HomeMy WebLinkAboutLEG 05-14 cat/ o Report to Council
PICKERING Report Number: LEG 05-14
Date: June 16, 2014
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: Veridian Corporation Amended and Restated Shareholders' Agreement
- File: L-1000-004-14
Recommendation:
1. That Report LEG 05-14 of the Director, Corporate Services & City Solicitor
regarding the Veridian Corporation Amended and Restated Shareholders'
Agreement be received;
2. That Council authorizes and approves the Amended and Restated Shareholders'
Agreement attached hereto as Attachment 1;
3. That the Mayor and City Clerk be authorized to execute the Amended and
Restated Shareholders' Agreement, in the form included as Attachment 1, subject
to such minor revisions as are acceptable to the Director Corporate Services &
City Solicitor, the Division Head, Finance &Treasurer and the Chief Administrative
Officer; and
4. That the appropriate City of Pickering officials be authorized to take the necessary
action to give effect hereto.
Executive Summary: The board of directors of Veridian Corporation ("Veridian")
supports amendments to the Veridian's shareholders' agreement. The amendments are
set out in the Amended and Restated Shareholders' Agreement which is included in this
Report as Attachment 1. The proposed amendments reduce the size of Veridian's board
of directors from 14 to 11, and further reduce the size of the board of directors of
Veridian Connections Inc. ("VCI") from 12 to 11. The proposed amendments also
incorporate changes which are properly characterized as "housekeeping", matters as
well as changes already implemented by means of two previous amending agreements.
City staff recommend that the City sign the Amended and Restated Shareholders'
Agreement.
Financial Implications: Senior management of Veridian advise that the cost savings
associated with the reduction in the size of the boards of directors of Veridian and VCI
amount to approximately $103,000 per year. Each year, the City of Pickering receives a
35
Report LEG 05-13 June 16, 2014
Subject: Veridian Corporation Amended and Restated Shareholders Agreement Page 2
substantial dividend payment on account of its shareholding in Veridian. (Last year, for
example, the dividend paid by Veridian to the City amounted to $1,927,000.)Any
increase in the efficiency with which Veridian conducts its business operations,
including the reduction in the size of its board of directors, will better enable Veridian's
ongoing operations and will enhance its ability to continue making substantial dividend
payments to the City and to its other shareholders.
Discussion: The existing Shareholders' Agreement was originally entered
into on September 28, 2001 and is subject to a first amending agreement and a second
amending agreement. A December 12, 2013 resolution of the board of directors of
Veridian Corporation (the "December Resolution"), sets out certain other amendments
sought by the board of directors of Veridian Corporation ("Veridian").
A redlined copy of the Amended and Restated Shareholders' Agreement (herein called
the"Shareholders' Agreement") is Attachment 1 to this Report. The Shareholders'
Agreement has been updated to incorporate the changes contained in the first and
second amending agreements and to reflect changes to the names of various agencies
and statutes relevant to Veridian's operations. Some historical references from the
original shareholders' agreement have been removed as they are no longer required.
The Shareholders' Agreement has also been amended to incorporate the changes set
forth in the December Resolution.
The proposed changes, adopted by the board of directors of Veridian on May 16, 2014,
would reduce the size of the board of directors of Veridian from 14 to 11, and the size of
the board of directors of VCI from 12 to 11. In addition, the total number of directors for
the corporations has been reduced from a potential of 25 directors to 15 directors.
Senior management of Veridian advises that the resulting combined cost savings would
be approximately $103,000 per year.
To effect the proposed amendments as set forth in the Shareholders' Agreement, the
approval of both a majority of the Shareholders and approval by more than 50% of the
voting shares is required.
Set out below is a summary of the changes contained within the Shareholders'
Agreement.
Directors of Veridian, Section 3.2
Following several discussions, it was decided that the board of directors of Veridian
would consist of 11 directors. As a result, the board of directors of Veridian has been
reduced by 3 directors. The directors which are to be elected by each Shareholder are
as set out in the table below which is also included in the Shareholders' Agreement:
CORP0227-07/01 revised
36
Report LEG 05-13 June 16, 2014
Subject: Veridian Corporation Amended and Restated Shareholders Agreement Page 3
Shareholder Non-Elected Elected Members Total Number of
Members (Municipal Director Appointees
Councillors)
Ajax 1 2 3
Belleville 1 1 2
Clarington 1 1 2
Pickering 1 3 4
There are a number of other points to be aware of regarding the composition of the
board of directors of Veridian:
• an Elected Member is a municipal Councillor of a Shareholder and has been
approved by that Shareholder's Council;
• Elected Members include the Mayor and the Mayor's Designate, provided that
neither shall be required to be approved by Council;
• a Non-Elected Member is not an elected member of Council but is someone who
has been approved by that Shareholder's Council
• the directors of Veridian, as selected by the Shareholders, elect the Chair and Vice
Chair;
• the Chair or Vice Chair of the Veridian board can be either Non-Elected or Elected
Members; and
• the Chair and Vice Chair can not both be representatives of one Shareholder.
Directors of Veridian Connections Inc. ("VCI"), Section 3.2
The following points summarize the proposed revisions as set forth in the Shareholders'
Agreement:
• the board of directors of VCI is to be comprised of 11 directors;
• the board of directors of VCI is to be selected by the directors of Veridian;
• subject only to the exception explained below, all of the Elected Members to the
board of directors of Veridian shall also be appointed directors of the board of
directors of VCI; and
• subject only to the exception explained below, a Non-Elected Member of the board
of Veridian shall not be appointed a director of the board of directors of VCI.
The December Resolution provided that the Elected Members for each of the Veridian
board of directors and the VCI board of directors were to be the same individuals. In
addition, the December Resolution provided that the Chair and Vice Chair of Veridian
were also to hold the same positions for VCI. The Affiliate Relationships Code for
Electricity Distributors and Transmitters (the "ARC") requires that one-third of directors
be independent from any affiliate. If a Non-Elected Member was elected as Chair or
Vice Chair, then if that same person was then appointed to the board of directors of VCI
along with the other Elected Members, the composition of the VCI Board would not
comply with the provisions of the ARC. To resolve this, it was determined that the
CORP0227-07/01 revised
37
Report LEG 05-13 June 16, 2014
Subject: Veridian Corporation Amended and Restated Shareholders Agreement Page 4
Shareholders' Agreement would include an exception to account for the circumstance in
which a Non-Elected Member was elected as Chair or Vice Chair. If a Non-Elected
Member is elected as the Chair or Vice Chair of the board of directors of Veridian, and
given the requirement that the same person be elected as Chair or Vice Chair of the
board of directors of VCI, in order to ensure that the board of directors of VCI complies
with the requirements of the ARC, the shareholder that nominated such Non-Elected
Member, would then nominate a substitute Elected Member that was not on the
Veridian Board, to be Elected Member for the VCI Board.
