HomeMy WebLinkAbout2014-060 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
BY-LAW NO. 2014-060
Being a By-law to approve and authorize the execution of an Amended and
Restated Shareholders' Agreement made as of the 2nd day of June, 2014
between The Corporation of the Town of Ajax ("Ajax"), The Corporation of the
City of Belleville ("Belleville"), The Corporation of the Municipality of Clarington
("Clarington"), The Corporation of the City of Pickering ("Pickering"), Veridian
Corporation, Veridian Connections Inc. and Veridian Energy Inc.
WHEREAS Ajax, Belleville, Clarington and Pickering entered into a shareholders'
agreement dated September 28, 2001 as amended by a first amending agreement
dated September 30, 2003 and as amended by a second amending agreement dated
March 30, 2010 (collectively, the "Shareholders' Agreement') with Veridian
Corporation, Veridian Connections Inc. and Veridian Energy Inc.;
AND WHEREAS the parties to the Shareholders' Agreement wish to amend the same
by way of an amended and restated shareholders' agreement to reduce the size of the
board of directors and further improve the corporate governance of the corporations and
address certain "housekeeping" matters resulting from the addition of details relating to
the boards of the corporations;
NOW THEREFORE THE COUNCIL OF THE MUNICIPALITY OF CLARINGTON
ENACTS AS FOLLOWS:
1. THAT Council authorizes and approves the amended and restated shareholders'
agreement (the "Restated Agreement") made as of June 2, 2014 amongst Ajax,
Belleville, Clarington and Pickering, as the shareholders of Veridian Corporation,
and Veridian Corporation, Veridian Connections and Veridian Energy Inc. in the
form of the draft agreement presented to Council and attached hereto as
Schedule "A";
2. THAT the Mayor and the Clerk are authorized to execute the Restated
Agreement.
3. THAT the Clerk is authorized to affix the Corporate Seal of the Municipality of
Clarington to the Restated Agreement.
THIS BY-LAW SHALL COME INTO FORCE AND EFFECT IMMEDIATELY ON AND
AFTER THE PASSING THEREOF.
BY-LAW PASSED THIS 2nd day of June, 2014.
Adrian F er, Mayor
ne Gr66`ntree, Municipal Clerk
Execution Copy
VERIDIAN CORPORATION
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
BORDEN LADNER GERVAIS LLP
Execution Copy
TABLE OF CONTENTS
Page No.
ARTICLE I INTERPRETATION..............................................................................................3
1.1 DEFINITIONS...................................................................................................................... 3
1.2 CONTROL........................................................................................................................... 9
1.3 HEADINGS ......................................................................................................................... 9
1.4 ENTIRE AGREEMENT......................................................................................................... 9
1.5 NUMBER AND GENDER.................................................................................................... 10
1.6 ACCOUNTING PRINCIPLES................................................................................................ 10
1.7 CALCULATION OF TIME................................................................................................... 10
1.8 STATUTORY REFERENCES................................................................................................ 10
1.9 RECLASSIFICATION OF SHARES........................................................................................ 10
1.10 INTERPRETATION......................................................................................................... 11
1.11 GOVERNING LAw........................................................................................................ 11
1.12 CURRENCY.................................................................................................................. 11
ARTICLE II BUSINESS OF THE CORPORATIONS.......................................................... 11
2.1 BUSINESS OF THE CORPORATIONS................................................................................... 11
2.2 CORPORATIONS' STANDARD OF SERVICE........................................................................ 13
ARTICLE III CORPORATE AFFAIRS OF VERH)IAN CORPORATION....................... 13
3.1 ASSURANCES................................................................................................................... 13
3.2 THE BOARD..................................................................................................................... 13
(a) Shareholder Action............................................................................................... 13
(b) VC Board.............................................................................................................. 14
(c) Chair and Vice Chair of Board............................................................................. 14
(d) VC Board Director Qualifications........................................................................ 14
(e) VCI Board of Directors......................................................................................... 14
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(f) Appointment of Board of Directors of VCI.......................................................... 15
(g) Chair and Vice Chair of Board of Directors of VCI............................................. 15
(h) Appointment of Boards of Directors of Subsidiaries............................................ 15
(i) Director Replacement........................................................................................... 16
0) Director Qualifications.......................................................................................... 16
(k) Nominees of Transferee Shareholders.................................................................. 16
(1) Term of Directors.................................................................................................. 17
(m) Vacancy................................................................................................................. 17
(n) Quorum................................................................................................................. 17
(o) Meetings of the Board........................................................................................... 17
(p) Decisions of the Directors..................................................................................... 18
(q) Board Duties......................................................................................................... 18
(r) Indemnification and Insurance for Directors and Officers................................... 18
(s) Compensation....................................................................................................... 19
3.3 BOARD COMMITTEES....................................................................................................... 19
(a) Nominating Committee......................................................................................... 19
(b) General Provisions Relating to Board Committees.............................................. 19
3.4 SHAREHOLDERS' MEETINGS............................................................................................20
3.5 REGULAR SHAREHOLDERS MEETINGS.............................................................................20
3.6 DECISIONS OF THE SHAREHOLDERS................................................................................. 20
3.7 SHAREHOLDER REPRESENTATIVE....................................................................................20
3.8 OFFICERS.........................................................................................................................21
3.9 MATTERS REQUIRING SHAREHOLDER APPROVAL...........................................................21
3.10 UNANIMOUS SHAREHOLDER AGREEMENT...................................................................22
3.11 AGREEMENT BINDS VERIDIAN CORPORATION AND SUBSIDIARIES ..............................22
3.12 AUDITORS....................................................................................................................23
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3.13 BANKING.....................................................................................................................23
3.14 FINANCIAL STATEMENTS.............................................................................................23
ARTICLE IV REPRESENTATIONS,WARRANTIES AND COVENANTS.....................23
4.1 REPRESENTATIONS AND WARRANTIES............................................................................23
4.2 COVENANTS ....................................................................................................................24
ARTICLE V TRANSFER OF SHARES..................................................................................24
5.1 GENERAL RESTRICTION ON TRANSFER............................................................................24
5.2 LEGEND ON SHARES........................................................................................................24
5.3 RIGHTS OF FIRST REFUSAL..............................................................................................25
(a) Notice of Offer......................................................................................................25
(b) Offer Open During Notice Period.........................................................................25
(c) Acceptance of Offer..............................................................................................25
(d) Excess Shares........................................................................................................26
(e) No Fractions..........................................................................................................26
(f) Sale........................................................................................................................26
(g) Deemed Refusal....................................................................................................26
(h) Prospective Purchaser Bound...............................................................................27
(i) Veridian Corporation as Purchaser.......................................................................27
5.4 PIGGYBACK RIGHT..........................................................................................................27
5.5 AMALGAMATED SHAREHOLDER......................................................................................28
ARTICLE VI CLOSING OF PURCHASE TRANSACTION...............................................28
6.1 TIME AND PLACE OF CLOSING......................................................................................... 28
6.2 DOCUMENTS TO BE DELIVERED BY THE VENDOR.............................................................28
6.3 DOCUMENTS TO BE DELIVERED BY THE PURCHASER....................................................... 29
6.4 FAILURE TO COMPLETE SALE..........................................................................................29
ARTICLE VII NON-COMPETITION AND CONFIDENTIALITY....................................30
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7.1 NON-COMPETTTION......................................................................................................... 30
7.2 CONFIDENTIALITY........................................................................................................... 30
7.3 INJUNCTIVE RELIEF......................................................................................................... 32
7.4 ACCOUNTING FOR PROFITS.............................................................................................. 32
7.5 REASONABLENESS OF RESTRICTIONS .............................................................................. 32
ARTICLE VIII SALE OF SURPLUS ASSETS.......................................................................33
8.1 RIGHT OF FIRST REFUSAL................................................................................................ 33
ARTICLE IX BOOKS,RECORDS AND RIGHT TO INFORMATION.............................33
9.1 BOOKS AND RECORDS..................................................................................................... 33
9.2 RIGHT TO INFORMATION..................................................................................................33
ARTICLEX TERM...................................................................................................................33
10.1 TERM...........................................................................................................................33
ARTICLE XI PROMISSORY NOTES....................................................................................34
11.1 PROMISSORY NOTES.................................................................................................... 34
ARTICLEXII GENERAL.........................................................................................................35
12.1 NOTICES...................................................................................................................... 35
12.2 ASSIGNMENT AND BINDING EFFECT............................................................................ 37
12.3 AMALGAMATION OF MUNICIPAL SHAREHOLDERS....................................................... 37
12.4 ARBITRATION.............................................................................................................. 37
(a) Selection of Single Arbitrator............................................................................... 37
(b) Referring Dispute..................................................................................................38
(c) Attempted Settlement............................................................................................38
(d) Decision Final and Binding.................................................................................. 38
(e) Powers of Arbitrator............................................................................................. 38
(fl Costs...................................................................................................................... 38
(g) Written Notices..................................................................................................... 38
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12.5 FURTHER ASSURANCES...........................:...................................................................39
12.6 SEVERABILITY.............................................................................................................39
12.7 AMENDMENT,MODIFICATION AND WAIVER...............................................................39
12.8 TIME OF ESSENCE........................................................................................................ 39
12.9 COUNTERPARTS...........................................................................................................40
12.10 No PARTNERSHIP ........................................................................................................40
12.11 PROCEEDINGS..............................................................................................................40
SCHEDULE «A"........................................................................................................................... 1
THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
made as of the day of , 2014.
