy or cure the same within ten days; or
(d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a), 11(b) and 11(c)), or the Company or any Subsidiary Guarantor defaults in the performance of or compliance with any term in a Subsidiary Guarantee, and in any case such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a notice of default and to refer specifically to this Section 11(d)); or
(e) any representation or warranty made in writing by or on behalf of the Company or any Subsidiary or by any officer of the Company or any Subsidiary in this Agreement or in any other Financing Agreement or in any other writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or
(f) any of the Company, a Subsidiary Guarantor or a Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, receiver-manager, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; provided that any plan of arrangement under the Business Corporation Act (Ontario), the Business Corporation Act (Alberta), the Canada Business Corporations Act or any analogous statute, whether foreign or domestic, consummated in compliance with Section 10.2 shall not constitute an Event of Default under this clause (f); or
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(g) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company, a Subsidiary Guarantor or a Material Subsidiary, a custodian, receiver, receiver-manager, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, a Subsidiary Guarantor or a Material Subsidiary, or any such petition shall be filed against the Company, a Subsidiary Guarantor or a Material Subsidiary and such petition shall not be dismissed within 30 days; provided that any plan of arrangement under the Business Corporation Act (Ontario), the Business Corporation Act (Alberta), the Canada Business Corporations Act or any analogous statute, whether foreign or domestic, consummated in compliance with Section 10.2 shall not constitute an Event of Default under this clause (g); or
(h) any event occurs with respect to the Company, a Subsidiary Guarantor or a Material Subsidiary which under the laws of any jurisdiction is analogous to any of the events described in Section 11(f) or 11(g), provided that the applicable grace period, if any, which shall apply shall be the one applicable to the relevant proceeding which most closely corresponds to the proceeding described in Section 11(f) or 11(g); or
(i) except as permitted by Sections 10.2 and 10.6, if proceedings are commenced for the dissolution, liquidation or winding up of the Company, any Subsidiary Guarantor or any Material Subsidiary unless such proceedings are being actively and diligently contested in good faith to the satisfaction of the Required Noteholders; or
(j) if one or more final judgments, decrees or orders (after available appeals have been exhausted) for an aggregate amount in excess of {Redacted}% of Consolidated Net Tangible Assets shall be awarded against the Company, any Subsidiary Guarantor or any Material Subsidiary and the Company, any Subsidiary Guarantor or any such Material Subsidiary, as applicable, has not provided security (to the holders of the Notes, the applicable court that rendered such judgment, the judgment creditor or an agent or trustee for one of the foregoing) for any of such judgments, decrees or orders or caused such judgment, decree or order to be satisfied or stayed within 60 days of such judgment, decree or order being awarded; or
(k) any Financing Agreement shall cease to be a legal, valid and binding agreement enforceable against the Company, a Subsidiary Guarantor or a Material Subsidiary thereunder in any material respect in accordance with the respective terms thereof or shall in any way be terminated or become ineffective or inoperative, except for the cancellation of Notes in the ordinary course and in accordance with the terms hereof and the release of Subsidiary Guarantors in accordance with the terms hereof, or shall in any way whatsoever cease to give or provide in any material respect the respective rights, titles, interest, remedies, powers or privileges intended to be created thereby including, without limitation, a determination by any Governmental Authority or court that such Financing Agreement is invalid, void or unenforceable in any material respect or any party thereto shall contest or deny the validity or enforceability of any of its obligations under such Financing Agreement; or
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(l) if the Company, any of the Subsidiary Guarantors or any Material Subsidiary (or any combination thereof) defaults in the payment when due (whether at maturity, upon acceleration, or otherwise) of Debt or Financial Instrument Obligations in aggregate in excess of {Redacted}% of Consolidated Net Tangible Assets unless such default has been remedied or waived in accordance with the provisions of the relevant indentures, credit agreements, instruments or other agreement evidencing such Debt or Financial Instrument Obligations; or
(m) if a default, event of default or other similar condition or event (however described) in respect of the Company, any of the Subsidiary Guarantors or any of the Material Subsidiaries (or any combination thereof) occurs or exists and is continuing under any indentures, credit agreements, agreements or other instruments evidencing or relating to Debt or Financial Instrument Obligations (individually or collectively) in an aggregate amount in excess of {Redacted}% of Consolidated Net Tangible Assets and such default, event or condition has resulted in such Debt or Financial Instrument Obligations becoming, or becoming capable at such time of being declared, due and payable thereunder before it would otherwise have been due and payable.
12. | REMEDIES ON DEFAULT, ETC. |
12.1. | Acceleration. |
(a) If an Event of Default with respect to the Company described in Section 11(f), 11(g) or 11(h) (other than an Event of Default described in clause (i) of Section 11(f) or described in clause (vi) of Section 11(f) by virtue of the fact that such clause encompasses clause (i) of Section 11(f)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in Section 11(a) or 11(b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, without limitation, interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default is intended to provide compensation for the deprivation of such right under such circumstances.
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12.2. | Other Remedies. |
If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. | Rescission. |
At any time after any Notes have been declared due and payable pursuant to Section 12.1(b) or 12.1(c), the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount or Modified Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount or Modified Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts that have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than nonpayment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 18, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
12.4. | No Waivers or Election of Remedies, Expenses, Etc. |
No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holders rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 16, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys fees, expenses and disbursements.
13. | TAX INDEMNIFICATION. |
All payments whatsoever under the Financing Agreements will be made by the Company and the Subsidiary Guarantors free and clear of, and without liability for withholding or deduction for or on account of, any present or future Taxes of whatever nature imposed or levied by or on behalf of any jurisdiction (or any political subdivision or taxing authority of or in such jurisdiction) (hereinafter a Taxing Jurisdiction), unless the withholding or deduction of such Tax is compelled by applicable law.
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If any deduction or withholding for any Tax of a Taxing Jurisdiction in which the Company or a Subsidiary Guarantor that in the payor of the payment is organized, resident for the purposes or is otherwise carrying on business in or from which Payments are made shall at any time be required in respect of any amounts to be paid by the Company or such Subsidiary Guarantor under the Financing Agreements, the Company or such Subsidiary Guarantor, as applicable, will pay to the relevant Taxing Jurisdiction the full amount required to be withheld, deducted or otherwise paid before penalties attach thereto or interest accrues thereon and pay to each holder of a Note such additional amounts as may be necessary in order that the net amounts paid to such holder pursuant to the terms of the Financing Agreements after such deduction, withholding or payment (including, without limitation, any required deduction or withholding of Tax on or with respect to such additional amount), shall be not less than the amounts then due and payable to such holder under the terms of the Financing Agreements before the assessment of such Tax, provided that no payment of any additional amounts shall be required to be made for or on account of:
(a) any Tax that would not have been imposed but for the existence of any present or former connection between such holder (or a fiduciary, settler, beneficiary, member of, shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership or corporation or any Person other than the holder to whom the Notes or any amount payable thereon is attributable for the purposes of such Tax) and the Taxing Jurisdiction, other than the mere holding of the relevant Note or the receipt of payments thereunder or in respect thereof or the exercise of remedies in respect thereof, including, without limitation, such holder (or such other Person described in the above parenthetical) being or having been a citizen or resident thereof, or being or having been present, provided services or engaged in trade or business therein or having or having had an establishment, office, fixed base or branch therein, provided that this exclusion shall not apply with respect to a Tax that would not have been imposed but for the Company or the Subsidiary Guarantor, after the date of the Closing, opening an office in, moving an office to, reincorporating in, or changing the Taxing Jurisdiction from or through which payments on account of the Financing Agreements are made to, the Taxing Jurisdiction imposing the relevant Tax;
(b) any Tax that would not have been imposed but for the delay or failure by such holder (following a written request by the Company) in the filing with the relevant Taxing Jurisdiction of Forms (as defined below) that are required to be filed by such holder to avoid or reduce such Taxes (including for such purpose any refilings or renewals of filings that may from time to time be required by the relevant Taxing Jurisdiction), provided that the filing of such Forms would not (in such holders reasonable judgment) impose any unreasonable burden (in time, resources or otherwise) on such holder or result in any confidential or proprietary income tax return information being revealed, either directly or indirectly, to any Person and such delay or failure could have been lawfully avoided by such holder, and provided further that, except in the case of backup withholding imposed under Section 3406 of the Code, such holder shall be deemed to have satisfied the requirements of this clause (b) upon the good faith completion and submission of such Forms (including refilings or renewals of filings) as may be specified in a written request of the -Company no later than 60 days after receipt by such holder of such written request (accompanied by copies of such Forms and related instructions, if any, all in the English language or with an English translation thereof);
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(c) any amount in excess of the amount of Tax that would be payable if the holder was a resident of the United States for the purpose of, and entitled to benefits as a resident of the United States under, the Canada-U.S. Income Tax Convention (1980), as amended;
(d) any Tax that would not have been imposed but for the holder (i) being a specified shareholder of the Company within the meaning of subsection 18(5) of the Tax Act or (ii) not dealing at arms length with the Company, the payor of the payment or a specified shareholder of the payor for the purposes of the Tax Act; or
(e) any combination of clauses (a), (b), (c) and (d) above.
If as a result of any payment by the Company or a Subsidiary Guarantor under the Financing Agreements, whether in respect of principal, Make-Whole Amount or Modified Make-Whole Amount (if any), interest, interest on overdue interest, fees or other payment obligations, any holder of a Note is required to pay tax under Part XIII of the Tax Act, then the Company and such Subsidiary Guarantor will, upon demand by such holder of any Note, indemnify the holder for the payment of any such amount, together with any interest, penalties and expenses in connection therewith, and for any Taxes on such indemnity payment provided that no indemnification payment shall be required to be made in respect of a Tax described in clauses (a), (b), (c), (d) or (e) of the previous paragraph. All amounts payable under this paragraph shall be payable by the Company and the applicable Subsidiary Guarantor, as applicable, on demand, shall, if paid in respect of interest, be a payment of additional interest, and shall bear interest at the Default Rate, calculated from the date demanded by such holder to the date paid by the Company or such Subsidiary Guarantor.
By acceptance of any Note, the holder of such Note agrees, subject to the limitations of clause (b) above, that it will from time to time with reasonable promptness (x) duly complete and deliver to or as reasonably directed by the Company all such forms, certificates, documents and returns provided to such holder by the Company (collectively, together with instructions for completing the same, Forms) required to be filed by or on behalf of such holder in order to avoid or reduce any such Tax pursuant to the provisions of an applicable statute, regulation or administrative practice of the relevant Taxing Jurisdiction or of a tax treaty between the holders country of residence and such Taxing Jurisdiction and (y) provide the Company with such information with respect to such holder as the Company may reasonably request in order to complete any such Forms, provided that nothing in this Section 13 shall require any holder to provide information with respect to any such Form or otherwise if in the opinion of such holder such Form or disclosure of information would involve the disclosure of tax return or other information that is confidential or proprietary to such holder, and provided further that each such holder shall be deemed to have complied with its obligation under this paragraph with respect to any Form if such Form shall have been duly completed and delivered by such holder to the Company or mailed to the appropriate Taxing Jurisdiction, whichever is applicable, within 60 days following a written request of the Company (which request shall be accompanied by copies of such Form and English translations of any such Form not in the English language) and, in the case of a transfer of any Note, at least 90 days prior to the relevant interest payment date.
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If any payment is made by the Company or Subsidiary Guarantor to or for the account of the holder of any Note after deduction for or on account of any Taxes, and increased payments are made by the Company or Subsidiary Guarantor pursuant to this Section 13, then, if such holder at its sole discretion determines that it has received or been granted a refund of such Taxes, or a credit or a remission for such Taxes as against other Taxes, such holder shall, to the extent that it can do so without prejudice to the retention of the amount of such refund, credit or remission, reimburse to the Company such amount as such holder shall, in its sole discretion, determine to be attributable to the relevant Taxes or deduction or withholding. Nothing herein contained shall interfere with the right of the holder of any Note to arrange its tax affairs in whatever manner it thinks fit and, in particular, no holder of any Note shall be under any obligation to claim relief from its corporate profits or similar tax liability in respect of such Tax in priority to any other claims, reliefs, credits or deductions available to it or (other than as set forth in clause (b) above and the immediately preceding paragraph) oblige any holder of any Note to disclose any information relating to its tax affairs or any computations in respect thereof.
The Company will furnish the holders of Notes, promptly and in any event within 60 days after the date of any payment by the Company, or Subsidiary Guarantor of any Tax in respect of any amounts paid under the Financing Agreements, the original tax receipt issued by the relevant Taxing Jurisdiction or other authorities involved for all amounts paid as aforesaid (or if such original tax receipt is not available or must legally be kept in the possession of the Company, a duly certified copy of the original tax receipt or any other reasonably satisfactory evidence of payment), together with such other documentary evidence with respect to such payments as may be reasonably requested from time to time by any holder of a Note.
If the Company or Subsidiary Guarantor is required by any applicable law, as modified by the practice of any relevant Taxing Jurisdiction, to make any deduction or withholding of any Tax in respect of which the Company or Subsidiary Guarantor would be required to pay any additional amount under this Section 13, but for any reason does not make such deduction or withholding with the result that a liability in respect of such Tax is assessed directly against the holder of any Note, and such holder pays such liability, then the Company or Subsidiary Guarantor will promptly reimburse such holder for such payment (including any related interest or penalties to the extent such interest or penalties arise by virtue of a default or delay by the Company or Subsidiary Guarantor) upon demand by such holder accompanied by an official receipt (or a duly certified copy thereof) issued by the relevant Taxing Jurisdiction.
If the Company or Subsidiary Guarantor makes payment to or for the account of any holder of a Note and such holder is entitled to a refund of the Tax to which such payment is attributable upon the making of a filing (other than a Form described above), then such holder shall, as soon as practicable after receiving written request from the Company (which shall specify in reasonable detail and supply the refund forms to be filed) use reasonable efforts to complete and deliver such refund forms to or as directed by the Company, subject, however, to the same limitations with respect to Forms as are set forth above.
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For purposes of this Section 13, the holder of the Notes shall refer to the beneficial owner thereof and not to any nominee that holds title to the Notes for such a beneficial owner.
The obligations of the Company under this Section 13 shall survive the payment or transfer of any Note and the provisions of this Section 13 shall also apply to successive transferees of the Notes.
14. | REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. |
14.1. | Registration of Notes. |
The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes of each series. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register of such series. If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owners option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
14.2. | Transfer and Exchange of Notes. |
Subject to any restriction on transfer under applicable securities laws, upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 19) for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holders attorney duly authorized in writing and accompanied by the relevant name, address and other details for notices of each transferee of such Note or part thereof) within ten Business Days thereafter the Company shall execute and deliver, at the Companys expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note of the same series, and the Company shall prior to or contemporaneously with the execution and delivery of such one or more new Notes provide written notice to each of the Subsidiary Guarantors of such transfer or exchange. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1A, 1B, 1C or 1D, as applicable. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than U.S.$100,000 (in the case of Series A Notes and Series C Notes) or Cdn.$100,000 (in the case of
-
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Series B Notes and Series D Notes), provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than U.S.$100,000 or Cdn.$100,000, as applicable. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2.
14.3. | Replacement of Notes. |
Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 19(b)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least Cdn.$75,000,000 (or the equivalent in another currency) or a Qualified Institutional Buyer, such Persons own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof, within ten Business Days thereafter the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note of the same series or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
15. | PAYMENTS ON NOTES. |
15.1. | Place of Payment. |
Subject to Section 14.2, payments of principal, Make-Whole Amount or Modified Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Calgary, Alberta at the principal office of the Company. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in Canada or the principal office of a bank or trust company in Canada.
15.2. | Home Office Payment. |
So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 15.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount or Modified Make-Whole Amount, if any, interest and all other amounts coming due hereunder by the method and at the address specified for such purpose below such Purchasers name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, plus any wiring fees applicable to wire transfers of
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funds, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 15.1. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 14.2. The Company will afford the benefits of this Section 15.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 15.2.
16. | EXPENSES, ETC. |
16.1. | Transaction Expenses. |
Whether or not the transactions contemplated hereby are consummated, the Company will pay all reasonable costs and expenses (including reasonable attorneys fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of the Financing Agreements (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) review of any events or transactions contemplated by Sections 9.6, 9.7 and 10.2, (b) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under the Financing Agreements or in responding to any subpoena or other legal process or informal investigative demand issued in connection with the Financing Agreements, or by reason of being a holder of any Note, (c) the costs and expenses, including financial advisors fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated by the Financing Agreements and (d) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO, provided that such costs and expenses under this clause (d) shall not exceed U.S.$10,000. The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes) and (ii) any and all wire transfer fees that any bank deducts from any payment under such Note to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note.
16.2. | Certain Taxes. |
The Company agrees to pay all stamp, documentary or similar taxes or fees which may be payable in respect of the execution and delivery or the enforcement of the Financing Agreements or the execution and delivery (but not the transfer) or the enforcement of any of the Notes in the United States or Canada or of any amendment of, or waiver or consent under or with
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respect to, the Financing Agreements, and to pay any goods and services or value added tax due and payable in respect of reimbursement of costs and expenses by the Company pursuant to this Section 16, and will save each holder of a Note to the extent permitted by applicable law harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax or fee required to be paid by the Company hereunder.
16.3. | Survival. |
The obligations of the Company under this Section 16 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of the Financing Agreements, and the termination of this Agreement.
16.4. | Currency of Expense Payments. |
Unless otherwise requested by a holder of Notes, the Company covenants and agrees to pay all amounts required to be paid under this Section 16 in the Applicable Currency.
17. | SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. |
All representations and warranties contained herein shall survive the execution and delivery of the Financing Agreements, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company or any Subsidiary pursuant to the Financing Agreements shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, the Financing Agreements embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.
18. | AMENDMENT AND WAIVER. |
18.1. | Requirements. |
This Agreement, the Notes and the other Financing Agreements may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 22, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount or Modified Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend Section 8 (except as set forth in the second sentence of Section 8.2 and Section 18.2(c)), 11(a), 11(b), 12, 13, 18, 21 or 23.9.
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18.2. | Solicitation of Holders of Notes. |
(a) Solicitation. The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes or any Subsidiary Guarantee. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 18.2 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of any Subsidiary Guarantee unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.
(c) Consent in Contemplation of Transfer. Any consent made pursuant to this Section 18.2 or under any Subsidiary Guarantee by the holder of any Note that has transferred or has agreed to transfer such Note to the Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.
18.3. | Binding Effect, Etc. |
Any amendment or waiver consented to as provided in this Section 18 or under any Subsidiary Guarantee applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term this Agreement and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
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18.4. | Notes Held by Company, Etc. |
Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, any Subsidiary Guarantee or the Notes, or have directed the taking of any action provided herein, in any Subsidiary Guarantee or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.
19. | NOTICES; ENGLISH LANGUAGE. |
All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized international commercial delivery service (charges prepaid), or (b) by a recognized international commercial delivery service (with charges prepaid). Any such notice must be sent:
(a) if to a Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,
(b) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
(c) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of the Chief Financial Officer, or at such other address as the Company shall have specified to the holder of each Note in writing.