Term of Directors, Chair and Vice Chair, Section 3.2(1)
The proposed amendments clarify that the term of Directors, Chair and Vice Chair
cannot be greater than 4 years or as is permitted pursuant to the Business Corporation
Act R.S.O. 1990, c. B.16, which currently provides that such term may not exceed 3
years.
Compensation, Section 3.2(s)
As set forth in the December Resolution, the board of directors of VC shall determine
director compensation. The proposed revisions provide that the Chair and Vice Chair
shall not comprise a majority of the directors elected to make recommendations
regarding compensation.
Accounting Principles, Section 1.6
Section 1.6 of the Shareholders'Agreement has been amended to refer to GAAP, which
definition takes into consideration that if the corporation has adopted the International
Financial Reporting Standards, the definition of GAAP will thereafter include such
standards.
Business of Corporation, Section 2.1
The provisions of section 2.1 have been updated to reflect amendments to section 71 of
the Ontario Energy Board Act, 1998. In particular, section 2.1(i) has been amended to
reflect the provisions of section 71(1), paragraph 9 of the said Act to include energy
conservation, load management or the use of cleaner energy sources, including
alternative and renewable energy sources.
Term of Directors, Section 3.2(f)
Section 119(4) of the Business Corporations Act(Ontario) provides that directors are to
hold office for a term expiring not later than the close of the third annual meeting of the
Shareholders following the election. Further, if a director is not elected for an expressly
stated term, then that director shall cease to hold office at the close of the first annual
meeting of shareholders following his or her election. As a result, notwithstanding that
section 3.2(f) does not specify a maximum term, any appointment to the board should
CORP0227-07/01 revised
38
Report LEG 05-13 June 16, 2014
Subject: Veridian Corporation Amended and Restated Shareholders Agreement Page 5
specify a term if it is to be more than 1 year and no board member's term may exceed 3
years.
Term of Shareholders' Agreement, Section 10.1
The original Shareholders' Agreement had a term of 5 years with automatic renewals.
Section 10.1 now provides that the Shareholders' Agreement shall continue until the
earlier of the date on which there is only 1 Shareholder or the date on which the
Shareholders agree to terminate the Shareholders' Agreement.
Additional Changes
A number of additional changes to the Shareholders' Agreement serve to update the
document to reflect current legislation and names of various organizations such as the
IESO (Independent Electricity System Operator). In addition, some of the terms used in
the original shareholders' agreement have been removed because they are no longer
relevant. These include: "Merger Agreement", "Veridian Successor Corporations",
"Belleville Successor Corporations", "Initial Shareholder", "Predecessor Utility", and
"Previous Shareholders' Agreement".
Attachments:
1 Draft Veridian Corporation Amended and Restated Shareholders Agreement
Prepared By: Pre•=r- '/Approved By:
.
Stan Karwowski Paul Bi: i
Division Head, Finance &Treasurer Directo Corpo -te Services &
City Sol itor
PB:ks
Recommended for the consideration
of Pickering Cit •uncil
JJff//JJ
Tony Preveb-I,
Y •.
Chief Administrative Officer
CORP0227-07/01 revised
39
ATTACHMENT# / TO REPORT# LE C-7 O -'
/ .of. 5�`
VERIDIAN CORPORATION
AMENDED AN1_RI $Ii fH.) SHAREHOLDERS' AGREEMENT
BORDEN LADNER GERVAIS LLP
40
it_LLStI.+lt
TABLE OF CONTENTS
Page No
ARTICLE 1 INTERPRETATION 3
1.1 DEFINITIONS 3
1.2 CONTROL n)
•
1.3 HEADINGS 9
1.4 ENTIRE AGREEMENT !{I9
1.5 NUMBER AND GENDER 109
1.6 ACCOUNTING PRINCIPLES 10
1.7 CALCULATION OF TIME 10
1.3 STATUTORY REFERENCES ! ,10
1.9 RECLASSIFICATION OF SHARES 11
1.10 INTERPRETATION 11
1.1 1 GOVERNING LAW 1 1
1.12 CURRENCY 1 'I,
ARTICLE H BUSINESS OF THE CORPORATIONS
2.1 BUSINESS OF THE CORPORATIONS 1-2 1�L
2.2 CORPORATIONS'STANDARD OF SERVICE 17-12
ARTICLE III CORPORATE AFFAIRS OF VERIDIAN CORPORATION 13
3.1 ASSURANCES 13
3.2 THE BOARD ! 113
(a) Shareholder Action 13
(b) TI7t*'Vt' Board attrl J'rtb,ii/ia i e ,rr Rl: --- _ ..--___ — 1-rl
S?1°AVAtcl
�,�._ �� t!s'USl�>1�G�:�IS!1���1��:A�1�tI0��a.V :t�s,�..n...�._ +e •
NI— ....... 4V-1,
41
1"-AcKkit IQ)) (.4.3pv
ARP Vial=1:1520°a ra-d-WAChl65131-4W...-,+-M-,,,4,-,L,•'' ''' '
(11:411,,viVircK19-0 of XLL.,
011-41)110,t_ntuuntalio v*millimtm.„05.345:idioric5,44.,.,,,, •,..•
(t j) Director Replacement 1-51,4
Q Qualifications,r1
•
(L- ) Nominees of Transferee Shareholders
(11) Term of Directors I 721
( w) Vacancy
OW Quorum 1-7Z1
(iv) Meetings of the Board 1 crzi
(jp) Decisions of the Directors
(411) Board Duties
co Indemnification and insurance for Directors and Officers 92
($)
CLiiilhtIUI1 .,.• '''' ',22
