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EXHIBIT (2)
THIS ARRANGEMENT AGREEMENT made as of the 13th day of October, 2000.
BETWEEN:
ULTRA PETROLEUM CORP., a corporation subsisting under the laws of the Yukon
Territory (hereinafter called "UPC")
OF THE FIRST PART
- and -
PENDARIES PETROLEUM LTD., a corporation subsisting under the laws of the
Province of New Brunswick (hereinafter called "PPL")
OF THE SECOND PART
WHEREAS the parties hereto intend to carry out the transactions contemplated
herein pursuant to an arrangement under the NBBCA;
NOW THEREFORE IN CONSIDERATION of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto covenant and
agree as follows:
ARTICLE 1
Definitions
1.1 In this Agreement, unless the context otherwise requires:
(a) "Agreement" means this agreement, including the recitals and all
Schedules to this agreement, as amended or supplemented from time to time,
and "hereby", "hereof", "herein", "hereunder", "herewith" and similar terms
refer to this Agreement and not to any particular provision of this
Agreement;
(b) "Arrangement" means the arrangement under the provisions of Section
128 of the NBBCA set out in the Plan of Arrangement;
(c) "Articles of Arrangement" means the articles of arrangement in
respect of the Arrangement required by the NBBCA to be sent to the Director
after the Final Order has been made;
(d) "AMEX" means the American Stock Exchange;
(e) "Business Day" means a day, other than a Saturday, Sunday or
statutory holiday, when banks are generally open for the transaction of
bank business in the location in which an action is to be taken hereunder;
(f) "Canadian Securities Laws" means the applicable securities laws,
regulations, rules and policies of each province or territory of Canada in
which Ultra Common Shares are to be distributed pursuant to the
Arrangement;
(g) "Closing" means the completion of the transactions contemplated
herein;
(h) "Competing Transaction" means any agreement, understanding, proposal
or offer (including without limitation a proposal or offer to PPL's
shareholders) which is, or if accepted would be, inconsistent with or
detrimental to the completion of the transactions contemplated herein;
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(i) "control" means, with respect to control of a body corporate by a
person, the holding (other than by way of security) by or on behalf of that
person of securities of the body corporate carrying voting rights
sufficient to elect a majority of the directors of the body corporate;
(j) "Court" means The Court of Queen's Bench of New Brunswick;
(k) "Director" means the Director appointed pursuant to section 184 of
the NBBCA;
(l) "Effective Date" means the date the Arrangement becomes effective
under the NBBCA as determined by the certificate of arrangement issued by
the Director pursuant to section 125(2) of the NBBCA;
(m) "Effective Time" means 12:01 a.m. (Fredericton time) on the
Effective Date;
(n) "Encumbrance" includes, without limitation, any mortgage, pledge,
assignment, charge, lien, security interest, claim, trust, royalty or
carried, participation, net profits or other third party interest and any
agreement, option, right or privilege (whether by law, contract or
otherwise) capable of becoming any of the foregoing;
(o) "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended;
(p) "Expiry Date" means January 31, 2001, provided that in the event
that the SEC has not completed its review of the Pendaries Proxy Statement
within 60 days of the date on which the Pendaries Proxy Statement is first
filed with the SEC, the Expiry Date shall be extended for a period of days
beyond January 31, 2001 equal to the number of days (to a maximum of 60
days) in excess of 60 days that elapse between the date the Pendaries Proxy
Statement is first filed with the SEC and the date on which the SEC shall
have completed their review of the Pendaries Proxy Statement, or such later
date as PPL and UPC shall agree upon in writing;
(q) "Final Order" means the order of the Court approving the
Arrangement, as such order may be affirmed, amended or modified;
(r) "Governmental Authority" includes any federal, provincial, municipal
or other political subdivision government, department, commission, board,
bureau, agency or instrumentality, domestic or foreign;
(s) "GST" means any and all taxes payable under Part IX of the Excise
Tax Act (Canada) as amended from time to time;
(t) "Income Tax Act" means the Income Tax Act (Canada);
(u) "Interim Order" means an order of the Court containing declarations
and directions with respect to the Arrangement, as such order may be
affirmed, amended or modified;
(v) "Letter of Intent" means the letter of intent between UPC and PPL
dated August 28, 2000, providing for the entering into of this Agreement;
(w) "Material Adverse Change" means any adverse change in the financial
condition, assets, business, operations or prospects of either Pendaries or
Ultra, as applicable, which is material to PPL and the Pendaries
Subsidiaries taken as a whole or to UPC and the Ultra Subsidiaries taken as
a whole; provided, however, that the occurrence of any event that affects
the oil and gas industry in general, including, but not limited to, changes
in product prices, shall not be a Material Adverse Change;
(x) "Material Adverse Effect" when used in connection with Pendaries or
Ultra, means any effect of Material Adverse Change relating to such party;
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(y) "Misrepresentation" includes any untrue statement of a material
fact, any omission to state a material fact that is required to be made and
any omission to state a material fact that is necessary to be made in order
for a statement not to be misleading;
(z) "NBBCA" means the Business Corporations Act (New Brunswick);
(aa) "NSA" means Netherland, Sewell & Associates, Inc., an independent
petroleum engineering firm;
(ab) "Ontario Securities Laws" means the applicable securities laws,
regulations, rules and policies of the Province of Ontario;
(ac) "Pendaries" means collectively PPL and the Pendaries Subsidiaries;
(ad) "Pendaries Assets" means all of the assets and properties of
Pendaries described in the Pendaries Reports;
(ae) "Pendaries Common Shares" means the common shares in the capital of
PPL;
(af) "Pendaries Counsel" means collectively Stewart McKelvey Stirling
Scales, and Jenkens & Gilchrist, or such other legal counsel as may be
designated by Pendaries;
(ag) "Pendaries Disclosure Statement" means the disclosure schedule
delivered by PPL to UPC prior to the execution of this Agreement;
(ah) "Pendaries Financial Statements" means collectively the audited
consolidated financial statements of Pendaries for the twelve months ended
December 31, 1999 and the unaudited consolidated financial statements of
Pendaries for the six months ended June 30, 2000, comprised of consolidated
balance sheets, consolidated statements of operations and retained deficit,
and consolidated statements of cash flow and the notes thereto;
(ai) "Pendaries Meeting" means the special meeting of the holders of
Pendaries Common Shares, including any adjournment or postponement thereof,
to be called in accordance with the Interim Order to consider and, if
thought fit, approve and adopt the Arrangement;
(aj) "Pendaries Options" means the options granted under agreements or
otherwise to purchase or acquire shares in Pendaries which if exercised
would result in the issuance of up to 575,500 Pendaries Common Shares, as
set out in the Pendaries Disclosure Statement;
(ak) "Pendaries Permitted Encumbrances" means the encumbrances and
burdens disclosed or reflected in the Pendaries Reports, and those
Encumbrances of a general nature generally affecting companies carrying on
in the ordinary course of business of exploration and development of oil
and gas or generally affecting title to oil and gas properties, or
disclosed in the Pendaries Financial Statements;
(al) "Pendaries Proxy Statement" means collectively the letter to
shareholders, notice of meeting, proxy statement and form of proxy to be
filed by PPL with the SEC and distributed to holders of Pendaries Common
Shares in connection with the holding of the Pendaries Meeting;
(am) "Pendaries SEC Documents" has the meaning ascribed thereto in
subsection 4.1(u) hereof;
(an) "Pendaries Reports" means the report of RSC evaluating the reserves
of Pendaries and the estimated future cash flow from such reserves
effective January 1, 2000;
(ao) "Pendaries Subsidiaries" means collectively Sino-American, Sino-
American Overseas Energy Corporation, a Cayman Islands corporation, and
Pendaries Production, Inc., a Delaware corporation;
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(ap) "person" includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association;
(aq) "Plan of Arrangement" means the plan of arrangement substantially
in the form and content of Exhibit 1 hereto, as amended or supplemented
from time to time in accordance with Article 3 hereof or at the direction
of the Court;
(ar) "RSC" means Ryder Scott Company, an independent petroleum
consulting firm;
(as) "SEC" means the United States Securities and Exchange Commission;
(at) "Sino-American" means Sino-American Energy Corporation, a Texas
corporation;
(au) "Sino-American Loan Documents" means collectively the promissory
notes, loan agreements, guarantees, security agreements and other
instruments which have been, or may in the future be, delivered by one or
more of PPL and the Pendaries Subsidiaries in connection with the loan
arrangement contemplated by paragraph 13 of, and the term sheet attached
to, the Letter of Intent;
(av) "Sino-American Property Agreements" means collectively (i) the
Petroleum Contract dated August 17, 1994 by and between China National
Offshore Oil Corporation, Kerr-McGee China Petroleum Ltd. and Murphy
Pacific Rim, Ltd. covering Block 04/36 in the Gulf of Bohai People's
Republic of China, (ii) the Joint Operating Agreement dated effective
October 1, 1994 by and between Kerr-McGee China Petroleum Ltd. and Murphy
Pacific Rim, Ltd., (iii) the Novation of Joint Operating Agreement dated
March 16, 1995 by and between Kerr-McGee China Petroleum Ltd., Murphy
Pacific Rim, Ltd. and Setsco Resources Inc., (iv) the Petroleum Contract
dated January 23, 1996 by and between China National Offshore Oil
Corporation, Kerr-McGee China Petroleum Ltd. and Huffco China, LDC covering
Block 05/36 in the Gulf of Bohai People's Republic of China, and (v) the
Joint Operating Agreement dated June 26, 1997 by and between Kerr-McGee
China Petroleum Ltd., Huffco China, LDC and Setsco Resources, Inc.;
(aw) "Subsidiary" means, when used to indicate a relationship with
another body corporate;
(i) a body corporate which is controlled by (A) that other, or (B)
that other and one or more bodies corporate, each of which is
controlled by that other, or (C) two or more bodies corporate each of
which is controlled by that other; or
(ii) a subsidiary of a body corporate that is the other's
subsidiary; and
(ax) "Tax" or "Taxes" means taxes, fees, levies, duties, tariffs,
imposts, premiums and governmental impositions or charges of any kind in
the nature of (or similar to) taxes, payable to any federal, provincial,
state, local or foreign taxing authority, including, without limitation,
(i) income, capital, business, franchise, profits, gross receipts, ad
valorem, goods and services, customs, net worth, value added, sales, use,
service, real or personal property, special assessments, capital stock,
license, payroll, withholding, employment, social security, workers'
compensation, unemployment insurance or compensation, utility, severance,
production, excise, stamp, occupation, premiums, environmental, recapture,
windfall profits, transfer and gains taxes, fees, levies, duties, tariffs,
imposts, premiums and governmental impositions and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect
thereto;
(ay) "Tax Return" means returns, reports, declarations, information
statements, or any other document with respect to Taxes required to be
filed with any taxing authority, whether domestic or foreign;
(az) "Title Documents" means all contracts, leases, deeds, mortgages,
letter of credit, licenses, concessions, permits and other instruments
through which title to the Pendaries Assets or Ultra Assets, as the case
may be, is derived or which relate or affect title to, or operation of, the
Pendaries Assets or the Ultra Assets, as the case may be, and without
limiting the generality of the foregoing, in respect of PPL shall include
the Sino-American Property Agreements;
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(ba) "TSE" means The Toronto Stock Exchange;
(bb) "Ultra" means collectively UPC and the Ultra Subsidiaries;
(bc) "Ultra Assets" means all of the assets and properties of Ultra
described in the Ultra Reports;
(bd) "Ultra Common Shares" means common shares in the capital of UPC as
constituted on the date hereof;
(be) "Ultra Counsel" means collectively Preston Lackowicz & Shier, and
Haynes and Boone, LLP, or such other legal counsel as may be designated by
Ultra;
(bf) "Ultra Disclosure Statement" means the disclosure schedule
delivered by UPC to PPL prior to the execution of this Agreement;
(bg) "Ultra Financial Statements" means collectively the audited
consolidated financial statements of Ultra for the twelve months ended June
30, 1999 and for the six months ended December 31, 1999, and the unaudited
consolidated financial statements of Ultra for the six months ended June
30, 2000, comprised of consolidated balance sheets, consolidated statements
of operations and deficit, consolidated statements of changes in financial
position and the notes thereto;
(bh) "Ultra Meeting" means the special meeting of the holders of Ultra
Common Shares, including any adjournment or postponement thereof, to be
called to consider and, if thought fit, approve and adopt the Arrangement;
(bi) "Ultra Options" means the options granted and outstanding as of the
date hereof under agreements or otherwise to purchase or acquire shares in
UPC which if exercised would result in the issuance of 4,595,000 Common
Shares;
(bj) "Ultra OSC Documents" has the meaning ascribed thereto in
subsection 4.2(u) hereof;
(bk) "Ultra Permitted Encumbrances" means the encumbrances or burdens
disclosed or reflected in the Ultra Reports and those Encumbrances of a
general nature generally affecting companies carrying on in the ordinary
course of business of exploration for development of oil and gas or
generally affecting title to oil and gas properties or disclosed in the
Ultra Financial Statements;
(bl) "Ultra Proxy Solicitation Material" means collectively the letter
to shareholders, notice of meeting, management information circular and
form of proxy to be filed by UPC with the Ontario Securities Commission and
the SEC and distributed to holders of Ultra Common Shares in connection
with the holding of the Ultra Meeting;
(bm) "Ultra Reports" means the report of NSA effective January 1, 2000
evaluating certain reserves of Ultra and the estimated future cash flows
from such reserves;
(bn) "Ultra Shareholder Approval" means the affirmative vote, at the
Ultra Shareholders Meeting, of more than 50% of the votes cast in respect
of approval of the Arrangement;
(bo) "Ultra Subsidiaries" means collectively Ultra Petroleum (USA) Inc.,
a Colorado corporation, and Ultra Resources, Inc., a Wyoming corporation;
(bp) "U.S. Securities Laws" means the United States Securities Act of
1933, as amended, the Exchange Act, and the rules and regulations of the
SEC thereunder.