BETWEEN:
THE CORPORATION OF THE TOWN OF AJAX, a
municipal corporation existing under the laws of Ontario
("Ajax")
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THE CORPORATION OF THE CITY OF BELLEVILLE, a
municipal corporation existing under the laws of Ontario
("Belleville")
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THE CORPORATION OF THE MUNICIPALITY OF
CLARINGTON, a municipal corporation existing under the laws
of Ontario
("Clarington")
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THE CORPORATION OF THE CITY OF PICKERING, a
municipal corporation existing under the laws of Ontario
("Pickering")
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VERIDIAN CORPORATION, a corporation amalgamated under
the laws of Ontario
("VC")
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VERIDIAN CONNECTIONS INC., a corporation amalgamated
under the laws of Ontario
("VCI")
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VERIDIAN ENERGY INC., a corporation amalgamated under
the laws of Ontario
("VEI")
(Ajax, Belleville, Clarington, Pickering, VC, VCI and VEI are collectively
referred to herein as the"Parties", and each a"Party")
Recitals
1. The authorized capital of VC consists of an unlimited number of Shares of which 10,000
are issued and outstanding as fully paid and non-assessable.
2. Ajax, Belleville, Clarington and Pickering are the sole registered and beneficial
shareholders of VC holding the following numbers of Shares,respectively:
SHAREHOLDER NUMBER OF SHARES PERCENTAGE TOTAL
Ajax 3,210 32.1%
Belleville 1,330 13.3%
Clarington 1,360 13.6%
Pickering 4,100 41.0%
3. The Parties entered into a shareholders' agreement dated September 28, 2001, as
amended by a first amending agreement to the shareholders' agreement dated
September 30, 2003 and as amended by a second amending agreement to the
shareholders' agreement dated March 30, 2010 (collectively, the "Original
Shareholders' Agreement") to provide for the conduct of certain affairs of VC, to
provide for certain restrictions on the transfer and ownership of Shares and to govern the
mutual rights and obligations of the Shareholders with respect to VC and each other
Shareholder.
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4. The Parties wish to further amend and restate the Original Shareholders' Agreement in its
entirety as set forth in this Agreement, with the intent that this Agreement shall be
effective as of January 1St,2015.
NOW THEREFORE in consideration of the premises, the mutual promises herein contained
and other good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged) each of the Parties agrees with each other Party as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions
In this Agreement the following terms shall have the following meanings unless the
subject matter or context otherwise requires:
"Act"means the Business Corporations Act, R.S.O. 1990, C. B.16;
"Agreement" means this Amended and Restated Shareholders' Agreement, all schedules
attached hereto and any agreement or schedule supplementing or amending this Amended and
Restated Shareholders' Agreement. All uses of the words "hereto", "herein", "hereof, "hereby"
and "hereunder" and similar expressions refer to this Amended and Restated Shareholders'
Agreement and not to any particular section or portion of it. References to an Article, Section,
Subsection or Schedule refer to the applicable article, section, subsection or schedule of this
Amended and Restated Shareholders' Agreement;
"Amalgamated Shareholder"has the meaning set out in Section 12.3;
"Arbitration Act''means the Arbitration Act, 1991, S.O., 1991, c. 17;
"Arbitrator"has the meaning set out in Subsection 12.4(a);
"Arm's Length" has the meaning attributed to it in the Income Tax Act (Canada) provided that,
for the purposes of Section 5.3, each Shareholder shall be deemed to be acting at Arm's Length
with each other Shareholder and VC;
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"Auditors" means the firm of chartered accountants appointed as auditor of the Corporations
from time to time;
"Board"means the Board of Directors of VC;
"Board Committees"means committees created by the Board from time to time for the purpose
of overseeing specific tasks and reporting to the Board and includes the committees referred to in
Section 3.3;
"Business" means the business of the Corporations as described in Section 2.1 or as may
otherwise be conducted by the Corporations from time to time;
"Business Day"means any day other than a Saturday, Sunday, or statutory holiday in Ontario;
"Chair"means the director elected by the Board to serve as its chairperson from time to time;
"Closing Date"means the date on which the purchase and sale of Shares is to be completed;
"Confidential Information" means any and all information and data relating in any manner to
the Business and any activities, plans, ideas, products, services, policies or intentions (including
without limitation, information of an operational, business, marketing, financial or economic
nature), whether or not proprietary in nature, that is of value to the Corporations and is held by
the Corporations as a trade secret and is not generally known to competitors of the Corporations
or to the public;
"Corporations"means collectively VC and the Subsidiaries;
"Debt" means, with respect to VC and the Subsidiaries, without regard to any uncapitalized
interest component thereof(whether actual or imputed) that is not due and payable, the aggregate
of the following amounts, each calculated in accordance with generally accepted accounting
principles,unless the context otherwise requires:
(a) indebtedness for money borrowed (including, without limitation, by way of
overdraft) or indebtedness represented by notes payable and drafts accepted
representing extensions of credit;
(b) the face amount of all bankers' acceptances and other similar instruments;
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(c) all obligations (whether or not with respect to the borrowing of money) that are
evidenced by bonds, debentures,notes or other similar instruments;
(d) all liabilities upon which interest charges are customarily paid;
(e) any capital stock of VC (or of any Subsidiary that is not held by VC or by a
Subsidiary that is wholly owned, directly or indirectly), which capital stock,by its
terms (or by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in part,
on or prior to the maturity date for cash or securities constituting debt;
(f) all capital lease obligations, synthetic lease obligations, obligations under sale and
leaseback transactions and purchase money obligations;
(g) the full amount of any contingent liability under any guarantee (other than by
endorsement of negotiable instruments for collection or deposit in the ordinary
course of business)
(h) course of business) in any manner of any part or all of an obligation of another
person of the type included in items (a) through (f) above, including contingent
liabilities in respect of letters of credit, letters of guarantee and similar
instruments; and
(i) contingent liabilities in respect of performance bonds and surety bonds, and any
other guarantee or other contingent liability of any part or all of an obligation of a
person, in each case only to the extent that the guarantee or other contingent
liability is required by generally accepted accounting principles to be treated as a
liability on a balance sheet of the guarantor or person contingently liable,
provided that trade payables, operating leases and accrued liabilities that are
current liabilities incurred and deposits received in the ordinary course of business
do not constitute Debt;
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"Debt/Equity Ratio" means a ratio of Debt to Equity on a consolidated basis for VC and all
Subsidiaries;
"Disputing Shareholders"has the meaning set out in Subsection 12.4(c);
"Elected Member" means an individual who is an elected member of Council of a Shareholder
and has been approved by that Shareholder's Council, and includes the Mayor or the Mayor's
Designate, provided that neither the Mayor or the Mayor's Designate shall be required to be
approved by the Council of the Shareholder;
"Electricity Act"means the Electricity Act, 1998, S.O. 1998, c.15;
"Encumbrance" means a mortgage, charge, pledge, hypothecation, lien (statutory or
otherwise), security interest, adverse claim, assignment as security or reservation of title of any
kind;
"Equity"means the aggregate of the equity, capital stock and surplus as such amounts appear on
a consolidated balance sheet of VC prepared in accordance with generally accepted accounting
principles and as determined by the Ontario Energy Board. In the event there is a conflict
between generally accepted accounting principles and the determination of the Ontario Energy
Board, the determination of the Ontario Energy Board with respect to the conflict shall prevail;
"Fair Market Value" means the appraised value as determined by a registered appraiser
selected and paid for by VC;
"Fiscal Year"means a 12-month period ending on December 31 in each year•,
"GAAP" when used in respect of accounting terms or accounting determinations relating to a
Person, means the Accounting Standards for Private Enterprises which are in effect from time to
time in Canada, as published in Part II of the Handbook of the Canadian Institute of Chartered
Accountants or any successor thereof (the "Handbook"), provided that if such Person has
adopted, or if and when such Person is required, or decides, to adopt, the International Financial
Reporting Standards, GAAP means those standards as in effect from time to time in Canada, as
published in Part I of the Handbook;
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"Governmental Authority" means any government or political subdivision (including without
limitation, any municipality or federal or provincial ministry) or agency, authority, commission,
department or instrumentality of any government or political subdivision, or any court or