3.3 BOA RD COMMITTEES ruzj
(a) Nominating Committee 2#23
(b) General Provisions Relating to Board Committees 2,P1
3.4 SHAREHOLDERS'MEETINGS 7-4 2,
3.5 REGULAR SHAREHOLDERS MEE FINGS 21
3.6 DECISIONS OF THE SHAREHOLDERS I m
3.7 SHAREHOLDER REPRESENTATIVE
3.8 OFFICERS :1-2L5
3.9 MATTERS REQUIRING SHAREHOLDER APPROVAL 2225
3.10 UNANIMOUS SHAREHOLDER AGREEMENT
3.11 AGREEMENT BINDS VERIDIAN CORPORATION AND SUBSIDIARIES
42 •
Wit rOlti
3.1 2 AUDITORS :14z2
3.13 BANKING -1477
3.14 FINANCIAL STATEMENTS -Li 22
ARTICLE IV REPRESENTATIONS,WARRANTIES AND COVENANTS 2411
4.1 REPRESENTATIONS AND WARRANTIES
4.2 COVENANTS
ARTICLE V TRANSFER OF SHARES 26211
5.1 GENERAL RESTRICTION ON TRANSFER :•1(),0
5.2 LEGEND ON SHARES )44U
5.3 RIGHTS OF FIRST REFUSAL •:44,19
(a) Notice of Offer 249
(b) Offer Open During Notice Period
(c) Acceptance of Offer 29
(d) Excess Shares
(e) No Fractions 24,31)
(0 Sale
(g) Deemed Refusal
(h) Prospective Purchaser Bound
(i) Veridian Corporation as Purchaser
5.4 PIGGYBACK RIGHT .21)311
5.5 AMALGAMATED SHAREHOLDER 293,2
ARTICLE VI CLOSING OF PURCHASE TRANSACTION
6.1 TIME AND PLACE OF CLOSING
6.2 DOCUMENTS TO BE DELIVERED BY THE VENDOR
6.3 DOCUMENTS TO BE DELIVERED BY THE PURCHASER
6.4 FAILURE TO COMPLETE SALE •
43
ARTICLE VII NON-COMPETITION AND CONFIDENTIALITY
7,1 NON-COMPH MON
7.2 CONFIDENTIALITY
7.3 INJUNCTIVE RELIEF
7.4 ACCOUNTING FOR PROFITS .436
7.5 REASONABLENESS OF RESTRICTIONS :436
ARTICLE VIII SALE OF SURPLUS ASSETS 4631
8.1 RIGHT OF FIRST REFUSAL
141/
ARTICLE IX BOOKS,RECORDS AND RIGHT TO INFORMATION
9.1 BOOKS AND RECORDS 1491
9.2 RIGT-IT TO INFORMATION
ARTICLE X TERM •
10.1 TERM r't 1444 47-4444.+AVM-=:
ARTICLE XI PROMISSORY NOTES
I 1.1 PROMISSORY NOTES.
ARTICLE XII GENERAL 273_9.
12.1 NOTICES 1-7,"
12.2 ASSIGNMENT AND BINDING EFFECT •
12.3 AMALGAMATION OF MUNICIPAL SHAREHOLDERS;
12.4 ARBITRATION
(a) Selection of Single Arbitrator 4041
(b) Referring Dispute 404)
(c) Attempted Settlement .3043
(d) Decision Final and Binding 30,4
(e) Powers of Arbitrator 4042
(0 Costs 40,4.4
(g) Written Notices tit
12,5 FURTHER ASSURANCES 14a 3
I2.6 SEVERADILITY 4143
l2 7 AMENDMENT,MODIFICATION AND WAIVER 4-a4I
12.3 TIME OF ESSENCE 4-1' #4
12.9 COUNTERPARTS -I I
12.10 NO PARTNERSHIP 4144
12.11 PROCEEDINGS 1444
SCHEDULE"A" 1
45
THIS :t.E1D. 1►1 13ltljLt1311�1 -_ ' :AG1tEH.NIENT
made as of the day of , 400.
BETWEEN:
THE CORPORATION OF THE TOWN OF AJAX,a municipal
corporation existing under the laws of Ontario
("Ajax")
- and -
THE CORPORATION OF THE CITY OF BELLEVILLE, a
municipal corporation existing under the laws of Ontario
("Belleville")
- and -
THE CORPORATION OF THE MUNICIPALITY OF
CLARINGTON, a municipal corporation existing under the laws
of Ontario
("Clarington")
- and -
THE CORPORATION OF THE CITY OF PICKERING, a
municipal corporation existing under the laws of Ontario
("Pickering")
- and -
VERID IAN CORPORATION, a corporation amalgamated under
the laws of Ontario
("VC")
•
46
- and -
VIRIDIAN CONNECTIONS INC., a corporation amalgamated
under the laws of Ontario
("VCI")
- and -
VIRIDIAN ENERGY INC.,a corporation amalgamated under the
laws of Ontario
("VEI")
(Ajax, Belleville,Clarington,Pickering,VC,VCI and VEI are collectively referred
to herein as the"Parties",and c.Ligit a"Pgrty
Recitals:
+-- - ii N:-(44 it3}i-1111 4.0.4 fft} l ii{ia it'{ t4-^c,ef
a. II
Mt 1-t+ �I �i tr ►tat+ t} +ttl t t ili <�t eleet+ieit- -7ti*-erta rat i4 n s:-ttile
� i 1La -su«s er .Cortiorations"-i-pot ;ant-to-4 he-Elee fi :i ,Q1-:
13e}leville tfe}t:r*'t er 4 it{tt}iti-t-!-4t ,-t;±.t,,,}}tt-1 13{ {at.,4 to it fed—i.;.
ltt —��t eles tt gt-y_tt+. t Mitt- yet .�t tc p Fi,�t -4�i�e Bele�ilte - tent ++�t
. Ajtt 4<4-trteri.te-4h b ttes.;, ,4L{it,-V:tidlett
a,� H L:'t#t k ai+ t3h�3 1 the 1 4}ev+li t+. t: <�t ('car{ atik;t� -f ul Etttttt-fet?tt teat ?
I The authorized capital of VC consists of an unlimited number of Shares of which 10,000
are issued and outstanding as fully paid and non-assessable:,
Ajax, Belleville, Clarington and Pickering arc the sole registered and beneficial
shareholders of VC holding the following numbers of Shares, respectively:
w.-\-- -11.;-0 NUMBER OF SHARES PERCENTAGE TOTAL
SHAREHOLDER
. Ajax 3,210 32.1%
Belleville 1,330 13.3%
47
- 3 -
Clarington 1,360 13.6%
Pickering 4,100 41.0%
The t+:1 & AN-4h =1 -_it=:t --4titE1_. 16-A tAilwo4r
.. � lio.:_s[tiocd_.ttttt? sharchcildq.
alustAttiLditcd tietrtembci 18_4: 9()1,_his anm tied bY k it 1__0,IWuditi, ;lsv ifl LQ,th_c
s.11ittehpWci, etmemi$l=ticd SeMtul et ito it11S ide..,iti!L. mtlAineatittlt
a r.__3.tm_IQ the shareholders' itgLeeti cnt_date. t • _1 .. .1t1. 1LtrsRllv_. Lk e.111.
"Original Sharehultiers_'_Agreemene) to provide for the conduct of certain affairs of
VC, to provide for certain restrictions on the transfer and ownership of Shares and to
govern the mutual rights and obligations of the Shareholders with respect to VC and each
other Shareholder.