1.2 The following Exhibit forms part of this Agreement:
Exhibit 1 Plan of Arrangement
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ARTICLE 2
Interpretation
2.1 The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this
Agreement.
2.2 Unless the contrary intention appears, references in this Agreement to
an Article, Section, subsection, paragraph, clause, subclause or schedule by
number or letter or both refer to the Article, Section, subsection, paragraph,
clause, subclause or schedule, respectively, bearing that designation in this
Agreement.
2.3 In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa and words importing
gender shall include all genders.
2.4 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a Business Day in the place where the
action is required to be taken, such action shall be required to be taken on
the next succeeding day which is a Business Day in such place.
2.5 References in this Agreement to any statute or sections thereof shall
include such statute as amended or substituted and any regulations promulgated
thereunder in effect as of the date hereof.
2.6 Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
2.7 All representations, warranties, covenants and opinions in or
contemplated by this Agreement as to the enforceability of any covenant,
agreement or document are subject to enforceability being limited by applicable
bankruptcy, insolvency, reorganization and other laws affecting creditors'
rights generally and the discretionary nature of certain remedies (including
specific performance and injunctive relief).
2.8 Each reference herein to the knowledge of a party means, unless
otherwise specified, the knowledge of such party's senior officers following
due inquiry.
ARTICLE 3
Arrangement
3.1 Subject to the terms and conditions hereof, as soon as reasonably
practicable, PPL shall apply to the Court pursuant to Section 128 of the NBBCA
for an order approving the Arrangement and in connection with such application
shall:
(a) forthwith file, proceed and diligently process an application for an
Interim Order under Section 128(4) of the Act providing for, among other
things the calling and holding of the Pendaries Meeting; and
(b) subject to obtaining the approvals as may be directed by the Court
in the Interim Order, take the steps necessary to submit the Arrangement to
the Court and apply for the Final Order.
3.2 The Arrangement shall become effective on the Effective Date.
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ARTICLE 4
Representations and Warranties
4.1 PPL represents and warrants to UPC that:
(a) each of PPL and the Pendaries Subsidiaries is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own or lease
its property and assets and to carry on its business as now conducted by it
and is duly qualified to carry on business in each jurisdiction in which
the nature of its business or the property or assets owned or leased by it
makes such qualification necessary;
(b) PPL has all requisite power and authority to enter into this
Agreement and all documents to be delivered pursuant hereto and, subject to
the terms hereof, to perform its obligations hereunder and thereunder;
(c) the execution and delivery of this Agreement and all documents to be
delivered pursuant hereto, the performance of the terms hereof and thereof
and the consummation of the transactions contemplated herein and therein do
not and will not, subject to fulfillment of the conditions hereof:
(i) result in the breach of or violate any term or provision of the
articles, by-laws or governing documents of PPL or any of the Pendaries
Subsidiaries, or
(ii) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the performance
required by, any agreement, instrument, licence, permit or authority to
which PPL or any of the Pendaries Subsidiaries is a party or by which
they are bound or to which any of their property is subject; or
(iii) result in the creation of any material Encumbrance upon the
Pendaries Assets other than Pendaries Permitted Encumbrances; or
(iv) give to any person any material interest or right, including
right of purchase, termination, cancellation or acceleration under any
such agreement, instrument, license, permit or authority, provided that
PPL makes no representation or warranty with respect to the rights, if
any, which may arise in favour of third parties pursuant to the Sino-
American Property Agreements as a result of the execution and delivery
of this Agreement or the performance of the terms hereof or the
consummation of the transactions contemplated hereby;
(v) violate any provision of law or administrative regulation or any
judicial or administrative order, award, judgment or decree applicable
to any of PPL, the Pendaries Subsidiaries, the Pendaries Common Shares
or the Pendaries Assets; or
(vi) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority or any
parties to the Title Documents relating to the Pendaries Assets, except
(A) pursuant to U.S. Securities Laws, (B) the Interim Order and the
Final Order, or (C) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would
not in the aggregate have a Material Adverse Effect on Pendaries or
prevent, materially hinder, or materially make more burdensome the
consummation of the transactions contemplated by this Agreement, or (D)
such filings and approvals as may be required under the "blue sky",
takeover or securities laws of various states.
(d) this Agreement has been duly authorized, executed and delivered by
PPL and this Agreement does constitute valid, legal and binding obligations
of PPL enforceable in accordance with its terms;
(e) PPL has not taken any action, directly or indirectly, with the
intention of adversely affecting the approval of the Arrangement or the
completion of the transactions contemplated hereby;
(f) other than as disclosed in writing to UPC at or prior to the date
hereof or as disclosed in the Pendaries Financial Statements, there are no
actions, claims, suits, other legal, administrative or arbitration
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proceedings or government investigations commenced, or to the knowledge of
Pendaries contemplated, at law or in equity or before or by any court or
other Governmental Authority and which involve or affect Pendaries,
including, without limitation, the title to, or ownership of, the Pendaries
Assets, and none of PPL or any of the Pendaries Subsidiaries is subject to
any outstanding order, writ, injunction or decree having, or which could
reasonably be foreseen to have, a Material Adverse Effect on Pendaries;
(g) the authorized capital of PPL consists of an unlimited number of
Pendaries Common Shares, of which 9,225,970 Pendaries Common Shares are
issued and outstanding as of the date hereof and all such issued and
outstanding Pendaries Common Shares are fully paid and non-assessable as of
the date hereof;
(h) the Pendaries Disclosure Statement sets forth the name, the number
of shares of authorized capital stock and the number of issued and
outstanding shares of capital stock of each direct or indirect Subsidiary
of PPL. Except as set forth in the Pendaries Disclosure Statement, all of
the outstanding shares of capital stock of each such Subsidiary are owned,
directly or indirectly, by PPL, beneficially and of record. Except as
disclosed in the Pendaries Disclosure Schedule, all of such shares of
capital stock of the Pendaries Subsidiaries are owned free and clear of any
Encumbrances, and are not subject to any agreements or understandings among
any persons with respect to the voting or transfer of such shares. There
are no outstanding subscriptions, options, convertible securities, warrants
or claims of any kind issued or granted by or binding on Pendaries to
purchase or otherwise acquire any security of or equity interest in any of
such Pendaries Subsidiaries. All of the outstanding shares of capital stock
of each Pendaries Subsidiary have been duly authorized and validly issued
and are fully paid and non-assessable, and none has been issued in
violation of the preemptive rights of any stockholder;
(i) PPL has no agreements of any nature to acquire any Subsidiary other
than the Pendaries Subsidiaries, or to acquire or lease any other business
operations out of the ordinary course and is not a party to or bound by any
agreement of guarantee, indemnification, assumption endorsement or similar
commitment in respect of the obligations, liabilities (contingent or
otherwise) or indebtedness of any other person, firm or corporation other
than pursuant to agreements which are standard or customary in the oil and
gas industry;
(j) other than the Pendaries Options, no person has any agreement,
option, right or privilege (including, without limitation, whether by law,
preemptive right, contract or otherwise) to purchase, subscribe for,
convert into, exchange for or otherwise require the issuance of any of the
unissued shares of PPL or of any of the Pendaries Subsidiaries;
(k) since December 31, 1999, PPL has:
(i) not amended its articles, by-laws or other governing documents
and there are no resolutions, special resolutions or other proceedings
pending for any amendment thereto except as may be desirable in respect
of the transactions contemplated by this Agreement;
(ii) not declared, paid or set aside for payment any dividends
whether by cash, shares or otherwise or made or authorized or proposed
other distributions of any kind and no repayments of capital have been
made by PPL (other than repayments of indebtedness at or below the
amount at which such indebtedness is shown on the Pendaries Financial
Statements) since December 31, 1999 nor reduced its stated capital in
any manner or purchased, acquired, cancelled or redeemed or agreed to
purchase, acquire, cancel or redeem any of its outstanding shares other
than as contemplated by this Agreement;
(l) since December 31, 1999, other than as has been publicly disclosed
by PPL or set out in the Pendaries Disclosure Statement, Pendaries has:
(i) conducted its business in all material respects in the ordinary
course;
(ii) not suffered any Material Adverse Change;
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(iii) not made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained; and
(iv) maintained in effect salary and other compensation levels in
accordance with its then existing salary administration programme and
has not authorized or paid or agreed to pay any bonus or similar
payment to any officer or director or person providing to Pendaries
services similar in nature to employment services or made any material
change in respect of employment or contract terms, as the case may be,
of any such officer, director or person and Pendaries is not presently
indebted to any of its present or former shareholders, directors or
officers in any material respect except as set forth in the Pendaries
Financial Statements or as disclosed in writing to UPC at or prior to
the date hereof;
(m) the Pendaries Financial Statements have been prepared in accordance
with generally accepted accounting principles applicable in Canada applied
on a basis consistent with that of prior periods (except as stated therein)
and present fairly the financial position of Pendaries as of the date
provided therein and the results of its operations and the changes in
financial position for the periods then ended and in all material respects
all accounts receivable included in the Pendaries Financial Statements, as
except to the extent collected since the date hereof, are bona fide,
collectible and not subject to set-off or counterclaim;
(n) Pendaries has duly and timely filed, in proper form, correct and
complete Tax Returns in respect of Taxes under all applicable federal,
provincial, state or local Tax legislation of Canada or any foreign country
having jurisdiction over Pendaries, for all prior periods in respect of
which such filings have heretofore been required, and all Taxes shown
thereon and all Taxes owing with respect to the current period and any
previous period have been paid or accrued on the books of Pendaries and
there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any Tax Return for any period, and all
payments by Pendaries to any non-resident of Canada have been made in
accordance with all applicable legislation in respect of withholding tax;
Pendaries is not aware of any contingent Tax liabilities or any grounds for
reassessment; there are no assessments or reassessments respecting
Pendaries pursuant to which there are amounts owing or discussions in
respect thereof with any taxing authority other than as disclosed in
writing to UPC at or prior to the date hereof; Pendaries has not acquired
property from, or disposed of property to, any Person with whom it does not
deal at arm's length (as that term is construed under the Income Tax Act)
for proceeds less than the fair market value thereof; Pendaries has no
outstanding loans or indebtedness incurred by directors, former directors,
officers, shareholders and/or employees or by any Person not dealing at
arm's length (as that term is construed under the Income Tax Act) with any
of the foregoing; there are no circumstances existing which could result in
the application of section 78, section 79, or sections 80 to 80.04 of the
Income Tax Act or any equivalent provincial provision, to Pendaries;
Pendaries has not claimed nor will claim any reserve under any provision of
the Income Tax Act or any equivalent provincial provision, if any such
amount could be included in the income of Pendaries for any period ending
after the date hereof; Pendaries has withheld from each payment made to any
of its officers, directors, former directors, former employees and
employees the amount of all Taxes and other deductions required to be
withheld therefrom and has paid the same to the proper tax or other
authority within the time required under any applicable Tax legislation;
Pendaries has remitted to the appropriate tax authority when required by
law to do so all amounts collected by it on account of the GST; and
Pendaries is a "taxable Canadian Corporation" for the purposes of the
Income Tax Act;
(o) all filings made by Pendaries under which Pendaries has received or
is entitled to government incentives, have been made in accordance, in all
material respects, with all applicable legislation and contain no
misrepresentations of material fact or omit to state any material fact
which could cause any amount previously paid to Pendaries or previously
accrued on the accounts of Pendaries to be recovered or disallowed;
(p) other than as disclosed in writing to UPC at or prior to the date
hereof, Pendaries is not a party to any written contracts of any nature,
including but not limited to, employment or material consulting
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agreements or collective bargaining agreements and there are no currently
existing employment benefit plans, arrangements or agreements of a material
nature, service contracts, leases and rental agreements that are in excess
of $20,000 remaining on the term of the said contract and to which
Pendaries is a party or by which it is bound;
(q) PPL does not make any representations or warranties, express or
implied, as to Pendaries' title to the Pendaries Assets, but does represent
and warrant that:
(i) the Pendaries Assets are free and clear of Encumbrances created
by, through or under Pendaries, excepting only the Pendaries Permitted