Notices under this Section 19 will be deemed given only when actually received.
Each document, instrument, financial statement, report, notice or other communication delivered in connection with this Agreement shall be in English.
The Purchaser acknowledges and confirms that it has requested that all documents evidencing or relating in any way to the sale of the Notes be drawn up in the English language only. Linvestisseur reconnaît et confirme par les présentes avoir exigé que tous les documents faisant foi ou se rapportant de quelque manière à la vente des titres soient rédigés en anglais seulement.
20. | REPRODUCTION OF DOCUMENTS. |
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar
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process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 20 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. | CONFIDENTIAL INFORMATION. |
For the purposes of this Section 21, Confidential Information means all information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on such Purchasers behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 21, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 21), (v) any Person from which it offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 21), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchasers investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchasers Notes and this Agreement or any Subsidiary Guarantee. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 21 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 21.
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In the event that as a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement or the other Financing Agreements, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 21, this Section 21 shall not be amended thereby and, as between such Purchaser or such holder and the Company and its Subsidiaries, this Section 21 shall supersede any such other confidentiality undertaking.
22. | SUBSTITUTION OF PURCHASER. |
Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliates agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 22), shall be deemed to refer to such Affiliate in lieu of such original Purchaser. In the event that such Affiliate is so substituted as a Purchaser hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference to such Affiliate as a Purchaser in this Agreement (other than in this Section 22), shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement, provided that any such transfer shall not constitute a novation of this Agreement.
23. | MISCELLANEOUS. |
23.1. | Successors and Assigns. |
All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not, except that, subject to Section 10.2, the Company may not assign or otherwise transfer any of its rights or obligations hereunder or under the Notes without the prior written consent of each holder. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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23.2. | Payments Due on Non-Business Days. |
Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.6 that notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or Modified Make-Whole Amount, or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; provided that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
23.3. | Accounting Terms. |
All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with IFRS. Except as otherwise specifically provided herein, all computations made pursuant to this Agreement shall be made in accordance with IFRS, and all financial statements shall be prepared in accordance with IFRS. For purposes of determining compliance with financial covenants contained in this Agreement, neither the Company nor any Subsidiary shall measure any Debt at less than the then outstanding principal amount thereof (as otherwise permitted by International Accounting Standards Standard 39 or any similar accounting standard).
23.4. | Severability. |
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
23.5. | Construction, Etc. |
Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.
23.6. | Counterparts. |
This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
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23.7. | Governing Law. |
This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
23.8. | Jurisdiction and Process; Waiver of Jury Trial. |
(a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to the Financing Agreements. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
(b) The Company agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 23.8(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment.
(c) The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 23.8(a) by mailing a copy thereof by registered, certified, priority or express mail, postage prepaid, return receipt or delivery confirmation requested, or delivering a copy thereof in the manner for delivery of notices specified in Section 19 (other than by facsimile or electronic means), to c/o Enerflex Inc., 10815 Telge Road, Houston, Texas, USA, 77095, as its agent for the purpose of accepting service of any process in the United States. The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.
(d) Nothing in this Section 23.8 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
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(e) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
23.9. | Obligation to Make Payment in Canadian Dollars or U.S. Dollars. |
(a) Payment. Principal and interest on the Notes shall be payable in the Applicable Currency. Unless otherwise specified herein, all other amounts payable under this Agreement shall be payable in the Applicable Currency.
(b) Canadian Dollars. Any payment on account of an amount that is payable under the Financing Agreements in Canadian Dollars which is made to or for the account of any holder of Notes in any other currency, whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of the Company, shall constitute a discharge of the obligation of the Company under the Financing Agreements only to the extent of the amount of Canadian Dollars which such holder purchases or could purchase in the foreign exchange markets in New York, New York, with the amount of such other currency in accordance with normal banking procedures at the rate of exchange prevailing on the Business Day following receipt of the payment first referred to above. If the amount of Canadian Dollars so purchased or that could be purchased is less than the amount of Canadian Dollars originally due to such holder, the Company agrees to the fullest extent permitted by law, to indemnify and save harmless such holder from and against all loss or damage arising out of or as a result of such deficiency. This indemnity shall, to the fullest extent permitted by law, constitute an obligation separate and independent from the other obligations contained in the Financing Agreements, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such holder from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under the Financing Agreements or under any judgment or order.
(c) U.S. Dollars. Any payment on account of an amount that is payable under the Financing Agreements in U.S. Dollars which is made to or for the account of any holder of Notes in any other currency, whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of the Company, shall constitute a discharge of the obligation of the Company under the Financing Agreements only to the extent of the amount of U.S. Dollars which such holder purchases or could purchase in the foreign exchange markets in New York, New York, with the amount of such other currency in accordance with normal banking procedures at the rate of exchange prevailing on the Business Day following receipt of the payment first referred to above. If the amount of U.S. Dollars so purchased or that could be purchased is less than the amount of U.S. Dollars originally due to such holder, the Company agrees to the fullest extent permitted by law, to indemnify and save harmless such holder from and against all loss or damage arising out of or as a result of such deficiency. This indemnity shall, to the fullest extent permitted by law, constitute an obligation separate and independent from the other obligations contained in the Financing Agreements, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such holder from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under the Financing Agreements or under any judgment or order.
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23.10. | Interest. |
(a) In respect of any overdue amounts hereunder or under the Notes where no provision is made herein or therein for payment of interest thereon, the Company shall pay interest on such overdue amounts on demand, calculated from the date such unpaid amount is due until such unpaid amount is paid in full, at the Default Rate.
(b) In no event shall any interest or fee to be paid hereunder or under a Note exceed the maximum rate permitted by applicable law. In the event any such interest rate or fee exceeds such maximum rate, such rate shall be adjusted downward to the highest rate (expressed as a percentage per annum) or fee that the parties could validly have agreed to by contract on the date hereof under applicable law. It is further agreed that any excess actually received by a holder of a Note shall be credited against the principal of the Notes (or, if the principal shall have been or would thereby be paid in full, the remaining amount shall be credited or paid to the Company).
(c) All interest (including interest on overdue interest) payable by the Company hereunder and under the Notes shall accrue from day to day, computed as provided herein, and shall be payable after as well as before maturity, demand, default and judgment.
(d) For the purposes of this Agreement, whenever interest in respect of the Notes to be paid hereunder or under such Notes is to be calculated on the basis of a year that is not equal to 365 or 366 days, as applicable (a Non-Calendar Day Year), the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual numbers of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Non-Calendar Day Year.
(e) The theory of deemed reinvestment shall not apply to the computation of interest and no allowance, reduction or deduction shall be made for the deemed reinvestment of interest in respect of any payments. Calculation of interest shall be made using the nominal rate method, and not the effective rate method, of calculation.
(f) To the extent permitted by law, Section 6 of the Judgment Interest Act (Alberta) is hereby waived and shall not apply to this Agreement or the Notes.
23.11. | Determinations Involving Different Currencies. |
For purposes of establishing the outstanding principal amounts of the Notes in connection with (i) allocating any applicable partial prepayment of the Notes or (ii) determining whether the holders of the requisite percentage of the aggregate principal amount of the Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, have accepted any prepayment applicable herein, or have directed the taking of any action provided herein or therein to be taken upon the direction of the holders of a specified percentage of the aggregate outstanding principal amount of the Notes, the outstanding principal amount of any Note denominated in Canadian Dollars shall be converted to U.S. Dollars at a conversion rate of Cdn.1.00 = U.S.$0.78561.
* * * *
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If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.
Very truly yours, | ||
ENERFLEX LTD. | ||
By: | (signed) John Blair Goertzen | |
Name: John Blair Goertzen | ||
Title: President and Chief Executive Officer |
{Signatures of purchasers redacted}
Signature Page Note Purchase Agreement
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
{Schedule redacted}
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
2011 Note Purchase Agreement means that certain Note Purchase Agreement dated June 22, 2011 between the Company and the holders from time to time of the Companys 6.011% Cdn.$40,000,000 Senior Notes due June 22, 2021, as amended by the First Amendment dated as of May 11, 2015 and the Second Amendment dated as of June 9, 2017, as the same may be further amended, modified, supplemented or restated from time to time in accordance with the provisions thereof.
Additional Payments is defined in Section 8.3.
Affiliate means any person which, directly or indirectly, controls, is controlled by or is under common control with another person; and, for the purposes of this definition, control (including, with correlative meanings, the terms controlled by or under common control with) means the power to direct or cause the direction of the management and policies of any person, whether through the ownership of shares or by contract or otherwise. Unless the context otherwise clearly requires, any reference to an Affiliate is a reference to an Affiliate of the Company.
Anti-Corruption Laws is defined in Section 5.22.
Anti-Money Laundering Laws is defined in Section 5.22.
Applicable Currency means (a) with respect to any payment in respect of Notes denominated in Canadian Dollars, Canadian currency and (b) with respect to any payment in respect of Notes denominated in U.S. Dollars, United States currency.
Applicable Laws or applicable law means, in relation to any person, transaction or event:
(a) all applicable provisions of laws, statutes, rules (having the force of law) and regulations from time to time in effect of any Governmental Authority; and
(b) all Governmental Authorizations to which the person is a party or by which it or its property is bound or having application to the transaction or event.
Approved Securities means obligations maturing within one year from their date of purchase or other acquisition by the Company or a Subsidiary and which are, directly or indirectly (including through a money market fund):
(a) issued by the Government of Canada, the United States of America, the Commonwealth of Australia, the United Kingdom of Great Britain and Northern Ireland or an instrumentality or agency thereof and guaranteed fully as to principal, premium, if any, and interest by the Government of Canada, the United States of America, the Commonwealth of Australia or the United Kingdom of Great Britain and Northern Ireland;
(b) issued by a province of Canada or a state of the United States of America, or the Commonwealth of Australia or a region of the United Kingdom of Great Britain and Northern Ireland, or an instrumentality or agency thereof, which has a long term debt rating of at least A by S&P, A2 by Moodys, or A by DBRS; or
(c) term deposits, guaranteed investment certificates, certificates of deposit, bankers acceptances or bearer deposit notes, in each case, of any Canadian chartered bank or other Canadian financial institution or any bank or other financial institution incorporated under the laws of the United States of America, the Commonwealth of Australia, the United Kingdom of Great Britain and Northern Ireland or any state thereof which has a long term debt rating of at least A+ by S&P, A1 by Moodys, or A (high) by DBRS.
Asset Specific Non-Recourse Debt means any Debt in respect of any amounts borrowed, Purchase Money Obligations, obligations secured by a Lien existing on property owned subject to a Lien (whether or not the obligations secured thereby shall have been assumed) and guarantees, indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent obligations in respect of obligations of another person for indebtedness of that other person in respect of any amounts borrowed by them and, in each case, incurred to finance the creation, development, construction or acquisition of assets and any increases in or extensions, renewals or refundings of any such indebtedness, liabilities and obligations, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness, liabilities and obligations or any judgment in respect thereof is limited in all circumstances (other than in respect of false or misleading representations or warranties) to the assets created, developed, constructed or acquired in respect of which such Debt, liabilities and obligations has been incurred and to any receivables, inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with the assets created, developed, constructed or acquired (and, for certainty, shall include the shares or other ownership interests of or investments in a single purpose entity or a Non-Guarantor Subsidiary which holds only such assets and other rights and collateral arising from or connected therewith) and to which the lender has recourse.
Attributable Debt means, in respect of any lease (excluding any lease characterized as an operating lease under IFRS entered into in the ordinary course of business) entered into by a person or a Subsidiary thereof as lessee, the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with IFRS) of the lease payments of the lessee, including all rent and payments to be made by the lessee in connection with the return of the leased property, during the remaining term of the lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended) but excluding for certainty, (a) amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labour costs and similar charges and (b) amounts payable by a lessee in connection with the exercise of any end of term purchase option, early buy out option or any similar amounts payable at the election of the lessee.
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Bank Facilities means collectively from time to time, the facilities evidenced by (i) the amended and restated credit agreement dated as of June 30, 2014 between the Company and Enerflex Australasia Holdings Pty Ltd., The Toronto-Dominion Bank, The Bank of Nova Scotia and such other financial institutions as become parties thereto, as lenders, and The Toronto-Dominion Bank, as agent of such lenders, as amended by a first amending agreement dated as of June 25, 2015, a second amending agreement dated as of December 18, 2015, a third amending agreement dated as of March 29, 2017 and a fourth amending agreement dated as of November 14, 2017, and as the same may be further amended, modified, supplemented or restated from time to time in accordance with the provisions thereof or (ii) any replacement facilities that are put in place by the Company or any Subsidiary as the primary bank credit facility or facilities of the Company as a whole.
Blocked Person is defined in Section 5.22.
Business means the fabrication or supply of natural gas compression, oil and gas processing, refrigeration systems and electric power equipment, and related services to the global energy market.
Business Day means (a) for the purposes of Section 8.8 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, Toronto, Ontario or Calgary, Canada are required or authorized to be closed.
Canadian Dollars or Cdn.$ means lawful money of Canada.
Canadian Held Notes is defined in Section 5.14(d).
Capital Adequacy Requirements means Guideline A, dated April 2014, entitled Capital Adequacy Requirements (CAR), as applicable from time to time to any lender under the Bank Facilities, issued by the Office of the Superintendent of Financial Institutions Canada and all other guidelines or requirements relating to capital adequacy issued by the Office of the Superintendent of Financial Institutions or any other governmental agency or regulatory authority in Canada regulating or having jurisdiction with respect to any lender under the Bank Facilities, as amended, modified, supplemented, reissued or replaced from time to time.
Capital Lease means any lease which is required be classified and accounted for as a capital lease under IFRS.
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Change of Control means and shall be deemed to have occurred if and when:
(a) any person or persons acting jointly or in concert (within the meaning ascribed to such phrase in the Multi-Lateral Instrument 62-104 Take-Over Bids and Issuer Bids) shall beneficially own, directly or indirectly, Voting Shares in the capital of the Company which have or represent more than 50% of all of the votes entitled to be cast by shareholders for an election of the board of directors of the Company; or
(b) other than in the case of a Permitted Replacement, individuals who were elected as members of the board of directors of the Company by the most recent resolutions of the shareholders of the Company or who were appointed by a majority of the directors of the board of directors of the Company shall no longer constitute a majority of the board of directors of the Company at any time prior to the next following resolutions of the shareholders of the Company relating to the election of the same.
Change of Control Prepayment Acceptance Notice is defined in Section 8.4.
Change of Control Prepayment Notice is defined in Section 8.4.
Change in Tax Law is defined in Section 8.3.
Closing is defined in Section 3.
Code means the United States Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
Commodity Hedging Agreement means any agreement constituting an Eligible Financial Contract under the regulations issued under the Bankruptcy and Insolvency Act (Canada) for the making or taking of delivery of any commodity (including Petroleum Substances), any commodity swap agreement, floor, cap or collar agreement or commodity future or option or other similar agreements or arrangements, or any combination thereof, entered into by the Company or a Subsidiary Guarantor where the subject matter of the same is any commodity or the price, value or amount payable thereunder is dependent or based upon the price of any commodity or fluctuations in the price of any commodity.
Company means Enerflex Ltd., a federal Canadian corporation or any successor that becomes such in the manner prescribed in Section 10.2.
Company EBITDA means, in respect of any financial period for which it is being determined, the consolidated net income of the Company determined in accordance with IFRS for such period, plus (without duplication):
(a) Interest Expense, to the extent deducted in the calculation of net income;
(b) all amounts deducted in the calculation of net income in respect of the provision for income taxes (in accordance with IFRS);
(c) all amounts deducted in the calculation of net income in respect of non cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities;
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(d) all amounts deducted in the calculation of net income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges;
(e) to the extent deducted from net income, non-cash losses resulting from marking-to-market the outstanding Financial Instruments of the Company and its Subsidiaries for such period in accordance with IFRS,
less (in each case, on a consolidated basis), with respect to the Company and its Subsidiaries:
(f) earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of the Company and its Subsidiaries (on an unconsolidated basis), in each case, to the extent included in the calculation of net income;
(g) to the extent included in net income, non-cash gains resulting from marking-to-market the outstanding Financial Instruments of the Company and its Subsidiaries for such period in accordance with IFRS;
(h) all cash payments during such period relating to non-cash charges which were added back in determining Company EBITDA in any prior period; and
(i) for certainty, any net income from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances, and (i) in the event the Company or a Subsidiary acquires another entity during any such period, all measures will be calculated pro forma based on the actual results of the acquired entity as if it had been owned by the Company or such Subsidiary over the entire period and (ii) in the event the Company or its Subsidiary disposes of an entity during any such period, all measures will be calculated pro forma on the basis that such entity was disposed of at the beginning of the period.
Confidential Information is defined in Section 21.
Consolidated Net Tangible Assets means, as at any date of determination, all consolidated assets of the Company as shown in a consolidated balance sheet of the Company for such date, less the aggregate of the following amounts reflected upon such balance sheet:
(a) all goodwill, deferred assets, trademarks, copyrights and other similar intangible assets;
(b) to the extent not already deducted in computing such assets and without duplication, depreciation, depletion, amortization, reserves and any other account which reflects a decrease in the value of an asset or a periodic allocation of the cost of an asset; provided that no deduction shall be made under this subparagraph (b) to the extent that such account reflects a decrease in value or periodic allocation of the cost of any asset referred to in subparagraph (a) above;
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(c) minority interests in a person not directly or indirectly owned or held by the Company or one of its Subsidiaries;
(d) Non-Recourse Assets to the extent of the outstanding Asset Specific Non-Recourse Debt financing such assets; and
(e) investments in and advances to Subsidiaries of the Company which are not Subsidiary Guarantors or Material Subsidiaries,
all as determined in accordance with IFRS.