, lte_PAajo tailiatLimagg .t:figint el u. eenwai1_01s
NMI 1 forth inil1l _$ e4tztenLx itULthuotenttiLitt.t 11.- 'gLes:.11
NOW THEREFORE in consideration of the premises,the mutual promises herein contained and
other good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged)each of the t,rtbtet:Pitt e agrees with each other l,r ++f arty as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions
hi this Agreement the following terms shall have the following meanings unless the subject
matter or context otherwise requires:
"Act"means the Business Corporations Act-Wata,h l LS,( , t 99t c.R.1(),
"Agreement"means this Amertde mislAe ted_Sl igeht 14rs.' Agreement,all schedules attached
hereto and any agreement or schedule supplementing or amending this Amettded and itojggd
sharer. 1d41 a',Agreement. All uses of the words "hereto", "herein", "hereof', "hereby" and
"hereunder"and similar expressions refer to this eMOa i li ' `',11. oJ_ o Agreement
48
•
.- 4 -
• and not to any particular section or portion of it. References to an Article, Section, Subsection or
Schedule refer to the applicable article, section, subsection or schedule of this Atrten3.W.,And
i� 1►h I j�.l l a fi ej 1 Agreement:
"Amalgamated Shareholder"has the meaning set out in Section 12.3;
"Arbitration Act" means the Arbitration Act _.,(.. ..t S.O., L'191_„PA 7;
"Arbitrator” has the meaning set out in Subsection 12.4(a);
"Arm's Length"has the meaning attributed =,trt-; +:,tp it in the Income Tax Act(Canada)provided
that, for the purposes of Section 5.3, each Shareholder shall be deemed to be acting at Arm's
Length with each other Shareholder and VC;
"Auditors"means the firm of chartered accountants appointed as auditor of the Corporations from
time to time;
R_4:' }t i3E$tttl- ,. F; kZt{4 tx F +1�i Iii 9 tip.
"Board"means the Board of Directors of VC;
"Board Committees" means committees created by the Board from time to time for the purpose
• of overseeing specific tasks and reporting to the Board and includes the committees referred to in
Section 3.3;
"Business"means the business of the Corporations as described in Section 2.1 or as may otherwise
he conducted by the Corporations from time to time;
"Business Day"means any day other than a Saturday, Sunday,or statutory holiday in Ontario;
"Chair" means the director elected by the Board to serve as its chairperson from time to time;
"Closing Date"means the date an which the purchase and sale of Shares is to be completed;
"Confidential Information"means any and all information and data relating in any manner to the
Business and any activities, plans, ideas, products, services, policies or intentions (including
without limitation, information of an operational, business, marketing, financial or economic
nature), whether or not proprietary in nature, that is of value to the Corporations and is held by the
49
Corporations as a trade secret and is not generally known to competitors of the Corporations or to
the public;
• "Corporations"means collectively VC and the Subsidiaries;
• 1,74tt4itf.11-41?P4404e —1E'6+144e4litiriliii+:�err'?t41 Ftt�. stX:.. ttl:
•
"Debt" means, with respect to VC and the Subsidiaries, without regard to any uncapitalized
interest component thereof(whether actual or imputed)that is not due and payable,the aggregate
of the following amounts, each calculated in accordance with generally 'accepted accounting
principles,unless the context otherwise requires:
(a) indebtedness for money borrowed (including, without limitation, by way of
overdraft) or indebtedness represented by notes payable and drafts accepted
representing extensions of credit;
(b) the face amount of all bankers' acceptances and other similar instruments;
(c) all obligations (whether or not with respect to the borrowing of money) that are
evidenced by bonds,debentures, notes or other similar instruments;
(d) all liabilities upon which interest charges are customarily paid;
(e) any capital stock of VC (or of any Subsidiary that is not held by VC or by a
Subsidiary that is wholly owned,directly or indirectly), which capital stock, by its
terms(or by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking lurid obligation or
otherwise,or is redeemable at the option of the holder thereof, in whole or in part,
on or prior to the maturity date for cash or securities constituting debt;
•
(f) all capital lease obligations,synthetic lease obligations, obligations under sale and
leaseback transactions and purchase money obligations;
(g) the full amount of any contingent liability under any guarantee (other than by
endorsement of negotiable instruments for collection or deposit in the ordinary
course of business)
50
•
- 6 -
(h) course of business) in any manner of any part or all of an obligation of another
person of the type included in items (a) through (t) above, including contingent
liabilities in respect of letters of credit,letters of guarantee and similar instruments;
and
(j} -contingent liabilities in respect of perfonuance bonds and surety bonds,and
any other guarantee or other contingent liability of any part or all of an obligation of
a person, in each case only to the extent that the guarantee or other contingent
liability is required by generally accepted accounting principles to he treated as a
liability on a balance sheet of the guarantor or person contingently liable,provided
that trade payables, operating leases and accrued liabilities that are current
liabilities incurred and deposits 'received in the ordinary course of business do not
constitute Debt ;
"Debt/Equity Ratio" means a ratio of Debt to Equity on a consolidated basis for VC and all
Subsidiaries; •
"Disputing "h tr 0►uttirr$hareboldcr5"has the meaning set out in Subsection 12.4(c);
t.r$L N1e b erl neat* ui�t�s tti. . +ttt� tat lccjed meet v.L.o cc t cil cal_i Jihmeholtig.t.
ti ljins bs,elt.appaVel I Icy That Sli troll l.Itt! .s.Coned, ;Ind .ironed tale M:ayot s.ti1Q,.Miy(.I'
prok ici4tl it ,,r heihtct Ilic J`l tyo, cii the Moth's ',11,111 he i'et atttrd lu I7
pJ.Ims,n' d h\ Ole Loom ∎_t.1_.tltk itutc:ltulder,
"Electricity Act"means the Electr icity Act, !L ,1 yt }�.u,_LI�
6,L.I._,
"Encumbrance" means a mortgage, charge, pledge, hypothecation, lien (statutory or
otherwise), security interest, adverse claim, assignment as security or reservation of title of any
kind;
"Equity"means the aggregate of the equity,capital stock.and surplus as such amounts appear on a
consolidated balance sheet of VC prepared in accordance with generally accepted accounting
principles and as determined by the Ontario Energy Board. In the event there is a conflict between
generally accepted accounting principles and the determination of the Ontario Energy Board, the
determination of the Ontario Energy Board with respect to the conflict shall prevail;
51
•
•
- 7 -
"Fair Market Value"means the appraised value as determined by a registered appraiser selected
and paid for by VC;
"Fiscal Year"means a 12-month period ending on December 31 in each year;
•'_ w i l ls u s s t_r 1,t i w 1 tt s or_ak.wilitiggsieletilljpativns 1041 mg 1 it Noon,
t11s:?t1 .T t
Amiotirlathids, for 1 nvzite j itC'_ ri which 'MC iit oflc o Ill,n ti is tit LIIII itt
snaL -PIA11SIi IILTO II 1)1 illc iiandbo4) .., c locier.'!J
Ac-utW ititutzt.urAlti ituj14it. )11,11 4"1 I1S� ook" {Li1e(1 tli.lt 0101 Pei i.iishi?.l ,
i t1 �t 4;i0 ivujivii,cs_1 1 ,1s J jppl. tilt'lnietjjjt ? cta1 ltt lc.u1ittg
S U _z'_u`a_.lhQs stiotaskgjadlicAtivi t i t t l e to time in (' ild; s puhirsirc;d in
('x1c1_1�vfthe at . l tu.