Encumbrances;
(ii) the concessions, petroleum contracts, deeds of assignments,
permits, licenses and other contracts necessary or appropriate to
operate the Pendaries Assets are, to the best of PPL's knowledge,
currently being operated, or anticipated to be operated, in full
compliance with all applicable laws, rules, regulations and orders of
all federal, state and local governmental bodies, authorities and
agencies and in conformity in all material respects for the provisions
of the concessions, petroleum contracts and other contracts; and
(iii) the concessions, petroleum contracts and other contracts are
in force and effect, except for such failures as would not,
individually or in the aggregate, have a Material Adverse Effect on the
value or operation of the Pendaries Assets, taken as a whole;
(iv) Pendaries is not in default, nor has Pendaries been informed of
any alleged default or received any notice of default, affecting or
capable of affecting the Pendaries Assets, or any of them, in an
adverse manner;
(v) except as disclosed or reflected in the Pendaries Reports,
Pendaries' interests in the Pendaries Assets are not subject to
reduction by rights of conversion or other alteration or election in
favor of a third party, created by, through or under Pendaries;
(vi) all rentals, royalties, taxes and other payments due under each
of the concessions, petroleum contracts and other contracts have been
timely and fully paid, except for such amounts that are being held in
suspense as a result of title issues and that do not provide any third
party with a right to cancel such contracts and such amounts as would
not, individually or in aggregate, have a Material Adverse Effect on
Pendaries; and
(vii) the estimates of Pendaries' oil and gas reserves set out in
the Pendaries Reports were prepared in accordance with standard
geological and engineering methods generally accepted in the oil and
gas industry. The working interest, net revenue interest and historical
factual information supplied by Pendaries to RSC in connection with the
preparation of the Pendaries Reports did not contain a
Misrepresentation. The oil and gas prices utilized in the Pendaries
Reports are not intended to be representative of historical or
prevailing prices existing as of the effective date or actual date of
the Pendaries Reports;
(r) other than as disclosed in writing to UPC at or prior to the date
hereof, to the best of the knowledge of Pendaries, Pendaries is not in
material violation of any applicable federal, provincial, municipal or
local laws, regulations, orders, government decrees or ordinances with
respect to environmental, health or safety matters (collectively
"Environmental Laws") and, for greater certainty and without limiting the
generality of the foregoing, but subject to the foregoing qualifications:
(i) Pendaries has operated its business at all times and has
received, handled, used, stored, treated, shipped and disposed of all
contaminants in strict compliance with all Environmental Laws;
(ii) there have been no unrectified spills, releases, deposits or
discharges of hazardous or toxic substances, contaminants or wastes on
any of the real property owned or leased by Pendaries or under its
respective control, nor to the best of PPL's knowledge has any such
real property been used at any time by any person as a landfill or
waste disposal site;
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(iii) there have been no releases, deposits or discharges, in
violation of Environmental Laws, of any hazardous or toxic substances,
contaminants or wastes into the earth, air or into any body of water or
any municipal or other sewer or drain water systems by Pendaries;
(iv) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the business
or assets of Pendaries;
(v) Pendaries has not failed to report to the proper Governmental
Authority the occurrence of any event which is required to be so
reported by any Environmental Laws; and
(vi) Pendaries holds all licences, permits and approvals required
under any Environmental Laws in connection with the operation of its
business and the ownership and use of its assets, all such licences,
permits and approvals are in full force and effect, and Pendaries has
not received any notification pursuant to any Environmental Laws that
any work, repairs, construction or capital expenditures are required to
be made by it as a condition of continued compliance with any
Environmental Laws, or any licence, permit or approval issued pursuant
thereto, or that any licence, permit or approval referred to above is
about to be reviewed, made subject to limitation or conditions,
revoked, withdrawn or terminated;
(s) PPL is a reporting issuer or the equivalent in the Provinces of
British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova
Scotia and Newfoundland, and has not been notified of any default of any
requirement of any applicable securities legislation, regulations, orders,
notices or policies;
(t) PPL is current with respect to all filings required by the TSE and
the AMEX and the Pendaries Common Shares which are issued and outstanding
as of the date hereof are listed and posted for trading on the TSE and the
AMEX and are not subject to any cease trading or trading suspension order;
(u) PPL has furnished UPC with a true and complete copy of each report,
schedule, registration statement and definitive proxy statement (including
exhibits) filed by PPL with the SEC since December 31, 1998 (the "Pendaries
SEC Documents"), which are all the documents (other than preliminary
material) that PPL was required to file with the SEC since such date,
except where the failure to file any such documents would not cause PPL to
be in material noncompliance with U.S. Securities Laws. As of their
respective dates, (i) the Pendaries SEC Documents complied in all material
respects with the requirements of the U.S. Securities Laws applicable to
such Pendaries SEC Documents and (ii) none of the Pendaries SEC Documents
contained any Misrepresentation. Except to the extent information contained
in any Pendaries SEC Document has been revised or superseded by a later-
filed Pendaries SEC Document, none of the Pendaries SEC Documents currently
contains any Misrepresentation;
(v) as of the respective dates of the Pendaries SEC Documents, (i) the
financial statements of PPL included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and
the published results and regulations of the SEC with respect thereto, (ii)
were prepared in all material respects in accordance with Canadian
generally accepted accounting principles applied on a consistent basis
during the periods involved (except as noted therein or as may be permitted
by the rules of the SEC) and (iii) fairly presented in all material
respects the consolidated financial position of PPL and the Pendaries
Subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject, in the case of any unaudited interim financial statements, to
normal year-end adjustments, none of which are or were material);
(w) the Pendaries Proxy Statement will be distributed in accordance with
and will comply as to form in all material respects with U.S. Securities
Laws and, if applicable, will include the information required by Rule 13e-
3 of the Exchange Act, and PPL will otherwise comply with Rule 13e-3. None
of the information relating to PPL and the Pendaries Subsidiaries included
in the Pendaries Proxy Statement shall, at the time the Pendaries Proxy
Statement is mailed or at the time of the Pendaries Meeting, contain any
Misrepresentation, except that no representation is being made by PPL with
respect to information supplied or approved in writing by UPC or any
affiliate of UPC specifically for inclusion in the Pendaries Proxy
Statement;
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(x) as of the date hereof, no "person" as defined in Section 801.1(a)(1)
of the Rules, Regulations, Statements and Interpretations (in this
paragraph the "HSR Rules") under the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976 (16 CFR 801 et.seq.) in which PPL is included has
annual net sales of $100,000,000 or more or total assets of $100,000,000 or
more, as determined in accordance with Section 801.11 of the HSR Rules;
(y) all information furnished by PPL for inclusion in the Ultra Proxy
Solicitation Material is or will be, as of the earlier of the date it
purports to be given at and the date of the Ultra Proxy Solicitation
Material, true and complete in all material respects and contains no
Misrepresentations; and
(z) the board of directors of PPL has (A) determined unanimously that as
of the date hereof that the Arrangement is fair to the holders of Pendaries
Common Shares and is in the best interests of PPL; and (B) determined as of
the date hereof to unanimously recommend that the holders of Pendaries
Common Shares vote in favour of the Arrangement.
4.1.1 PPL makes no representations or warranties to UPC in addition to those
expressly enumerated in subsection 4.1. Except and to the extent provided in
subsection 4.1, PPL does not warrant title to the Pendaries Assets or make
representations or warranties with respect to: (i) the quantity, quality or
recoverability of petroleum substances respecting the Pendaries Assets; (ii)
any estimates of the value of the Pendaries Assets or the revenues applicable
to future production from the Pendaries Assets; (iii) any engineering,
geological or other interpretations or economic evaluations respecting the
Pendaries Assets; (iv) the rates of production of petroleum substances from the
Pendaries Assets; (v) the quality, condition or serviceability of the Pendaries
Assets; or (vi) the suitability of their use for any purpose. Without
restricting the generality of the foregoing, but subject always to the
provisions herein, UPC acknowledges that it has made its own independent
investigation, analysis, evaluation and inspection of the interests of PPL in
the Pendaries Assets and the state and condition thereof and that it has relied
solely on such investigation, analysis, evaluation and inspection as to its
assessment of the condition, quantum and value of the Pendaries Assets.
4.1.2 Except with respect to the representations and warranties in
subsection 4.1 or in the event of fraud, UPC forever releases and discharges
PPL and its directors, officers, servants, agents and employees from any claims
and all liability to UPC or UPC's assigns and successors, as a result of the
use or reliance upon advice, information or materials pertaining to the
Pendaries Assets which was delivered or made available to UPC by Pendaries or
its directors, officers, servants, agents or employees prior to or pursuant to
this Agreement, including, without limitation, any evaluations, projections,
reports and interpretive or non-factual materials prepared by or for Pendaries,
or otherwise in Pendaries' possession.
4.2 UPC represents and warrants to PPL that:
(a) each of UPC and the Ultra Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or lease its
property and assets and to carry on its business as now conducted by it and
is duly qualified to carry on business in each jurisdiction in which the
nature of its business or property or assets owned or leased by it makes
such qualification necessary;
(b) UPC has all requisite power and authority to enter into this
Agreement and all documents to be delivered pursuant hereto and, subject to
the terms hereof, to perform its obligations hereunder and thereunder;
(c) the execution and delivery of this Agreement and all documents to be
delivered pursuant hereto, the performance of the terms hereof and thereof
and the consummation of the transactions contemplated herein and therein do
not and will not subject to fulfillment of the conditions hereof:
(i) result in the breach of or violate any term or provision of the
articles, by-laws or governing documents of UPC or any of the Ultra
Subsidiaries; or
(ii) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the performance
required by, any agreement, instrument, licence, permit or authority
12
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to which UPC or any of the Ultra Subsidiaries is a party or by which
any of them is bound or to which their property is subject; or
(iii) result in the creation of any material Encumbrance upon the
Ultra Assets other than Ultra Permitted Encumbrances; or
(iv) give to any person any material interest or right, including
right of purchase, termination, cancellation or acceleration under any
such agreement, instrument, license, permit or authority;
(v) violate any provision of law or administrative regulation or any
judicial or administrative order, award, judgment or decree applicable
to any of UPC, the Ultra Subsidiaries, the Ultra Common Shares or the
Ultra Assets; or
(vi) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority or any
parties to the Title Documents relating to the Ultra Assets, except (A)
pursuant to Canadian Securities Laws and U.S. Securities Laws, (B) the
Interim Order and the Final Order, (C) the approval of the TSE, (D)
where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the
aggregate have a Material Adverse Effect on Pendaries or prevent,
materially hinder, or materially make more burdensome the consummation
of the transactions contemplated by this Agreement, or (E) such filings
and approvals as may be required under the "blue sky", takeover or
securities laws of various states.
(d) this Agreement has been duly authorized, executed and delivered by
UPC and this Agreement does constitute valid, legal and binding obligations
of UPC enforceable in accordance with its terms; the execution and delivery
of this Agreement by UPC and the performance by UPC of the transactions
contemplated by this Agreement have been duly authorized by its Board of
Directors and, subject to receipt of Ultra Shareholder Approval, no other
corporate proceedings on its part are necessary to authorize this Agreement
or the transactions contemplated hereby;
(e) UPC has not taken any action, directly or indirectly, with the
intention of adversely affecting the approval of the Arrangement or the
completion of the transactions contemplated hereby;
(f) other than as disclosed in writing to PPL at or prior to the date
hereof or as disclosed in the Ultra Financial Statements, there are no
actions, claims, suits, other legal, administrative or arbitration
proceedings or government investigations commenced, or to the knowledge of
UPC contemplated, at law or in equity or before or by any court or other
Governmental Authority and which involve or affect UPC, including, without
limitation, the title to, or ownership of, the Ultra Assets, and none of
UPC or any of the Ultra Subsidiaries is subject to any outstanding order,
writ, injunction or decree having, or which could reasonably be foreseen to
have, a Material Adverse Effect on Ultra;
(g) the authorized share capital of UPC consists of an unlimited number
of Ultra Common Shares, of which 56,944,762 Ultra Common Shares are issued
and outstanding as of the date hereof and all such issued and outstanding
Ultra Common Shares are fully paid and non-assessable as of the date
hereof;
(h) the Ultra Disclosure Statement sets forth the name, the number of
shares of authorized capital stock and the number of issued and outstanding
shares of capital stock of each direct or indirect Subsidiary of UPC.