tribunal, and specifically includes the Ontario Energy Board, the IESO and the Ontario Power
Authority;
"IESO" means the Independent Electricity System Operator established pursuant to the
Electricity Act;
"Law" means any law, including common law, equitable principle, statute, ordinance,
regulation, rule, order, permit, decision, declaration, notice, demand, injunction, writ, policy,
decree or award of any Governmental Authority;
"Mayor's Designate" means the designate selected by the Mayor to serve on the Board in place
of the Mayor provided that the Mayor's Designate shall be a member of that Mayor's municipal
Council;
"Non-Elected Member" means an individual who is not an elected member of Council of a
Shareholder and has been approved by that Shareholder's Council;
"Notice Period"has the meaning set out in Subsection 5.3(b);
"OEB Board"means the Ontario Energy Board, and its successors;
"Offer"has the meaning set out in Subsection 5.3(a);
"Offered Shares"has the meaning set out in Subsection 5.3(a);
"Original Shareholders'Agreement"has the meaning set out in Recital 3;
"Other Holders"has the meaning set out in Section 5.3;
"Person" means an individual, firm, partnership, unincorporated association, corporation, bank,
trust or other legal entity of any kind whatsoever;
"Promissory Notes"means the promissory notes listed in Schedule"A"which promissory notes
may be amended or replaced from time to time;
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"Prospective Purchaser"has the meaning set out in Subsection 5.3(a);
"Purchase Notice"has the meaning set out in Subsection 5.3(c);
"Retiring Director"has the meaning set out in Subsection 3.2(m);
"Selling Notice"has the meaning set out in Subsection 5.3(a);
"Selling Shareholder"has the meaning set out in Section 5.3;
"Shareholder"means any Person which is a registered holder of Shares, and includes each of Ajax,
Belleville, Clarington and Pickering;
"Shareholder Representative"has the meaning set out in Section 3.7;
"Shares"means common shares (without par value) in the capital of VC;
"South Central Ontario" means the area inside of a five hundred (500) kilometer radius of the
centre of Ajax;
"Subsidiary" means any subsidiary (as this term is defined in the Act) of VC including, but not
limited to, VCI and VEI;
"Surplus Assets" means any land or buildings owned by VC or any Subsidiary that VC or any
Subsidiary respectively has determined to offer for sale;
"Third Party"means any Person with whom a Shareholder deals at Arm's Length;
"Transferee Shareholder" means any Person which acquires Shares from a Shareholder in
accordance with the provisions of this Agreement;
"VC Notes"has the meaning set out in Section 11.1(b);
"VCI Notes"has the meaning set out in Section 11.1(c); and
"Vice-Chair" means the director elected by the Board to serve as its vice-chairperson from time
to time.
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1.2 Control
For the purposes of this Agreement, a body corporate shall be deemed to be "controlled"
by another Person or by two or more Persons if such Person or Persons (either individually or
collectively and whether or not they act together jointly or in concert) directly or indirectly own,
legally and beneficially, and exercise the full voting rights over, shares of such body corporate
which:
(a) have attached to them voting rights, exercisable in all circumstances, which
represent more than 50% of the votes attaching to all outstanding securities of
such body corporate;
(b) have sufficient votes to elect a majority of the board of directors of such body
corporate; and
(c) carry a right to receive, on a winding up or dissolution, more than 50% of the
remaining property of such body corporate after payment of all debts and
liabilities of the body corporate.
1.3 Headings
The division of this Agreement into Articles, Sections and Subsections and the insertion
of headings are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The Article, Section and Subsection headings in this Agreement
are not intended to be full or precise descriptions of the text to which they refer and shall not be
considered part of this Agreement.
1.4 Entire Agreement
This Agreement constitutes the entire agreement among the Parties pertaining to the
subject matter of this Agreement and supersedes all prior correspondence, agreements,
negotiations, discussions and understandings, if any, written or oral. The execution of this
Agreement has not been induced by, nor do any of the Parties rely upon or regard as material,
any representations, warranties, conditions, other agreements or acknowledgements not expressly
made in this Agreement. The Parties agree that the Original Shareholders' Agreement in its
entirety is hereby superseded by this Agreement.
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1.5 Number and Gender
In this Agreement, words in the singular include the plural and vice-versa and words in
one gender include all genders.
1.6 Accounting Principles
In this Agreement, unless specified otherwise, each accounting and financial term has the
meaning assigned to it under GAAP.
1.7 Calculation of Time
In this Agreement, a period of days shall be deemed to begin on the first day after the
event which began the period and to end at 5:00 p.m. (Eastern time) on the last day of the period.
If, however, the last day of the period does not fall on a Business Day, the period shall terminate
at 5:00 p.m. (Eastern time) on the next Business Day.
1.8 Statutory References
A reference in this Agreement to a statute refers to that statute, and any regulations or
rules issued thereunder, as amended, supplemented or replaced from time to time.
1.9 Reclassification of Shares
The provisions of this Agreement shall apply, with any necessary changes to:
(a) any shares or securities of any nature into which the Shares or any of them may be
converted, exchanged, reclassified, redivided, redesignated, subdivided or
consolidated;
(b) any shares or securities of any nature that are received by a Shareholder as a stock
dividend or distribution payable in shares, securities, warrants, rights or options of
any nature of VC;
(c) any shares, securities, warrants, rights or options of any nature of VC or any
successor, continuing company or corporation of VC that may be received by a
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Shareholder on a reorganization, amalgamation, arrangement, consolidation or
merger, statutory or otherwise; and
(d) any shares, securities, warrants, rights or options hereafter issued or allotted by
VC to a Shareholder, all of which shares, securities, warrants, rights or options
shall be deemed to be Shares for all purposes of this Agreement.
1.10 Interpretation
If any conflict shall appear between the by-laws and the articles of VC or any Subsidiary
and the provisions of this Agreement,the provisions of this Agreement shall govern.
1.11 Governing Law
This Agreement shall be governed by and construed, interpreted and performed in
accordance with the laws of Ontario and the laws of Canada applicable therein and shall be
treated in all respects as an Ontario contract.
1.12 Currency
All dollar amounts referred to in this Agreement and all payments to be made hereunder
are in Canadian funds.
ARTICLE H
BUSINESS OF THE CORPORATIONS
2.1 Business of the Corporations
The Corporations may engage in the following business activities and such other business
activities as may be permitted by Law and authorized by the Board from time to time:
(a) transmitting or distributing electricity;
(b) owning and/or operating an electricity generation facility, including without
limitation:
(i) a renewable energy generation facility that does not exceed 10 megawatts
or such other capacity as may be prescribed by regulation under applicable
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Law and that meets any criteria that may be prescribed by the regulations
under applicable Law;
(ii) a generation facility that uses technology that produces power and thermal
energy from a single source and that meets any criteria prescribed by
applicable Law; or
(iii) a facility that is an energy storage facility that meets any criteria that may
be prescribed by applicable Law;
(c) retailing electricity;
(d) distributing or retailing gas or any other energy product which is carried through
pipes or wires to the user;
(e) business activities that enhance or develop the ability of any of the Corporations
to carry on any of the activities described in paragraphs (a), (c) or(d) above;
(f) business activities the principal purpose of which is to use more effectively the
assets of any of the Corporations including providing meter installation and
reading services, providing billing services and business activities in the
telecommunications area;
(g) managing or operating on behalf of a municipal corporation which owns shares in
VCI, the provision of water, artificial or natural gas, steam, hot water or sewage
services, in compliance with applicable laws;
(h) renting or selling or maintaining equipment and appliances, including without
limitation,hot water heaters ; and
(i) providing services related to the promotion of energy conservation, energy
efficiency, load management or the use of cleaner energy sources, including
alternative and renewable energy sources.
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2.2 Corporations'Standard of Service
It is the intention of the Shareholders that the Corporations shall provide service levels in
accordance with industry standards, and new standards of service that are established by the
OEB Board, where applicable, after the date of this Agreement so that each service area will
enjoy common standards and derive equal benefits, including but not limited to, the following
matters:
(a) distribution, energy services and tariffs;
(b) maintenance standards and schedules;
(c) emergency response capabilities;
(d) distribution system capacity;
(e) customer convenience and accessibility,
(f) power reliability and quality; and
(g) marketing programmes and services.