Controlled Entity means any of the Subsidiaries of the Company and any of their or the Companys respective controlled Affiliates. As used in this definition, controlled means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
Convertible Securities means convertible subordinated securities issued by the Company or a Subsidiary Guarantor which have all of the following characteristics:
(a) the obligations under, pursuant or relating to such securities and the indenture or agreement governing such securities shall be unsecured obligations of the Company or the applicable Subsidiary Guarantor, and no Subsidiary shall have provided a Subsidiary Guarantee or any Financial Assistance in respect of any of such obligations;
(b) an initial final maturity or due date in respect of repayment of principal, which is after the latest maturity date of any Note outstanding at the time such securities are created, incurred, assumed or guaranteed (the Outside Maturity Date);
(c) no scheduled or mandatory payments or repurchases of principal thereunder (other than acceleration following an event of default in regard thereto or payments which can be satisfied by the delivery of equity in the capital of the Company or the applicable Subsidiary Guarantor as contemplated in (g) below) prior to the Outside Maturity Date in effect at the time such security are issued;
(d) upon and during the continuance of any Event of Default or acceleration of the time for payment of any of the Notes, accrued interest, Make-Whole Amounts and all other amounts owing under this Agreement, (i) all amounts payable in respect of principal, premium (if any) or interest under such securities or notes are subordinate and junior in right of payment to all such Notes, accrued interest, Make-Whole Amounts and all other amounts owing under this Agreement to the holders of the Notes and (ii) no enforcement steps or proceedings may be commenced in respect of such securities;
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(e) upon any distribution of the assets of the Company or the applicable Subsidiary Guarantor on any dissolution, winding up, total liquidation or reorganization of such person (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company or the applicable Subsidiary Guarantor, or otherwise), all principal, accrued interest, Make-Whole Amounts and all other amounts owing under this Agreement shall first be paid in full in cash, or provisions made for such payment, before any payment by the Company or the applicable Subsidiary Guarantor is made on account of principal, premium (if any), interest or other obligations payable in regard to such securities;
(f) a Default, Event of Default, acceleration of the time for repayment of any all principal, accrued interest, Make-Whole Amounts and all other amounts owing under this Agreement or enforcement of the rights and remedies of the holders of the Notes hereunder or under any other Financing Agreements or document delivered pursuant thereto shall not:
(i) cause a default or event of default (with the passage of time or otherwise) under such securities or the indenture or agreement governing the same; or
(ii) cause or permit the obligations under, pursuant or relating to such securities to be due and payable prior to the stated maturity thereof;
(g) payments of principal due and payable under, pursuant or relating to such securities can be satisfied, at the option of the Company or the applicable Subsidiary Guarantor, by issuing and delivering equity in the capital of the Company or the applicable Subsidiary Guarantor in accordance with the indenture or agreement governing such securities; and
(h) payments of interest due and payable under, pursuant or relating to such securities can be satisfied, at the option of the Company or the applicable Subsidiary Guarantor, by payment of the proceeds of the issue and sale of equity in the capital of the Company or the applicable Subsidiary Guarantor resulting from a bid process whereby the trustee under the indenture or agreement governing such securities:
(i) accepts delivery from the Company or the applicable guarantor of such equity;
(ii) accepts bids with respect to, and consummate sales of, such equity, each as the Company or the applicable Subsidiary Guarantor shall direct in its absolute discretion; and
(iii) uses the proceeds received from such sale of equity to satisfy such interest,
where the acceptance of any such bid in accordance with (ii) above is conditional on the acceptance of sufficient bids to result in aggregate proceeds from such issue and sale of equity equalling the interest due on the applicable interest payment date.
Currency Hedging Agreement means any currency swap agreement, cross currency agreement, forward agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Company or a Subsidiary Guarantor where the subject matter of the same is currency exchange rates or the price, value or amount payable thereunder is dependent or based upon currency exchange rates or fluctuations in currency exchange rates as in effect from time to time.
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Current Financial Covenant Testing means, as at any date of determination, a calculation of compliance with the covenants contained in Section 10.11 using:
(a) the amounts of Net Funded Debt as at such date (after giving effect to the transaction or transactions that occasioned the requirement for such testing herein),
(b) the amounts of EBITDA and Interest Expense for the most recent period of four consecutive fiscal quarters that ended prior to the date of determination (or if the figures in respect thereof are not then available, the immediately preceding period of four consecutive fiscal quarters for which such figures are available), in any case taken as a single accounting period.
Debt means, with respect to any person (X), all obligations, liabilities and Debt of X which would, in accordance with IFRS, be classified upon a consolidated balance sheet of X as indebtedness for borrowed money of X and its Subsidiaries and, whether or not so classified, shall include (without duplication):
(a) indebtedness for borrowed money;
(b) obligations for the repayment of: (i) bankers acceptances (including payment and reimbursement obligations in respect thereof), or (ii) letters of credit and letters of guarantee supporting obligations which would otherwise constitute Debt within the meaning of this definition or indemnities issued in connection therewith;
(c) obligations with respect to the reimbursement of drawings under all other letters of credit and letters of guarantee;
(d) obligations under Guarantees, indemnities, assurances, legally binding comfort letters or other contingent obligations for the repayment of indebtedness or other obligations of any other person which would otherwise constitute Debt within the meaning of this definition and all other obligations incurred for the purpose of or having the effect of providing financial assistance to another person for the repayment of such indebtedness or such other Debt obligations, including, without limitation, endorsements of bills of exchange (other than for collection or deposit in the ordinary course of business);
(e) (i) all indebtedness representing the deferred purchase price of any property to the extent that such indebtedness is or remains unpaid after the expiry of the customary time period for payment (excluding current accounts payable to trade creditors in the ordinary course of business, so long as the same are not outstanding longer than is customary in Xs or the applicable Subsidiarys business), provided however that such time period shall in no event exceed 90 days, (ii) all obligations created or arising under any conditional sales agreement or other title retention agreement and (iii) obligations created or arising under any Capital Lease (to the extent of the amount required to be accounted for as a Capital Lease under IFRS);
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(f) all Attributable Debt other than in respect of (i) leases of office space or (ii) operating leases, in each case entered into in the ordinary course of business;
(g) all other long term obligations (including the current portion thereof) upon which interest charges are customarily paid prior to default;
(h) Prepaid Obligations; and
(i) all indebtedness of other persons secured by a Lien on any asset, whether or not such indebtedness is assumed thereby; provided that the amount of such indebtedness shall be the lesser of (i) the fair market value of such asset at such date of determination, and (ii) the amount of such indebtedness recorded as a liability in accordance with IFRS,
but shall exclude each of the following, determined (as required) in accordance with IFRS:
(j) mark to market amounts under Financial Instrument Obligations;
(k) accounts payable to trade creditors and accrued liabilities incurred in the ordinary course of business;
(l) current taxes payable and future taxes;
(m) dividends or other equity distributions payable; and
(n) accrued interest not yet due and payable,
provided that, unless otherwise expressly provided or the context otherwise requires, references herein to Debt shall be and shall be deemed to be references to Debt of the Company and its Subsidiaries.
Default means any event or condition which, with the giving of notice, lapse of time or upon a declaration or determination being made (or any combination thereof), would constitute an Event of Default.
Default Rate means (a) in respect of amounts in Canadian Dollars, that rate of interest that is the greater of (i) {Redacted}% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes denominated in Canadian Dollars, and (ii) {Redacted}% over the rate of interest publicly announced by The Toronto-Dominion Bank as its prime rate for determining the interest rate it will charge for Canadian Dollar loans made by it in Canada and (b) in respect of amounts in U.S. Dollars, that rate of interest that is the greater of (i) {Redacted}% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes denominated in U.S. Dollars, and (ii) {Redacted}% over the rate of interest publicly announced by Citibank N.A. in New York, New York as its base or prime rate.
Disclosure Documents is defined in Section 5.7.
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Distribution means:
(a) the declaration, payment or setting aside for payment of any dividend or other distribution on or in respect of any shares in the capital of the Company or any Subsidiary Guarantor which is not a Wholly-Owned Subsidiary (including any return of capital);
(b) the redemption, retraction, purchase, retirement or other acquisition, in whole or in part, of any shares in the capital of the Company or any Subsidiary Guarantor which is not a Wholly-Owned Subsidiary or any securities, instruments or contractual rights capable of being converted into, exchanged or exercised for shares in the capital thereof, including, without limitation, options, warrants, conversion or exchange privileges and similar rights;
(c) the making of any loan or advance or any other provision of credit or Financial Assistance by the Company or any Subsidiary Guarantor to any Related Party other than to the Company or a Subsidiary Guarantor;
(d) the payment of any principal, interest, fees or other amounts on or in respect of any loans, advances or other Debt owing at any time by the Company or any Subsidiary Guarantor to any Related Party, other than to the Company or a Subsidiary Guarantor; or
(e) (i) the payment of any amount, (ii) the sale, transfer, lease or other disposition of any property or assets, or (iii) any granting or creation of any rights or interests, at any time, by the Company or any Subsidiary Guarantor to or in favour of any Related Party, other than, in each case, to or in favour of the Company or a Subsidiary Guarantor,
and whether any of the foregoing is made, paid or satisfied in or for cash, property or any combination thereof.
EBITDA means, in respect of any financial period for which it is being determined:
(a) the Net Income for such period of the Company and the Subsidiary Guarantors (on an unconsolidated basis), plus (in each case, on an unconsolidated basis of the Company and the Subsidiary Guarantors and without duplication):
(i) Interest Expense, to the extent deducted in the calculation of Net Income;
(ii) all amounts deducted in the calculation of Net Income in respect of the provision for income taxes (in accordance with IFRS);
(iii) all amounts deducted in the calculation of Net Income in respect of non cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities;
(iv) all amounts deducted in the calculation of Net Income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges;
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(v) all cash distributions received in such period by the Company and the Subsidiary Guarantors from persons which are not Subsidiary Guarantors; and
(vi) to the extent deducted from Net Income, non-cash losses resulting from marking-to-market the outstanding Financial Instruments of the Company and the Subsidiary Guarantors for such period in accordance with IFRS,
less (in each case, on a consolidated basis) with respect to the Company and the Subsidiary Guarantors:
(vii) earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of the Company and the Subsidiary Guarantors (on an unconsolidated basis), in each case, to the extent included in the calculation of Net Income;
(viii) to the extent included in Net Income, non-cash gains resulting from marking-to-market the outstanding Financial Instruments of the Company and the Subsidiary Guarantors for such period in accordance with IFRS;
(ix) all cash payments during such period relating to non-cash charges which were added back in determining EBITDA in any prior period; and
(x) for certainty, any Net Income from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances,
and (i) in the event the Company or a Subsidiary Guarantor acquires another entity during any such period, all measures will be calculated pro forma based on the actual results of the acquired entity as if it had been owned by the Company or such Subsidiary Guarantor over the entire period and (ii) in the event the Company or a Subsidiary Guarantor disposes of an entity during any such period, all measures will be calculated pro forma on the basis that such entity was disposed of at the beginning of the period; plus
(b) the Non-Guarantor EBITDA for such period of each Non-Guarantor Subsidiary in respect of which the Company has obtained political risk insurance (1)(A) on terms and conditions substantially the same in scope as the terms and conditions contained in the insurance policy annexed hereto as Schedule C and, for certainty, covering loss in respect of each of expropriation, political violence and loss of use of assets due to political violence and (B) from an export credit agency or commercial insurer formed under the laws of an OECD Country with (at all times the Non-Guarantor EBITDA of such Non-Guarantor Subsidiary is being included in a determination of EBITDA) a Financial Strength Rating of A- or higher from A.M. Best (or such other policy issuer acceptable to the Required Holders, acting reasonably) or (2) on such other terms and conditions as agreed to by the Required Holders, in their sole discretion, such Non-Guarantor EBITDA to be up to a maximum aggregate amount of {Redacted}% of the Company EBITDA for such period.
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Notwithstanding the foregoing, any Subsidiary Guarantor formed under the laws of Thailand shall not be considered a Subsidiary Guarantor for purposes of calculating EBITDA for any period until such Subsidiary Guarantor has received the approval in principal from Governmental Authorities in Thailand required in connection with payments under the Subsidiary Guarantee of such Subsidiary Guarantor to any foreign beneficiary thereunder.
Environmental Laws means all Applicable Laws with respect to the environment or environmental or public health and safety matters contained in statutes, regulations, rules, ordinances, orders, judgments, Governmental Authorizations or policies, guidelines or directives having the force of law.
Equity Plan Hedging Agreement means any agreement constituting an Eligible Financial Contract under the regulations issued under the Bankruptcy and Insolvency Act (Canada) in connection with equity securities of the Company or a Subsidiary Guarantor, any equity securities plan hedging agreement, floor, cap or collar agreement or equity security plan future or option or other similar agreements or arrangement, or any combination thereof, entered into by the Company or a Subsidiary Guarantor where the subject matter of the same is any equity securities of the Company or a Subsidiary Guarantor or the price, value or amount payable thereunder is dependent or based upon the price of any equity securities of the Company or a Subsidiary Guarantor or fluctuations in the price of any such equity securities.
Equivalent Amount means, on any date, the equivalent amount in Canadian Dollars, United States Dollars, Australian Dollars, Pounds Sterling or Euros, as the case may be, after giving effect to a conversion of a specified amount of:
(a) United States Dollars to Canadian Dollars, Australian Dollars, Pounds Sterling or Euros;
(b) Canadian Dollars to United States Dollars, Australian Dollars, Pounds Sterling or Euros;
(c) Australian Dollars to United States Dollars, Canadian Dollars, Pounds Sterling or Euros;
(d) Pounds Sterling to United States Dollars, Canadian Dollars, Australian Dollars or Euros; or
(e) Euros to United States Dollars, Canadian Dollars, Australian Dollars or Pounds Sterling,
as the case may be, at the rate of exchange for Canadian interbank transactions established by the Bank of Canada and published at approximately 4:30 p.m. (Toronto time) on the Banking Day immediately preceding the day in question, or, if such rate is for any reason unavailable, at the spot rate quoted for wholesale transactions by The Toronto-Dominion Bank at approximately noon (Toronto time) on the day in question in accordance with its normal practice.
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ERISA means the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
ERISA Affiliate means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.
Event of Default is defined in Section 11.
Financial Assistance means, with respect to any person and without duplication, any loan, Guarantee, indemnity, assurance, acceptance, extension of credit, loan purchase, share purchase, equity or capital contribution, investment or other form of direct or indirect financial assistance or support of any other person or any obligation (contingent or otherwise) intended to enable another person to incur or pay any Debt or to comply with agreements relating thereto or otherwise to assure or protect creditors of the other person against loss in respect of Debt of the other person and includes any Guarantee of or indemnity in respect of the Debt of the other person and any absolute or contingent obligation to (directly or indirectly):
(a) advance or supply funds for the payment or purchase of any Debt of any other person;
(b) purchase, sell or lease (as lessee or lessor) any property, assets, goods, services, materials or supplies primarily for the purpose of enabling any person to make payment of Debt or to assure the holder thereof against loss;
(c) guarantee, indemnify, hold harmless or otherwise become liable to any creditor of any other person for, from, against or in respect of any losses, liabilities or damages in respect of Debt;
(d) make a payment to another for goods, property or services regardless of the non-delivery or non-furnishing thereof; or
(e) make an advance, loan or other extension of credit to or to make any subscription for equity, equity or capital contribution, or investment in or to maintain the capital, working capital, solvency or general financial condition of another person for the purpose of enabling any person to make payment on Debt.
The amount of any Financial Assistance is the amount of any loan or direct or indirect financial assistance or support, without duplication, given, or all Debt of the obligor to which the Financial Assistance relates, unless the Financial Assistance is limited to a determinable amount, in which case the amount of the Financial Assistance is such determinable amount.
Financial Instrument means any Equity Plan Hedging Agreement, Interest Hedging Agreement, Currency Hedging Agreement or Commodity Hedging Agreement.
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Financial Instrument Obligations means obligations arising under Financial Instruments entered into by the Company or a Subsidiary Guarantor to the extent of the net amount due or accruing due by the Company or a Subsidiary Guarantor.
Financing Agreements mean this Agreement, the Notes, any Subsidiary Guarantee, and all certificates, instruments and other documents executed and delivered or to be executed and delivered by the Company or any Subsidiary to or for the benefit of the holders of the Notes (including, without limitation, any security granted to or for the benefit of the holders of Notes pursuant to Section 10.5), in each case as amended, restated or replaced from time to time, and Financing Agreement means any of them.
Forms is defined in Section 13.
Governmental Authority means any federal, provincial, state, regional, municipal or local government or any department, agency, board, tribunal or authority thereof or other political subdivision thereof and any entity or person exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government or the operation thereof.
Governmental Authorization means an authorization, order, permit, approval, grant, license, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree or demand or the like issued or granted by law or by rule or regulation of any Governmental Authority.
Guarantee means any guarantee, undertaking to assume, endorse, contingently agree to purchase or to provide funds for the payment of, or otherwise become liable in respect of, any obligation of any person; provided that the amount of each Guarantee shall be deemed to be the amount of the obligation guaranteed thereby, unless the Guarantee is limited to a determinable amount in which case the amount of such Guarantee shall be deemed to be the lesser of such determinable amount or the amount of such obligation. For greater certainty, nothing contained in this Agreement shall restrict the ability of the Company or any Subsidiary to provide performance guarantees not related to or guaranteeing Debt.
Hazardous Materials means any substance, product, liquid, waste, pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid matter, organic or inorganic matter, fuel, micro-organism, ray, odour, radiation, energy, vector, plasma, constituent, material or any combination thereof which (a) is regulated or prohibited under any Environmental Law or (b) is hazardous, hazardous waste, toxic, a pollutant, a deleterious substance, a contaminant or a source of pollution or contamination under any Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
Hedging Affiliate means any Affiliate of a lender under the Principal Debt Facility which enters into a Financial Instrument.
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holder means, with respect to any Note the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 15.1.
IFRS means International Financial Reporting Standards, as published by the International Accounting Standards Board (IASB).
Imposed Taxes is defined in Section 5.14(b).
Initial Subsidiary Guarantors is defined in Section 4.2.
Intellectual Property means, collectively, patents, patents pending, copyrights, proprietary processes or programs, industrial designs, trademarks, trademark applications, trade names and other intellectual property of every nature and kind.
Interest Coverage Ratio means, as at a Quarter End, the ratio of (a) EBITDA for the 12 months ending at such Quarter End to (b) Interest Expense during the same period.
Interest Expense means, for any period, without duplication, interest expense of the Company determined on a consolidated basis in accordance with IFRS as the same would be set forth or reflected in a consolidated statement of income of the Company and, in any event and without limitation, shall include:
(a) all interest accrued or payable in respect of such period, including capitalized interest;
(b) all fees (including standby, commitment and stamping fees and fees payable in respect of letters of credit and letters of guarantee supporting obligations which constitute Debt) accrued or payable in respect of such period and which relate to any indebtedness for borrowed money or credit agreement, prorated (as required) over such period;
(c) any difference between the face amount and the discount proceeds of any bankers acceptances, commercial paper and other obligations of the Company or any Subsidiary issued at a discount, prorated (as required) over such period; and
(d) all net amounts charged or credited to interest expense under any Interest Hedging Agreements in respect of such period,
but excluding (i) any interest expense of Non-Guarantor Subsidiaries in respect of Non-Recourse Debt, which, if such Non-Guarantor Subsidiaries were Subsidiary Guarantors, would constitute Interest Expense, and (ii) interest expense relating to any Capital Lease which but for the adoption of International Financial Reporting Standards would have been classified as operating leases under IFRS in effect as of December 31, 2010.
Interest Hedging Agreement means any interest swap agreement, forward rate agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or arrangement, or any combination thereof, entered into by the Company where the subject matter of the same is interest rates or the price, value or amount payable thereunder is dependent or based upon the interest rates or fluctuations in interest rates in effect from time to time (but, for certainty, shall exclude conventional floating rate debt).
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Institutional Accredited Investor shall mean any commercial, investment or merchant bank, trust company, insurance company, finance company, mutual fund, registered money or asset manager, savings and loan association, credit union, registered investment advisor, pension fund, investment company with assets in excess of Cdn.$5,000,000, licensed broker or dealer, or qualified institutional buyer (as such term is defined under Rule 144A promulgated under the Securities Act, or any successor law, rule or regulation) or any other Person, in each case that is also an institutional accredited investor (as such term is defined under Regulation D promulgated under the Securities Act, or any successor law, rule or regulation).