"Governmental Authority" means any government or political subdivision (including without
limitation, any municipality or federal or provincial ministry) or agency, authority, commission,
department or instrumentality of any government or political subdivision,or any court or tribunal,
and specifically includes the Ontario Energy Board„ l 1{'SU and the I14-ta .tttali?_'owei
A.911urtil.X;
"t\1-01Ear means the Independent Electricity Nltlrl; tts n Operator established pursuant to
the Electricity Act;
744 us emh ill �'tl,T�, Bellev mIte.
and--4 iektgi t twi4a" means any law, including common law, equitable principle, statute,
ordinance, regulation, rule, order, permit, decision, declaration, notice, demand, injunction, writ,
policy,decree or award of any Governmental Authority;
"Mayor's Designate"means the designate selected by the Mayor to serve on the Board in place of
the Mayor provided that the Mayor's Designate shall be a member of that Mayor's municipal
Council;
" }:#„,t' z�9�ti' i�tfft- 1t:tti�ir-c# a itlt'r� zt'cCI� L{1 Ntt .i4dli�ltrr _ - �CE�-ifil fi� iie t:.3?ldtl
g4i1 +01flel iNo -[ lmted.,M mdi mew l>:fill individual „it„ is wl�.t►=c1eClt ) f r 9i
C'vu cil $ art d r_ld $iNsjuippied,ILYANISItijr l;,ildL l' ; t',,un il;
"Notice Period"has the meaning set out in Subsection 5.3(b);
52
- 8 -
' t)WI; (Wald iilr;lll.;tli0Atto to L,ttelgy AO insmitc "tit>
"Offer"has the meaning set out in Subsection 5.3(a);
"Offered Shares"has the meaning set out in Subsection 5.3(a);
S� �inllShart1.0ders'.A Utett" l itea u ptit 4n.Kceitol ;
"Other Holders"has the meaning set out in Section 5.3;
"Person" m eans an individual, firm, P artnershi P unincorporated association, corporation,oration bank,
trust or other legal entity of any kind whatsoever;
,1.3' eileeec ur.t-1ilit "mearnseiidi-tifAit 1-la ir't ble-%it ::outouistrio .-43e11-eville(m 1t4-ettpi +t y
d&-tPtviwi-iind---t,t1 r tar t4 C.:.li r-ira .firs
i'l4titI t:-le't rf$ E4iifllititiift i ztiiit-ili,lctfH l' wvtc-1 t ti:Eiit t fi i2itti 4+x4t
'rt"rt{iets ?Slisii`etiltlfler 5' -Agrt•rxrsi..'rlt' i#� £tic' rlitrr liNlklt`i i- tYrt c i}ii nt f}}it�ti�—�k £r :
i t-+bait 4ii.-Pit- i iti~told-1,11,2 It l ty 1 .4404;
"Promissory Notes" means the promissory notes listed t' w Schedule "A" :_
promissory notes may be amended or replaced from time to time;
"Prospective Purchaser"has the meaning set out in Subsection 5.3(a);
"Purchase Notice"has the meaning set out in Subsection 5.3(c);
"Retiring Director"has the meaning set out in Subsection 3.2(tm3;
"Selling Notice"has the meaning set•out in Subsection 5.3(a);
"Selling Shareholder"has the meaning set out in Section 5.3;
"Shareholder"means any Person which is a registered holder of Shares t ;(title iF s Aro.
!hoc,IlL.i 1,011whill_�:ii ii 1'it1tiC11�n;
"Shareholder Representative"has the meaning set out in Section 3.7;
"Shares"means common shares(without par value) in the capital of VC;
53
- 9 -
"South Central Ontario" means the area inside of a five hundred (500) kilometer radius of the
centre of Ajax;
"Subsidiary" means any subsidiary (as this term is defined in the Act) of VC including, but not
limited to, VCI and VEI;
"Surplus Assets" means any land or buildings owned by VC or any Subsidiary that VC or any
Subsidiary respectively has determined to offer for sale;
"Third Party"means any Person with whom a Shareholder deals at Arm's Length;
"Transferee Shareholder" means any Person which acquires Shares from a Shareholder in
accordance with the provisions of this Agreement;
"Vti'141-an SIUQUe"Or(;:oritel'aihitALIqvio"has the meaning set out in AS:01,(91
.1#9,
-V-tj NolKsThnik
"Vice-Chair"means the director elected by the Board to serve as its vice-chairperson from time to
time.
1.2 Control
For the purposes of this Agreement,a body corporate shall he deemed to be"controlled"by
another Person or by two or more Persons if such Person or Persons (either individually or
collectively and whether or not they act together jointly or in concert) directly or indirectly own,
legally and beneficially, and exercise the full voting rights over, shares of such body corporate
which:
(a) have attached to them voting rights, exercisable in all circumstances, which
represent more than 50%of the votes attaching to all outstanding securities of such
body corporate;
(b) have sufficient votes to elect a majority of the hoard of directors of such body
corporate; and
54
- 10 -
(c) carry a right to receive, on a winding up or dissolution, more than 50% of the
remaining property of such body corporate after payment of all debts and liabilities
of the body corporate.
1.3 Headings
The division of this Agreement into Articles,Sections and Subsections and the insertion of
headings are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The Article, Section and Subsection headings in this Agreement
are not intended to be full or precise descriptions of the text to which they refer and shall not be
considered part of this Agreement.