Except as set forth in the Ultra Disclosure Statement, all of the
outstanding shares of capital stock of each such Subsidiary are owned,
directly or indirectly, by UPC, beneficially and of record. Except as
disclosed in the Ultra Disclosure Schedule, all of such shares of capital
stock of the Ultra Subsidiaries are owned free and clear of any
Encumbrances, and are not subject to any agreements or understandings among
any persons with respect to the voting or transfer of such shares. There
are no outstanding subscriptions, options, convertible securities, warrants
or claims of any kind issued or granted by or binding on Ultra to purchase
or otherwise acquire any security of or equity interest in any of such
Ultra Subsidiaries. All of the outstanding shares of capital stock of each
Ultra Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable, and none has been issued in violation of the
preemptive rights of any stockholder;
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(i) as of the date hereof, UPC has no agreements of any nature to
acquire any Subsidiary other than the Ultra Subsidiaries, or to acquire or
lease any other business operations out of the ordinary course and is not a
party to or bound by any agreement of guarantee, indemnification,
assumption endorsement or similar commitment in respect of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other person,
firm or corporation other than pursuant to agreements which are standard or
customary in the oil and gas industry;
(j) the Ultra Common Shares to be issued pursuant to the Arrangement
will, upon issuance, be duly and validly issued as fully paid and non-
assessable shares of UPC;
(k) other than the Ultra Options and rights to acquire Ultra Common
Shares which may be granted after the date hereof pursuant to the 2000
Share Incentive Plan of UPC, no person has any agreement, option, right or
privilege (including, without limitation, whether by law, preemptive right,
contract or otherwise) to purchase, subscribe for, convert into, exchange
for or otherwise require the issuance of any of the unissued shares of UPC
or any of the Ultra Subsidiaries;
(l) since December 31, 1999:
(i) except as disclosed to PPL, UPC has not amended its articles,
by-laws or other governing documents, and there are no resolutions,
special resolutions or other proceedings pending for any amendment
except as may be desirable in respect of the transactions contemplated
by this Agreement;
(ii) except as disclosed to PPL, UPC has not declared, paid or set
aside for payment any dividends whether by cash, shares or otherwise or
made, authorized or proposed other distributions of any kind, and no
repayments of capital have been made by UPC (other than repayment of
indebtedness at or below the amount at which such indebtedness is shown
on the Ultra Financial Statements) since December 31, 1999, nor reduced
its stated capital in any manner or purchased, acquired, cancelled or
redeemed or agreed to purchase, acquire, cancel or redeem any of its
outstanding shares;
(m) since December 31, 1999, other than as has been publicly disclosed
by UPC or set out in the Ultra Disclosure Statement, Ultra has:
(i) conducted its business in all material respects in the ordinary
course;
(ii) not suffered any Material Adverse Change; and
(iii) not made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained;
(n) the Ultra Financial Statements have been prepared in accordance with
generally accepted accounting principles applicable in Canada applied on a
basis consistent with that of prior periods (except as stated therein) and
present fairly the financial position of UPC as of the date provided
therein and the results of its operations and the changes in financial
position for the periods then ended and in all material respects all
accounts receivable included in the Ultra Financial Statements, except to
the extent collected since the date thereof; are bona fide, collectible and
not subject to set-off or counterclaim;
(o) Ultra has duly and timely filed, in proper form, correct and
complete Tax Returns in respect of Taxes under all applicable federal,
provincial, state or local Tax legislation of Canada or any foreign country
having jurisdiction over Ultra, for all prior periods in respect of which
such filings have heretofore been required, and all Taxes shown thereon and
all Taxes owing with respect to the current period and any previous period
have been paid or accrued on the books of Ultra and there are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any Tax Return for any period, and all payments
by Ultra to any non-resident of Canada have been made in accordance with
all applicable legislation in respect of withholding tax; Ultra is not
aware of any contingent Tax liabilities or any grounds for reassessment;
there are no assessments or reassessments respecting Ultra pursuant to
which there are amounts owing or discussions in respect thereof with any
taxing authority other than as disclosed
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<PAGE>
in writing to UPC at or prior to the date hereof; Ultra has not acquired
property from, or disposed of property to, any Person with whom it does not
deal at arm's length (as that term is construed under the Income Tax Act)
for proceeds less than the fair market value thereof; Ultra has no
outstanding loans or indebtedness incurred by directors, former directors,
officers, shareholders and/or employees or by any Person not dealing at
arm's length (as that term is construed under the Income Tax Act) with any
of the foregoing; there are no circumstances existing which could result in
the application of section 78, section 79, or sections 80 to 80.04 of the
Income Tax Act or any equivalent provincial provision, to Ultra; Ultra has
not claimed nor will claim any reserve under any provision of the Income
Tax Act or any equivalent provincial provision, if any such amount could be
included in the income of Ultra for any period ending after the date
hereof; Ultra has withheld from each payment made to any of its officers,
directors, former directors, former employees and employees the amount of
all Taxes and other deductions required to be withheld therefrom and has
paid the same to the proper tax or other authority within the time required
under any applicable Tax legislation; Ultra has remitted to the appropriate
tax authority when required by law to do so all amounts collected by it on
account of the GST; and Ultra is a "taxable Canadian Corporation" for the
purposes of the Income Tax Act;
(p) all filings made by Ultra under which it has received or is entitled
to government incentives, have been made in accordance, in all material
respects, with all applicable legislation and contain no misrepresentations
of material fact or omit to state any material fact which could cause any
amount previously paid to Ultra or previously accrued on the accounts of
Ultra to be recovered or disallowed;
(q) UPC does not make any representations or warranties, express or
implied, as to Ultra's title to the Ultra Assets, but does represent and
warrant that:
(i) the Ultra Assets are free and clear of Encumbrances created by,
through or under Ultra, excepting only the Ultra Permitted
Encumbrances;
(ii) the leases, rights-of-ways, surface agreements, easements,
servitudes, permits, licenses and other contracts necessary or
appropriate to operate the Ultra Assets (in this subsection the "Ultra
Leases") are, to the best of UPC's knowledge, currently being operated,
or anticipated to be operated, in full compliance with all applicable
laws, rules, regulations and orders of all federal, state and local
governmental bodies, authorities and agencies and in conformity in all
material respects for the provisions of the leases; and
(iii) the Ultra Leases are in force and effect, except for such
failures as would not, individually or in the aggregate, have a
Material Adverse Effect on the value or operation of the Ultra Assets,
taken as a whole;
(iv) Ultra is not in default, nor has Ultra been informed of any
alleged default or received any notice of default, affecting or capable
of affecting the Ultra Assets, or any of them, in an adverse manner;
(v) except as disclosed or reflected in the Ultra Reports, Ultra's
interests in the Ultra Assets are not subject to reduction by rights of
conversion or other alteration or election in favor of a third party,
created by, through or under Ultra;
(vi) all rentals, royalties, taxes and other payments due under each
of the Ultra Leases have been timely and fully paid, except for such
amounts that are being held in suspense as a result of title issues and
that do not provide any third party with a right to cancel such Ultra
Leases and such amounts as would not, individually or in aggregate,
have a Material Adverse Effect on Ultra; and
(vii) the estimates of Ultra's oil and gas reserves set out in the
Ultra Reports were prepared in accordance with standard geological and
engineering methods generally accepted in the oil and gas industry. The
working interest, net revenue interest and historical factual
information supplied by Ultra to NSA in connection with the preparation
of the Ultra Reports did not contain a Misrepresentation. The oil and
gas prices utilized in the Ultra Reports are not intended to be
representative of historical or prevailing prices existing as of the
effective date or actual date of the Ultra Reports;
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(r) other than as disclosed in writing to PPL at or prior to the date
hereof, to the best of the knowledge of Ultra, Ultra is not in material
violation of any applicable Environmental Laws and, for greater certainty
and without limiting the generality of the foregoing, but subject to the
foregoing qualifications:
(i) Ultra has operated its business at all times and has received,
handled, used, stored, treated, shipped and disposed of all
contaminants in strict compliance with all Environmental Laws;
(ii) there have been no unrectified spills, releases, deposits or
discharges of hazardous or toxic substances, contaminants or wastes on
any of the real property owned or leased by Ultra or under its
respective control, nor to the best of UPC's knowledge has any such
real property been used at any time by any person as a landfill or
waste disposal site;
(iii) there have been no releases, deposits or discharges, in
violation of Environmental Laws, of any hazardous or toxic substances,
contaminants or wastes into the earth, air or into any body of water or
any municipal or other sewer or drain water systems by Ultra;
(iv) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the business
or assets of Ultra;
(v) Ultra has not failed to report to the proper Governmental
Authority the occurrence of any event which is required to be so
reported by any Environmental Laws; and
(vi) Ultra holds all licences, permits and approvals required under
any Environmental Laws in connection with the operation of its business
and the ownership and use of its assets, all such licences, permits and
approvals are in full force and effect, and Ultra has not received any
notification pursuant to any Environmental Laws that any work, repairs,
construction or capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws, or any
licence, permit or approval issued pursuant thereto, or that any
licence, permit or approval referred to above is about to be reviewed,
made subject to limitation or conditions, revoked, withdrawn or
terminated;
(s) Ultra has made available to NSA, prior to the issuance of the Ultra
Reports, all information material to an adequate determination of its oil
and gas reserves and non-reserve lands, none of such information contained
a Misrepresentation and UPC has no knowledge of any material adverse change
to the oil and gas reserves or non-reserve lands of Ultra since the
effective date of the Ultra Reports; and
(t) UPC is current with respect to all filings required by the TSE, and
the Ultra Common Shares which are issued and outstanding as of the date
hereof are listed and posted for trading on the TSE and are not subject to
any cease trading or trading suspension order;
(u) UPC has furnished PPL with a true and complete copy of each report
(including exhibits) filed by UPC with the Ontario Securities Commission
since June 30, 1998 (the "Ultra OSC Documents"), which are all the
documents (other than preliminary material) that UPC was required to file
with the Ontario Securities Commission since such date, except where the
failure to file any such documents would not cause UPC to be in material
noncompliance with Ontario Securities Laws. As of their respective dates,
(i) the Ultra OSC Documents complied in all material respects with the
requirements of the Ontario Securities Laws applicable to such Ultra OSC
Documents and (ii) none of the Ultra OSC Documents contained any
Misrepresentation. Except to the extent information contained in any Ultra
OSC Document has been revised or superseded by a later-filed Ultra OSC
Document, none of the Ultra OSC Documents currently contains any
Misrepresentation;
(v) as of the respective dates of the Ultra OSC Documents, (i) the
financial statements of UPC included in the Ultra OSC Documents complied as
to form in all material respects with applicable accounting requirements
and the published results and regulations of the Ontario Securities
Commission with respect thereto, (ii) were prepared in all material
respects in accordance with Canadian generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as noted
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therein or as may be permitted by the rules of the Ontario Securities
Commission) and (iii) fairly presented in all material respects the
consolidated financial position of UPC and the Ultra Subsidiaries as of the
dates thereof and the consolidated results of their operations and changes
in financial position for the periods then ended (subject, in the case of
any unaudited interim financial statements, to normal year-end adjustments,
none of which are or were material);
(w) UPC is and has for at least the previous 12 months been, a
"reporting issuer" in the Provinces of British Columbia and Ontario, and
has not been notified of any default of any requirement of any applicable
securities legislation, regulations, orders, notices or policies;
(x) the Ultra Proxy Solicitation Material will be distributed in
accordance with and will comply as to form in all material respects with
Ontario Securities Laws. None of the information relating to UPC and the
Ultra Subsidiaries included in the Ultra Proxy Solicitation Material shall,
at the time the Ultra Proxy Solicitation Material is mailed or at the time
of the Ultra Meeting, contain any Misrepresentation, except that no
representation is being made by UPC with respect to information supplied or
approved in writing by PPL or any affiliate of PPL specifically for
inclusion in the Ultra Proxy Solicitation Material;
(y) all information furnished by UPC for inclusion in the Pendaries
Proxy Statement is or will be, as of the earlier of the date it purports to
be given at and the date of the Pendaries Proxy Statement, true and
complete in all material respects and contains no Misrepresentations;
(z) the board of directors of UPC determined as of October 6, 2000,
which determination has not been withdrawn, amended or modified up to the
date hereof, to unanimously recommend that the holders of Pendaries Common
Shares vote in favour of the Arrangement.
4.2.1 UPC makes no representations or warranties to PPL in addition to those
expressly enumerated in subsection 4.2. Except and to the extent provided in
subsection 4.2, UPC does not warrant title to the Ultra Assets or make
representations or warranties with respect to: (i) the quantity, quality or
recoverability of petroleum substances respecting the Ultra Assets; (ii) any
estimates of the value of the Ultra Assets or the revenues applicable to future
production from the Ultra Assets; (iii) any engineering, geological or other
interpretations or economic evaluations respecting the Ultra Assets; (iv) the
rates of production of petroleum substances from the Ultra Assets; (v) the
quality, condition or serviceability of the Ultra Assets; or (vi) the
suitability of their use for any purpose. Without restricting the generality of
the foregoing, but subject always to the provisions herein, PPL acknowledges
that it has made its own independent investigation, analysis, evaluation and
inspection of the interests of UPC in the Ultra Assets and the state and
condition thereof and that it has relied solely on such investigation,
analysis, evaluation and inspection as to its assessment of the condition,
quantum and value of the Ultra Assets.
4.2.2 Except with respect to the representations and warranties in
subsection 4.2 or in the event of fraud, PPL forever releases and discharges
UPC and the Ultra Subsidiaries and their directors, officers, servants, agents
and employees from any claims and all liability to PPL or PPL's assigns and
successors, as a result of the use or reliance upon advice, information or
materials pertaining to the Ultra Assets which was delivered or made available
to PPL by Ultra or their directors, officers, servants, agents or employees
prior to or pursuant to this Agreement, including, without limitation, any
evaluations, projections, reports and interpretive or non-factual materials
prepared by or for UPC, or otherwise in UPC's possession.