Institutional Investor means (a) any Purchaser of a Note while such Person remains a holder of such Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 2% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.
Investment means (a) any purchase or other acquisition of shares or other securities (other than Approved Securities) of any person, (b) any loan or advance to or for the benefit of any person, or (c) any capital contribution to any other person.
Lien means mortgages, charges, pledges, hypothecs, assignments by way of security, conditional sales or other title retentions, security created under the Bank Act (Canada), liens, encumbrances, security interests or other interests in property, howsoever created or arising, whether fixed or floating, perfected or not, which secure payment or performance of an obligation and, including, in any event:
(a) deposits or transfers of cash, marketable securities or other financial assets under any agreement or arrangement whereby such cash, securities or assets may be withdrawn, returned or transferred only upon fulfilment of any condition as to the discharge of any other Debt or other obligation to any creditor;
(b) (i) rights of set-off or (ii) any other right of or arrangement of any kind with any creditor, which in any case are made, created or entered into, as the case may be, for the purpose of or having the effect (directly or indirectly) of (A) securing Debt, (B) preferring some holders of Debt over other holders of Debt or (C) having the claims of any creditor be satisfied prior to the claims of other creditors with or from the proceeds of any properties, assets or revenues of any kind now owned or later acquired (other than, with respect to (C) only, rights of set-off granted or arising in the ordinary course of business);
(c) the rights of lessors under Capital Leases and any other lease financing, excluding, for greater certainty, operating leases; and
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(d) absolute assignments of accounts receivable.
Make-Whole Amount is defined in Section 8.8.
Material means material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole.
Material Acquisition means an acquisition by the Company or a Subsidiary Guarantor of assets or stock of another person in a single transaction or series of transactions with a value that is greater than {Redacted}% of Consolidated Net Tangible Assets (calculated prior to completion of such acquisition).
Material Adverse Change means any event, circumstance, occurrence or change which results in, or which would reasonably be expected to result in, a Material Adverse Effect.
Material Adverse Effect means a material adverse effect on:
(a) the financial condition of the Company and its Subsidiaries on a consolidated basis and taken as a whole;
(b) the ability of the Company or any of the Subsidiary Guarantors to observe or perform its obligations under the Financing Agreements to which it is a party or the validity or enforceability of such Financing Agreements or any material provision thereof; or
(c) the property, business or operations of the Company and its Subsidiaries on a consolidated basis and taken as a whole.
Material Subsidiary means, in each case, calculated as at each Quarter End for the previous 12 months, any Subsidiary which, determined on an unconsolidated basis (a) has assets greater than {Redacted}% of the consolidated assets of the Company or (b) has earned revenues greater than {Redacted}% of the consolidated revenues of the Company.
Memorandum is defined in Section 5.7.
Modified Make-Whole Amount is defined in Section 8.8.
Multiemployer Plan means a multiemployer plan (as such term is defined in section 4001(a)(3) of ERISA) to which contributions are or, within the preceding five years have been, made or required to be made by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.
NAIC means the National Association of Insurance Commissioners or any successor thereto.
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Net Funded Debt means all obligations, liabilities and indebtedness of Company, on a consolidated basis which would, in accordance with IFRS, be classified upon a consolidated balance sheet of Company as indebtedness for borrowed money and, whether or not so classified, shall include (without duplication):
(a) indebtedness for borrowed money;
(b) obligations for the repayment of: (i) bankers acceptances (including payment and reimbursement obligations in respect thereof), or (ii) letters of credit and letters of guarantee supporting obligations which would otherwise constitute Net Funded Debt within the meaning of this definition or indemnities issued in connection therewith;
(c) obligations with respect to the reimbursement of drawings under all other letters of credit and letters of guarantee;
(d) obligations under Guarantees, indemnities, assurances, legally binding comfort letters, the face value of financial letters of credit or other contingent obligations for the repayment of indebtedness or other obligations of any other person which would otherwise constitute Net Funded Debt within the meaning of this definition and all other obligations incurred for the purpose of or having the effect of providing financial assistance to another person for the repayment of such indebtedness or such other Debt obligations, including, without limitation, endorsements of bills of exchange (other than for collection or deposit in the ordinary course of business);
(e) (i) all indebtedness representing the deferred purchase price of any property to the extent that such indebtedness is or remains unpaid after the expiry of the customary time period for payment (excluding current accounts payable to trade creditors in the ordinary course of business, so long as the same are not outstanding longer than is customary in the Companys or the applicable Subsidiarys business), provided however that such time period shall in no event exceed 90 days, (ii) all obligations created or arising under any conditional sales agreement or other title retention agreement and (iii) obligations created or arising under any Capital Lease (to the extent of the amount required to be accounted for as a Capital Lease under IFRS) except for those obligations relating to the Capital Leases that were or, in the case of leases entered into after June 1, 2011, would have been, characterized as operating leases under IFRS immediately prior to the adoption of International Financial Report Standards;
(f) all other long term obligations (including the current portion thereof) upon which interest charges are customarily paid prior to default; and
(g) Prepaid Obligations,
less, in each case, unencumbered cash and shall exclude each of the following, determined (as required) in accordance with IFRS:
(h) Non-Recourse Debt of Subsidiaries which are not Subsidiary Guarantors;
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(i) Convertible Securities issued by the Company or a Subsidiary Guarantor;
(j) letters of credit or letters of guarantee which are not direct credit substitutes within the meaning of the Capital Adequacy Requirements;
(k) Financial Instrument Obligations;
(l) accounts payable to trade creditors and accrued liabilities incurred in the ordinary course of business;
(m) current taxes payable and future taxes;
(n) dividends or other equity distributions payable; and
(o) accrued interest not yet due and payable.
Net Funded Debt to EBITDA Ratio means, as at a Quarter End, the ratio of (a) Net Funded Debt as at such Quarter End to (b) EBITDA for the 12 months ending at such Quarter End.
Net Income means, in respect of any period for which it is being determined, the net income of the Company and the Subsidiary Guarantors determined on an unconsolidated basis in accordance with IFRS.
Non-Canadian Held Notes is defined in Section 5.14(d).
Non-Guarantor EBITDA means, in respect of any period for which it is being determined, in respect of any Non-Guarantor Subsidiary, on an unconsolidated basis, the net income of such Non-Guarantor Subsidiary on an unconsolidated basis in accordance with IFRS, for such period, plus (in each case, on an unconsolidated basis of such Non-Guarantor Subsidiary and without duplication):
(a) interest expense of such Non-Guarantor Subsidiary determined on an unconsolidated basis in accordance with IFRS as the same would be set forth or reflected in an unconsolidated statement of income of such Non-Guarantor Subsidiary, to the extent deducted in the calculation of net income;
(b) all amounts deducted in the calculation of net income in respect of the provision for income taxes (in accordance with IFRS);
(c) all amounts deducted in the calculation of net income in respect of non cash items, including, without limitation, depletion, depreciation, amortization and future income tax liabilities; and
(d) all amounts deducted in the calculation of net income in respect of equity loss and extraordinary and non-recurring losses and any non-cash impairment charges,
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less (in each case, on an unconsolidated basis), with respect to such Non-Guarantor Subsidiary:
(e) earnings attributable to minority interests and extraordinary and non-recurring earnings and gains of such Non-Guarantor Subsidiary (on an unconsolidated basis), in each case, to the extent included in the calculation of net income;
(f) all cash payments during such period relating to non-cash charges which were added back in determining Non-Guarantor EBITDA in any prior period; and
(g) for certainty, any net income from or attributable to Non-Recourse Assets to which income (or proceeds thereof) the lenders or other creditors holding Non-Recourse Debt may have recourse under any circumstances.
Non-Guarantor Subsidiary means a Subsidiary that (a) is not a Subsidiary Guarantor or (b) has been designated, in compliance with the provisions hereof, as a Non-Guarantor Subsidiary.
Non-Recourse Assets means the assets created, developed, constructed or acquired with or in respect of which Non-Recourse Debt has been incurred and any and all receivables, inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with the assets created, developed, constructed or acquired (and, for certainty, shall include the shares or other ownership interests of or investments in a single purpose entity or a Non-Guarantor Subsidiary which holds only such assets and other rights and collateral arising from or connected therewith) and to which recourse of the lender of such Non-Recourse Debt (or any agent, trustee, receiver or other person acting on behalf of such lender) in respect of such indebtedness is limited in all circumstances (other than in respect of false or misleading representations or warranties).
Non-Recourse Debt means any indebtedness in respect of any amounts borrowed, Purchase Money Obligations, obligations secured by a Lien existing on property owned subject to a Lien (whether or not the obligations secured thereby shall have been assumed) and guarantees, indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent obligations in respect of obligations of another person for indebtedness of that other person in respect of any amounts borrowed by them and any increases in or extensions, renewals or refundings of any such indebtedness, liabilities and obligations, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the lender in respect of such indebtedness, liabilities and obligations or any judgment in respect thereof is limited in all circumstances (other than in respect of false or misleading representations or warranties) to persons other than the Company or any Subsidiary Guarantor.
Non-U.S. Plan means any plan, fund or other similar program that (a) is established or maintained outside the United States of America by the Company or any Subsidiary primarily for the benefit of employees of the Company or one or more Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and (b) is not subject to ERISA or the Code.
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Notes is defined in Section 1.
OFAC means the Office of Foreign Assets Control of the United States Department of the Treasury.
OFAC Sanctions Program means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.ustreas.gov/offices/enforcement/ofac/programs/.
Officers Certificate means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.
Payment is defined in Section 5.14(b).
PBGC means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
Permitted Contest means action taken by or on behalf of the Company or a Subsidiary in good faith by appropriate proceedings diligently pursued to contest a Tax, claim or Lien, provided that the person to which the Tax, claim or Lien being contested is relevant (and, in the case of a Subsidiary of the Company, the Company on a consolidated basis) has established reasonable reserves therefor if and to the extent required by IFRS.
Permitted Disposition means, in respect of the Company, any of the Subsidiary Guarantors or any of the Material Subsidiaries, any of the following:
(a) a sale or disposition by the Company, such Subsidiary Guarantor or such Material Subsidiary of inventory (including, for certainty, property produced for sale) in the ordinary course of business;
(b) a sale or disposition by the Company, such Subsidiary Guarantor or such Material Subsidiary in the ordinary course of business and in accordance with sound industry practice of tangible personal property that is obsolete, no longer useful for its intended purpose or being replaced in the ordinary course of business;
(c) a sale or disposition of any property or assets by (i) the Company to a Subsidiary Guarantor, (ii) a Subsidiary Guarantor to the Company or another Subsidiary Guarantor or (iii) a Material Subsidiary that is not also a Subsidiary Guarantor to the Company, a Subsidiary Guarantor or another Material Subsidiary; and
(d) a sale or disposition by the Company, a Subsidiary Guarantor or any Material Subsidiary of its interest in machinery, equipment or other tangible personal property for which Purchase Money Obligations were incurred and (i) such Purchase Money Obligations are fully repaid concurrently with such sale or disposition and (ii) such sale or disposition is made in the ordinary course of business at fair market value to a person at arms length from the Company and its Subsidiaries.
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Permitted Hedging means Financial Instruments entered into by the Company or a Subsidiary Guarantor which are entered into in the ordinary course of business and for hedging purposes and not for speculative purposes; provided that, such Financial Instruments are consistent with the Companys board-approved hedging policy.
Permitted Liens means as at any particular time any of the following encumbrances on the assets, property or undertakings or any part of the assets, property or undertakings of the Company, any Subsidiary Guarantor or any Material Subsidiary:
(a) liens for taxes, assessments or governmental charges not at the time due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest;
(b) deemed liens and trusts arising by operation of law or pledges or deposits in connection with workers compensation, employment insurance and other social security legislation, in each case, which secure obligations not at the time due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest;
(c) liens under or pursuant to any judgment or award rendered, or claim filed, against the Company, a Subsidiary Guarantor or a Material Subsidiary, the time for the appeal or petition for rehearing of which shall not have expired, or which the Company, such Subsidiary Guarantor or Material Subsidiary (as applicable) shall be contesting at the time by a Permitted Contest or which the Company, such Subsidiary Guarantor or Material Subsidiary (as applicable) shall in good faith be prosecuting an appeal or proceeding for review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured;
(d) undetermined or inchoate liens, charges, privileges, statutory liens, adverse claims or encumbrances of any nature whatsoever arising or potentially arising under statutory provisions incidental to construction or current operations which have not at such time been filed pursuant to law against the Company, a Subsidiary Guarantor or a Material Subsidiary or which relate to obligations not due or delinquent or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest;
(e) easements, rights of way, servitudes, usufructs or other similar rights in land (including, without in any way limiting the generality of the foregoing, rights of way and servitudes for railways, sewers, drains, gas and oil and other pipelines, gas and water mains, electric light and power and telecommunication, telephone or telegraph or cable television conduits, poles, wires and cables) granted to or reserved or taken by other persons which individually or in the aggregate do not materially impair its use in the operation of the business of the Company and its Subsidiaries, taken as a whole;
(f) the rights reserved to or vested in Governmental Authorities by statutory provisions or by the terms of leases, licenses, franchises, grants or permits, which affect any land, to terminate the leases, licenses, franchises, grants or permits or to require annual or other periodic payments as a condition of the continuance thereof;
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(g) liens or covenants restricting or prohibiting access to or from lands abutting on controlled access highways or covenants affecting the use to which lands may be put; provided, however, such liens or covenants do not materially impair the use of the lands in the operations of the Company, a Subsidiary Guarantor or a Material Subsidiary;
(h) any carriers, warehousemans, builders, mechanics, garagemans, labourers, employees or materialmans lien or other similar lien arising in the ordinary course of business or out of the construction or improvement of any land or arising out of the furnishing of materials or supplies, provided that such lien secures monies not at the time overdue, or, if due or delinquent, the validity of which is being contested at the time by a Permitted Contest;
(i) in respect of any land, any defects or irregularities in the title to such land which are of a minor nature and which, in the aggregate, will not materially impair the use of such land for the purposes for which such land is held;
(j) security given by the Company, a Subsidiary Guarantor or a Material Subsidiary to a public utility or any municipality or governmental or other public authority when required by such utility or municipality or other authority in connection with the operations of the Company, a Subsidiary Guarantor or a Material Subsidiary (as applicable), all in the ordinary course of its business which individually or in the aggregate do not materially impair its use in the operation of the business of the Company and its Subsidiaries, taken as a whole;
(k) the reservation in any original grants from the Crown of any land or interests therein and statutory exceptions and reservations to title and reservations of mineral rights in any grants from the Crown or from any other predecessors in title;
(l) Liens in favour of the holders of the Notes;
(m) any operating lease entered into in the ordinary course of business;
(n) pledges of cash or Approved Securities and bankers liens, rights of set off and other similar liens existing solely with respect to such cash and Approved Securities on deposit in one or more accounts maintained by the Company, any of the Subsidiary Guarantors or any of the Material Subsidiaries, in each case, granted in the ordinary course of business in favour of a lender or lenders under the Principal Debt Facility, with which such accounts are maintained, securing amounts owing to such lender with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements or securing Permitted Hedging;
(o) Liens securing Non-Recourse Debt incurred by Material Subsidiaries which are not Subsidiary Guarantors; provided that the amount of such Non-Recourse Debt does not, in the aggregate at any time, exceed {Redacted}% of Consolidated Net Tangible Assets;
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(p) landlords liens or any other rights of distress reserved in or exercisable under any lease of real property for rent and for compliance with the terms of such lease; provided that such lien does not attach generally to all or substantially all of the undertaking, assets and property of the Company, any Subsidiary Guarantor or any Material Subsidiary;
(q) liens or deposits to secure performance of (i) bids, tenders, contracts (other than contracts for the payment of money), (ii) statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business or (iii) leases of real property entered into in the ordinary course of business, in each case, to which the Company, a Subsidiary Guarantor or a Material Subsidiary is a party;
(r) Liens resulting from the deposit of cash or Approved Securities or Liens on other assets as security when the Company, a Subsidiary Guarantor or a Material Subsidiary is required by a Governmental Authority or by normal business practice to provide such deposits or security in connection with contracts, licenses or tenders or similar matters in the ordinary course of business and for the purpose of carrying on the same, or to secure workers compensation, surety or appeal bonds or to secure costs of litigation when required by Applicable Law;
(s) rights and interests created by notice by any Department of Highways or similar authorities with respect to proposed highways and which do not materially impair the operation of the business of the Company, a Subsidiary Guarantor or a Material Subsidiary;
(t) lis pendens that may be registered against any real property or interest therein of the Company, a Subsidiary Guarantor or a Material Subsidiary in respect of any action or proceeding against the Company, such Subsidiary Guarantor or such Material Subsidiary or in which it is a defendant but with respect to which action or proceeding no judgment, award or attachment against the Company, such Subsidiary Guarantor or such Material Subsidiary has been granted or made and which the Company, such Subsidiary Guarantor or such Material Subsidiary is defending in good faith;
(u) Liens in favour of the lenders or the agent on behalf of the lenders under the credit agreement described in item (i) under the definition of Bank Facilities, but only to the extent they secure the cash collateral provisions set out therein; and
(v) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Lien referred to in the preceding subparagraphs (a) to (u) inclusive of this definition, so long as any such extension, renewal or replacement of such Lien is limited to all or any part of the same property that secured the Lien extended, renewed or replaced (plus improvements on such property) and the Debt or obligation secured thereby is not increased,
provided that, without affecting the character or status of any of the above described Liens as being permitted hereunder, nothing in this definition shall in and of itself cause the Notes or the other amounts owing hereunder to be subordinated in priority of payment to any such Permitted Liens or cause any Liens in favour of the holder of the Notes to rank subordinate to any such Permitted Liens.
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Permitted Replacement means the replacement of those directors who have died or have been found to be of unsound mind by a court of competent jurisdiction.
Person means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.
Petroleum Substances means crude oil, crude bitumen, synthetic crude oil, petroleum, natural gas, natural gas liquids, related hydrocarbons and any and all other substances, whether liquid, solid or gaseous, whether hydrocarbons or not, produced or producible in association with any of the foregoing, including hydrogen sulphide and sulphur.
Plan means an employee benefit plan (as defined in section 3(3) of ERISA, but not including any Multiemployer Plan) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.
Prepaid Obligations means take or pay, forward sale, prepaid or similar liabilities of a person whereby such person is obligated to settle, at some future date, an obligation in respect of Petroleum Substances, whether by deliveries (accelerated or otherwise) of Petroleum Substances, the payment of money or otherwise, including the transfer of any Petroleum Substances, whether in place or when produced, for a period of time until, or of an amount such that, the lender or purchaser will realize therefrom a specified amount of money (however determined, including by reference to interest rates or other factors which may not be fixed) or a specified amount of such products or any interest in property of the character commonly referred to as a production payment and all such obligations for which such person is liable without having received and retained a payment therefor or having assumed such obligation.