1.4 Entire Agreement
1 ggprtent 5114p1e' t l .._ t1t Aglawi . witc,s vgiuj _ ' -L L
c 18 Ar reeinent arid, tippet-50g ail L'[ _ rTesponde,,> „<l} elat€tlts,
OSZ9tWiii2DILAiiCitti§i9ps ;in butt C.Vs dlns? if any,_wsiI r _The execution of this
Agreement has not been induced by, nor do any of the p-; As,?bts rely upon or regard as
material, any representations, warranties, conditions, other agreements or acknowledgements not
expressly made in this Agreement +1 4l1,er-de.€+finw3t}4.4.44tl p -:+_4+,1,�
;�. -t,. , _, The ;1, ie,}'antic.- agree that the Pft)-4-tott-tOljg.iiiiit
Shareholders' Agreement jtt :{ttiiety is hereby superseded by this Agreement.
1.5 Number and Gender
In this Agreement,words in the singular include the plural and vice-versa and words in one
gender include all genders.
1.6 Accounting Principles
\her - e FAN)if t111h,14 rate t*t ( 13++retch-Aae tint u ttilti -itt,4t:t4 -tt-r , tr3=left
el
{t lrrtl TrlE (� a i1ti i3'iL^'-ti+t.frig 4tH-44 t* 143,. -:wh's;t1t t3
t:t z_--t t ef-i-ti Yfil$ -6+114y''£tfitr-144ir-z'+'=e t'tt`li+.' t44i ft14$ain't?I lly t?tllfiti ft all te44-f' 4ittr43{ 1t}t't F11 rF{i
1-efr'-; IS atIt'c`flieti-'if c 4ti-Fli-tfit4`p u 4pl<:':* `.;hall ht..intest-=r.:4e.t
55
•
•
. 11
Ii" #;-:.''IitSt1}tg-tittd-•T Hi+HtttUti {-z.-r=tti'_ 14-1:d ith#..alit, 11.14)44.:;" -
f?i+rFty ._,,liiitt <,. 1114elTf kfl Fe 6Y4:0ri4t!-Hit'
11t'it+ dal -4 i (-Iudn-
Ill!WI Agteett en _awls' i olhe Ati.K satith cc.outtlittg. 4111t0 1:Will_bp,lk
1.7 Calculation of Time
In this Agreement,a period of days shall be deemed to begin on the first day after the event
which began the period and to end at 5:00 p.m. (Eastern time) on the last day of the period. If,
however, the last day of the period does not fall on a Business Day, the period shall terminate at
5:00 p.m. (Eastern time)on the next Business Day.
1.8 Statutory References
A reference in this Agreement to a statute refers to that statute,and any regulations or rules
issued thereunder, as amended,supplemented or replaced from time to time.
1.9 Reclassification of Shares
I)tc; I]!_l!-1d i.h ot_tltt0g.1 1lk4?1, 1411–ll11 '.AvI11,41; 9G - 11v 14111' 1—!:i
(Ai 4111.4140.0, W.1r-010.”.1-AII, PAWN-)f�i9 illcIl.l�l� ,�1s11� ��!":�jn 9.J-111 t111114,1?s,,
tml nia--CXt lla►.itw4 _ c'4cJL1,stll
(W ly lit.4".s ?d;.. 444th 1,k tillilt[V Atli t x414 14`-ulLS'LI ciivider
'_1dG.11.. l di..staplion p fable in ( ici's_ _ Culls 01'<1(?tll!ns c!t
(c) tht4 Agtee+ enttihitil-ftpt,. wi441-atom'-liter Sitf eh iii : to--(*)
any 4lizirecr-t ecoritieti-t3f ftat tire Min-v hieh-ri+e- Itic+th+W-lift -rti-#litettrtNtty
e±+ttFt�r"t -tlt-elftrtt it rt ltt4siI1ttl. tedi'itlt.1 letir}i:;Dau l; ,ttltfii 1.le4 k t
consfritrf;tte{l (41)- life i tt ;y or Nt,*t++-ilia, tiny 3ec=t4wd by it
Shilrehott f a; a - If FLiv4(.4414 '. ;#i'.tri#-mtlit-tt shttrt-. t;eetwitie..
56
12
< any shares,securities, warrants,
rights or options of any nature of VC or any successor, continuing company or
corporation of VC that may be received by a Shareholder on a reorganization,
amalgamation, arrangement, consolidation or merger, statutory or otherwise; and
to)ifii?}-slim et,.'- E=3ifith.-.. ,1:_l 14 •,i t j } r Ir f . „ i.ti-- +
..t i i � 1—�:1 -1e.• ! is
1i N} i ;Jtaffeji ttki Al or:�i.�li�II ,lr=,r .;-+;J;i-441;N:Att.ti
tl earth 4,4 ihw..:>,11:-erz, 1+1.;x11 1 1� tr1—iir7
t(l) 111 .:51) rya t_,3 .!!l4:L tit<Ilt!ild 0u111- "-'1 l!1�I1+!!,`1�!�. 1,1C1 1�,1M11!.--- ti tNti
1�! sl �ar�111,�ti41.Atli IF) 1' u1%:11 1114 ,i1.!!J 1t �11 f.1L1S��ll'
�i�i, lr4tl�u Jai..tiliFl.�
191 tall I)1111)k'';c., 01 11�11 .1 L110411011:
1.10 Interpretation
• If any conflict shall appear between the by-laws and the articles of VC or any Subsidiary
and the provisions of this Agreement, the provisions of this Agreement shall govern.
1.11 Governing Law
This Agreement shall be governed by and construed, interpreted and performed in
accordance with the laws of Ontario and the taws of Canada applicable therein and shall be treated
in all respects as an Ontario contract.
1.12 Currency
All dollar amounts referred to in this Agreement and all payments to be made hereunder are
in Canadian funds.
ARTICLE II
BUSINESS OF THE CORPORATIONS
2.1 Business of the Corporations
The Corporations may engage in the following business activities and such other business
activities as may be permitted by Law and authorized by the Board from time to time:
(a) transmitting or distributing electricity;
•
57
•
1
- 13 -
(b) owning and/or operating an electricity generation facility.,llw udalil, wt .._hut
Ilttt�l�Ian: -
U) liq . gr!.sighriatt k l ,thii,L ±IL410-1i3W L$
or sue1_Vl SI ?14A 4..Pr Lse ri betty 1, ' AP2.1icable
LULA110 111 (1 1s__a11y Pr5lol.51 I gidati
nder a ppIlc'_1?ll.