ARTICLE 5
Covenants
5.1 PPL covenants and agrees that, until the transactions contemplated
herein have closed or this Agreement has been terminated, whichever is the
earlier, PPL and each of the Pendaries Subsidiaries:
(a) will conduct its operations according to its ordinary and usual
course of business and consistent with past practices, and will use its
reasonable commercial efforts to fulfil the conditions set forth herein to
the extent the fulfillment of the same is within the control of PPL and/or
the Pendaries Subsidiaries;
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(b) will not without the prior written consent of UPC:
(i) make any capital expenditures other than pursuant to existing
capital expenditure programs that are disclosed in the Pendaries
Disclosure Statement, or pursuant to cash calls made on Pendaries
pursuant to the Sino-American Property Agreements;
(ii) sell, transfer or otherwise dispose of or create any
Encumbrance on, or allow the sale, transfer or other disposition of or
creation of any Encumbrance on any of the Pendaries Assets other than
chattel property or other non-real property that is replaced by
equivalent property or consumed in the operation of the Pendaries
Assets and other than any Encumbrances arising in the ordinary course
of business as a result of operations under agreements affecting the
Pendaries Assets;
(iii) grant any option, warrant, right or subscription privilege or
enter into any agreement to grant any such option, warrant, right or
subscription privilege to purchase or otherwise acquire any securities
of PPL or issue any securities of PPL except pursuant to the exercise
of Pendaries Options; or
(iv) directly or indirectly, through officers, directors, employees,
representatives, advisors, agents or otherwise, take any action to
continue, solicit, initiate or encourage any Competing Transaction, and
will notify UPC forthwith immediately if any inquiries or proposals
with respect to a possible Competing Transaction are received by PPL,
and shall provide details of any such inquiries or proposals as such
information becomes available to PPL; provided, however, that in the
event that PPL receives an unsolicited inquiry or proposal with respect
to a possible Competing Transaction, the directors and officers of PPL
shall be entitled to take such actions which PPL's Board of Directors,
based upon the advice of PPL's counsel, determine in good faith to be
required in order for such directors and officers to fulfil their
fiduciary obligations to PPL, provided that prior to furnishing any
information or engaging in any negotiations with the third party
initiating such inquiry or proposal, PPL shall have provided written
notice to UPC to the effect that it is doing so;
(c) will maintain insurance on and in respect of all the Pendaries
Assets in like kind to, and in an amount not less than the amount of,
insurance in respect of the Pendaries Assets in effect on the date hereof;
(d) will make available and cause to be made available to UPC, its
agents and advisors, as soon as possible, all documents and agreements
(including without limitation, any correspondence between Pendaries and or
any governmental body and its minute book) in any way relating to or
affecting the Pendaries Assets or the financial status of Pendaries and
such other documents or agreements as may be necessary to enable Ultra to
effect a thorough investigation of Pendaries, its business, properties and
financial status, except where Pendaries is contractually precluded from
making such document or agreement available, and Pendaries shall cooperate
with Ultra in securing access for Ultra to any such documentation not in
the possession or under the control of Pendaries;
(e) will not enter into any transaction not in the ordinary course of
business or pay any dividends or make any other distribution to its
shareholders or repay, other than in the ordinary course of business, any
outstanding indebtedness;
(f) will not disclose to any person, other than officers, directors, key
employees and professional advisors of PPL any confidential information
relating to Ultra except information disclosed in the Pendaries Proxy
Statement, required to be disclosed by law or otherwise known to the public
or PPL;
(g) will provide to UPC, in a timely and expeditious manner, all
information as may be reasonably requested by UPC or is required by
applicable law, with respect to PPL for inclusion in the Ultra Proxy
Solicitation Material or any amendments or supplements to the Ultra Proxy
Solicitation Material so that UPC can comply in all material respects with
all applicable legal and reporting requirements on the date of issue
thereof;
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<PAGE>
(h) will:
(i) forthwith carry out the terms of the Interim Order and the Final
Order provided that nothing shall require PPL to consent to any
modification of this Agreement, the Arrangement or PPL's obligations
thereunder or hereunder,
(ii) convene the Pendaries Meeting as ordered by the Interim Order;
(iii) provide notice to UPC of the Pendaries Meeting and allow UPC
representatives to attend the Pendaries Meeting unless such attendance
is prohibited by rules governing such Pendaries Meeting; and
(iv) conduct the Pendaries Meeting in accordance with the Interim
Order, the bylaws of PPL and any instrument governing such meeting, as
applicable, and as otherwise required by law;
(i) will prepare (in consultation with UPC), file and distribute to the
holders of Pendaries Common Shares in a timely and expeditious manner, the
Pendaries Proxy Statement and any amendments or supplements to the
Pendaries Proxy Statement as required by the Interim Order or by applicable
law or regulation of regulatory authorities, in all jurisdictions where the
same is required complying in all material respects with all applicable
legal and reporting requirements on the date of issue thereof;
(j) subject to the applicable fiduciary obligations to shareholders of
PPL as advised by counsel, the Board of Directors of PPL shall not
withdraw, modify or change in a manner adverse to UPC its recommendation
that the holders of Pendaries Common Shares vote to approve the Arrangement
and this Agreement, and shall use its reasonable efforts to solicit from
holders of Pendaries Common Shares proxies in favour of the Arrangement;
(k) will, subject to obtaining such approvals as are required by the
Interim Order and the terms and conditions hereof, forthwith prepare, file,
proceed with and diligently pursue an application for the Final Order;
(l) subject to the terms and conditions hereof, will file Articles of
Arrangement, and the Final Order with the Director, in order for the
Arrangement to become effective;
(m) will make other necessary filings and applications under applicable
U.S. and Canadian, federal and provincial and laws and regulations
(including without limitation U.S. Securities Laws) required on the part of
PPL in connection with the transactions contemplated herein and take all
reasonable action necessary to be in compliance with such laws and
regulations;
(n) will use its reasonable efforts to diligently pursue and obtain all
consents, approvals and authorizations (including without limitation all
regulatory and third party approvals and consents) required or necessary in
connection with the transactions contemplated herein;
(o) will not issue, authorize or propose the issuance of, or purchase or
propose the purchase of, any shares of its capital stock of any class or
securities convertible into, rights, warrants or options to acquire, any
such shares or other exchangeable or convertible securities, other than
pursuant to the exercise of the Pendaries Options or as otherwise disclosed
to UPC;
(p) will not authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle or
an agreement with respect to, any merger, consolidation or business
combination (other than the Arrangement), any acquisition of a material
amount of assets or securities, any disposition of a material amount of
assets or securities or any material change in its capitalization, or any
entry into a material contract or any release or relinquishment of any
material contract rights, not in the ordinary course of business, other
than pursuant to commitments existing on the date hereof and set out in the
Pendaries Disclosure Statement, or commitments entered into after the date
hereof with the written consent of UPC;
(q) except as contemplated in the term sheet attached to the Letter of
Intent, will not guarantee the payment of indebtedness or incur
indebtedness for money borrowed or issue any debt securities;
19
<PAGE>
(r) will not subdivide the Pendaries Common Shares or issue any rights,
options, warrants, shares or Pendaries Common Shares to all or
substantially all holders of Pendaries Shares or make any change in its
share capital or make any similar distribution that would materially and
adversely affect the value of the Pendaries Common Shares or the ability of
UPC to acquire all of the issued and outstanding Pendaries Common Shares on
the terms contemplated by the Arrangement;
(s) will not purchase or otherwise acquire, or propose to purchase or
otherwise acquire, any securities of any third party issuer;
(t) will not propose or adopt any amendments to its charter or by-laws;
(u) will not enter into, assign or terminate, or amend in any material
respect, any Title Document; and
(v) will not waive, compromise or settle any right or claim that would
adversely affect the ownership, operation or value of any of the Pendaries
Assets;
(w) will mail on or before October 16, 2000, notice of the proposed
Arrangement in form and substance satisfactory to PPL and UPC to the China
National Offshore Oil Corporation, a company organized and existing under
the laws of the People's Republic of China, Kerr-McGee China Petroleum
Ltd., a company incorporated in the Bahamas, and Newfield Exploration
Company;
(x) if the Ultra Common Shares are not approved for listing on AMEX, PPL
will comply in all respects with Rule 13e-3 of the Exchange Act;
(y) will promptly advise UPC orally and, if then requested, in writing:
(i) of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of PPL contained in
this Agreement (except any such representation or warranty which speaks
solely as of a date prior to the occurrence of such event), if made on
or as of the date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(ii) of any Material Adverse Change in respect of Pendaries; and
(iii) of any material breach by PPL of any covenant or agreement
contained in this Agreement.
5.2 UPC covenants and agrees that, until the transactions contemplated
herein have closed or this Agreement has been terminated, whichever is the
earlier, UPC and each of the Ultra Subsidiaries:
(a) will conduct its operations according to its ordinary and usual
course of business and consistent with past practices, and will use its
reasonable commercial efforts to fulfil the conditions set forth herein to
the extent the fulfillment of the same is within the control of UPC and/or
the Ultra Subsidiaries;
(b) will maintain insurance on and in respect of all the Ultra Assets in
like kind to, and in an amount not less than the amount of, insurance in
respect of the Ultra Assets in effect on the date hereof,
(c) will make available and cause to be made available to PPL, its
agents and advisors, as soon as possible, all documents and agreements
(including, without limitation, any correspondence between Ultra and any
governmental body and its minute books) in any way relating to or affecting
the Ultra Assets or the financial status of Ultra and such other documents
or agreements as may be necessary to enable PPL to effect a thorough
investigation of Ultra, its business, properties and financial status,
except where Ultra is contractually precluded from making such document or
agreement available, and Ultra shall cooperate with PPL in securing access
for PPL to any such documentation not in the possession or under the
control of Ultra;
(d) will not disclose to any person, other than officers, directors, key
employees and professional advisors of UPC any confidential information
relating to Pendaries except information disclosed in the Pendaries Proxy
Statement, required to be disclosed by law or otherwise known to the public
or UPC;
(e) will make application to obtain all necessary approvals and make all
filings required with the securities commissions or similar authorities in
all jurisdictions of Canada in which registered holders of
20
<PAGE>
Pendaries Common Shares are resident as shown on the books of PPL to
validly authorize and enable the distribution by Ultra pursuant to
exemptions from the prospectus and registration requirements of applicable
Canadian Securities Laws of the Ultra Common Shares to be issued pursuant
to the Arrangement, and, without limiting the generality of the foregoing,
will make application for, and diligently pursue, such discretionary orders
of Canadian securities regulators as may be necessary to enable Ultra
Counsel to provide the opinion contemplated by subsection 7.1(c)(iv)
hereof;
(f) prepare jointly with PPL the Pendaries Proxy Statement and provide
to PPL, in a timely and expeditious manner, all information as may be
reasonably requested by PPL or is required by the Interim Order or
applicable law, with respect to UPC for inclusion in the Pendaries Proxy
Statement or any amendments or supplements to the Pendaries Proxy Statement
so that PPL can comply in all material respects with all applicable legal
and reporting requirements on the date of issue thereof;
(g) will forthwith carry out the terms of the Interim Order and the
Final Order provided that nothing shall require Ultra to consent to any
modification of this Agreement, the Arrangement or UPC's obligations
hereunder or thereunder;
(h) will:
(i) convene the Ultra Meeting on or before December 15, 2000;
(ii) provide notice to PPL of the Ultra Meeting and allow PPL
representatives to attend the Ultra Meeting unless such attendance is
prohibited by rules governing such Ultra Meeting; and
(iii) conduct the Ultra Meeting in accordance with the by-laws of
UPC and any instrument governing such meeting, as applicable, and as
otherwise required by law;
(i) will prepare (in consultation with PPL), file and distribute to the
holders of Ultra Common Shares in a timely and expeditious manner, the
Ultra Proxy Solicitation Material and any amendments or supplements to the
Ultra Proxy Solicitation Material as required by applicable law or
regulation of regulatory authorities, in all jurisdictions where the same
is required complying in all material respects with all applicable legal
and reporting requirements on the date of issue thereof;
(j) subject to the applicable fiduciary obligations to shareholders of
UPC as advised by counsel, the Board of Directors of UPC shall not
withdraw, modify or change in a manner adverse to PPL its recommendation
that the holders of Ultra Common Shares vote to approve the Arrangement and
this Agreement, and shall use its reasonable efforts to solicit from
holders of Ultra Common Shares proxies in favour of the Arrangement;
(k) will make all other necessary filings and applications under
applicable federal and provincial laws and regulations required on the part
of Ultra in connection with the transactions contemplated herein and take
all reasonable action necessary to be in compliance with such laws and
regulations;
(l) on the Effective Date, issue Ultra Common Shares to those persons
entitled thereto pursuant to the Arrangement in accordance with their
entitlement under the Arrangement;
(m) will use its reasonable efforts to diligently pursue and obtain all
consents, approvals and authorizations (including without limitation all
regulatory and third party approvals and consents) required or necessary in
connection with the transactions contemplated herein;
(n) except in the ordinary course of business, or except as contemplated
by the term sheet attached to the Letter of Intent, will not guarantee the
payment of indebtedness or incur indebtedness for money borrowed or issue
any debt securities;
(o) will take all necessary corporate action to issue the Ultra Common
Shares to be issued in connection with the Arrangement and shall issue such
Ultra Common Shares on the basis contemplated herein and shall apply for
and diligently pursue the listing of such Ultra Common Shares on the TSE;
(p) will not subdivide the Ultra Common Shares or issue any rights,
options, warrants, shares or Ultra Common Shares to all or substantially
all holders of Ultra Shares or make any change in its share capital
21
<PAGE>
or make any similar distribution that would materially and adversely affect
the value of the Ultra Common Shares to be issued to PPL's Shareholders in
connection with the Arrangement;
(q) will not reorganize, amalgamate or merge UPC with any other person,
nor acquire by amalgamating, merging or consolidating with, purchasing a
majority of the voting securities or substantially all of the assets of or
otherwise, any business or person which acquisition or other transaction
would reasonably be expected to prevent or materially delay the
transactions contemplated hereby beyond the Expiry Date;
(s) will use reasonable commercial efforts to cause the Ultra Common
Shares, including the Ultra Common Shares issuable pursuant to the
Arrangement, to be listed on AMEX;
(t) will maintain and continue all rights to indemnification or
exculpation now existing in favour of the directors or officers of PPL or
any Subsidiary as provided in its articles or by-laws thereof full force
and effect for a period of not less than six years from the Effective Time;
and
(u) will maintain in effect, for not less than six years from the
Effective Time, coverage substantially equivalent to that in effect under
the current policies of the directors' and officers' liability insurance
maintained in effect by Pendaries (provided that the coverage limit need
not be greater than US$10,000,000) which is no less advantageous, and with
no gaps or lapses in coverages with respect to matters occurring prior to
the Effective Time;
(v) subject to their applicable fiduciary obligations, the Board of
Directors of UPC will convene a directors' meeting on or before November
10, 2000 for the purpose of considering adding to the matters to be dealt
with at the Ultra Meeting an increase in the number of directors of UPC and
the election of additional directors to fill the vacancies created by such
increase; and
(w) will promptly advise PPL orally and, if then requested, in writing:
(i) of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of UPC contained in
this Agreement (except any such representation or warranty which speaks
solely as of a date prior to the occurrence of such event), if made on
or as of the date of such event or the Effective Date, untrue or
inaccurate in any material respect;
(ii) of any Material Adverse Change in respect of Ultra; and
(iii) of any material breach by UPC of any covenant or agreement
contained in this Agreement.