Principal Debt Facility shall mean (i) the Bank Facilities, (ii) the 2011 Note Purchase Agreement and (iii) each other credit or debt facility provided by a bank or other financial institution to the Company or any Subsidiary with an aggregate principal commitment (whether used or available) of not less than Cdn.${Redacted} (or its equivalent as of the date of any determination in the relevant currency of payment), together with any amendment, refinancing, extension, renewal or replacement of any such credit facility provided that the aggregate commitment is not less than Cdn.${Redacted} (or its equivalent as of any date of determination, in the relevant currency of payment).
Priority Debt means, without duplication, the sum of:
(a) Purchase Money Obligations,
(b) obligations created or arising under Capital Leases,
(c) all Debt of the Company, the Subsidiary Guarantors and the Material Subsidiaries secured by any Lien other than a Permitted Lien, and
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(d) all Debt of any Subsidiary, excluding Qualified Subsidiary Debt.
property or properties means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
PTE is defined in Section 6.2.
Purchase Money Obligation means any monetary obligation created or assumed as part of the purchase price of real or personal property (including a lease of such property), whether or not secured, any extensions, renewals or refundings of any such obligation, provided that the principal amount of such obligation outstanding on the date of such extension, renewal or refunding is not increased and further provided that any security given in respect of such obligation shall not extend to any property other than the property acquired in connection with which such obligation was created or assumed and fixed improvements, if any, erected or constructed thereon and the proceeds thereof.
Purchaser is defined in the first paragraph of this Agreement.
Qualified Institutional Buyer means any Person who is a qualified institutional buyer within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.
Quarter End means March 31, June 30, September 30 and December 31 in each year.
Qualified Subsidiary Debt means, without duplication:
(a) unsecured Debt of any Subsidiary Guarantor;
(b) unsecured Debt of a Subsidiary owing to the Company, or a Subsidiary Guarantor.
Rejection Notice is defined in Section 8.3.
Related Fund means, with respect to any holder of any Note, any fund or entity that (a) invests in securities or bank loans, and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.
Related Party means any person which is any one or more of the following:
(a) an Affiliate of the Company or any Subsidiary;
(b) a unitholder, shareholder or partner of the Company or any Subsidiary which, together with all Affiliates of such person, owns or controls, directly or indirectly, more than 10% of the units, shares, capital or other ownership interests (however designated) of the Company or any Subsidiary, or an Affiliate of any such unitholder, shareholder or partner;
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(c) an officer, director or trustee of any of the foregoing; and
(d) a person which is not at arms length from the Company and its Subsidiaries.
Required Holders means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
Required Permits means all Governmental Authorizations which are necessary at any given time for the Company, each of the Subsidiary Guarantors and each of the Material Subsidiaries to own and operate its property, assets, rights and interests or to carry on its business and affairs.
Responsible Officer means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
Sanctions Laws is defined in Section 5.22.
Securities Act means the United States Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
Senior Financial Officer means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.
Series A Notes is defined in Section 1.
Series B Notes is defined in Section 1.
Series C Notes is defined in Section 1.
Series D Notes is defined in Section 1.
Subordinating Person is defined in Section 9.7.
Subordination Agreement means a subordination agreement by the Company and each Subsidiary Guarantor and Material Subsidiary as required by Section 9.7 in favour of the holders of Notes, which shall be satisfactory in form and substance to the holders of Notes, as amended or modified or restated or supplemented from time to time.
Subsidiary means, with respect to any person (X):
(a) any corporation of which at least a majority of the outstanding shares having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time shares of any other class or classes of such corporation might have voting power by reason of the happening of any contingency, unless the contingency has occurred and then only for as long as it continues) is at the time directly, indirectly or beneficially owned or controlled by X or one or more of its Subsidiaries, or X and one or more of its Subsidiaries;
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(b) any partnership of which, at the time, X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries: (i) directly, indirectly or beneficially own or control more than 50% of the income, capital, beneficial or ownership interests (however designated) thereof; and (ii) is a general partner, in the case of limited partnerships, or is a partner or has authority to bind the partnership, in all other cases; or
(c) any other person of which at least a majority of the income, capital, beneficial or ownership interests (however designated) are at the time directly, indirectly or beneficially owned or controlled by X, or one or more of its Subsidiaries, or X and one or more of its Subsidiaries,
provided that, unless otherwise expressly provided or the context otherwise requires, references herein to Subsidiary or Subsidiaries shall be and shall be deemed to be references to Subsidiaries of the Company.
Subsidiary Guarantee means a guarantee by each Subsidiary of the Company that becomes a party thereto pursuant to this Agreement or otherwise, guaranteeing the obligations of the Company under the Financing Agreements to each holder of a Note, which shall be satisfactory in form and substance to the holders of Notes, as amended, restated or replaced from time to time.
Subsidiary Guarantor means any Subsidiary that has executed and delivered a Subsidiary Guarantee and in respect of which the holders of Notes have received a favourable legal opinion of counsel to the Company as to the due authorization, execution, delivery, legality, validity and enforceability of its obligations to the holders of Notes under the Subsidiary Guarantee, and that such obligations do not violate or conflict with any law, constating document or agreement to which it is a party or by which its assets are bound, nor violate any restrictions, if any, governing financial assistance (or similar restrictions in the applicable jurisdiction) and has not ceased to be a Subsidiary Guarantor pursuant to Section 9.6.
Subsidiary Stock means, with respect to any Person, the stock or other equity interests (or any options or warrants to purchase stock or other Securities exchangeable for or convertible into stock or other equity interests) of any Subsidiary of such Person.
SVO means the Securities Valuation Office of the NAIC or any successor to such Office.
Taxes means all taxes, levies, imposts, stamp taxes, duties, fees, deductions, withholdings, charges, compulsory loans or restrictions or conditions resulting in a charge which are imposed, levied, collected, withheld or assessed by any country or political subdivision or taxing authority thereof now or at any time in the future, together with interest thereon and penalties, charges or other amounts with respect thereto, if any, and Tax and Taxation shall be construed accordingly.
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Tax Act means the Income Tax Act (Canada), as amended or substituted from time to time, including the Regulations thereunder.
Tax Prepayment Notice is defined in Section 8.3.
Taxing Jurisdiction is defined in Section 13.
Transfer means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, Subsidiary Stock.
U.S. Dollars or U.S.$ means lawful money of the United States of America.
U.S. Economic Sanctions Laws means those laws, executive orders, enabling legislation or regulations administered and enforced by the United States pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime, including the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC Sanctions Program.
USA Patriot Act means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
Voting Shares means capital stock of any class of any corporation which carries voting rights to elect the board of directors thereof under any circumstances, provided that, for purposes hereof, shares which carry the right to so vote conditionally upon the happening of an event shall not be considered Voting Shares until the occurrence of such event.
Wholly-Owned Subsidiary means, with respect to any person (X):
(a) a corporation, all of the issued and outstanding shares in the capital of which are beneficially held by:
(i) X;
(ii) X and one or more corporations, all of the issued and outstanding shares in the capital of which are held by X;
(iii) two or more corporations, all of the issued and outstanding shares in the capital of which are held by X;
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(b) a corporation which is a Wholly-Owned Subsidiary of a corporation that is a Wholly-Owned Subsidiary of X; or
(c) a partnership, all of the partners of which are X and/or Wholly-Owned Subsidiaries of X,
provided that (i) unless otherwise expressly provided or the context otherwise requires, references herein to Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries shall be and shall be deemed to be references to Wholly-Owned Subsidiaries of the Company and (ii) {Redacted} shall for all purposes hereof be a Wholly-Owned Subsidiary of the Company (but only while {Redacted} shall remain a Subsidiary Guarantor).
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SCHEDULE C
FORM OF POLITICAL RISK INSURANCE POLICY
EXPROPRIATION, WAR & TERRORISM INSURANCE (MOBILE ASSETS)
Underwriters agree to indemnify the Insured for its Loss in respect of the Mobile Assets arising from the occurrence during the Policy Period of one or more Causes of Loss subject always to the Definitions, Exclusions and Conditions below.
1 | CAUSES OF LOSS |
1.1 | Expropriation, Wilful Destruction, Forced Abandonment, and Deprivation of Mobile Assets |
i) | An act or series of acts occurring within the Policy Period not limited to expropriation but including also confiscation, nationalisation, seizure, appropriation, requisition, sequestration or wilful destruction or damage by, or under the law, order or administrative action of the Government of the Risk Country which expressly or permanently deprives the Insured in whole or in part of the use or possession of their Mobile Assets (for the purposes of this Policy the Insured shall be deemed to have been permanently deprived in whole or part of their use or possession of their Mobile Assets after a period of 180 days has elapsed from the Date of Loss; or |
ii) | The Insured being required to abandon their Mobile Assets for a continuous period of not less than the Waiting Period arising in circumstances beyond the control of the Insured and solely and directly in consequence of: |
a) | any law, order, decree or regulation of the Government that prevents the use or possession of the Mobile Assets of the Insured, and/or |
b) | the Insured being required or advised by its government or official representative(s) thereof to evacuate personnel from the Risk Country(ies) or a region thereof, subject to such requirement or advice being generally applicable to all nationals of the Insureds Country who are located in the Risk Country(ies) or the applicable region thereof. |
For the purpose of this policy, a government travel advisory alone shall not constitute the above referenced requirement or advisement.
1.2 | Licence Cancellation / Export Embargos |
i) | The Insureds inability, for a period of 180 days, to export the Mobile Assets outside the Risk Country or its territorial waters, as a direct result of not being able to obtain or renew the necessary permits (including export licences) from the appropriate authority in the Risk Country, provided always that |
a) | The Insured and its agents shall make every reasonable effort to remove the Mobile Assets from the Risk Country, and |
b) | At inception of this policy, |
1) | The necessary permits (including export licenses) for the removal of the Mobile Assets from the Risk Country are held or obtainable, and |
2) | There is no known impending adverse control or suspension of permits (including export licenses) that may prevent the Insured from removing the Mobile Assets from the Risk Country or its territorial waters. |
1.3 | Political Violence |
Physical damage to or destruction of Mobile Assets caused by Riots and / or Strikes and / or Civil Commotion, and/or Insurrection and/or Revolution and/or Rebellion and/or Mutiny and/or Coup dEtat and / or Sabotage and / or Terrorism and / or Malicious Damage, including fire damage and Loss by looting directly following one of these perils, provided that such Loss or damage occurs in the Risk Country.
1.4 | War Damage |
Physical damage to or destruction of Mobile Assets during the Policy Period directly caused by War.
1.5 | Third Party Blockade or Quarantine |
Use of military force, or the direct threat thereof, by one or more third party sovereign nations preventing the Insured from removing the Mobile Assets from the Risk Country(ies). The Insured will have been deemed to have been prevented from removing the Mobile Assets after 180 days pass from the date the Insured advised the Leading Underwriters that it could not remove the Mobile Assets.
2 | DEFINITIONS |
In the context of this policy the following terms shall mean:
2.1 | Agreed Value: Purchase price of Mobile Assets as set out in the Contract(s). |
2.2 | Civil Commotion: A substantial disturbance of the public peace by three (3) or more persons assembled together and acting with common intent. |
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2.3 | Contract(s): As detailed in item 13 of the Schedule. |
2.4 | Contract Party: The entity named in item 14 of the Schedule. |
2.5 | Coup dEtat: Means the sudden, violent and illegal overthrow of a sovereign government or any attempt at such overthrow. |
2.6 | Date of Loss:The date during the Policy Period on which an Insured Risk occurs. |
2.7 | Deductible: Means the amount specified in item 9 of the Schedule. The Deductible shall be borne by the Insured and remain uninsured. Deductible to apply to each and every loss period. |
2.8 | Government: The present or any succeeding central governing authority (without regard to the method of its succession or to whether it is recognised by the government of any other country and including authorised agents thereof), or agency or authority acting on its behalf, in effective control of all or part of a country. |
2.9 | Insured: The entity named in item 1 of the Schedule. |
2.10 | Insured Percentage: The percentage of the amount of each and every loss which is to be insured herein which is stated in item 11 of the Schedule. |
2.11 | Insured Risks: The causes of Loss itemised in Section 1, Causes of Loss. |
2.12 | Insureds Country: The countries named in item 2 of the Schedule. |
2.13 | Insurrection, Revolution and Rebellion: Means a deliberate, organised and open resistance, by force and arms, to the laws or operations of a sovereign government, committed by its citizens or subjects and/or a rising against a sovereign government or other authority. |
2.14 | Limit of Liability: The amount stated in item 8 of the Schedule which is the maximum amount payable under this policy for Loss in respect of every and all Insured Risks occurring during the respective Policy Period. |
2.15 | Malicious Damage: Means all physical loss or damage resulting from a malicious act caused by anyone, whether or not the act is committed during a disturbance of the public peace and shall include all loss caused by sabotage. Included hereunder is any wilful act of any striker or locked out worker done in furtherance of a strike or in resistance to a lock-out whether or not such act is committed in the course of a disturbance of the public peace, provided always such strike or lock out is as a result of direct Government action. |
2.16 | Mobile Asset(s): Any goods, and/or merchandise and/or cargo belonging to or under the custody, care or control of the Insured commonly regarded as removable property in the ordinary course of business, wherever located in transit, territorial waters or in store (excluding cash) and detailed in item 4 of the Schedule. |
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2.17 | Mutiny: Means a wilful resistance by three (3) members of legally armed or peace keeping forces to a superior officer. |
2.18 | Policy Period: The period stated in item 3 of the Schedule. |
2.19 | Riot: A violent disturbance by three (3) or more persons assembled together which threatens the public peace. |
2.20 | Risk Country: The country or countries as listed in item 5 of the Schedule. |
2.21 | Sabotage: Any act of deliberate subversion that causes damage to, or destruction of, real or personal property of the Insured, arising out of an Insured Risk under this Policy. |
2.22 | Strike: A work stoppage by workers to enforce demands made on an employer or to protest against an act or conditions, provided always such strike is as a result of direct Government action. |
2.23 | Terrorism: The use of violence for political, ideological or religious ends and includes any use of violence for the purpose of putting the public or any section of the public in fear. Terrorism does not include an act of violence directed at a specific individual or individuals that is motivated for personal reasons. |
2.24 | Waiting Period: The period stated in item 7 of the Schedule which must elapse from the Date of Loss before a claim is payable under this policy. |
2.25 | War: Means declared or undeclared international hostile action taken by sovereign, international armed forces of the Government of the Risk Country against any other nation or Sovereign Power. |
2.26 | Loss: Means the value at the Date of Loss, according to the Basis of Valuation as detailed in item 6 of the Schedule, of that part of the Mobile Assets that have been lost, damaged or destroyed less compensation, salvage and any other recoveries received by the Insured and after taking into account the Deductible specified in Item 9 of the attached Schedule. |
In no event shall the amount payable in all hereunder exceed the Limit of Liability specified in Item 8 of the attached Schedule.
3 | EXCLUSIONS |
3.1 | Insureds Country |
Excluding any loss arising within the Insureds Country.
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3.2 | Contractual |
Excluding any loss arising out of non performance or failure of any partys obligations under any contractual agreement or obligations assumed thereunder (whether in dispute or not) to which the Insured may be party.
3.3 | Delay |
Excluding any loss arising from delay, deterioration and/or loss of market.
3.4 | Five Powers |
Excluding any loss arising from war (whether before or after the outbreak of hostilities) between any of the following Five Powers: China, France, Great Britain, the Russian Federation and the United States of America.
3.5 | Insolvency or Financial Default |
Excluding any loss arising from insolvency or financial default of any party or person whatsoever.
3.6 | Necessary Authorisations |
Excluding any failure of the Insured to have obtained authorisations and permits absence of which will make the operation illegal in the Risk Country, unless such failure occurs as a direct result of a cause of Loss as insured hereunder.
3.7 | Non-compliance |
Excluding any loss arising from any failure of the Insured to comply with the laws of the Risk Country(ies) or of the Insureds Country, unless as a direct result of a Cause of Loss hereunder.
3.8 | INSTITUTE CHEMICAL, BIOLOGICAL, BIO-CHEMICAL, ELECTROMAGNETIC WEAPONS AND CYBER ATTACK EXCLUSION CLAUSE (CL 380) |
This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith
In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from
(i) | any chemical, biological, bio-chemical or electromagnetic weapon |
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(ii) | the use or operation, as a means for inflicting harm, of any computer, computer system, computer software programme, computer virus or process or any other electronic system. |
3.9 | INSTITUTE RADIOACTIVE CONTAMINATION, CHEMICAL, BIOLOGICAL, BIOCHEMICAL AND ELECTROMAGNETIC WEAPONS EXCLUSION CLAUSE (CL370) |
This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith.
In no case shall this insurance cover loss, damage, liability or expense directly or indirectly caused by or contributed to by or arising from:
(i) | ionising radiations from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel. |
(ii) | the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof. |
(iii) | any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. |
(iv) | the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter. The exclusion in this sub-clause does not extend to radioactive isotopes, other than nuclear fuel, when such isotopes are being prepared, carried, stored, or used for commercial, agricultural, medical, scientific or other similar peaceful purposes. |
(v) | any chemical, biological, bio-chemical, or electromagnetic weapon. |
3.10 | Material Breach |
Excluding any loss arising out of wrongful, fraudulent or dishonest acts or omissions of the Insured, its agents, contractors or sub-contractors.
3.11 | Disputes |
Excluding any loss arising out of disputes between the Insured and the Contract Party unless, and until, either the Supplier and/or Buyer has withdrawn from such dispute, or the disputes have been settled in accordance with the arbitration and dispute settlement provisions of the Contract or otherwise settled to the satisfaction of Insurers.
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3.12 | Theft and Wrongful Release by the Contract Party |
Excluding any loss arising out of theft or wrongful release of the Mobile Assets. In respect of Cause of Loss 1.1, Expropriation, Wilful Destruction, Forced Abandonment and Deprivation of Mobile Assets, the Insured must prove beyond reasonable doubt that the loss does not arise out of theft or wrongful release by the Contract Party.
3.13 | Non-fulfilment |
Excluding any loss arising out of the failure of the Contract Party to fulfil its contractual responsibilities or any breach by the Contract Party of any warranty contained within the Warehousing Agreement unless such warranties cannot be met as a consequence of the occurrence of a Cause of Loss.
3.5 | Sanction Limitation and Exclusion Clause |
No Underwriter shall be deemed to provide cover and no Underwriter shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose that Underwriter to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America.
4 | CONDITIONS AND WARRANTIES |
4.1 | Confidentiality |
Warranted that the Insured shall not disclose the existence of this Policy at any time either before or after an insured cause of loss occurs and whether before or after the expiry of this Policy to any third party other than to its own professional, financial and legal advisers (on a confidential basis) without the prior written consent of the Leading Underwriters.
4.2 | Declarations |
Actual monthly maximum exposures with respect to each Risk Country to be provided by the Insured in the form set out in Appendix A. Such exposures to be provided quarterly in arrears.
4.3 | Due Diligence |
The Insured (or any agent, sub or co-contractor of the Insured) shall at all times use due diligence and do (and concur in doing and permit to be done) all things reasonably practicable (including but not limited to protecting, removing and recovering the Mobile Assets) to avoid or diminish any loss herein insured and to secure compensation for any such loss including action against other parties any rights and remedies or to obtain any relief or indemnity.