ARTICLE III
CORPORATE AFFAIRS OF VERIDIAN CORPORATION
3.1 Assurances
The Shareholders shall cause such meetings of Shareholders to be held, votes to be cast,
resolutions to be passed, by-laws to be made, confirmed and/or repealed, agreements and other
documents and instruments to be executed and all other acts and things to be done, to ensure that
at all times the provisions of this Article III are in effect, complied with or implemented.
3.2 The Board
(a) Shareholder Action. Each of the Shareholders agrees to elect as members of the
Board the nominees put forward by each other Shareholder from time to time in
accordance with the provisions of this Agreement.
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(1) VC Board. The business and affairs of VC shall be managed or supervised by
the Board which shall consist of 11 directors or such other number of directors as
the Shareholders may determine from time to time by special resolution in
accordance with the Act. Each of the Shareholders shall nominate the number
and type of individuals as members to the Board as listed opposite that
Shareholder's name below:
SHAREHOLDER NON-ELECTED ELECTED TOTAL
MEMBERS MEMBERS NUMBER OF
DIRECTOR
APPOINTEES
Ajax 1 2 3
Belleville 1 1 2
Clarington 1 1 2
Pickering 1 3 4
(c) Chair and Vice Chair of Board. The Board shall elect from its members a Chair
and Vice-Chair who may be either Non-Elected Members or Elected Members.
The Chair and Vice-Chair shall not be directors that have been nominated by the
same Shareholder.
(d) VC Board Director Qualifications. The Mayor or the Mayor's Designate shall
be one of each of the Shareholder's Elected Members to the Board, and each
Shareholder shall provide notice of same to VC, provided that if the Mayor ceases
to hold the office of Mayor, or the Mayor's Designate ceases to be an Elected
Member, the applicable Shareholder shall forthwith replace the Mayor or the
Mayor's Designate, as applicable, with the then current Mayor or that Mayor's
Designate.
(e) VCI Board of Directors. The business and affairs of VCI shall be managed or
supervised by a board of directors which shall consist of 11 directors or such other
number of directors as VC, as sole shareholder, may determine from time to time
by special resolution in accordance with the Act.
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(f) Appointment of Board of Directors of VCI. The Board shall select and
appoint the board of directors of VCI subject to the following considerations:
(i) the Board shall nominate the same Elected Members to the board of
directors of VCI as were nominated to the Board provided that if a Non-
Elected Member is elected as either the Chair or Vice Chair of the Board,
then the Shareholder that nominated such Non-Elected Member, shall
nominate, and the Board shall appoint to the board of directors of VCI, an
Elected Member that is not already an Elected Member of the Board in the
place of an Elected Member that was appointed to the Board. For
example, if a Non-Elected Member that was appointed by Ajax is then
elected as the Chair or Vice Chair of the Board, then Ajax shall determine
which of the 2 Elected Members shall be members of the Board only and
Ajax shall nominate an alternate Elected Member to be appointed to the
board of directors of VCI;
(ii) save and except when a Non-Elected Member of the Board is elected as
the Chair or Vice Chair, in which circumstance the provisions of
Section 3.2(g) shall apply, the Board shall not appoint any Non-Elected
Member as a member of the board of directors of VCI;
(iii) the board of directors of VCI shall comply with the requirements of
s. 2.1.2 of the Affiliate Relationships Code for Electricity Distributors and
Transmitters issued by the OEB or any other requirements for board
composition of local distribution companies;
(g) Chair and Vice Chair of Board of Directors of VCI. The individuals elected
as Chair and Vice-Chair of VC shall also hold the same offices at VCI.
(h) Appointment of Boards of Directors of Subsidiaries. The Board shall appoint
the board of directors of any Subsidiary, other than the board of directors of VCI
who shall be appointed by the Board in accordance with the provisions of
Section 3.2(f)
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(i) Director Replacement. Any Shareholder may replace any director nominated by
it at any time during the term of this Agreement and shall nominate a new
member to the Board as appropriate to replace the removed Board member.
(j) Director Qualifications. In addition to the requirements of the Act, the
qualifications of candidates for the Board and the board of directors of any
Subsidiary, shall, where possible, include the following:
(i) business experience;
(ii) time availability,
(iii) financial skills;
(iv) marketing skills;
(v) industry knowledge;
(vi) independence of judgment;
(vii) integrity;
(viii) knowledge of public policy issues relating to the Corporations; and
(ix) knowledge and experience concerning environmental matters, labour
relations and occupational health and safety issues.
(k) Nominees of Transferee Shareholders. Following the transfer of Shares to a
Transferee Shareholder, that Transferee Shareholder shall be entitled to nominate
one member of the Board for each whole block of Shares owned by the
Transferee Shareholder representing 9% of the total issued and outstanding
Shares. A Transferee Shareholder owning less than 9% of the total issued and
outstanding Shares shall not be entitled to nominate any member of the Board and
a Transferee Shareholder owning less than 18% of the total issued and
outstanding Shares shall only be entitled to nominate one member of the Board.
An Amalgamated Shareholder shall not be considered a Transferee Shareholder
for the purpose of this Section 3.2(k) and shall retain its rights to nominate
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members to the Board in the same manner as if the Shareholders forming the
Amalgamated Shareholder had not amalgamated.
(1) Term of Directors, Chair and Vice-Chair.
(i) Each Shareholder shall determine the term for each Elected Member and
each Non-Elected Member nominated by it, provided that such term shall
not exceed the greater of four(4) years or as may be permitted by the Act.
(ii) Members of the Board may serve successive terms on the Board.
(iii) The term of the Chair and Vice-Chair shall not exceed the greater of four
(4) years or as may be permitted by the Act.
(iv) The Chair and Vice-Chair may serve successive terms.
(m) Vacancy. If a director ceases to be a director for any reason (a "Retiring
Director"), the Shareholders shall fill the vacancy thereby created as soon as
reasonably possible, provided that such vacancy shall be filled by an individual
nominated by the Shareholder who had nominated the Retiring Director.
(n) Quorum. A quorum for a meeting of the Board shall be a majority of the
members of the Board. A meeting shall be adjourned for lack of a quorum and a
notice of the adjourned meeting shall be sent to all directors rescheduling the
meeting to a date at least 15 days following the adjourned meeting.
(o) Meetings of the Board. Meetings of the Board shall be held at least once in
every calendar quarter or at the request of the Chair or of a majority of the
members of the Board. All meetings of the Board shall be held in Ontario, or by
such telephone or electronic communication devices as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously. At least 5 days' written notice of the time and place of the
meeting and of the business to be transacted at the meeting in sufficient detail to
enable each director to assess reasonably the importance of such business to the
affairs of VC shall be given to each director.
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(1) Decisions of the Directors. Decisions or resolutions of the Board shall require
the approval of the majority of the directors present at each meeting thereof. The
Chair shall not have a second or casting vote. A resolution in writing signed by
all of the directors entitled to vote on that resolution at a meeting of the Board is
as valid as if it had been passed at a meeting of the Board. In the event that an
equal number of votes are cast at a meeting both for and against a motion, the
motion shall be defeated.
(q) Board Duties. Subject to those matters requiring Shareholder approval as set out
in Section 3.9, the Board shall supervise the management of the business and
affairs of VC and, without limiting the generality of the foregoing, the Board shall
be responsible for,but not limited to, overseeing the following specific matters:
(i) the establishment of appropriate reserves and a dividend policy for VC
and the Subsidiaries consistent with sound financial principles, all with the
intention of providing the Shareholders with a reasonable rate of return on
their investment while maintaining reasonable rates for customers;
(ii) the declaration of any dividend or distribution of capital in respect of the
Shares or the shares of any Subsidiary; and
(iii) the determination and approval of director compensation for directors of
VC and any Subsidiary in accordance with Section 3.2(s) .
(r) Indemnification and Insurance for Directors and Officers. Each of the
Corporations shall indemnify and save its directors and officers harmless from
and against any and all liability, damages, costs (including any income tax
payable as a result of receiving such indemnity, reasonable counsel fees and
disbursements), charges and expenses arising out of or related to any act or
omission done or permitted by them to be done in connection with the execution
of the duties of their office as directors or officers of any one or more of the
Corporations or by reason of their being or having been directors of any one or
more of the Corporations.
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(1) Compensation. A group of directors of the Board that are elected by the Board,
shall make recommendations to the Board concerning the compensation for
members of the Board, the Chair, Vice-Chair and Board Committee members and
committee chairpersons, subject to the approval of the Board. The parties agree
that the said group of directors elected by the Board, as contemplated in this
Section 3.2(s) may include both the Chair and/or the Vice-Chair, provided the
Chair and/or Vice-Chair shall not comprise a majority of the members of such
committee.