ARTICLE 6
Employment
6.1 Prior to the Effective Date, UPC shall use its reasonable best efforts
to enter into employment agreements with each of Bobby J. Fogle, Urich Ho,
Philip R. Henry, Michael D. Watford and Fox Benton III, and consulting
agreements with each of Robert E. Rigney and Fred Tietz, which employment
agreements and consulting agreements shall be conditional upon completion of
the Arrangement and shall be effective as of the Effective Date. The
employment agreements shall provide for the employment of each such individual
at a salary which is not less than the salary currently being paid to such
individual by Ultra or Pendaries, as the case may be. The consulting agreement
with Robert E. Rigney shall provide for Mr. Rigney to devote 50% of his time
to the affairs of Ultra and its Subsidiaries (which for greater certainty
shall then include Pendaries). The employment agreement with Bobby J. Fogle
shall provide for Mr. Fogle to devote 75% of his time to the affairs of Ultra
and its Subsidiaries (which for greater certainty shall then include
Pendaries). The consulting agreement with Fred Tietz shall provide for Mr.
Tietz to be engaged as a consultant to Ultra and its Subsidiaries at a
consulting fee which is not less than the consulting fee currently being paid
to Mr. Tietz by Pendaries.
6.2 Subject to the fiduciary obligations of the Board of Directors of UPC
to act in the best interests of UPC and its shareholders, at the next annual
or special meeting of shareholders of UPC following the Effective
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<PAGE>
Date management of UPC shall recommend that the number of directors of UPC be
increased by at least one director and shall nominate one person designated by
Robert E. Rigney, who is a director of PPL on the date hereof, for election as
a director of UPC.
ARTICLE 7
Closing Conditions
7.1 The obligation of PPL to complete the transactions contemplated herein
is subject to the fulfillment of the following conditions precedent on or
before the Effective Date or such other time as is specified below:
(a) all representations and warranties of UPC under this Agreement shall
have been true and correct on the date hereof;
(b) the representations and warranties of UPC shall be true and correct
in all material respects (except where already qualified as to materiality
or the absence of Material Adverse Effect) as of the Effective Date as if
made on and as of such date (except to the extent such representations and
warranties speak solely as of an earlier date, in which event such
representations and warranties shall be true and correct to such extent as
of such earlier date, or except as affected by transactions contemplated or
permitted by this Agreement), and PPL shall have received a certificate of
UPC addressed to PPL and dated the Effective Date, signed on behalf of UPC
by two senior executive officers of UPC (on UPC's behalf and without
personal liability) confirming the same as of the Effective Date;
(c) UPC shall have provided PPL with opinions of Ultra Counsel
reasonably satisfactory to PPL dated the Effective Date (or such other date
as UPC and PPL may agree) and addressed to PPL and Pendaries Counsel to the
effect that:
(i) UPC and each Subsidiary is duly incorporated, organized and
validly existing under the law of the jurisdiction of its
incorporation, and is duly qualified to carry on business in such
jurisdictions in which the nature of its business or the property or
assets owned or leased by it makes such qualification necessary and UPC
has full power and authority to enter into this Agreement and perform
its obligations hereunder,
(ii) all necessary proceedings, corporate, regulatory or otherwise,
of UPC have been taken to fully, validly and effectively authorize this
Agreement, the Arrangement, the performance by UPC of its obligations
hereunder, and the execution and delivery by UPC of this Agreement,
(iii) this Agreement has been duly executed and delivered by UPC;
(iv) the execution and delivery of this Agreement by UPC, the
performance of the terms hereof by UPC and the consummation of the
transactions contemplated herein do not and will not require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (A) pursuant to
Canadian Securities Laws and U.S. Securities Laws, (B) the Interim
Order and the Final Order, (C) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse Effect
on Ultra or prevent, materially hinder, or materially make more
burdensome the consummation of the transactions contemplated by this
Agreement, (D) such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or (E) such
consents, approvals, authorizations, permits, filings or notifications
that have been previously made;
(v) the first trade by any person, other than a control person
distribution, of Ultra Common Shares issued pursuant to the Arrangement
will not be subject to the prospectus requirements of, or any hold
period under, applicable Canadian Securities Laws;
(vi) the Ultra Common Shares issued pursuant to the Arrangement are
duly and validly issued as fully paid and non-assessable Ultra Common
Shares and such Ultra Common Shares have been conditionally approved
for listing on the TSE subject to satisfaction of the conditions
prescribed by the TSE;
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<PAGE>
(vii) the limited offer and sale of Ultra Common Shares in accordance
with the provisions of the Arrangement Agreement and the Plan of
Arrangement does not require registration under the U.S. Securities Act
of 1933 and, subject to certain exceptions and qualifications to be
specifically set out in the opinion letter of Ultra Counsel, upon
issuance, such shares will be freely tradeable under such law by the
holders thereof.
in giving such opinion, Ultra Counsel may rely, in respect of matters
governed by the laws of any jurisdiction other than the Yukon Territory or
the laws of Canada applicable therein, upon the opinion of local counsel in
such jurisdiction provided that Ultra Counsel is of the opinion that the
opinion of such local counsel is one upon which Ultra Counsel may properly
rely; and, in respect of matters of fact, upon certificates of UPC or any
other appropriate persons;
(d) UPC shall have complied with its covenants herein in all material
respects and shall have provided to PPL a certificate of UPC certifying
that UPC has complied with its covenants herein in all material respects
and Pendaries shall have no knowledge to the contrary;
(e) between the date hereof and the Effective Date, there shall have
been no Material Adverse Change in respect of Ultra;
(f) on the Effective Date, the number of directors of UPC shall be
increased from three to four, and an individual designated by PPL shall be
appointed as a director to fill the vacancy created by such increase;
(g) on the Effective Date, the Board of Directors of UPC shall have
appointed the following officers:
<TABLE>
<S> <C>
Chairman, CEO and
President Michael D. Watford
Vice-President,
Accounting Bobby J. Fogle
Vice-President, Finance Fox Benton, III
</TABLE>
The foregoing conditions precedent are for the benefit of PPL and may be
waived, in whole or in part, by PPL in writing at any time. If any of the said
conditions precedent shall not be complied with or waived by PPL on or before
the date required for the performance thereof, PPL may, in addition to the
other remedies it may have at law or equity, rescind and terminate this
Agreement by written notice to UPC; provided, however, that PPL may not rely
on the failure to satisfy any of the foregoing conditions if the condition
would have been satisfied but for a material default by PPL in complying with
its obligations hereunder.
7.2 The obligation of UPC to complete the transactions contemplated herein
is subject to fulfillment of the following conditions precedent on or before
the Effective Date or such other time as is specified below:
(a) all representations and warranties of PPL under this Agreement shall
have been true and correct on the date hereof;
(b) the representations and warranties of PPL shall be true and correct
in all material respects (except where already qualified as to materiality
or the absence of Material Adverse Effect) as of the Effective Date as if
made on and as of such date (except to the extent such representations and
warranties speak solely as of an earlier date, in which event such
representations and warranties shall be true and correct to such extent as
of such earlier date, or except as affected by transactions contemplated or
permitted by this Agreement), and UPC shall have received a certificate of
PPL addressed to UPC and dated the Effective Date, signed on behalf of PPL
by two senior executive officers of PPL (on PPL's behalf and without
personal liability) confirming the same as of the Effective Date;
(c) PPL shall have provided UPC with opinions of Pendaries Counsel
reasonably satisfactory to UPC dated the Effective Date (or such other date
as UPC and PPL may agree) and addressed to UPC and Ultra Counsel, to the
effect that:
(i) each of PPL and the Pendaries Subsidiaries is duly incorporated,
organized and validly existing under the law of the jurisdiction of its
incorporation, and is duly qualified to carry on business in such
jurisdictions in which the nature of its business or the property or
assets owned or
24
<PAGE>
leased by it makes such qualification necessary and PPL has full power
and authority to enter into this Agreement and perform its obligations
hereunder;
(ii) all necessary proceedings, corporate, regulatory or otherwise,
of PPL have been taken to fully, validly and effectively authorize this
Agreement, the Arrangement, the performance by PPL of its obligations
hereunder, and the execution and delivery by PPL of this Agreement; and
(iii) this Agreement has been duly executed and delivered by PPL,
(iv) the execution and delivery of this Agreement by PPL, the
performance of the terms hereof by PPL and the consummation of the
transactions contemplated herein do not and will not require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority or any parties to the Title
Documents relating to the Pendaries Assets, except (A) pursuant to
Canadian Securities Laws or U.S. Securities Laws, (B) the Interim Order
and the Final Order, (C) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse Effect
on Pendaries or prevent, materially hinder, or materially make more
burdensome the consummation of the transactions contemplated by this
Agreement, (D) such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or (E) such
consents, approvals, authorizations, permits, filings or notifications
that have been previously made; and
(v) the Pendaries Proxy Statement complies as to form with Schedule
14A of the Exchange Act and, if applicable, contains all information
required by Rule 13e-3 of the Exchange Act, and does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
in giving such opinion, Pendaries Counsel may rely, in respect of matters
governed by the laws of any jurisdiction other than the Province of New
Brunswick or the laws of Canada applicable therein, upon the opinion of
local counsel in such jurisdiction provided that Pendaries Counsel is of
the opinion that the opinion of such local counsel is one upon which
Pendaries Counsel may properly rely; and, in respect of matters of fact,
upon certificates of Pendaries or any other appropriate persons;
(d) PPL shall have complied with its covenants herein in all material
respects and shall have provided to UPC a certificate of PPL certifying
that PPL has complied with its covenants herein in all material respects,
and UPC shall have no knowledge to the contrary;
(e) between the date hereof and the Effective Date there shall have been
no Material Adverse Change in respect of Pendaries;
(f) there shall have been no material breach by PPL or any of the
Pendaries Subsidiaries of any of their respective covenants,
representations or warranties contained in the Sino-American Loan
Documents;
(g) China National Offshore Oil Company shall not have asserted any
rights with respect to or arising from the Arrangement, which rights, if
upheld, could be expected to have a Material Adverse Effect on Pendaries or
Ultra;
(i) nothing shall have come to the attention of UPC that would cause UPC
to be unable to rely on the exemption provided in section 3(a)(10) of the
Exchange Act; and
(j) the number of Ultra Common Shares to be issued by UPC in exchange
for Pendaries Common Shares pursuant to the Arrangement shall not be
greater than 15,000,000.