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4.4 | Examination of Records |
Underwriters shall have the right to examine any letters, account or other documents in the possession or control of the Insured relating to the interest insured hereunder.
4.5 | Headings |
Headings throughout this Policy are included for the convenience of reference only and shall not constitute a part of this Policy.
4.6 | Law and Arbitration |
The construction, validity and performance of this Policy shall be governed by the law of England and Wales and all disputes which may arise under, out of, in connection with or in relation to this Policy or to the determination of the amount of loss hereunder shall be submitted to arbitration at the London Courts of International Arbitration in accordance with its rules at the date of such submission. The award rendered by the Arbitrator(s) shall be final and binding upon all parties and judgement thereon may be entered in any court having jurisdiction.
4.7 | Notice of Loss |
Upon the discovery of any event likely to give rise to a claim under this Policy, the Insured shall give notice to the Underwriters as soon as reasonably practicable.
4.8 | Non-Cancellation |
There shall be no cancellation of this Policy and no return of premium unless specially agreed at inception.
4.9 | Non-Contribution |
It is agreed that this Policy does not cover any loss which at the time of the happening of such loss is insured or would, but for the existence of this Policy, be insured by any other policy or policies, except in respect of any excess beyond the amount which would have been payable under such other policy or policies has this Policy not been effected.
4.10 | No Prior Knowledge |
Underwriters shall have no liability under this Policy and the Insured shall have no rights under this Policy unless at inception of cover and at the time of any amendment to this Policy the Insured:
i) | was not in breach of any common law duty in regard to non-disclosure or misrepresentation, and |
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ii) | had no knowledge and had received no information of any matter, fact or circumstance which could give rise to or increase the likelihood of a loss hereunder. |
Compliance with this condition shall be a necessary prerequisite to cover under this Policy and in any proceedings by the Insured hereunder or between the Insured and Underwriters the burden shall in all circumstances be upon the Insured to establish that this condition has been complied with.
4.11 | Occurrence Clause |
It is agreed that any destruction of or damage to the Mobile Assets specified in Item 4 of the attached Schedule arising during any one period of 72 consecutive hours , except in the case of War, when this period shall be thirty (30) consecutive days and arising from Cause of Loss 1.3 and/or 1.4 provided that such destruction or damage occurs in the Risk Country(ies), shall be deemed as a single event and therefore constitute one occurrence with regard to the Limit of Liability and application of the Policy Deductible.
4.12 | Onus of Proof |
In any claim, and/or action, suit or proceeding to enforce a claim for loss hereunder, the burden of proving that the loss is recoverable under this Policy, that no condition or warranty has been breached and that no exclusion applies shall fall upon the Insured.
4.13 | Proof of Loss |
The Insured shall submit a sworn proof of loss to Underwriters. If such proof has not been received by them within two years from the expiry date of this Policy, Underwriters shall be discharged from all liability hereunder.
4.14 | Recoveries |
After payment of a claim hereunder any sums which are recovered from any source in connection with the subject matter of this insurance shall be the property of Underwriters.
4.15 | Settlement of Loss |
Insurers will pay to the Insured the Insured Percentage of the ascertained Loss as soon as practicable and, at the latest, within 30 days after the same has been ascertained, assessed and agreed following the presentation of satisfactory proof of loss and an appropriate form of discharge of liability, but not before the expiry of the applicable Waiting Period.
Late settlement of Loss by Underwriters will bear interest at the rate offered by the Insureds principal clearing bank, but in any event at no more than LIBOR plus 50 basis points, starting on the 30th day after the Loss has been ascertained and assessed by all Insurers.
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4.16 | Subrogation |
The Insured shall upon payment of a claim hereunder transfer to Underwriters as they direct all rights relating to the interest in respect of which a claim has been paid so that Underwriters are subrogated to such rights.
4.17 | Fraud Condition |
This policy will become void, and all claims hereunder will be forfeited, if the Insured has made any material statement, report, application or claim, where the Insured knew that the statement, report, application or claim was false or fraudulent.
4.18 | Assignment |
This policy shall only be assignable with the prior written approval of underwriters hereon.
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Schedule attaching to and forming part of Policy Number:
1) INSURED |
: | |||||
2) INSUREDS COUNTRY |
: | |||||
3) POLICY PERIOD |
: | |||||
4) MOBILE ASSETS |
: | |||||
5) RISK COUNTRY(IES) |
: | |||||
6) SPECIFIC LOCATIONS |
: | |||||
7) BASIS OF VALUATION |
: | |||||
8) WAITING PERIOD |
: | |||||
9) LIMIT OF LIABILITY |
: | |||||
10) DEDUCTIBLE |
: | |||||
11) PREMIUM |
: | |||||
12) INSURED PERCENTAGE |
: | |||||
13) DECLARATIONS |
: | |||||
14) CONTRACTS |
: | |||||
15) CONTRACT PARTIES |
: |
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EXHIBIT 1A
[Form of Series A Note]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ENERFLEX LTD. (THE COMPANY) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY, WHETHER DIRECTLY OR INDIRECTLY, (A) TO THE COMP ANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 16, 2018.
ENERFLEX LTD.
4.67% U.S. Dollar Senior Note, Series A, due December 15, 2024
No. [_________] |
, 2017 | |||
U.S.$[_______] |
PPN 29269R A | #2 |
FOR VALUE RECEIVED, the undersigned, ENERFLEX LTD. (herein called the Company), a corporation organized and existing under the federal laws of Canada, hereby promises to pay to [__________], or registered assigns, the principal sum of U.S.$[__________] [_________] U.S. DOLLARS (or so much thereof as shall not have been prepaid) on December 15, 2024, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.67% per annum from the date hereof, payable semiannually on the fifteenth day of June and December in each year, commencing with June 15, 2018, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount or
Modified Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) {Redacted}% and (ii) {Redacted}% over the rate of interest publicly announced by Citibank N.A. in New York, New York as its base or prime rate for determining the interest rate it will charge for U.S. Dollar loans made by it, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Interest on this Series A Note shall be computed on the basis of a 360-day year of twelve 30-day months. Solely for purpose of the Interest Act (Canada), whenever interest in respect of the Notes to be paid hereunder or under such Notes is to be calculated on the basis of a year that is not equal to 365 or 366 days, as applicable (a Non-Calendar Day Year), the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual numbers of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Non-Calendar Day Year. All interest payable by the Company hereunder shall accrue from day to day, computed as described herein and shall be payable after as well as before maturity, demand, default and judgment. The theory of deemed reinvestment shall not apply to the computation of interest hereunder and no allowance, reduction or deduction shall be made for the deemed reinvestment of interest in respect of any payments hereunder. Calculation of interest hereunder shall be made using the nominal rate method, and not the effective rate method, of calculation.
Payments of principal of, interest on and any Make-Whole Amount or Modified Make-Whole Amount with respect to this Series A Note are to be made in lawful money of the United States at such place as the Company shall have designated by written notice to the holder of this Series A Note as provided in the Note Purchase Agreement referred to below.
This Series A Note is one of the Senior Notes (herein called the Notes) issued pursuant to the Note Purchase Agreement, dated as of December 15, 2017 (as from time to time amended, the Note Purchase Agreement), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Series A Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representations set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Series A Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Series A Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Series A Note for registration of transfer, accompanied by a written instrument of transfer duly executed by the registered holder hereof or such holders attorney duly authorized in writing, a new Series A Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Series A Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Series A Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
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If an Event of Default occurs and is continuing, the principal of this Series A Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Series A Note is guaranteed pursuant to the Subsidiary Guarantees and reference is hereby made to such guarantees.
This Series A Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Series A Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
ENERFLEX LTD. | ||
By | ||
Name: | ||
Title: |
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EXHIBIT 1B
[Form of Series B Note]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ENERFLEX LTD. (THE COMPANY) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY, WHETHER DIRECTLY OR INDIRECTLY, (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 16, 2018.
ENERFLEX LTD.
4.50% Canadian Dollar Senior Note, Series B, due December 15, 2024
No. [_________] |
, 2017 | |
Cdn.$[_______] |
PPN 29269R B*5 |
FOR VALUE RECEIVED, the undersigned, ENERFLEX LTD. (herein called the Company), a corporation organized and existing under the federal laws of Canada, hereby promises to pay to [__________], or registered assigns, the principal sum of Cdn.$[__________] [________] CANADIAN DOLLARS (or so much thereof as shall not have been prepaid) on December 15, 2024, with interest (computed on the basis of a 365-day year in equal semi-annual payments) (a) on the unpaid balance thereof at the rate of 4.50% per annum from the date hereof, payable on the fifteenth day of June and December in each year, commencing with June 15, 2018, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount or Modified
Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) {Redacted}% and (ii) {Redacted}% over the rate of interest publicly announced by The Toronto-Dominion Bank as its prime rate for determining the interest rate it will charge for Canadian Dollar loans made by it in Canada, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Interest on this Series B Note shall be computed on the basis of a 365-day year. Solely for purpose of the Interest Act (Canada), whenever interest in respect of the Notes to be paid hereunder or under such Notes is to be calculated on the basis of a year that is not equal to 365 or 366 days, as applicable (a Non-Calendar Day Year), the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual numbers of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Non-Calendar Day Year. All interest payable by the Company hereunder shall accrue from day to day, computed as described herein and shall be payable after as well as before maturity, demand, default and judgment. The theory of deemed reinvestment shall not apply to the computation of interest hereunder and no allowance, reduction or deduction shall be made for the deemed reinvestment of interest in respect of any payments hereunder. Calculation of interest hereunder shall be made using the nominal rate method, and not the effective rate method, of calculation.
Payments of principal of, interest on and any Make-Whole Amount or Modified Make-Whole Amount with respect to this Series B Note are to be made in lawful money of Canada at such place as the Company shall have designated by written notice to the holder of this Series B Note as provided in the Note Purchase Agreement referred to below.
This Series B Note is one of the Senior Notes (herein called the Notes) issued pursuant to the Note Purchase Agreement, dated as of December 15, 2017 (as from time to time amended, the Note Purchase Agreement), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Series B Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representations set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Series B Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Series B Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Series B Note for registration of transfer, accompanied by a written instrument of transfer duly executed by the registered holder hereof or such holders attorney duly authorized in writing, a new Series B Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Series B Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Series B Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
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If an Event of Default occurs and is continuing, the principal of this Series B Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Series B Note is guaranteed pursuant to the Subsidiary Guarantees and reference is hereby made to such guarantees.
This Series B Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Series B Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
ENERFLEX LTD. | ||
By | ||
Name: | ||
Title: |
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EXHIBIT 1C
[Form of Series C Note]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ENERFLEX LTD. (THE COMPANY) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY, WHETHER DIRECTLY OR INDIRECTLY, (A) TO THE COMP ANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 16, 2018.
ENERFLEX LTD.
4.87%U.S. Dollar Senior Note, Series C, due December 15, 2027
No. [_________] |
, 2017 | |
U.S.$[_______] |
PPN 29269R B@3 |
FOR VALUE RECEIVED, the undersigned, ENERFLEX LTD. (herein called the Company), a corporation organized and existing under the federal laws of Canada, hereby promises to pay to [__________], or registered assigns, the principal sum of U.S.$[__________] [_________] U.S. DOLLARS (or so much thereof as shall not have been prepaid) on December 15, 2027, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.87% per annum from the date hereof, payable semiannually on the fifteenth day of June and December in each year, commencing with June 15, 2018, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount or
Modified Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) {Redacted}% and (ii) {Redacted}% over the rate of interest publicly announced by Citibank N.A. in New York, New York as its base or prime rate for determining the interest rate it will charge for U.S. Dollar loans made by it, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Interest on this Series C Note shall be computed on the basis of a 360-day year of twelve 30-day months. Solely for purpose of the Interest Act (Canada), whenever interest in respect of the Notes to be paid hereunder or under such Notes is to be calculated on the basis of a year that is not equal to 365 or 366 days, as applicable (a Non-Calendar Day Year), the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual numbers of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Non-Calendar Day Year. All interest payable by the Company hereunder shall accrue from day to day, computed as described herein and shall be payable after as well as before maturity, demand, default and judgment. The theory of deemed reinvestment shall not apply to the computation of interest hereunder and no allowance, reduction or deduction shall be made for the deemed reinvestment of interest in respect of any payments hereunder. Calculation of interest hereunder shall be made using the nominal rate method, and not the effective rate method, of calculation.
Payments of principal of, interest on and any Make-Whole Amount or Modified Make-Whole Amount with respect to this Series C Note are to be made in lawful money of the United States at such place as the Company shall have designated by written notice to the holder of this Series C Note as provided in the Note Purchase Agreement referred to below.
This Series C Note is one of the Senior Notes (herein called the Notes) issued pursuant to the Note Purchase Agreement, dated as of December 15, 2017 (as from time to time amended, the Note Purchase Agreement), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Series C Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representations set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Series C Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Series C Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Series C Note for registration of transfer, accompanied by a written instrument of transfer duly executed by the registered holder hereof or such holders attorney duly authorized in writing, a new Series C Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Series C Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Series C Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
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If an Event of Default occurs and is continuing, the principal of this Series C Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Series C Note is guaranteed pursuant to the Subsidiary Guarantees and reference is hereby made to such guarantees.
This Series C Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Series C Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
ENERFLEX LTD. | ||
By | ||
Name: | ||
Title: |
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EXHIBIT 1D
[Form of Series D Note]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF ENERFLEX LTD. (THE COMPANY) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY, WHETHER DIRECTLY OR INDIRECTLY, (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 16, 2018.
ENERFLEX LTD.
4.79% Canadian Dollar Senior Note, Series D, due December 15, 2027
No. [_________] | , 2017 | |
Cdn.$[_______] |
PPN 29269R B#1 |
FOR VALUE RECEIVED, the undersigned, ENERFLEX LTD. (herein called the Company), a corporation organized and existing under the federal laws of Canada, hereby promises to pay to [__________], or registered assigns, the principal sum of Cdn.$[__________] [________] CANADIAN DOLLARS (or so much thereof as shall not have been prepaid) on December 15, 2027, with interest (computed on the basis of a 365-day year in equal semi-annual payments) (a) on the unpaid balance thereof at the rate of 4.79% per annum from the date hereof, payable on the fifteenth day of June and December in each year, commencing with June 15, 2018, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount or Modified
Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) {Redacted}% and (ii) {Redacted}% over the rate of interest publicly announced by The Toronto-Dominion Bank as its prime rate for determining the interest rate it will charge for Canadian Dollar loans made by it in Canada, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).
Interest on this Series D Note shall be computed on the basis of a 365-day year. Solely for purpose of the Interest Act (Canada), whenever interest in respect of the Notes to be paid hereunder or under such Notes is to be calculated on the basis of a year that is not equal to 365 or 366 days, as applicable (a Non-Calendar Day Year), the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual numbers of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Non-Calendar Day Year. All interest payable by the Company hereunder shall accrue from day to day, computed as described herein and shall be payable after as well as before maturity, demand, default and judgment. The theory of deemed reinvestment shall not apply to the computation of interest hereunder and no allowance, reduction or deduction shall be made for the deemed reinvestment of interest in respect of any payments hereunder. Calculation of interest hereunder shall be made using the nominal rate method, and not the effective rate method, of calculation.
Payments of principal of, interest on and any Make-Whole Amount or Modified Make-Whole Amount with respect to this Series D Note are to be made in lawful money of Canada at such place as the Company shall have designated by written notice to the holder of this Series D Note as provided in the Note Purchase Agreement referred to below.
This Series D Note is one of the Senior Notes (herein called the Notes) issued pursuant to the Note Purchase Agreement, dated as of December 15, 2017 (as from time to time amended, the Note Purchase Agreement), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Series D Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 21 of the Note Purchase Agreement and (ii) made the representations set forth in Sections 6.1 and 6.2 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Series D Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.
This Series D Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Series D Note for registration of transfer, accompanied by a written instrument of transfer duly executed by the registered holder hereof or such holders attorney duly authorized in writing, a new Series D Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Series D Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Series D Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
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If an Event of Default occurs and is continuing, the principal of this Series D Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Series D Note is guaranteed pursuant to the Subsidiary Guarantees and reference is hereby made to such guarantees.
This Series D Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Series D Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
ENERFLEX LTD. | ||
By | ||
Name: | ||
Title: |
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EXHIBIT 4.5(a)(i)
FORM OF OPINION OF US COUNSEL TO THE COMPANY
{Exhibit redacted}
EXHIBIT 4.5(a)(ii)
FORM OF OPINION OF CANADIAN COUNSEL TO THE COMPANY
{Exhibit redacted}
EXHIBIT 4.5(a)(iii)
FORM OF OPINION OF ALBERTA COUNSEL TO THE COMPANY
{Exhibit redacted}
EXHIBIT 4.5(a)(iv)
FORM OF OPINION OF MANITOBA COUNSEL TO THE COMPANY
{Exhibit redacted}
EXHIBIT 4.5(b)
FORM OF OPINION OF SPECIAL U.S. COUNSEL TO THE PURCHASERS
{Exhibit redacted}
SCHEDULE 4.2
Initial Subsidiary Guarantors
{Exhibit redacted}
SCHEDULE 5.7
Disclosure Documents
None.
SCHEDULE 5.9
Financial Statements
Audited consolidated financial statements for the financial years ended December 31, 2016 and December 31, 2015, together with managements discussion and analysis thereon, and the interim consolidated financial statements for the interim period ended September 30, 2017, together with managements discussion and analysis thereon.
SCHEDULE 5.15
Organization and Ownership of Shares of Subsidiaries; Affiliates; Guarantors
(i) | {Redacted} |
(ii) | Affiliates of the Company, other than Subsidiaries |
None.
(iii) | Directors and Senior Officers of the Company |
Directors:
Robert S. Boswell
Maureen Cormier Jackson
W. Byron Dunn
J. Blair Goertzen
H. Stanley Marshall
Kevin Reinhart
Stephen J. Savidant
Michael A. Weill
Helen J. Wesley
Senior Officers:
J. Blair Goertzen, President and Chief Executive Officer
D. James Harbilas, Executive Vice President and Chief Financial Officer
Greg Stewart, Executive Vice President, Corporate Services
Bradley Beebe, President, Canada
Marc Rossiter, President, USA
Patricia Martinez, President, Latin America
Phil Pyle, President, International
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SCHEDULE 5.21
Existing Debt; Future Liens
{Exhibit redacted}
SCHEDULE 5.24
Environmental Matters
None.
EXHIBIT 7.2
Form of Compliance Certificate
ENERFLEX LTD.
COMPLIANCE CERTIFICATE
Reference is made to the note purchase agreement (the Note Agreement) dated as of December 15, 2017 among Enerflex Ltd. (the Company) and the purchasers listed on Schedule A of the Note Agreement providing for the issuance by the Company of its (a) 4.67% U.S.$105,000,000 Senior Notes, Series A, due December 15, 2024, (b) 4.50% Cdn.$15,000,000 Senior Notes, Series B, due December 15, 2024, (c) 4.87% U.S.$70,000,000 Senior Notes, Series C, due December 15, 2027, and (d) 4.79% Cdn.$30,000,000 Senior Notes due December 15, 2027 (collectively, the Notes). Unless otherwise indicated, all capitalized terms used in this certificate that are defined in the Note Agreement have the meanings ascribed to them in the Note Agreement.