3.3 Board Committees
The Board may establish Board Committees from time to time and delegate certain duties
to them including, without limitation,the Board Committees described below:
(a) Nominating Committee. The Board shall appoint members to the Nominating
Committee. The Nominating Committee shall be comprised for 4 directors, and
each of the Shareholders shall have a director nominated by that Shareholder as a
member of the Nominating Committee. In the event that one or more
Shareholders amalgamate but the Shareholders are still the Shareholders only but
in their amalgamated form, the Nominating Committee shall remain comprised of
4 directors and the directors shall be nominees of each Shareholder in the same
manner as if there was no amalgamation. The purpose of the Nominating
Committee shall be to make recommendations to the Shareholders concerning
candidates for the Board.
(b) General Provisions Relating to Board Committees. The quorum for meetings
of Board Committees shall be a majority of the members from time to time of
each Board Committee. Decisions of all Board Committees shall be made by a
majority of the members of the respective Board Committee. Except as otherwise
provided in this Section 3.3 and subject to the supervision of the Board, each
Board Committee shall establish its own rules of procedure for operating in an
efficient and expeditious manner. A Transferee Shareholder shall not acquire the
rights of any Shareholder to designate nominees to any Board Committee except
with the agreement of all of the other Shareholders.
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3.4 Shareholders'Meetings
A quorum for a meeting of Shareholders shall be at least two individuals representing, by
proxy or as otherwise permitted by the Act, both (i) a majority in number of the Shareholders;
and (ii)not less than 51% of the Shares then issued and outstanding.
In the event that the Shareholders amalgamate such that only two Shareholders in number
remain, the quorum for a meeting of shareholders shall be both the Shareholders represented by
proxy or as otherwise permitted by the Act.
The chair of any meeting of the Shareholders of VC shall be the Chair or, in the absence
of the Chair, the Vice-Chair, or in the absence of the Vice-Chair, the President of VC or, in the
absence of the President, such individual as the Shareholders represented at such meeting shall
determine. The chair of any meeting of the sole shareholder of VCI shall be the chair or, in the
absence of the chair,the vice-chair of VCI.
3.5 Regular Shareholders Meetings
Unless the Shareholders otherwise determine, the Shareholders shall meet at least
annually at the registered office of VC or at such other times or places as the Shareholders may
determine.
3.6 Decisions of the Shareholders
All decisions or resolutions of the Shareholders shall require, and shall be deemed to be
effective upon, the approval of at least two thirds of the votes cast at a meeting of Shareholders.
A Shareholders' resolution in writing signed by all of the Shareholders entitled to vote on that
resolution at a meeting of the Shareholders is as valid as if it had been passed at a meeting of the
Shareholders.
3.7 Shareholder Representative
Each Shareholder shall designate the Mayor as the legal representative of that
Shareholder (the "Shareholder Representative") for purposes of providing any consent or
approval required by this Agreement or by the Act. In the event that the Mayor is unable or
unwilling to act as the Shareholder Representative, the Chief Administrative Officer (or the
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individual who performs the equivalent duties) shall be the Shareholder Representative for
purposes of this Agreement and of the Act unless the Shareholder determines otherwise. A
Shareholder shall designate its Shareholder Representative (by proxy duly completed in
accordance with the Act) as its representative to attend and vote at any meeting of Shareholders.
3.8 Of
(a) The officers of VC shall include a President and such other officers as the Board
may determine from time to time. The Board shall appoint the officers of VC
from time to time.
(b) For greater certainty the Parties recognize that in carrying on the ordinary course
of Business, it is not practicable for the Board to be involved in the day to day
affairs of VC. The Board will delegate responsibilities to the officers, who will
report to the Board and the Board Committees from time to time as required.
3.9 Matters Requiring Shareholder Approval
The Shareholders agree that, without Shareholder approval given in accordance with
Section 3.6, VC shall not:
(a) amend its articles (within the meaning of the Act) or enact, revoke, or amend any
by-law of VC;
(b) issue, or enter into any agreement to issue, any shares of VC of any class, or any
securities convertible into any shares of any class, or grant any option or other
right to purchase any such shares or securities convertible into such shares;
(c) redeem, purchase for cancellation or otherwise retire any of its outstanding
Shares;
(d) sell or otherwise dispose of, by conveyance, transfer, lease, sale and leaseback,
merger or other reorganization or transaction, mortgage, pledge, charge or
otherwise grant a security interest in, all or substantially all of the assets or
undertaking of VC;
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(e) enter into any contracts, commitments or transactions that would increase the
Debt/Equity Ratio to greater than 70% Debt/30% Equity;
(f) grant security for or guarantee, or otherwise become liable for any debt, liability
or obligation of any Person other than a Subsidiary,
(g) take or institute the proceedings for any winding up,reorganization or dissolution;
(h) enter into any amalgamation, arrangement or consolidation; and
(i) apply to continue as a corporation under the laws of another jurisdiction.
3.10 Unanimous Shareholder Agreement
Each of the Shareholders acknowledges that this Agreement is intended to operate as a
unanimous shareholder agreement with respect to VC within the meaning of the Act. Pursuant to
Section 108(2) of the Act, the discretion and powers of the Board to manage or supervise the
management of the business and affairs of VC are hereby restricted to the extent of the
provisions of Section 3.9 of this Agreement.
3.11 Agreement Binds Veridian Corporation and Subsidiaries
VC and the Subsidiaries, by their execution of or acknowledgement to be bound by this
Agreement, acknowledges that they have actual notice of the terms of this Agreement, consent to
this Agreement and by this Agreement covenant with each of the Shareholders that they will at
all times during the term of this Agreement:
(a) give or cause to be given such notices, execute or cause to be executed such
deeds, transfers and documents as may from time to time be necessary or
conducive to the carrying out of the terms and intent of this Agreement;
(b) do or cause to be done all such acts, matters and things as may from time to time
be necessary or conducive to the carrying out of the terms and intent of this
Agreement; and
(c) take no action that would constitute a contravention of any of the terms and
provisions of this Agreement.
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3.12 Auditors
The Auditors shall be appointed by the Shareholders from time to time.
3.13 Banking
The Corporations' bankers shall be such financial institution(s) as the Board shall from
time to time determine. All resolutions respecting banking authority, the opening of bank
accounts and the drawing on such accounts shall require the consent of the Board before
becoming effective.
3.14 Financial Statements
VC shall cause to be prepared and delivered as soon as reasonably practicable and in no
event later than 180 days after the end of each fiscal year of VC and VCI annual audited
consolidated financial statements for such fiscal year prepared in accordance with GAAP and
accompanied by a report of the Auditors.
ARTICLE IV
REPRESENTATIONS,WARRANTIES AND COVENANTS
4.1 Representations and Warranties
Each of the Shareholders represents and warrants as follows and acknowledges that each
of the other Parties hereto are relying on such representations and warranties in connection with
the entering into of this Agreement:
(a) it is the registered and beneficial owner of the Shares stated to be owned by such
Shareholder in the recitals hereto, free and clear of all Encumbrances and there
are no outstanding agreements, options, warrants or other rights capable of
becoming an agreement, option or warrant to purchase such Shares;
(b) it has the power and capacity to own its assets and to enter into and perform its
obligations hereunder and has taken all necessary action to authorize the
execution and delivery of this Agreement;
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(c) this Agreement and the transactions contemplated herein have been duly
authorized by it and constitutes a valid and binding obligation of it enforceable
against it in accordance with its terms subject to the laws of bankruptcy and the
availability of equitable remedies; and
(d) the execution, delivery and performance of this Agreement does not and will not
contravene the provisions of its articles, by-laws, constating documents or the
provisions of any agreement or other instrument to which it is a Party or may be
bound.
4.2 Covenants
Each of the Shareholders covenants and agrees with each other Party hereto that all of the
foregoing representations and warranties pertaining to it set forth in Article 4.1 will continue to
be true and correct during the continuance of this Agreement.
ARTICLE V
TRANSFER OF SHARES
5.1 General Restriction on Transfer
Save and except for transfers made pursuant to and in accordance with
Sections 5.3 and 5.4 of this Agreement, no Shares, nor the whole or any item or part of any right,
title, benefit or interest therein or thereto, may be sold, transferred, assigned,made subject to any
Encumbrance or otherwise disposed. No Shareholder shall be entitled to create or grant an
Encumbrance on its Shares.
5.2 Legend on Shares
All share certificates representing Shares of VC shall bear on their face the following
notation:
"The shares represented by this certificate are subject to the provisions of the
Original Shareholders' Agreement made as of September 28, 2001 among all of
the shareholders of the Corporation as at that date, which agreement contains
restrictions on the right to sell, transfer, pledge, mortgage, assign, vote or
otherwise deal with or encumber such shares. Notice of such restrictions and the
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other provisions of such agreement is hereby given. A copy of such agreement is
available for inspection from the Secretary of the Corporation on request."