The foregoing conditions precedent are for the benefit of UPC and may be
waived, in whole or in part, by UPC in writing at any time. If any of the said
conditions precedent shall not be complied with or waived by UPC on or before
the date required for the performance thereof, UPC may, in addition to the
other remedies it may have at law or equity, rescind and terminate this
Agreement by written notice to PPL; provided, however, that UPC may not rely on
the failure to satisfy any of the foregoing conditions if the condition would
have been satisfied but for a material default by UPC in complying with its
obligations hereunder.
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<PAGE>
7.3 The obligations of UPC and PPL to complete the transactions contemplated
herein are subject to fulfillment of the following conditions precedent on or
before the Effective Date or such other time as is specified below:
(a) a resolution shall have been passed at the Pendaries Meeting, duly
approving the Arrangement in accordance with the Interim Order;
(b) on or before the Expiry Date, the Final Order shall have been
granted in form and substance satisfactory to UPC and PPL, acting
reasonably, and such Final Order shall not have been set aside or modified,
on appeal or otherwise, in a manner unacceptable to such parties, acting
reasonably;
(c) there shall be no action taken under any existing applicable law or
regulation, nor any statute, rule, regulation or order which is, enacted,
enforced, promulgated or issued by any court, department, commission,
board, regulatory body, government or governmental authority or similar
agency, domestic or foreign, that:
(i) makes it illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Arrangement or any other transactions
contemplated herein;
(ii) results in a judgment or assessment of material damages
directly or indirectly relating to the transactions contemplated
herein;
(iii) prohibits Ultra's or Pendaries' ownership or operation of all
or any material portion of the business or assets of Ultra or
Pendaries, respectively, or compels Ultra or Pendaries to dispose of or
hold separately all or any portion of the business or assets of Ultra
or Pendaries or the Ultra Common Shares or the Pendaries Common Shares;
or
(iv) imposes or confirms material limitations on the ability of UPC
effectively to exercise and fulfill rights of ownership of the
Pendaries Common Shares or the holders of Pendaries Common Shares to
hold or receive Ultra Common Shares under the Arrangement or otherwise,
including, without limitation, the right to vote any such securities;
(d) Pendaries and Ultra shall have obtained all consents, approvals and
authorizations (including without limitation all regulatory and third party
approvals and consents) required or necessary in connection with the
transactions contemplated herein, the failure of which to obtain would have
a Material Adverse Effect on Pendaries or Ultra, as the case may be, on
terms and conditions that will not have a Material Adverse Effect on
Pendaries and/or Ultra;
(e) holders of not more than 5% of number of Pendaries Common Shares
outstanding as of the date hereof shall have exercised any rights of
dissent granted under the Interim Order in relation to the Plan of
Arrangement proposed at the Pendaries Meeting and PPL shall have provided
to UPC a certificate of PPL certifying on the Effective Date the number of
Pendaries Common Shares in respect of which the holders have exercised
rights of dissent;
(f) the TSE shall have accepted notice of the Arrangement and the
transactions contemplated hereby and the Ultra Common Shares to be issued
to holders of Pendaries Common Shares under this Agreement shall have been
conditionally approved for listing on the TSE; and
(g) the Pendaries Proxy Statement shall have included opinions of
counsel to PPL with respect to the Canadian and U.S. tax consequence of the
Arrangement, substantially in the form of the draft opinions provided by
PPL to UPC prior to the execution hereof.
The foregoing conditions are for the mutual benefit of UPC and PPL and may
be waived, in whole or in part, by both UPC and PPL at any time. If any of the
said conditions precedent shall not be complied with or waived as aforesaid on
or before the date required for the performance thereof, UPC or PPL may rescind
and terminate this Agreement by written notice to the other party; provided,
however, that no party may not rely on the failure to satisfy any of the
foregoing conditions if the condition would have been satisfied but for a
material default by such party in complying with its obligations hereunder.
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7.4 Each of PPL and UPC shall give prompt notice to the other of the
occurrence or failure to cure at any time from the date hereof to the Effective
Date of any event or state of facts which occurrence or failure to cure would,
or would be likely to (a) cause any of the representations or warranties of any
party contained herein to be untrue or inaccurate in any material respect, or
(b) result in the failure to comply with or satisfy any covenant, condition or
agreement to comply with or be satisfied by any party hereunder, provided
however, that no such representation shall affect the representations or
warranties of the parties or the conditions or obligations of the parties
hereunder.
7.5 The conditions set forth in this Article 7 shall be conclusively deemed
to be satisfied, waived or released when with the agreement of the parties the
Articles of Arrangement are filed under the Act to effect the Arrangement.
ARTICLE 8
Termination
8.1 If any condition contained in Sections 7.2 or 7.3 is not satisfied at or
before the Expiry Date, then UPC may by notice to PPL terminate this Agreement
and the obligations of the parties hereunder (except as otherwise herein
provided), but without detracting from the rights of UPC arising from any
breach by PPL but for which the condition would have been satisfied.
8.2 If any condition contained in Sections 7.1 or 7.3 is not satisfied at or
before the Expiry Date, then PPL may by notice to UPC terminate this Agreement
and the obligations of the parties hereunder (except as otherwise herein
provided), but without detracting from the rights of PPL arising from any
breach by UPC but for which the condition would have been satisfied.
8.3 This Agreement may be terminated:
(a) by the mutual agreement of PPL and UPC (for greater certainty,
without further action on the part of PPL shareholders if terminated after
the holding of the Pendaries Meeting);
(b) by either UPC or PPL by notice to the other party at any time prior
to the Effective Time if there shall be passed any law that makes
consummation of the transactions contemplated by this Agreement illegal or
otherwise prohibited;
(c) by UPC if the Board of Directors of PPL shall have withdrawn,
modified or changed in a manner adverse to UPC its approval or
recommendation of the Arrangement (unless the holders of Pendaries Common
Shares shall have approved the Arrangement prior to such termination or UPC
has suffered a Material Adverse Change or UPC shall have made a
misrepresentation at the date hereof or breached a covenant under this
Agreement in such a manner that, taking into account the last paragraph of
Section 7.1 hereof, PPL would be entitled to rely on the failure of a
condition set forth in Sections 7.1(a), (d) or (e) as a reason not to
complete the Arrangement);
(d) by PPL if the Board of Directors of PPL shall have withdrawn,
modified or changed in a manner adverse to UPC its approval or
recommendation of the Arrangement (unless the holders of Pendaries Common
Shares shall have approved the Arrangement prior to such termination);
(e) by PPL if the Board of Directors of UPC shall have withdrawn,
modified or changed in a manner adverse to PPL its approval or
recommendation of the Arrangement (unless the holders of Ultra Common
Shares shall have approved the Arrangement prior to such termination or PPL
has suffered a Material Adverse Change or PPL shall have made a
misrepresentation at the date hereof or breached a covenant under this
Agreement in such a manner that, taking into account the last paragraph of
Section 7.2 hereof, UPC would be entitled to rely on the failure of a
condition set forth in Sections 7.2(a), (d) or (e) as a reason not to
complete the Arrangement);
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(f) by UPC if the Board of Directors of UPC shall have withdrawn,
modified or changed in a manner adverse to PPL its approval or
recommendation of the Arrangement (unless the holders of Ultra Common
Shares shall have approved the Arrangement prior to such termination);
(g) by either UPC or PPL by notice to the other party if the PPL
shareholder approval shall not have been obtained by reason of the failure
to obtain the required vote at the PPL Meeting; or
(h) by either UPC or PPL by notice to the other party if the Ultra
Shareholder Approval shall not have been obtained by reason of the failure
to obtain the required vote at the Ultra Meeting.
8.4 If the Effective Date does not occur on or prior to the Expiry Date,
then, unless otherwise agreed in writing by the parties, this Agreement shall
terminate.
8.5 The exercise by either party of any right of termination hereunder shall
be without prejudice to any other remedy available to such party.
8.6 If this Agreement is validly terminated pursuant to any provision of
this Agreement, the parties shall return all materials and copies of all
materials delivered to PPL or UPC, as the case may be, or their agents and,
except for the obligations set forth in subsection 10.6 hereof (which shall
survive any termination of this Agreement and continue in full force and
effect), no party shall have any further obligations to any other party
hereunder with respect to this Agreement. The covenants contained in this
Section shall survive any termination of this Agreement and continue in full
force and effect.
8.7 After the Effective Date, the respective representations, warranties and
covenants of UPC and PPL contained herein shall expire and be terminated and
extinguished at and from the Effective Date and no party shall have any
liability or further obligation to any party hereunder in respect of such
representations, warranties or covenants thereafter.
ARTICLE 9
Amendment
9.1 This Agreement may, at any time and from time to time before or after
the holding of the Pendaries Meeting be amended by written agreement of the
parties hereto without further notice to or authorization on the part of their
respective shareholders, and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the parties hereto;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the obligations of the
parties hereto,
provided that, notwithstanding the foregoing, the number of Ultra Common Shares
which the holders of Pendaries Common Shares shall have the right to receive on
the Arrangement may not be reduced without the approval of the shareholders of
PPL given in the same manner as required for the approval of the Arrangement or
as may be ordered by the Court.
ARTICLE 10
General
10.1 Each party agrees to bear all costs and expenses incurred by it in
connection with the transactions contemplated hereby.
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10.2 No party hereto shall disclose, by press release, any aspect of the
transactions contemplated hereby, without prior written consent of the other
party. Notwithstanding the foregoing if either party is required by law or
administrative regulation to make any disclosure relating to the transactions
contemplated herein, that party will inform the other party as to the wording
of such disclosure prior to its being made.
10.3 Any notice, consent, waiver, direction or other communication required
or permitted to be given under this Agreement by a party to any other party
shall be in writing and may be given by delivering same or sending same by
facsimile transmission or by hand delivery addressed to the party to whom the
notice is to be given at its address for service herein. Any notice, consent,
waiver, direction or other communication aforesaid shall, if delivered, be
deemed to have been given and received on the date on which it was delivered to
the address provided herein (if a Business Day and, if not, the next succeeding
Business Day) and if sent by facsimile transmission on a Business Day be deemed
to have been given and received at the time of receipt unless actually received
at the point of delivery after 4:00 p.m. on a Business Day or anytime on a day
which is not a Business day, in which case it shall be deemed to have been
given and received on the next Business Day.
10.4 The address for service of each of the parties hereto shall be as
follows:
if to UPC:
Ultra Petroleum Corp.
16801 Greenspoint Park Drive
Suite 370
Houston, Texas
U.S.A. 77060
Attention: Michael D. Watford
Facsimile: (281) 876-2831
with a copy to:
Charlotte H. Kauffman
Ultra Petroleum Corp.
1200 Summit Avenue
Suite 700
Fort Worth, Texas
U.S.A. 76102
Facsimile: (817) 335-2434
if to PPL:
Pendaries Petroleum Ltd.
8 Greenway Plaza
Suite 910
Houston, Texas
U.S.A. 77046
Attention: Robert E. Rigney / Bobby J. Fogle
Facsimile: (713) 355-3511
with a copy to:
Stikeman Elliott
5300 Commerce Court West
199 Bay Street
Toronto, Ontario M5L 1B9
Attention: Brian M. Pukier
Facsimile: (416) 947-0866
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and to:
Jenkens & Gilchrist
1100 Louisiana
Suite 1800
Houston, Texas 77002
Attention: Judy G. Gechman
Facsimile: (713) 951-3314
10.5 Time shall be of the essence in this Agreement
10.6 UPC and PPL each represent and warrant to the other that it has not
done any act which would give rise to a valid claim against the other party for
any obligation or liability contingent or otherwise for brokerage fees,
finders' fees, agents' commissions or other similar forms of compensation with
respect to the transactions contemplated herein.
10.7 This Agreement constitutes the entire agreement between the parties
hereto and cancels and supersedes all prior agreements and understandings
between the parties with respect to the terms of the Arrangement.
10.8 If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect
in any jurisdiction, the remaining provisions or parts thereof contained herein
shall be and shall be conclusively deemed to be, as to such jurisdiction,
severable therefrom and:
(a) the validity, legality or enforceability of such remaining
provisions or parts thereof shall not in any way be affected or impaired by
the severance of the provisions or parts thereof severed; and
(b) the invalidity, illegality or unenforceability of any provision or
part thereof contained in this Agreement in any jurisdiction shall not
affect or impair such provision or part thereof or any other provisions of
this Agreement in any other jurisdiction.
10.9 Each party hereto shall, from time to time, and at all times hereafter,
at the request of the other party hereto, but without further consideration, do
all such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
10.10 This Agreement may only be amended by a written instrument signed by
the parties hereto.
10.11 This Agreement shall be governed by, and be construed in accordance
with, the laws of the Province of New Brunswick and applicable laws of Canada
but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other than
the Province of New Brunswick. Each party hereto hereby irrevocably attorns to
the jurisdiction of the Courts of the Province of New Brunswick in respect of
all matters arising under or in relation to this Agreement.
10.12 This Agreement may be executed in identical counterparts, each of
which is and is hereby conclusively deemed to be an original and all
counterparts collectively are to be conclusively deemed one instrument.
10.13 No waiver by any party hereto shall be effective unless in writing and
any waiver shall affect only the matter and the occurrence thereof specifically
identified and shall not extend to any other matter or occurrence.