I, [name], [title (Chief Financial Officer)] of the Company, DO HEREBY CERTIFY, solely in my capacity as an officer of the Company and without personal liability, as follows:
1. | I have reviewed the relevant terms of the Note Agreement and have made, or caused to be made, under my supervision, a review of the transactions and conditions of the Company and its Subsidiaries from [date of the start of the annual or interim period covered by the financial statements furnished with this certificate] to the date hereof; |
2. | [Such review has not revealed the existence during such period of any condition or event that constitutes a Default or an Event of Default under the Note Agreement;] |
[or]
[Such review has revealed [describe the nature and period of existence of a condition or event during the period that constitutes a Default or an Event of Default and any action taken or proposed to be taken by the Company with respect thereto];]
3. | [For annual financials only] Evidence of compliance by the Company with the requirements of Section 10.7 of the Note Agreement for the most recent calendar year which ended on December 31, 20__ (the Calendar Year), is as follows: |
Except for Permitted Dispositions, the aggregate fair market value of property or assets sold, transferred or otherwise disposed of by the Company and its Subsidiaries during the Calendar Year was % of Consolidated Net Tangible Assets (maximum: {Redacted}%).
4. | [For annual financials only] Evidence of compliance by the Company with the requirements of Section 10.8 of the Note Agreement for the Calendar Year is as follows: |
The aggregate amount of Investments and Financial Assistance of the types restricted under Section 10.8 of the Note Agreement made by the Company, the Subsidiary Guarantors and Material Subsidiaries during the Calendar Year was $ (maximum $) (i.e., {Redacted}% of Consolidated Net Tangible Assets plus 100% of net proceeds from equity offerings).
5. | Evidence of compliance by the Company with the requirements of Section 10.11 of the Note Agreement as of the end of the Companys most recently completed fiscal quarter (the Period) which ended on [date] is as follows: |
(a) | [the Net Funded Debt to EBITDA Ratio, calculated on a rolling four quarter basis, was : (maximum 3.00 : 1.00);] |
[or]
[A Material Acquisition was completed during the four quarters ending on the last day of the Period, the Company is invoking the Acquisition Leverage Step Up and, accordingly (i) the Net Funded Debt to EBITDA Ratio, calculated on a rolling four quarter basis, was : (maximum 3.50 : 1.00), (ii) without taking into account the Material Acquisition, the Net Funded Debt to EBITDA Ratio, calculated on a rolling four quarter basis, was : (maximum 3.00 : 1.00), [and (iii) the Company previously invoked the Acquisition Leverage Step Up and the Net Funded Debt to EBITDA Ratio, calculated on a rolling four quarter basis, did not exceed 3.00 to 1.00 for the two Quarter Ends preceding the subsequent Material Acquisition in question];]
(b) | the Interest Coverage Ratio, calculated on a rolling four quarter basis, was : (maximum: 3.00 : 1.00); and |
(c) | set forth on Schedule A hereto are the calculations relating to clauses (a) and (b) above. |
6. | Evidence of compliance by the Company with the requirements of Section 10.12 of the Note Agreement for the Period is as follows: |
The aggregate amount of Priority Debt excluding obligations relating to Capital Leases (as provided for in Section 10.12 of the Note Agreement) was $ which equals % of Consolidated Net Tangible Assets (maximum: {Redacted}%).
DATED
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ENERFLEX LTD. | ||
By: | ||
Name: | ||
Title: |
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Exhibit 10.3
ENERFLEX LTD.
AMENDED AND RESTATED 2013 STOCK OPTION PLAN
1. | Purpose of the Plan |
The purpose of the Plan is to encourage certain officers and other key full time employees of the Corporation and of its Affiliates to acquire an increased proprietary interest in the Corporation through share options.
2. | Defined Terms |
Where used herein, the following terms shall have the following meanings, respectively:
Affiliate shall have the meaning ascribed to that term by the Securities Act (Alberta), as such statute is amended, re-enacted or replaced from time to time;
Approved Leave of Absence means a leave of absence from full time employment with the Corporation or its Affiliates that is provided for in the policies, plans or regulations of the Corporation or its Affiliates or that is approved by management of the Corporation, including, without limitation, maternity and parental leave in accordance with the Corporations (or its Affiliates) policies, Short-Term Disability and Long-Term Disability;
Blackout Extension Term means the period of ten (10) Business Days commencing on the first day after the date that any Blackout Period ends;
Blackout Period means a period when the Participant is prohibited from trading in the Corporations securities pursuant to (i) the Corporations written policies then applicable or (ii) a notice in writing (which may be delivered by email) to the Participant by a senior officer or director of the Corporation;
Board means the board of directors of the Corporation;
Business Day means any day other than a Saturday or Sunday on which the TSX is open for trading;
Cancelled Options has the meaning ascribed to it in section 5.3;
CBCA means the Canada Business Corporations Act, as such statute is amended, re-enacted or replaced from time to time;
Common Shares means the common shares in the capital of the Corporation as presently constituted or any shares, securities or other property into which such shares are changed, reclassified, subdivided, consolidated or converted or which is substituted for such shares, or as such shares, securities or other property may further be changed, reclassified, subdivided, consolidated, converted or substituted;
Control Change means the occurrence of any of (i) the purchase or acquisition of shares of the Corporation and/or securities (Convertible Securities) convertible into or exchangeable for shares of the Corporation or carrying the right to acquire shares of the Corporation as a result of which a person, group of persons or persons acting jointly or in concert, or persons associated or affiliated within the meaning of the CBCA with any such person, group of persons or any of such persons acting jointly or in concert (excluding, for this purpose, any employee benefit or other plan of the Corporation) (collectively, the Holders) beneficially own or exercise control or direction over shares of the Corporation and/or Convertible Securities such that, assuming only the conversion of Convertible Securities beneficially owned by the Holders, the Holders would beneficially own shares which would entitle the Holders to cast more than 35% of the votes attaching to all shares in the capital of the Corporation which may be cast to elect directors of the Corporation; or (ii) Incumbent Directors ceasing to constitute a majority of the Board; or (iii) approval by the shareholders of the Corporation of an amalgamation, arrangement, merger or other consolidation of the Corporation with another corporation pursuant to which the shareholders of the Corporation immediately prior thereto do not immediately thereafter own shares of the successor or continuing corporation which would entitle them to cast more than 50% of the votes attaching to all shares in the capital of the successor or continuing corporation which may be cast to elect directors of that corporation; or (iv) a liquidation, dissolution or winding up of the Corporation or a sale, lease or other disposition of all or substantially all the assets of the Corporation other than a sale, lease or other disposition to a subsidiary of the Corporation or which does not result in a change in the ultimate shareholders of the Corporation or such subsidiary;
Control Change Period means the period commencing on the date of occurrence of a Control Change and ending on the third anniversary of that date;
Corporation means Enerflex Ltd. and includes any successor corporation thereof;
EMT means the Executive Management Team of the Corporation, comprised of (i) the President and Chief Executive Officer and (ii) each direct report to the President and Chief Executive Officer who is designated by the Board as a member of the EMT;
Fair Market Value means, at any date, the volume weighted average price per share at which the Common Shares have traded on the TSX during the last five trading days prior to that date on which at least a board lot of Common Shares has so traded or, if the Common Shares are not then listed and posted for trading on the TSX, then on such stock exchange on which the Common Shares are then listed and posted for trading as may be selected for such purpose by the Board, or, if the Common Shares are not then listed and posted for trading on any stock exchange, then it shall be the fair market value per Common Share as determined by the Board in its sole discretion; and for such purposes, the volume weighted average price per share at which the Common Shares have traded on the TSX or on any other stock exchange shall be calculated by dividing (i) the aggregate sale price for all the Common Shares traded on such stock exchange during the relevant five trading days by (ii) the aggregate number of Common Shares traded on such stock exchange during the relevant five trading days;
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insider means an insider (as defined in the TSX Company Manual) of the Corporation;
Incumbent Director means any member of the Board who was a member of the Board immediately prior to the occurrence of the transaction, transactions, elections or appointments giving rise to a Control Change and any successor to an Incumbent Director who was elected or appointed to succeed any Incumbent Director by the affirmative vote of the directors, including a majority of the Incumbent Directors then on the Board;
Long-Term Disability means long-term disability as that term is defined in accordance with the long-term policies or plans of the Corporation or any of its Affiliates which are applicable to such Participant at the relevant time;
Option means an option to purchase Common Shares granted in accordance with the Plan by the Board to an officer or other key full time employee of the Corporation or an Affiliate thereof, subject to the provisions contained herein;
Option Price means, in respect of any particular Option, the price per share at which Common Shares may be purchased under that Option, as the same may be adjusted in accordance with Section 7 hereof;
Participant means an officer or other key full time employee of the Corporation or an Affiliate thereof to whom an Option has been granted and which Option, or a portion thereof, remains unexercised; and, for greater certainty, any person that is a non-employee director of the Corporation is not eligible to participate in this Plan;
Plan means this amended and restated 2013 stock option plan of the Corporation as set out herein, as the same may be amended or varied from time to time;
Restricted Option has the meaning ascribed to it in section 4.5;
Retirement means a retirement approved by the Board in accordance with the retirement policies or plans of the Corporation or any of its Affiliates which are applicable to such Participant at the relevant time;
Short-Term Disability means short-term disability as that term is defined in accordance with the short-term policies or plans of the Corporation or any of its Affiliates which are applicable to such Participant at the relevant time;
TSX means the Toronto Stock Exchange; and
TSX Company Manual means the TSX Company Manual, as amended from time to time, including such Staff Notices of the TSX from time to time which may supplement the same.
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3. | Administration of the Plan |
3.1 The Plan shall be administered by the Board. The Corporation shall effect the grant of Options under the Plan, in accordance with determinations made by the Board pursuant to the provisions of the Plan, including as to:
(a) | the officers and other key full time employees of the Corporation and of its Affiliates to whom Options may be granted; |
(b) | the number of Common Shares which shall be the subject of each Option; and |
(c) | any and all terms and conditions in addition to (and not inconsistent with) those contained herein which are to be attached to any or all such Options, |
by the execution and delivery of instruments in writing in such form or forms as shall have been approved by the Board or an officer authorized by the Board.
3.2 The Board may from time to time adopt such policies, guidelines, rules and regulations for administering the Plan as it may deem proper and in the best interests of the Corporation and may, subject to applicable law, delegate any of its powers hereunder to a committee of the Board. The day-to-day administration of the Plan may be delegated to such officers and employees of the Corporation or its subsidiaries as the Board determines. The Board may also appoint or engage a trustee, custodian or administrator to administer or implement the Plan.
4. | Granting of Options |
4.1 The Board from time to time may grant Options to such officers and other key full time employees of the Corporation and of its Affiliates as the Board shall determine. Each grant of an Option shall be subject to the terms and conditions contained herein and may be subject to additional terms and conditions (not inconsistent herewith) determined by the Board from time to time.
4.2 The aggregate number of Common Shares reserved by the Corporation for issuance under the Plan shall not exceed 8,799,176, subject to adjustment pursuant to Section 7, and the aggregate number of Common Shares so reserved for issuance to any one person shall not exceed 5% of the issued and outstanding Common Shares (on a non-diluted basis). The aggregate number of Common Shares (i) issued to insiders, within any one-year period, or (ii) issuable to insiders, at any time, under the Plan, when combined with the aggregate number of Common Shares issued or issuable, as the case may be, under any other security based compensation arrangements established or maintained by the Corporation, shall not exceed 10% of the issued and outstanding Common Shares (such limitation is referred to herein as the insider participation limit). The Common Shares in respect of which Options are not exercised shall be available for subsequent Options. No fractional shares may be issued under the Plan. To the extent that any Option has terminated or expired without being fully exercised, or has been cancelled pursuant to Section 5.3 hereof, any unissued Common Shares which have been reserved to be issued upon the exercise of the Option shall become available to be issued upon the exercise of Options subsequently granted under the Plan.
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4.3 The Option Price shall be fixed by the Board at the time a grant of an Option is approved by the Board and shall be equal to the Fair Market Value as of the date determined by the Board, or if no such determinations have been made, as of the effective date of a grant of an Option, provided that, the Option Price for any Participant that is a U.S. Taxpayer (as defined in Annex A to this Plan) must be determined in accordance with Annex A to this Plan.
4.4 An Option must be exercised within a period of time not exceeding seven years from the date of grant of the Option (or such shorter period of time as the Board may determine and specify in connection with the grant of the Option), otherwise the Option shall expire immediately after the applicable period.
4.5 If the expiry date of any Option falls within any Blackout Period (Restricted Options), then the expiry date of such Restricted Options shall, without any further action, be extended to the last day of the Blackout Extension Term. The foregoing extension applies to all Options whatever the date of grant and shall not be considered an extension of the term of the Options as referred to in Section 10.2(c).
5. | Exercise of Options |
5.1 Subject to the provisions of the Plan and the terms and conditions of the Option, an Option or any portion thereof may be exercised from time to time by delivery to the Corporation at its registered office of a notice in writing signed by the Participant or, in the case of the Participants death or incapacity, the Participants legal personal representative and addressed to the Corporation or by delivery of a notice to such other third party as may be permitted by the Corporation. Such notice shall state the intention of the Participant, or, in the case of the Participants death or incapacity, the Participants legal personal representative, to exercise the Option or a portion thereof and the number of Common Shares in respect of which the Option is then being exercised, and must be accompanied by payment in full of the applicable Option Price for the Common Shares which are the subject of the exercise. Unless approved by the Chairman of the Board or Corporate Counsel of the Corporation, no Options may be exercised by a Participant during a Blackout Period.
5.2 Subject to Section 8, the vesting of Options granted hereunder shall be determined by the Board at the time of grant, in its sole discretion, and the Participant may only exercise an Option in accordance with the terms of vesting so determined by the Board.
5.3 Where a Participant proposes to purchase Common Shares pursuant to Options granted under this Plan, the Participant or, if applicable, the Participants legal personal representative, may instead notify the Corporation in writing that the Participant or, if applicable, the Participants legal personal representative, elects to dispose of some or all of the Options to the Corporation (the Cancelled Options), in which event the Corporation shall pay to the Participant or, if applicable, the Participants legal personal representative, in respect of the Cancelled Options compensation equal to the difference between the Fair Market Value of the Common Shares on the date on which such election is received by the Corporation and the Option Price specified in such Cancelled Options (as it may be modified under Section 7 hereof). Upon such payment being made, all Cancelled Options shall thereupon be cancelled. Notwithstanding the foregoing, the Board may, in its sole and unfettered discretion, decline to
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permit the acquisition of such Cancelled Options by the Corporation by providing written notice to that effect to the Participant or, if applicable, the Participants legal personal representative at any time within 21 days following the date on which the Corporation receives the notice referred to in the first sentence of this section. In the event that the Board exercises its discretion in the manner contemplated in the preceding sentence, the provisions of Section 5.1 shall apply to the exercise of the applicable Options and the provisions of this section shall have no further application to such Options.
5.4 Pursuant to this Plan, the Corporation may effect any and all withholdings or deductions (including from a Participants other income) that may be required for income tax purposes under all applicable legislation, regulation and policy. Where there are insufficient funds to satisfy the required withholding, the Participant shall make such other arrangements with the Corporation to satisfy such withholding that is acceptable to the Corporation.
5.5 The Corporation desires to permit Participants to enjoy the deduction allowed under Section 110(1)(d) of the Tax Act. Accordingly, the Corporation may make an election under Section 110(1.1) of the Tax Act in prescribed form to waive its right to a deduction in the case of a cash payment made to the Participant under Section 5.3. Such election will be filed with the Canada Revenue Agency and the Participant will, upon request, be provided with evidence in writing of such election for attachment to the Participants Canadian personal income tax return for the year in which the payment was made.
6. | Non-Assignability of Options |
Each Option granted to a Participant is non-assignable and non-transferable and, except in the case of the Participants death or incapacity, shall be exercisable only by the Participant.
7. | Adjustments |
Appropriate adjustments in the number of Common Shares subject to the Plan and, with respect to Options granted or to be granted, in the respective numbers of Common Shares optioned and in the respective Option Prices, shall be made by the Board to give effect to adjustments in the number of Common Shares resulting from subdivisions or consolidations of the Common Shares or the payment of stock dividends by the Corporation (other than stock dividends paid in lieu of cash dividends in the ordinary course) or to give effect to reclassifications or conversions of the Common Shares or any other relevant changes in the authorized or issued capital of the Corporation or any other event in respect of which, in the opinion of the Board, such an adjustment would be necessary to preserve the Participants rights hereunder and under the Options, in all such cases which occur subsequent to the approval of the Plan by the Board.
8. | Termination of Employment |
8.1 Subject to Sections 8.2, 8.3, 8.4, 8.5 and 8.7, all rights to purchase Common Shares pursuant to an Option shall expire and terminate immediately upon the Participant holding such Option ceasing to be an officer or a full time employee of the Corporation or its Affiliates, as applicable, provided that if the employment of a Participant is terminated for cause, such rights held by that Participant shall terminate immediately upon notification being given to the Participant of such termination for cause.
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8.2 If, before the expiry of an Option in accordance with the terms thereof, the Participant holding such Option shall cease to be an officer or a full time employee of the Corporation or its Affiliates, as applicable, by reason of death, the unexercised part of such Option shall become fully vested and may be exercised (including such part thereof, if any, which, but for this Section 8.2, would not otherwise be exercisable) at any time within 120 days of such death.
8.3 If, before the expiry of an Option in accordance with the terms thereof, an EMT Participant holding such Option shall cease to be an officer or employee of the Corporation or its Affiliates, as applicable, by reason of Retirement, such Option shall continue to vest during the two-year period following the effective date of such Retirement (the Retirement Date) and on the second anniversary of the Retirement Date any unvested Option will immediately vest, subject to any conditions imposed by the Board in connection with such Retirement. Such EMT Participant shall be entitled to exercise any vested Option until the earlier of the originally scheduled expiry date of such Option and the third anniversary of the Retirement Date, subject to any conditions imposed by the Board in connection with such Retirement.
8.4 Subject to Section 8.7, if, before the expiry of an Option in accordance with the terms thereof, the Participant holding such Option shall cease to be an officer or a full time employee of the Corporation or its Affiliates, as applicable, by reason of voluntary resignation or termination without cause, such Option may be exercised at any time within 90 days of the date the Participant so ceases to be an officer or so ceases to be an employee, as the case may be, but only to the extent that the Participant was entitled to exercise such Option as at that date.
8.5 Notwithstanding anything else in this Plan, if, before the expiry of an Option in accordance with the terms thereof, the Participant takes a leave of absence other than an Approved Leave of Absence, then all unvested Options shall be forfeited and become null and void from the first day of the Participants leave of absence. Such Participant shall be entitled to exercise any vested portion of the Option at any time within 90 days from the first day of the Participants leave of absence. For greater certainty, following the expiration of the aforementioned 90 day period the vested portion of the Option shall be forfeited and become null and void.