5.3 Rights of First Refusal
If any Shareholder(in this Article V called the "Selling Shareholder") wishes to sell all,
but not less than all, of its Shares (subject to Section 5.5) to a Person with whom it deals at
Arm's Length, the other Shareholders and VC (in this Article V called the "Other Holders")
shall have the prior right to purchase such Shares in accordance with the following provisions:
(a) Notice of Offer. A Selling Shareholder shall give to the Secretary of VC and to
each Other Holder notice in writing of its desired intention to sell all, but not less
than all, of its Shares (in this Article V called the "Offered Shares"). The notice
(in this Article called the "Selling Notice") shall have annexed thereto a true copy
of the offer, agreement or similar document (the "Offer") containing the terms
and conditions pursuant to which the Selling Shareholder wishes to sell the
Offered Shares to the prospective purchaser (in this Article V called the
"Prospective Purchaser"), who shall be identified, and the price and terms of
payment which the Selling Shareholder is willing to accept for the Offered Shares
which shall be the same as set forth in the Offer;
(b) Offer Open During Notice Period. The Secretary of VC shall thereupon be
deemed to be the agent of the Selling Shareholder for the purposes of offering the
Offered Shares to the Other Holders on the terms of payment and for the price
contained in the Selling Notice and the offer by the Secretary shall be irrevocable
and remain open for acceptance, as hereinafter provided, for a period of 60 days
(in this Article V called the "Notice Period") after receipt of the Selling Notice
by the Secretary;
(c) Acceptance of Offer. Within 15 Business Days after receipt of the Selling
Notice by the Secretary, the Secretary shall offer the Offered Shares for sale to the
Other Holders as nearly may be in proportion to the number of Shares held by
each such Other Holder respectively as at the date of such offer. The offer by the
Secretary shall state that any Other Holder desiring to purchase a number of
Offered Shares less than or in excess of its proportion shall indicate in its notice to
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the Secretary (in this Article V called the "Purchase Notice") stating the number
of Offered Shares it desires to purchase. If, within the Notice Period, a Purchase
Notice has not been received by the Secretary of VC from an Other Holder, such
Other Holder shall be deemed to have declined to purchase the Offered Shares
being offered;
(d) Excess Shares. If the Other Holders do not claim their respective proportions,
any unclaimed Offered Shares shall be used to satisfy the claims of such Other
Holders for Offered Shares in excess of their proportions. If the claims in excess
are more than sufficient to exhaust such unclaimed Offered Shares, the unclaimed
Offered Shares shall be divided pro rata among such Other Holders desiring
Offered Shares in excess of their proportion, in proportion to the number of
Shares held by them respectively as at the date of such offer, provided that any
unclaimed Offered Shares after such pro rata division shall be divided pro rata
among Other Holders in proportion to their claims in excess of their respective
proportions determined as aforesaid. Notwithstanding anything to the contrary,
no Other Holder shall be bound to purchase any Offered Shares in excess of the
amount indicated in its Purchase Notice;
(e) No Fractions. If the Offered Shares are not capable, without division into
fractions of Shares, of being offered to or being divided among the Other Holders
in the proportions above mentioned, the same shall be offered to or divided
among the Other Holders as nearly as may be in the proportions hereinbefore
mentioned and any balance shall be offered to or divided among the Other
Holders or some of them in such equitable manner as may be determined by the
Board;
(f) Sale. If all, but not less than all, of the Offered Shares are accepted by the Other
Holders pursuant to the provisions of this Section 5.3, the Offered Shares shall be
sold to the Other Holders for the price and for the terms contained in the Selling
Notice;
(g) Deemed Refusal. If Purchase Notices have not been received by the Secretary in
respect of all of the Offered Shares within the Notice Period, the Other Holders,
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and each of them, shall be deemed to have declined to purchase the Offered
Shares and, subject to the provisions of paragraph (h), the Selling Shareholder
may within 60 days after the expiration of the Notice Period sell all, but not less
than all, of the Offered Shares to the Prospective Purchaser at the price and upon
terms of payment which are not more favourable than those specified in the
Selling Notice; and
(h) Prospective Purchaser Bound. The Selling Shareholder shall sell the Offered
Shares to a Person who is not a Parry hereto only if such other Person
simultaneously with any such sale executes and delivers to each of the other
Parties hereto a counterpart of this Agreement in which case such Person shall
have the rights of a Transferee Shareholder and shall be subject to the same
obligations as a Party to this Agreement as if it were an original signatory in place
of the Selling Shareholder or its predecessor in title originally Party to this
Agreement, as applicable. Without limiting the generality of the foregoing, a
Transferee Shareholder shall agree to be bound by the provisions of Section 7.1.
(i) Veridian Corporation as Purchaser. The Other Holders, except VC, may cause
VC to act as an Other Holder.
5.4 Piggyback Right
In the event one or more Selling Shareholders receives an Offer and, in accordance with
the procedures set forth in Section 5.3, the Other Holders decline to purchase the Offered Shares
from the Selling Shareholder(s), and the Shares which the Selling Shareholder(s) wish to sell
under the Offer(s) would result in a Person owning more than 49% of all of the issued and
outstanding Shares, then each Other Holder except VC shall have the right to require that all, but
not less than all, of its Shares be sold to the Prospective Purchaser, on the same terms and
conditions as those set out in the Offer; provided that, if the Prospective Purchaser will not
purchase the aggregate amount of Shares which the Selling Shareholder(s) and the Other Holders
except VC requested to be sold pursuant to the immediately preceding sentence, the number of
Shares which the Selling Shareholder(s) and the Other Holders except VC shall be permitted to
sell to the Prospective Purchaser shall be proportionately reduced so that each may sell the same
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percentage of its Shares. The Other Holders except VC may only exercise their right under this
Section 5.4 by written notice given to the Secretary of VC within the Notice Period.
5.5 Amalgamated Shareholder
An Amalgamated Shareholder is entitled to sell its Shares in accordance with this
Agreement in the same manner as if the Amalgamated Shareholder had not been amalgamated
and, may for the purposes of Section 5.3 offer to sell less than all of its Shares (only if such
Amalgamated Shareholder sells its Shares in the original blocks held by it prior to
amalgamation)provided that each offer is otherwise made in compliance with Section 5.3.
ARTICLE VI
CLOSING OF PURCHASE TRANSACTION
6.1 Time and Place of Closing
The closing of any purchase and sale of Shares contemplated by Sections 5.3 or 5.4 of
this Agreement shall unless otherwise agreed upon by the Parties to such transaction, take place
at the registered office of VC on the date specified in the Selling Notice.
6.2 Documents to be delivered by the Vendor
On or before the closing of a purchase and sale of Shares contemplated hereunder, the
vendor shall deliver to the purchaser the following (each in form and substance satisfactory to
the purchaser):
(a) a share certificate or certificates representing the Shares being sold, duly endorsed
in blank for transfer or newly issued in the name of the purchaser;
(b) a certificate of a senior officer certifying that any representations and warranties
made by such vendor in this Agreement are true and correct as of the Closing Date;
(c) the written resignation of such vendor's nominee(s) to the Board and a release by
such nominee(s) of all claims against VC with respect to any matter or thing arising
as a result of being a director;
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(2) the written release of the vendor of all claims against VC and the Subsidiaries,
any of the other Shareholders with respect to any matter or thing arising up to and
including the Closing Date as a result of being a Shareholder; and
6.3 Documents to be delivered by the Purchaser
On or before the closing of a purchase and sale of Shares contemplated hereunder, the
purchaser shall deliver to the vendor the following:
(a) a certified cheque or bank draft in an amount equal to the purchase price for the
Shares being purchased;
(b) in the event Shares are sold to a Person who is not a Shareholder pursuant to
Sections 5.3 or 5.4 hereof, a duly executed counterpart of this Agreement or other
agreement pursuant to which such Person agrees to be bound by the provisions
hereof; and
(c) such other documents as may be reasonably required by any Party to such
purchase and sale to properly complete the purchase and sale of the Shares.
6.4. Failure to Complete Sale
In the event the vendor fails to complete the subject, purchase and sale transaction, the
purchaser shall have the right to deposit the purchase price for the subject Shares for the account
of the vendor in an interest-bearing account at a branch of VC's bankers. Thereafter,
notwithstanding that the documents required pursuant to Section 6.2 have not been delivered by
the vendor,the purchase and sale of the subject Shares shall be deemed to be fully completed and
all right, title,benefit and interest, both at law and in equity, in and to the subject Shares shall be
deemed to have been transferred and assigned to and become vested in the purchaser and all
right, title, benefit and interest, both at law and in equity, of the vendor or any other Person
having an interest in and to the subject Shares shall cease and the records of VC shall be
amended accordingly.