10.14 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement may
not be assigned by any party hereto without the prior consent of the other
party hereto.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement.
ULTRA PETROLEUM CORP.
Per:_________________________________
Per:_________________________________
PENDARIES PETROLEUM LTD.
Per:_________________________________
Per:_________________________________
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Exhibit 1 to that Arrangement Agreement made the 13th day of October, 2000
between Ultra Petroleum Corp. and Pendaries Petroleum Ltd.
PLAN OF ARRANGEMENT
dated .
and made pursuant to
Section 128 of the Business Corporations Act (New Brunswick)
ARTICLE 1
Definitions
1.1 In this Plan, unless the context otherwise requires:
(a) "Arrangement" means the arrangement contemplated by this Plan pursuant
to Section 128 of the NBBCA;
(b) "Arrangement Agreement" means the arrangement agreement dated as of
October 13, 2000 between UPC and PPL, as amended, supplemented and/or restated
in accordance therewith prior to the Effective Date, providing for, among other
things, the Arrangement;
(c) "Arrangement Resolution" means the special resolution of the Pendaries
Shareholders considered at the Pendaries Meeting;
(d) "Articles of Arrangement" means the articles of arrangement in respect
of the Arrangement required by the NBBCA to be sent to the Director after the
Final Order is made;
(e) "Business Day" means a day, other than a Saturday, Sunday or statutory
holiday, when banks are generally open for the transactions of banking
business;
(f) "Court" means The Court of Queen's Bench of New Brunswick
(g) "Depositary" means Montreal Trust Company of Canada, as the registrar
and transfer agent of the Ultra Common Shares;
(h) "Director" means the director registrar appointed pursuant to Section
184 of the NBBCA.
(i) "Effective Date" means the date the Arrangement becomes effective under
the NBBCA as determined by the certificate of arrangement issued by the
Director pursuant to section 129(2) of the NBBCA;
(j) "Effective Time" means 12:01 am. (Fredericton time) on the Effective
Date;
(k) "Final Order" means the order of the Court approving the Arrangement, as
such order may be affirmed, amended or modified;
(l) "Interim Order" means an order of the Court containing declarations and
directions under the NBBCA with respect to the Arrangement;
(m) "NBBCA" means the Business Corporations Act (New Brunswick);
(n) "Pendaries Common Shares" means the common shares in the capital of PPL
as constituted on the date hereof;
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(o) "Pendaries Dissenting Shares" means all Pendaries Common Shares which
are deemed to have been cancelled on the Effective Date in accordance with the
provisions of Section 5.1(a);
(p) "Pendaries Meeting" means the special meeting of the holders of
Pendaries Common Shares, including any adjournment or postponement thereof, to
be called in accordance with the Interim Order to consider and, if thought fit,
approve and adopt the Arrangement;
(q) "Pendaries Options" means the options granted under agreements or
otherwise to purchase or otherwise acquire shares in the capital of Pendaries
(including without limitation Pendaries Common Shares);
(r) "Pendaries Shareholders" means the holders of Pendaries Common Shares;
(s) "Plan" means this plan as amended or supplemented from time to time, and
"hereby", "hereof", "herein", "hereunder", "herewith" and similar terms refer
to this Plan and not to any particular provision of this Plan; and
(t) "PPL" means Pendaries Petroleum Ltd., a corporation incorporated under
the NBBCA;
(u) "Ultra Common Shares" means the common shares in the capital of UPC as
constituted on the date hereof; and
(v) "UPC" means Ultra Petroleum Corp., a corporation subsisting under the
Business Corporations Act (Yukon Territory).
1.2 The headings contained in this Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Plan.
1.3 Unless the contrary intention appears, references in this Plan to an
Article, Section or subsection by number or letter or both refer to the
Article, Section or subsection bearing that designation in this Plan.
1.4 In this Plan, unless the contrary intention appears, words importing the
singular include the plural and vice versa, words importing gender shall
include all genders; and "person" includes any individual, partnership, firm,
trust, body corporate, government, governmental body, agency or
instrumentality, unincorporated body of persons or association.
1.5 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a Business Day in the place where the
action is required to be taken, such action shall be required to be taken on
the next succeeding day which is a Business Day in such place.
1.6 References in this Plan to any statute or sections thereof shall include
such statute as amended or substituted and any regulations promulgated
thereunder from time to time in effect.
ARTICLE 2
Effect of the Plan
2.1 At the Effective Time, the Plan shall be binding upon PPL, the Pendaries
Shareholders, the holders of Pendaries Options and UPC.
ARTICLE 3
Arrangement
3.1 At the Effective Time, each of the events set out below shall occur and
be deemed to occur in the sequence set out therein without further act or
formality:
(a) all Pendaries Common Shares (other than the Pendaries Dissenting Shares
and Pendaries Common Shares held by UPC and its affiliates) shall be
and shall be deemed to be transferred to UPC in
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<PAGE>
exchange for Ultra Common Shares on the basis of one and fifty-eight one
hundredths of one (1.58) fully paid and non-assessable Ultra Common
Shares for each one (1.00) Pendaries Common Share; and
(b) with respect to each Pendaries Common Share to which subsection 3.1 (a)
applies (other than those Pendaries Common Shares to which section 3.3
applies):
(i) the holder thereof shall (A) cease to be a holder of such share, (B)
such holder's name shall be removed from the register of Pendaries
Common Shares with respect to such shares, (C) be allotted and
issued, as fully paid and non-assessable shares, the number of Ultra
Common Shares calculated in the basis set forth in subsection 3.1(a)
(subject to section 3.2), and (D) such holder's name shall be added
to the register of Ultra Common Shares with respect to such Ultra
Common Shares; and
(ii) UPC shall be and be deemed to be the transferee and shall be
entered in the register of Pendaries Common Shares as the holder
thereof; and
(c) all Pendaries Options shall be cancelled.
3.2 No certificates representing fractional Ultra Common Shares will be
issued. In the event that the exchange ratios referred to herein would in any
case otherwise result in a holder of a Pendaries Common Share being entitled to
a fractional Ultra Common Share, an adjustment shall be made to the next
highest whole number of Ultra Common Shares and a certificate for the resulting
whole number of Ultra Common Shares will be issued. In calculating such
fractional interests, all Pendaries Common Shares held by a beneficial holder
of Pendaries Common Shares shall be aggregated.
ARTICLE 4
Outstanding Certificates
4.1 After the Effective Time, certificates formerly representing Pendaries
Common Shares to which subsection 3.1(a) applies shall represent only the right
to receive certificates representing the Ultra Common Shares, if any, which the
former holder of such Pendaries Common Shares is entitled to receive pursuant
to Article 3 subject to compliance with the requirements set forth in this
Article 4.
4.2 Either prior to or as soon as practicable after the Effective Date, UPC
shall forward to each holder of Pendaries Common Shares to which subsection
3.1(a) applies at the address of such holder as it appeared in the relevant
share register of PPL a letter of transmittal containing, among other things,
instructions for obtaining delivery of certificates representing the Ultra
Common Shares pursuant to this Plan. Such holder of Pendaries Common Shares
shall be entitled to receive certificates representing the Ultra Common Shares
which such holder is entitled to receive pursuant to Article 3 upon delivering
the certificate formerly representing such holder's Pendaries Common Shares to
the Depositary, or as the Depositary may otherwise direct, in accordance with
the instructions contained in the letter of transmittal. Such certificate
formerly representing such holder's Pendaries Common Shares shall be
accompanied by the letter of transmittal, duly completed, and such other
documents as the Depositary may reasonably require. The Depositary shall
register the Ultra Common Shares in such name, and shall deliver by first class
mail, postage prepaid, or, in the case of postal disruption, by such other
means as the Depositary deems prudent certificates representing such Common
Shares to such address as such holder may direct in such letter of transmittal,
as soon as practicable after receipt by the Depositary of such documents.
4.3 The holders of Pendaries Common Shares shall not be entitled to any
interest, dividend, premium or other payment on or with respect to the
Pendaries Common Shares other than the Ultra Common Shares, if any, which they
are entitled to receive for the Pendaries Common Shares pursuant to this Plan.
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<PAGE>
4.4 No dividends or other distributions declared or made with respect to
Ultra Common Shares with a record date after the Effective Time, shall be paid
to the holder of any unsurrendered certificate which immediately prior to the
Effective Time represented outstanding Pendaries Common Shares, unless and
until the holder of such certificate shall surrender such certificate in
accordance with Section 4.2. Subject to applicable law, at the time of such
surrender of any such certificate (or, in the case of clause (z) below, at the
appropriate payment date), there shall be paid to the holder of the
certificates representing Pendaries Common Shares, without interest, (y) the
amount of any cash dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to which such holder is
entitled pursuant hereto, and (z) on the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to such Ultra Common Shares.
4.5 In the event any certificate which immediately prior to the Effective
Time represented one or more outstanding Pendaries Common Shares that were
exchanged pursuant to Article 3 shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed, together with such holder's letter of
transmittal, UPC will issue in exchange for such lost, stolen or destroyed
certificate, certificates representing the UPC Common Shares issuable under
this Plan in accordance with Article 3. When authorizing such issuance of
certificate(s) representing UPC Common Shares issuable in exchange for any
lost, stolen or destroyed certificate, the person to whom such certificate(s)
are to be issued shall, as a condition precedent to the issuance of such
certificate(s), give a bond satisfactory to PPL and UPC and their respective
transfer agents in such sum as PPL and UPC may direct or otherwise indemnify
PPL and UPC in a manner satisfactory to PPL and UPC against any claim that may
be made against PPL and UPC with respect to the certificate alleged to have
been lost, stolen or destroyed.
4.6 Any certificate which immediately prior to the Effective Time
represented outstanding Pendaries Common Shares that were exchanged pursuant to
Article 3, which is not deposited with all other instruments required by
Section 4.2 on or prior to December 31, 2008 shall cease to represent a claim
or interest of any kind or nature as a securityholder of PPL or UPC. On such
date, Ultra Common Shares to which the former holder of the certificate
referred to in the preceding sentence was ultimately entitled shall be deemed
to have been surrendered for no consideration to UPC, together with all
entitlements to dividends and distributions in respect thereof held for such
former holder. Neither of PPL or UPC shall be liable to any person in respect
of Ultra Common Shares, if any, (or dividends or distributions in respect
thereof) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
ARTICLE 5
Shareholder Dissent Rights
5.1 Holders of Pendaries Common Shares may exercise rights of dissent with
respect to such shares pursuant to and in the manner set forth in Section 131
of the NBBCA, as such rights may be modified by the Interim Order and this
Section 5.1 (the "Dissent Rights"), in connection with the Arrangement provided
that, notwithstanding Section 131(5) of the NBBCA, the written objection to the
Arrangement Resolution referred to in Section 131(5) of the NBBCA must be
received by PPL not later than 5:00 p.m. (Toronto time) on the Business Day
preceding the Pendaries Meeting. Holders of Pendaries Common Shares who duly
exercise such rights of dissent and who:
(a) are ultimately determined to be entitled to be paid fair value for
their Pendaries Common Shares, shall be deemed to have transferred such
Pendaries Common Shares as of the Effective Time, without any further
act or formality and free and clear of all liens, claims and
encumbrances, to UPC in consideration for a payment of cash from PPL
equal to such fair value; or
(b) are ultimately determined not to be entitled, for any reason, to be
paid fair value for their Pendaries Common Shares, shall be deemed to
have participated in the Arrangement on the same basis as a
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<PAGE>
non-dissenting holder of Pendaries Common Shares and shall receive Ultra
Common Shares on the basis determined in accordance with Article 3;
but in no case shall UPC or any other person be required to recognize such
holders of Pendaries Dissenting Shares as holders of Pendaries Common Shares
after the Effective Time, and the names of such holders of Pendaries Dissenting
Shares shall be deleted from the register of holders of Pendaries Common Shares
at the Effective Time.
ARTICLE 6
Amendments to Plan of Arrangement
6.1 PPL reserves the right to amend, modify and/or supplement this Plan at
any time and from time to time prior to the Effective Date, provided that each
such amendment, modification and/or supplement must be (i) set out in writing,
(ii) approved by UPC, (iii) filed with the Court and, if made following the
Pendaries Meeting, approved by the Court and (iv) communicated to the Pendaries
Shareholders if and as required by the Court.
6.2 Any amendment, modification or supplement to this Plan may be proposed
by PPL at any time prior to the Pendaries Meeting (provided that UPC shall have
consented thereto) with or without any other prior notice or communication, and
if so proposed and accepted by the persons voting at the Pendaries Meeting
(other than as may be required under the Interim Order), shall become part of
this Plan for all purposes.
6.3 Any amendment, modification or supplement to this Plan that is approved
by the Court following the Pendaries Meeting shall be effective only if (i) it
is consented to by each of PPL and UPC and (ii) if required by the Court, it is
consented to by the Pendaries Shareholders voting in the manner directed by the
Court.
6.4 Any amendment, modification or supplement to this Plan may be made
following the Effective Date unilaterally by UPC, provided that it concerns a
matter which, in the reasonable opinion of UPC, is of an administrative nature
required to better give effect to the implementation of this Plan.
5