8.6 For greater certainty, in the case of a Participant ceasing to be an officer or full time employee of the Corporation or its Affiliates in the circumstances set out in Section 8.2, 8.3, 8.4 or 8.7, the date the Participant ceases to be an officer or employee of the Corporation or any of its Affiliates, as the case may be, shall be considered to be the last date on which the Participant is actively at work or such later date for exercising an Option as the notice provisions of the applicable employment standards act may require, if any, and without regard to any contractual or common law notice period that might apply to such termination or any period during which the Participant receives termination or severance pay. For greater certainty, in the event that a Participant is on an Approved Leave of Absence, they shall not be deemed to have ceased to be actively at work or to have ceased to be a full time employee.
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8.7 If, before the expiry of an Option in accordance with the terms thereof, the employment as an officer or full time employee with the Corporation or with its Affiliates of the Participant holding such Option is terminated by the Corporation or its Affiliates in circumstances where:
(a) | subsequent to a Control Change and during the Control Change Period; or |
(b) | prior to the date on which a Control Change occurs and it is reasonably demonstrated that such termination: |
(i) | was at the request of a third party who has taken steps reasonably calculated to effect a Control Change; or |
(ii) | otherwise arose in connection with or anticipation of a Control Change; and |
(c) | such termination was for any reason whatsoever other than voluntary resignation, death, or termination for cause, |
then the unexercised part of such Option shall become fully vested and may be exercised (including such part thereof, if any, which, but for this Section 8.7, would not otherwise be exercisable) at any time within 90 days of the date the Participant so ceases to be an officer or so ceases to be an employee, as the case may be. Notwithstanding the foregoing provisions of this Section 8.7, the Board may, in its sole and absolute discretion, provide in the instrument in writing evidencing the grant of an Option a provision to the effect that this Section 8.7 shall not apply in respect of that Option or shall apply on such modified basis as is expressly set forth in such instrument in writing.
8.8 The Plan does not confer upon a Participant any right with respect to continuation as an officer or full time employee with the Corporation or any Affiliate of the Corporation, nor does it interfere in any way with the right of a Participant or the Corporation or any Affiliate of the Corporation to terminate the Participants appointment as an officer or employment at any time.
8.9 Options shall not be affected by any change of employment of the Participant so long as the Participant continues to be employed on a full time basis by the Corporation or by any of its Affiliates.
9. | Decisions of the Board |
All decisions and interpretations of the Board respecting the Plan or any Options shall be conclusive and binding on the Corporation and the Participants and their respective legal personal representatives and on all officers and other full time employees of the Corporation and of its Affiliates who, under the provisions of the Plan, may be eligible to participate herein. There is no obligation to treat Participants uniformly.
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10. | Amendment or Discontinuance of Plan |
10.1 The Board may amend, suspend, discontinue or terminate the Plan and any outstanding Option granted hereunder, in whole or in part, at any time without notice to or approval by the shareholders of the Corporation (provided that, in the case of any action taken in respect of an outstanding Option, the consent of the Participant holder of such Option to such action shall be required unless the Board determines that the action would not materially and adversely affect such Participant), for any purpose whatsoever. Examples of the types of amendments that the Board is entitled to make without shareholder approval include the following:
(a) | ensuring continuing compliance with applicable laws, regulations, requirements, rules or policies of any governmental authority or any stock exchange; |
(b) | amendments of a housekeeping nature which include amendments to eliminate any ambiguity or correct or supplement any provision contained herein which may be incorrect or incompatible with any other provision hereof; |
(c) | changing the vesting provisions of the Plan or any Option; |
(d) | changing the termination provisions of the Plan or any Option which does not entail an extension beyond the originally scheduled expiry date of that Option; and |
(e) | adding a cashless exercise (or net exercise) feature, payable in cash or securities, which provides for a full deduction of the number of underlying Common Shares from the Plan reserve. |
10.2 Notwithstanding anything contained herein to the contrary, no amendment to the Plan requiring the approval of the shareholders of the Corporation under any applicable securities laws or requirements shall become effective until such approval is obtained. In addition to the foregoing, the approval of the holders of a majority of the Common Shares present and voting in person or by proxy at a duly called meeting of shareholders shall be required for:
(a) | any amendment to the provisions of this Section 10 which is not an amendment within the nature of Section 10.1(a) or Section 10.1(b); |
(b) | any increase in the maximum number of Common Shares issuable under the Plan (other than pursuant to Section 7); |
(c) | any reduction in the Option Price or extension of the period during which an Option may be exercised (including a cancellation and re-grant of an Option constituting a reduction of the Option Price or extension of the exercise period of such Option and, for greater certainty, including a substitution of an Option with cash or other award the terms of which are more favorable to the recipient); |
(d) | any amendment to the definition of Participant; |
(e) | any amendment to Section 6; and |
(f) | any amendment to remove or to exceed the insider participation limit set out in Section 4.2; |
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provided that, in the case of an amendment referred to in Section 10.2(c) or Section 10.2(f), insiders who benefit from such amendment are not eligible to vote their Common Shares in respect of the approval.
10.3 For the purposes of this Section 10, an amendment does not include an accelerated expiry of an Option by reason of the fact that a Participant ceases to be an officer or employee of the Corporation or any of its Affiliates.
10.4 The shareholders approval of an amendment, if required pursuant to the terms hereof, shall be given by approval of the holders of a majority of the Common Shares present and voting in person or by proxy at a duly called meeting of the shareholders. Options may be granted under the Plan prior to the approval of the amendment, provided that no Common Shares may be issued pursuant to the amended terms of the Plan until the shareholders approval of the amendment has been obtained.
11. | Government Regulation |
The Corporations obligation to issue and deliver Common Shares under any Option is subject to:
(a) | the satisfaction of all requirements under applicable securities laws in respect thereof and obtaining all regulatory approvals as the Corporation shall determine to be necessary or advisable in connection with the authorization, issuance or sale of such Common Shares; |
(b) | the admission of such Common Shares to listing on any stock exchange on which Common Shares may then be listed; and |
(c) | the receipt from the Participant of such representations, agreements and undertakings as to future dealings in such Common Shares as the Corporation determines to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction. |
In this connection, the Corporation shall take all reasonable steps to obtain such approvals and registrations as may be necessary for the issuance of such Common Shares in compliance with applicable securities laws and for the listing of such Common Shares on any stock exchange on which Common Shares are then listed.
12. | Participants Rights |
A Participant shall not have any rights as a shareholder of the Corporation in respect of any Common Shares issuable pursuant to an Option until the issuance of Common Shares upon the exercise of the Option or a portion thereof, and then only with respect to the Common Shares so issued.
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13. | Recoupment |
All grants of Options are subject to the Corporations Clawback Policy as in effect from time to time and, in accordance with such policy, may be subject to the requirement that the Option or proceeds from the exercise of such Option be repaid to the Corporation after they have been distributed to the Participant. The action permitted to be taken by the Board under this Section is in addition to, and not in lieu of, any and all other rights of the Board and/or the Corporation under applicable law and shall apply notwithstanding anything to the contrary in the Plan.
14. | Adoption |
This Plan was initially adopted by the Board on August 14, 2013, ratified by the shareholders of the Corporation on April 16, 2014 and amended and restated by the Board on December 6, 2017. This Plan was further amended and restated by the Board on February 21, 2020, with the amended section 4.2 subject to approval by the shareholders of the Corporation on May 8, 2020. This Plan supersedes any previous printed or online versions.
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ANNEX A
RULES APPLICABLE TO U.S. TAXPAYERS
This Annex A modifies the terms of the Plan and applies to Participants who are U.S. Taxpayers to the extent their Options may be subject to taxation in the United States. Terms defined in the Plan and used herein shall have the meanings set forth in the Plan document, as amended from time to time.
1. US Taxpayer means a Participant whose compensation from the Corporation or any of its Affiliates is subject to Section 409A.
2. Non-qualified stock options; Exemption from Section 409A.
Options granted to US Taxpayers are not intended to satisfy the requirements of Code Section 422 as incentive stock options. No Options shall be granted to a US Taxpayer if such US Taxpayer is not permitted to be granted an Option under Section 409A without the imposition of a penalty tax. Notwithstanding any provision of the Plan to the contrary, it is intended that Options granted under the Plan to US Taxpayers be exempt from Section 409A, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Each US Taxpayer is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of such US Taxpayer in connection with the Plan (including any taxes and penalties under Section 409A), and neither the Corporation nor any Affiliate of the Corporation shall have any obligation to indemnify or otherwise hold such US Taxpayer (or any beneficiary) harmless from any or all of such taxes or penalties.
3. Option Price.
Notwithstanding any other provision of the Plan, so long as at the time of the grant of an Option the Common Shares are readily tradable as determined under United States Treasury Regulation Section 1.409A-1(b)(5)(vi)(G), the Option Price shall be equal to the (i) Fair Market Value (as defined in the Plan) provided that the Option Price complies with the second, third and fourth sentences of Treasury Regulation Section 1.409A 1(b)(5)(iv)(A) (the Required Condition) or (ii) if the Option Price does not comply with the Required Condition, the closing sale price of the Common Shares reported on the primary securities exchange on which the Common Shares are listed on the last business day on which such exchange is open for trading prior to the date of grant of such Option, provided that if at the time of grant the Common Shares are not readily tradable as determined under United States Treasury Regulation Section 1.409A 1(b)(5)(vi)(G), the Option Price shall be determined by the reasonable application of a reasonable valuation method in accordance with Treasury Regulation Section 1.409A 1(b)(5)(iv)(B).
4. Expiry of Option/Trading Blackouts.
Notwithstanding any other provision of the Plan and any provisions of the Option Agreement to the contrary, Options granted to US Taxpayers may not be exercised under any circumstance following the 10th anniversary of the Date of Grant.
5. Use of Trust
Notwithstanding any provision of the Plan, no trust shall be established or funded with respect to Options granted to US Taxpayers if such trust would cause such Options to be treated as other than a stock right described in Treasury Regulation Section 1.409A-1(b)(5)(i)(A) or (B).
6. Adjustments to Options.
Notwithstanding the Plan or any provision of the Option Agreement to the contrary, in connection with any adjustment to the Options, the number of Common Shares deliverable on the exercise of an Option held by a US Taxpayer and the Option Price of an Option held by a US Taxpayer shall be adjusted in a manner intended to keep the Options exempt from Section 409A.
7. Amendment of Appendix
The Board shall retain the power and authority to amend or modify this Appendix to the extent the Board in its sole discretion deems necessary or advisable to comply with Section 409A. Such amendments may be made without the approval of any US Taxpayer.
8. Non-transferability of Awards.
Notwithstanding any provision of the Plan, except as otherwise set forth in the applicable Option Agreement, no Option or any interest or participation therein may be transferred (other than by will or by the laws of descent and distribution) if such transfer would be treated as a modification of such Option for purposes of the Code.
9. Distributions to Specified Employees.
Solely to the extent required by Section 409A, any payment in respect of an Option which has become payable on or following Separation from Service (as set forth in Section 409A(a)(2)(A)(i) of the Code) to any US Taxpayer who is determined to be a Specified Employee shall not be paid before the date which is 6 months after such Specified Employees Separation from Service (or, if earlier, the date of death of such Specified Employee). Following any applicable 6 month delay of payment, all such delayed payments shall be made to the Specified Employee in a lump sum on the earliest possible payment date. Specified Employee means a US Taxpayer who meets the definition of specified employee, as defined in Section 409A(a)(2)(B)(i) of the Code.
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Exhibit 21.1
List of Enerflex Ltd. Subsidiaries as of December 31, 2021
Name of Subsidiary or Organization | Jurisdiction of Incorporation |
Percentage of Voting Securities Owned Directly or Indirectly | ||||
1. |
Enerflex Energy Systems Inc. |
Delaware | 100% | |||
2. |
Enerflex Energy Systems (Australia) PTY Ltd |
Australia | 100% | |||
3. |
Enerflex Australasia Holdings Pty Ltd. |
Australia | 100% | |||
4. |
Cooperatief Enerflex U.A. |
Netherlands | 100% | |||
5. |
Enerflex Middle East Ltd. |
Barbados | 100% | |||
6. |
Enerflex Netherlands Cooperatief U.A. |
Netherlands | 100% |
NOTE: The Company has elected to exclude certain subsidiaries that do not constitute a Significant Subsidiary as set forth in Section 601(b)(21) of Regulation S-K.
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in this Registration Statement on Form F-4 of Enerflex Ltd. of our report dated March 2, 2022 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in Exterran Corporations Annual Report on Form 10-K for the year ended December 31, 2021. We also consent to the reference to us under the heading Experts in such Registration Statement.
/s/PricewaterhouseCoopers LLP
Houston, Texas
March 18, 2022
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption Experts and to the use of our report dated March 18, 2022 in the Registration Statement (Form F-4 No. 333-XXXXX) of Enerflex Ltd. and related Proxy Statement of Exterran Corporation and Prospectus of Enerflex Ltd. for the registration of Enerflex Ltd. common shares to be issued in exchange for Exterran Corporation common stock.
/s/ Ernst & Young LLP
Calgary, Canada
March 18, 2022
Exhibit 99.1
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/EXTN Cast your vote online. Have your Proxy Card ready. Follow the simple instructions to record your vote. PHONE Call 1 866 355 1240 Use any touch tone telephone, 24 hours a day, 7 days a week. Have your Proxy Card ready. Follow the simple recorded instructions. MAIL Mark, sign and date your Proxy Card. Fold and return your Proxy Card in the postage paid envelope provided. Exterran Corporation Special Meeting of Stockholders For Stockholders as of _______ __, 2022 TIME: ______________, 2022 ____ AM/PM, Central Daylight Time PLACE: Special Meeting to be held live via the Internetplease visit www.proxydocs.com/EXTN for more details This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Andrew J. Way, David A. Barta and Kelly M. Battle, and each of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation of such substitution, and authorizes them, and each of them, to vote all the shares of capital stock of Exterran Corporation which the undersigned is entitled to vote at the Special Meeting to be held via the Internet on ________, ____ 2022 at __:__ AM/PM, Central Daylight Time, and any adjournment or postponement thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment or postponement thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and any adjournment or postponement thereof and revoking any proxy heretofore given and hereby acknowledges receipt of the Notice of Special Meeting. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
Exterran Corporation Special Meeting of Stockholders Please make your marks like this: X Use dark black pencil or pen only THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS: 1. To be amended approve and from adopt time the to time), Agreement by and and among Plan Exterran, of Merger, Enerflex dated as Ltd. of (Parent) January 24, and 2022 Enerflex (as it US may Holdings, Exterran surviving Inc. (Merger the merger Sub), as pursuant a wholly-owned to which Merger subsidiary Sub of will Parent merge (the with Merger and into and Exterran such with agreement, transactions as contemplated it may be amended thereby, from including time to the time, Merger the Merger (the Exterran Agreement), Merger and Proposal) the . 2. To payable approve, to Exterrans on a non-binding named executive advisory basis, officers the that compensation is based on or that otherwise may be paid relates or become to the Merger. 3. To approve the adjournment of the Special Meeting from time to time to solicit additional proxies in favor of the Exterran Merger Proposal, if there are insufficient votes at the time of such adjournment to approve the Exterran merger proposal, to ensure that any supplement or amendment to the proxy statement/prospectus is timely provided to Exterran stockholders or if otherwise determined by the chairperson of the Special Meeting to be necessary or appropriate. NOTE: In their discretion, the proxies are authorized to vote upon such business as may properly come before the Special Meeting or any postponement or adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Exhibit 99.2
CONSENT OF WELLS FARGO SECURITIES, LLC
Exterran Corporation
11000 Equity Drive
Houston, TX 77041
Attention: Board of Directors
RE: | Proxy Statement / Prospectus the (Proxy Statement/Prospectus) of Exterran Corporation (Exterran) and Enerflex Ltd., which forms part of the Registration Statement on Form F-4 of Enerflex Ltd. (the Registration Statement) |
Members of the Board of Directors:
We hereby consent to the inclusion of our opinion letter, dated January 23, 2022, to the Exterran Board of Directors as Annex B to the Proxy Statement/Prospectus included in the Registration Statement filed with the Securities and Exchange Commission as of the date hereof and the references to our firm and our opinion in such Proxy Statement/Prospectus under the headings SummaryOpinion of the Financial Advisor to ExterranOpinion of Wells Fargo Securities, LLC, The Exterran Merger ProposalBackground of the Merger, The Exterran Merger ProposalRecommendation of the Exterran Board; Exterrans Reasons for the Transaction, The Exterran Merger ProposalOpinion of the Financial Advisor to Exterran and The Exterran Merger ProposalCertain Unaudited Prospective Financial Information.
The foregoing consent applies only to the Registration Statement being filed with the Securities and Exchange Commission as of the date hereof and not to any other amendments or supplements thereto, and our opinion is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any other registration statement (including any subsequent amendments to the above-mentioned Registration Statement), proxy statement or any other document, except in accordance with our prior written consent.
In giving our consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder, nor do we admit that we are experts with respect to any part of such Registration Statement within the meaning of the term experts as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Dated: March 18, 2022 |
/s/ Wells Fargo Securities |
WELLS FARGO SECURITIES, LLC |
Exhibit 107.1
Calculation of Filing Fee Tables
Form F-4
(Form Type)
Enerflex Ltd.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
Security Type |
Security Class Title |
Fee Calculation Rule |
Amount Registered(1) |
Proposed Maximum Offering Price Per Unit |
Maximum Price(3) |
Fee Rate |
Amount of Registration Fee | |||||||||
Newly Registered Securities | ||||||||||||||||
Fees to Be Paid |
Equity | Common Shares | 457(f) | 34,092,825(2) | $6.24(3) |
$208,567,869.12 | $92.70 per $1,000,000.00(4) |
$19,334.24 | ||||||||
Fees Previously Paid |
| | | | | | ||||||||||
Carry Forward Securities | ||||||||||||||||
Carry Forward Securities |
| | | | | | | | ||||||||
Total Offering Amounts | | | |
$19,334.24 | ||||||||||||
Total Fees Previously Paid | | | | | ||||||||||||
Total Fee Offsets | | | | | ||||||||||||
Net Fee Due | | | | $19,334.24 |
(1) | Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the Securities Act), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions. |
(2) | Includes the maximum number of common shares of Enerflex Ltd., a corporation formed under the Canada Business Corporations Act, R.S.C., 1985, c. C-44, as amended (Enerflex), that may be issuable pursuant to that certain Agreement and Plan of Merger, dated as of January 24, 2022, by and among Enerflex, Enerflex US Holdings Inc., and Exterran Corporation (Exterran), as described in the proxy statement/prospectus that forms a part of this Registration Statement. |
(3) | Estimated solely for the purpose of calculating the registration fee, based upon the average of the high and low prices of Exterrans common stock, par value $0.01 per share, on the New York Stock Exchange on March 11, 2022 ($6.24 per share of common stock). |
(4) | Pursuant to Section 6(b) of the Securities Act, a rate equal to $92.70 per $1,000,000 of the proposed maximum aggregate offering price. |
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