(ii) liwnvolion(l')iti , ls,1lut9 ? Yiiiilll^t ,iucc§.1!t<► er trn�l,)li4rtl it!
f a u p a n d_ nt ts ably sits a_.p!'e crihvd by
(III) a fac ilitv tli ill l eti I �1 a 11t1YOJAI:1 ets. iy cu"itrr l that may die:
I'1«c!a s i2 zl)l table taw;
(c) retailing electricity;
(d) distributing or retailing gas or any other energy product which is carried through
pipes or wires to the user;
(e) business activities that enhance or develop the ability of any of the Corporations to
carry on any of the activities described in paragraphs(a),0-4.-(e); or(d) above;
(f) business activities the principal purpose of which is to use more effectively the
assets of any of the Corporations including providing meter installation and reading
services, providing billing services and business activities in the
telecommunications area;
(g) WajrtaCu: LLTS '!..J111l_9 .at. 1lp1L !Jfk►tion Y.1il;1t awns.a5.t1u1 .l!)
41 .11 1}rVY Qt-lita --eti .ryt r litt.�tz � _. 11t11!� t_► r 0_1-4W iiu c
(0 l (t4-)renting;4 selling or maintaining equipment and appliances, including without
limitation,hot water heaters ; and
- l4
{a J ; providing services related to 1l!t prumutRu „r -iiel ut 1 1.,
energy efficiency;. n1litli4 tl1. j1e cloim ,is t ttc4 Jichi(in
11t r�ttttvc_f ttOt ,vllew4a►.Kacf y.. • •
2.2 Corporations'Standard of Service
It is the intention of the loui;il Shareholders that t-u)the Corporations shall provide service
levels ::i .`.f..{Hi --le-4,,!l4-fs-t-4-lie -;ef •ii'*d art,,I tit
ii�it r titt}t�?:liu{rli piI'M (ri 4 r? r;ffH '•vt' li t 3: t 40Alie �iF?elr ,t`4c i i.tiFj + t -fit 4i'�; if;-��3
<,-,}rtio ttiiimiii:-(t~) :s1. col:d jcc„w, l 1.l istC sal l k. lKJ new standards of service-J.11ilt are
established by the a Board _where Applicable., after the date of this Agreement so that each
service area will enjoy common standards and derive equal benefits, including but not limited to,
the following matters:
(a) distribution, energy services and tariffs;
(b) maintenance standards and schedules;
(c) emergency response capabilities;
(d) distribution system capacity; •
(e) customer convenience and accessibility;
(f) power reliability and quality;and
(g) marketing programmes and services.
ARTICLE III
CORPORATE AFFAIRS OF VERIDIAN CORPORATION
3.1 Assurances
The Shareholders shall cause such meetings of Shareholders to be held, votes to be cast,
resolutions to be passed, by-laws to be made, confirmed and/or repealed, agreements and other
documents and instruments to be executed and all other acts and things to be done,to ensure that at
all times the provisions of this Article Ill are in effect,complied with or implemented.
59
15
3.2 The Board
(a) Shareholder Action. Each of the Shareholders agrees to elect as members of the
Board the nominees put forward by each other Shareholder from time to time in
accordance with the provisions of this Agreement.
(b) t=tieyVc Board-arid ` ubsidi+►f%--Beat•+b. The business and affairs of VC shall be
managed or supervised by the Board which shall consist of,l.l 14 directors or such
other number of directors as the Shareholders may determine from time to time by
special resolution in accordance with the Act. Each of the Shareholders shall
nominate the number aad; _of h us t members to the Boa d.,. s listed
opposite that lrtiti3l-Shareholder's name below:
?1amlh-r f-Di fec- tit
4
a l3elleYille
* xa #raft
T-1.e-43ofitcl ;tall final -ete44++rw-i4 in, hers,,r-t 41ir-- d r`iee-4=!{aFr-.
• 16 -
AREIIOLDER NO.11.11,4Wwisar4:- 4,11 TOTAL
MEMBERS AMBERS NUMBERO1
piRECTOR
APPOINTEES
&AA 1
BeIkv_&,
Uadngto
(c Chair And YlmckalrLIRHAr1,T.11.digari1.shall eleLfrouiii mernbersiLKIDir
iinclY_Le_e_LchitirAylp,,wyjlesithor „on-Tilect4Mcpbcrs or fleocktqemb_em
rtigilait And Vice7c1104.51_Wino!.bv 0.1Mtors thitJiye iuLtJii
(4) ' torQ li flea ions The Mycr QJ.,.thP MaYor'S
11C-V1Of each_cf.thc S.hath.oltkriet_A :. ibers to_ the BoariLim(Leact
bzJLthrithAiL1 provide of same to,V_Cari: led that 11"tI1eAtayaLmises
tv_hold tilLaiee Mayoii Ve_sbal* cep (c1_12Q_An_. 1A0
McmhciiJjç ip.pjiçjikk !ibitycholdcr slit!! 101bwith jIc .kh Ntivor guile
theR swot_fylavr or OW ,Mikyor'.s
(s) iclurduktf mrge_tot.s, )he businoslithiligiaDLYCI shall E .uigo
01.
- algclQuoybigilAinit_cwoja 1-Sliita9rULI. otlm
nuipbessf di reetoriALYS,us sulgibgraoktv_LADAYAVMDAIS from.6E110,041w
kmpgdali.otikipajthgeeonlopee with the Ask
(1) .Avilltut 1. ;oxtrd otilThLtetm,o1.VCIL_The flora shalIsclealmsttypoitg
thg-1/9„4.10-QS stoicctio t1-0,111 .smioidsmuatm
W acjittar_d_shalLtipplinatcAllumamgabgts_ 91
difcctigxcigiv,junipategiluhrjklard pigyiAlAjtaiLkl.
Nictoilectecmg, t5._ clops! ittAtinilic_chilir r_hotut the
61
,--------
Boarqjittat_-alOitotefigkict thot 11Q111iti,1ted u_c,j1_N..9.Jalle-C1 1.1 Mgiktef)
grollhominate,andllint atitlittall:MD ol to the noatil ofsiligclprs of YCI,
an lile.Zsl Mfholis not rtItvad,y,anElgAellivkAr_tba_nalic:&ail.iii
the place of an jctc d NientberAhitt 3M----MP9itited t9 tklautild,to-t
esatup irti, 1 i a NI wkli ii,caed_Mortcf_t_kaima,,iippointed_b_y_Altm i.. .„1_11cli
dyad as the Chairpr.Yke Chairilf Ate Board,thgn AidkOalblejenvac
‘....tich,stfill _cdttiMertittaLdnill be metitcs§_s4=11K,Wr al.or.11y apt,
Ajax shaitnominate an alternate 1 lected 'Member to be. appAnted to_Ilw
__cb_Aral_nf_thritctos.,,,t)r v t 1,
00 stt,ycjirld emswyjrcao_aoni:lecte4 Nlent2ey QiitiV_H _Js,t,...tadgiths:
aair ,i Vi:CLU1011,i1.1, 14.1k-C,irgi,1131,41ilnec_11.11:5,)v-1§i,S1a,,95 SeCti911-1211)
gialLapply, the Board shalfstot juzzand ttirty_NDLLE- leqc.d IvkritherA§_rt
ntetilhei of the board ,,i cittcctoriQf VC):,
WO 1-1-1-q 1100 of directors of V( 1shitlisaltuPlY_With 11-le Falun-villeins of s 7 1.2
(.-.)Ji1C---1"01ii" R-Clilik.k11-1411iP CkkiL: tier EleAtiAt2, 1 )1.,ti tkutots Arld
flojair, _._-.ued_ja_tire,„„DEB sa Any_A;LtesillirellICULt-Thr-----Uigd
LVILIMi119114.419.01 4101-ablititalSaMP&VI;
(g) Chair_ond Vjee Chair of Board of lArectors_91 ycl. The inciLvititlirtLeleeteti as
Omit jimi Yjs&SARIL21:y, a . _ J1 the same oftiso at yct.