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ARTICLE VII
NON-COMPETITION AND CONFIDENTIALITY
7.1 Non-Competition
(a) Each Shareholder covenants and agrees that it shall not, except through VC or
otherwise with the consent of all Shareholders, or as provided in Section 7.1(b),
directly or indirectly, from the date hereof until 2 years after the Party ceases to be
a Shareholder, compete within (a) Ontario; or (b) South Central Ontario; with the
Business, whether by carrying on or engaging in or being concerned with or
interested in or advising, lending money to, guaranteeing the debts or obligations
of or permitting the Party's name or any part thereof to be used or employed by
any Person engaged in or concerned with or interested in any business within (c)
Ontario; or (d) South Central Ontario that is competitive with the Business, or
otherwise.
(b) The Parties acknowledge that (i) a municipality other than the Shareholder which
is a shareholder of one or more corporations incorporated under the Act for the
purposes of generating, transmitting, distributing or retailing electricity, and (ii) a
person which holds a portfolio investment of less than 5% of the shares of a
corporation whose shares are publicly traded which competes with the Business is
permitted to become a Shareholder in accordance with the provisions of this
Agreement.
7.2 Confidentiality
Each Shareholder shall not use or disclose to any Person other than in the ordinary course
of the Business of the Corporations, directly or indirectly, any Confidential Information at any
time other than to employees, officers or directors of such Shareholder provided that all such
Persons shall treat such information as confidential and not disclose same to any Third Party nor
use the same for any purpose other than for the purposes of the Corporations or in respect of a
Shareholder's investment in the Corporations, provided, however, that nothing in this Article VII
shall preclude a Shareholder from disclosing or using Confidential Information if:
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(a) the Confidential Information is available to the public or in the public domain at
the time of such disclosure or use, without breach of this Agreement;
(b) disclosure of Confidential Information is required to be made by any law,
regulation, governmental body or authority or by court order;
(c) disclosure of Confidential Information is made in connection with any arbitration
pursuant to Section 12.4;
(d) disclosure of Confidential Information is made to a court which is determining the
rights of the Parties under this Agreement;
(e) the Confidential Information is properly within the legitimate possession of a
Shareholder prior to its disclosure hereunder and without any obligation of
confidentiality;
(f) after disclosure, the Confidential Information is lawfully received by a
Shareholder from another Person who is lawfully in possession of such
information and such other Person is not restricted from disclosing the
information to the Shareholder;
(g) the disclosure of Confidential Information is necessary to complete a transfer of
Shares in accordance with this Agreement;
(h) the Confidential Information is independently developed by a Shareholder
through Persons who have not had access to, or knowledge of, the Confidential
Information, other than as permitted in(a)through(g) above or(i)below; or
(i) the Confidential Information is approved by the Corporations for disclosure prior
to its actual disclosure.
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Each Shareholder acknowledges and agrees that the obligations under this Section 7.2
shall remain in effect for the period of two (2) years after it ceases to be a Shareholder.
Notwithstanding the foregoing restrictions, the nominees of the Shareholders on the Board shall
be entitled to discuss the affairs of the Corporations with the officers, directors, employees and
representatives of such Shareholder.
7.3 Injunctive Relief
Each Shareholder understands and agrees that VC, and consequently the other Parties,
will suffer irreparable harm in the event that the Shareholder breaches any of the obligations set
out in this Article VII and that monetary damages shall be inadequate to compensate for the
breach. Accordingly, each Shareholder agrees that, in the event of a breach or threatened breach
by it of any of the provisions of this Article VII, VC and the other Parties hereto, in addition to
and not in limitation of any other rights, remedies or damages available to them at law or in
equity, shall be entitled to an interim injunction, interlocutory injunction and permanent
injunction in order to prevent or to restrain any such breach by the Shareholder.
7.4 Accounting for Profits
Each Shareholder agrees that in the event of a violation of any of its covenants or
agreements under this Article VII, VC shall be entitled to an accounting and repayment of all
profits, compensation, royalties, commissions, remunerations or benefits which the Shareholder
directly or indirectly shall have realized or may realize relating to, growing out of, or in
connection with any such violation(s); this remedy shall be in addition to and not in limitation of
any injunctive relief or other rights or remedies to which VC and the other Parties are or may be
entitled at law or in equity or otherwise under this Article VII.
7.5 Reasonableness of Restrictions
Each Shareholder acknowledges that it has given careful consideration to the provisions
of Sections 7.1 to 7.4 above and, having done so, agrees that the restrictions set forth in those
sections are fair and reasonable and are reasonably required for the protection of the other
Shareholders' investments in VC and for the protection of the interests of VC and its Business,
and that it is being reasonably compensated for the imposition of such restrictions.
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ARTICLE VIH
SALE OF SURPLUS ASSETS
8.1 Right of First Refusal
In the event that VC or any Subsidiary intends to sell any Surplus Assets, the municipal
Shareholder in whose legal boundaries the Surplus Assets are located shall have a first right of
refusal to purchase the Surplus Assets at their Fair Market Value. Such municipal Shareholder
shall be entitled to receive written notice of any proposed disposition 90 days from the date of
such notice to exercise its right to purchase, failing which the Surplus Assets may be sold by VC
or any Subsidiary as the case may be.
ARTICLE IX
BOOKS, RECORDS AND RIGHT TO INFORMATION
9.1 Books and Records
VC shall at all times maintain at its registered office proper books of account, which shall
contain accurate and complete records of all transactions, receipts, expenses, assets and liabilities
of VC.
9.2 Right to Information
The Parties covenant and agree that each Shareholder of VC shall have rights of
inspection as set out in Sections 140, 141, 144 and 145 of the Act.
ARTICLE X
TERM
10.1 Term
This Agreement shall come into force and effect as of the date set out on the first page of
this Agreement, and shall continue in force until the earlier of-
(a) the date on which one Shareholder holds all of the Shares; and
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(3) the date on which this Agreement is terminated by written agreement of all of the
Shareholders.
ARTICLE XI
PROMISSORY NOTES
11.1 Promissory Notes.
(a) Each of the Promissory Notes shall rank equally.
(b) No Shareholder may take any step to amend, convert, exchange or enforce those
Promissory Notes issued by VC in favour of the Shareholders (in this section, the
"VC Notes") without the agreement of each other Shareholder which holds VC
Notes on the identical terms and conditions. A Shareholder which proposes such
a step shall give notice in writing of its proposal and the agreement of a
Shareholder to such proposal shall be given in writing by the Treasurer of that
Shareholder. In the event that all Shareholders do not agree with the proposal, no
Shareholder shall proceed with the proposed action.
(c) No Shareholder may take any step to amend or exchange those Promissory Notes
issued by VCI in favour of the Shareholders (in this section, the "VCI Notes")
without the agreement of each other Shareholder which holds VCI Notes on the
identical terms and conditions. A Shareholder which proposes such a step to
amend or exchange shall give notice in writing of its proposal and the agreement
of a Shareholder to such proposal shall be given in writing by the Treasurer of
that Shareholder. In the event that all Shareholders do not agree with the
proposal, no Shareholder shall proceed with the proposed action.
Notwithstanding the foregoing and for greater clarity, any Shareholder may
demand repayment in accordance with the terms thereof, in whole or in part, of
the aggregate amount outstanding (principal plus interest) on its respective VCI
Note without having to consult with or obtain the agreement of the other
Shareholders holding VCI Notes.
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ARTICLE XII
GENERAL
12.1 Notices
(a) All notices, requests, demands, consents or other communications required to be
given or made or provided for in this Agreement shall be in writing and shall be
deemed to have been given if delivered, if. (i) delivered in person and left with the
clerk's office if such notice is being delivered to a Shareholder, or in the case of
notice to other parties, with a responsible employee of the relevant Party at the
applicable address set forth below; (ii) sent by prepaid courier service or (except
in the case of actual or apprehended disruption of postal service) mail; (iii) sent by
facsimile transmission, with confirmation of transmission by the transmitting
equipment(a"Transmission"); or(iv)by e-mail
in the case of notice to Ajax addressed to it at:
Corporation of the Town of Ajax
65 Harwood Avenue South
Ajax, ON L1S 2H9
Attention: Mayor
Fax Number: 905-683-1061
E-Mail: Steve.parish @ajax.ca
in the case of notice to Belleville addressed to it at:
Corporation of the City of Belleville
459 Sidney Street
Belleville, ON K8N 2Y7
Attention: Mayor
Fax Number: 613-967-3209
E-Mail: Mayor.ellis@city.b elleville.on.ca
in the case of notice to Clarington addressed to it at:
Corporation of the Municipality of Clarington
40 Temperance Street
Bowmanville, ON L1C 3A6
Attention: Mayor
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Fax Number: 905-623-5717
E-Mail: afoster @clarington.net
in the case of notice to Pickering addressed to it at:
Corporation of the City of Pickering
1 The Esplanade
Pickering, ON L1V 3P4
Attention: Mayor
Fax Number: 905-420-9695
E-Mail: dryan @pickering.ca
In the case of notice to Veridian Corporation and/or Subsidiary addressed to it
at:
55 Taunton Road E.
Ajax,ON LIT 3V3
Attention: President,Veridian Corporation
Fax Number: 905-427-6827
E-Mail: mangemeer @veridian on.ca
(b) Any Party may change its address for notice by giving notice to the other Parties.
(c) Any notice sent in accordance with this Section 12.1 shall be deemed to have
been received:
(i) if delivered prior to or during normal business hours on a Business Day in
the place where the notice is received, on the date of delivery;
(ii) if sent by mail, on the fifth Business Day in the place where the notice is
received after mailing, or, in the case of disruption of postal service, on the
fifth such Business Day after cessation of that disruption;
(iii) if sent by facsimile during normal business hours on a Business Day in the
place where the Transmission is received, on the same day that it was
received by Transmission, on production of a Transmission report from
the machine from which the facsimile was sent which indicates that the
facsimile was sent in its entirety to the relevant facsimile number of the
recipient;
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(iv) if sent by e-mail during normal business hours on a Business Day in the
place where the e-mail is received, on the same day that it was received by
e-mail; or
(v) if sent in any other manner, on the date of actual receipt.
except that any notice delivered in person, sent by Transmission or e-mail not on
a Business Day or after normal business hours on a Business Day, in each case in
the place where the notice is received, shall be deemed to have been received on
the next succeeding Business Day in the place where the notice is received
12.2 Assignment and Binding Effect
This Agreement is not assignable by any Party except insofar as its benefit and burden
pass with the Shares transferred in accordance with its provisions. This Agreement shall be
binding on and enure to the benefit of the Parties hereto and their respective successors and
permitted assigns. Reference in this Agreement to any Party shall be deemed to include reference
to such Party and its respective successors and assigns as permitted hereunder.
12.3 Amalgamation of Municipal Shareholders
Two or more Shareholders that amalgamate ("Amalgamated Shareholder") shall retain
the same rights granted under this Agreement as if the respective Shareholders had not
amalgamated except as otherwise provided herein.
12.4 Arbitration
(a) Selection of Single Arbitrator. The Shareholders agree that any controversy,
dispute or claim between them or any of them arising out of or relating to this
Agreement or the performance, enforcement, breach, termination or validity of it,
including the determination of the scope of the Agreement to arbitrate, shall be
determined by arbitration before a single arbitrator (the "Arbitrator") agreed to
by all of the Shareholders. If the Shareholders are unable to agree on the
Arbitrator, then, an application may be made under the Arbitration Act to a judge
for the appointment.
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(3) Referring Dispute. Any Shareholder may refer a dispute to the Arbitrator by
providing notice in writing to the Arbitrator and to all of the shareholders hereto
expressing its intention to refer the dispute to arbitration and briefly describing the
nature of the dispute.
(c) Attempted Settlement. Upon service of the notice referred to above, the
Shareholders who are party to the dispute (the "Disputing Shareholders") will
attempt to negotiate a settlement of the dispute amongst themselves. In the event
that the Parties are unable to reach settlement by themselves within 10 days of the
service of the notice referred to above, the Shareholders will proceed with the
arbitration and any Disputing Shareholders shall be free to apply to the Arbitrator
for directions as to the scheduling of the arbitration itself and the pre-hearing
procedures.
(d) Decision Final and Binding. The Shareholders agree that the award of the
Arbitrator shall be final and binding without any right of appeal and shall be the
sole and exclusive remedy between them regarding any claims, counterclaims,
issues or disputes referred to the Arbitrator.
(e) Powers of Arbitrator. The Shareholders agree that the Arbitrator shall have the
powers and jurisdiction of an arbitrator pursuant to the Arbitration Act and such
power shall include the power to award interim and interlocutory injunctions and
other equitable relief.
(f) Costs. The Arbitrator shall have the power to award the costs of the Arbitrator's
services and related costs against either Party; however, each Party will bear the
costs of their own counsel and witness fees.
(g) Written Notices. All notices by one Shareholder to the other in connection with
the arbitration shall be in writing and shall be deemed to have been duly given or
made if delivered or sent by facsimile transmission to the addresses provided in
this Agreement.
- 39 -
12.5 Further Assurances
Each Party hereto shall do such acts and shall execute such further documents,
conveyances, deeds, assignments, transfers and the like, and will cause the doing of such acts
and will cause the execution of such further documents as are within its power as any other Party
may in writing at any time and from time to time reasonably request be done and or executed, in
order to give full effect to the provisions of this Agreement.
12.6 Severability
If any provision of this Agreement is determined to be invalid or unenforceable by a
court of competent jurisdiction from which no further appeal lies or is taken, that provision shall
be deemed to be severed herefrom, and the remaining provisions of this Agreement shall not be
affected thereby and shall remain valid and enforceable.
12.7 Amendment,Modification and Waiver
This Agreement may not be modified, amended, terminated or supplemented except as
agreed, in writing, by Shareholders both comprising a majority in number of the Shareholders
and holding not less than 51% of the Shares then issued and outstanding. In the event that the
Shareholders amalgamate such that only two Shareholders remain, this Agreement may not be
modified, amended, terminated or supplemented except as agreed, in writing, by all the
Shareholders. Any waiver of, or consent to depart from, the requirements of any provision of
this Agreement shall be effective only if it is in writing and signed by the Party giving it, and
only in the specific instance and for the specific purpose for which it has been given. No failure
on the part of any Party to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of any other right.
12.8 Time of Essence
Time is of the essence of this Agreement.
- 40 -
12.9 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 constitute one agreement.
12.10 No Partnership
Nothing in this Agreement shall be deemed in any way or for any purpose to constitute
any Party a partner of or a joint venture with any other Party.
12.11 Proceedings
The covenants, agreements and obligations herein expressed to be observed and
performed by the Parties hereto may be enforced by any of the Parties hereto pursuant to
Section 12.4 without joining the remaining Parties as parties in any proceedings.
12.12 Effective Date
The Parties agree that notwithstanding the execution of this Agreement as of the date of
this Agreement, that the Original Shareholders' Agreement shall continue to bind the Parties
until January 1St, 2015.
[SIGNATURE PAGE FOLLOWS]
- 41 -
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement as of
the date first above written.
THE CORPORATION OF THE TOWN OF AJAX
By:
c/s
By:
c/s
THE CORPORATION OF THE CITY OF BELLEVILLE
By:
c/s
By:
c/s
THE MUNICIPALITY OF CL GTON
r
1
By: c/s
1
`ah Foster, Mayor
By:
4� �-11-�//"
- c/s
C.Anne Greentree,Municipal Clerk
-42 -
THE CORPORATION OF THE CITY OF PICKERING
By: c/s
By:
c/s
VERIDIAN CORPORATION
By: c/s
By:
c/s
VERIDIAN CONNECTIONS INC.
By: c/s
By:
c/s
VERIDIAN ENERGY INC.
By: c/s
By:
c/s
TOR01: 5445496:v13
SCHEDULE "A"
LIST OF PROMISSORY NOTES
1. Fourth Amended and Restated Term Promissory Note for the principal amount of
$14,060,000 due November 1,2039 issued by VCI in favour of Ajax dated March 30,2010.
2. Fourth Amended and Restated Term Promissory Note for the principal amount of$5,588,000
due November 1,2039 issued by VCI in favour of Belleville dated March 30,2010.
3. Fourth Amended and Restated Term Promissory Note for the principal amount of$5,966,000
due November 1,2039 issued by VCI in favour of Clarington dated March 30,2010.
4. Fourth Amended and Restated Term Promissory Note for the principal amount of
$17,974,000 due November 1, 2039 issued by VCI in favour of Pickering dated March 30,
2010.
5. First Amended and Restated Term Promissory Note for the principal amount of$21,000,000
due December 17,2039 issued by VCI in favour of VC dated March 30,2010.
6. Fourth Amended and Restated Term Promissory Note for the principal amount of$5,550,000
issued by VC in favour of Ajax dated October 31,2012.
7. Fourth Amended and Restated Term Promissory Note for the principal amount of$2,206,000
issued by VC in favour of Belleville dated October 31,2012.
8. Fourth Amended and Restated Term Promissory Note for the principal amount of$2,355,000
issued by VC in favour of Clarington dated October 31,2012.
9. Fourth Amended and Restated Term Promissory Note for the principal amount of$7,095,000
issued by VC in favour of Pickering dated October 31,2012.