UN Uilointil1vtli-QLonfitisrUDireetor5._of Subsidiarivs Iht! BoarltoR:op_p_ofro
t Irv.,imitta slir_cAor5_or 0 jiLaki): aliKLitaiiitic board 0 ditcc191.5DiKa.
who slialltived by jlie 1.3oar_d In Aecortittnee,..AyAn tht prdvisim ofkcjj no
LAO
W 0-.2) Director Replacement. Any 4oiaI Shareholder may replace any director
nominated by it at any time during the term of this Agreement and.shall nominate a
new member to the Board as appropriate to replace the removed Bonn, member.
tj) (ti) Director Qualifications, o4. Bear4--Ith%-41-Iii-ni-,:i—Sliiweiie-itiett-siielki■-giViiiii4-e'
I 1.,": 'Mayor of the-tflittel Sliiirdioleltf-or-the-Maor'.4.);.-st4net.: cs one-of-the 4iiiiia4
but Atlilt-rlit-nontineet:•to the BoaRl-provitled-the+if-the Mityor-ceases.1(+4N-44-4h,i
62
•
- 18 -
fti• c—: _'.a {s ,t, •f ,ail •ti t1,;fl. S:� :. �,
i1't C �' i Fie}tC: ...r '¢{�3� }.' �� t. ' #•.?�l 'Isf fhld ;gal'. 3 M�+�c't {t;}l�
fl!yfii{ff".tc°t+a';lfs�t�,>i at i$kc"tii ri <:?t 3#^ t:t:±ji t=ip f f*i••�titi i+i tI r13i;3 .'S A h.:
14t,ppl3t ....,_{.s+t i -i "l�±c#4ii� t = }+fti it i� 4 d.t=tf :+.I..lrit:} ,+i{+' tft }}St.. $ t t•�i
It itiztt?{a�rrel3 1+1 t' �t3ttl4 t�; t
j-4 411i11‘,41 4 ,,,t,rf�r.,»4.Os-t I t,{t-t-+1-- 4fW- ,+EVatl , In
addition to the requirements of the Act, the qualifications of candidates for the
Board antJlleboard of driectars ofanv Sib i itiry,shall, where possible, include
the following:
•
(i) business experience;
(ii) time availability;
(iii) financial skills;
(iv) marketing skills;
(v) industry knowledge;
(vi) independence of judgment;
(vii) integrity;
(viii) knowledge of public policy issues relating to the Corporations; and
(ix) knowledge and experience concerning environmental matters, labour
relations and occupational health and safety issues.
tk) t t-Naminees of Transferee Shareholders. Following the transfer of Shares to a
Transferee Shareholder, that Transferee Shareholder shall be entitled to nominate
• one member of the Board for each whole block of Shares owned by the Transferee
Shareholder representing 9% of the total issued and outstanding Shares. A
Transferee Shareholder owning less than 9% of the total issued and outstanding
Shares shall not be entitled to nominate any member of the Board and a Transferee
Shareholder owning less than 18%of the total issued and outstanding Shares shall
only be entitled to nominate one member of the Board. An Amalgamated
63
•
- 19-
Shareholder shall not be considered a Transferee Shareholder for the purpose of
this Section 3.2(:- and shall retain its rights to nominate members to the Board in
the same manner as if the hitt-ii t--Shareholders forming the Amalgamated
Shareholder had not amalgamated.
tl) Term of Directors,Chair and Vice-Chair.
l -tgl, 1 tettoldeLsh tlL geIcnilil e_leun_lit ouch Elects i ivle,lnher an4l
_sm-41_AS 1tcd-Mclak e one l]li at by it..110 vlO .il?. t sup 1, 10111 :‘110 ll
11(11— .,, TCOUT.41:1 --d s3 YSKU MAIM bC_i c:rmitlrt by:111 -
_ 6C 1,
-The iftd-Mh4tt {�.f i�rimm as- Li,tcrrrined-b tl} Slmcmrel�t�t»te;,
Members of the Board may serve successive terms on the Board.
(iii) AC teen C!Ctkritiail as Yic4 It it hjl r?.s�;��s��! '4 c.s11 AIM )
y t � 1st Y tz4. 1 -Uy._11K Act,
•
(DJ Aid_Ylcs:OlaiLluityos :
(!il) t-,►-Vacancy. If a director ceases to be a director for any reason (a "Retiring
Director"), the Shareholders shall fill the vacancy thereby created as soon as
reasonably possible, provided that such vacancy shall be filled by an individual
nominated by the Shareholder who had nominated the Retiring Director.
to) :1 1 Ouorum. A quorum for a meeting of the Board shall be a majority of the
members of the Board. A meeting shall be adjourned for lack of a quorum and a
notice of the adjourned meeting shall be sent to all directors rescheduling the
meeting to a date at least 15 days following the adjourned meeting.
(U) ) Meetings of the Board. Meetings of the Board shall be held at least once in
every calendar quarter or at the request of the Chair or of a majority of the members
of the Board. All meetings of the Board shall be held in Ontario, or by such
telephone or electronic communication devices as permit all persons participating
in the meeting to communicate with each other simultaneously and
64
- 20
instantaneously. At least 5 days' written notice of the time and place of the meeting
and of the business to be transacted at the meeting in sufficient detail to enable each
director to assess reasonably the importance of such business to the affairs of VC
shall he given to each director.
tip) i3 Decisions of the Directors. Decisions or resolutions of the Board shall require
the approval of the majority of the directors present at each meeting thereof. The
Chair shall not have a second or casting vote. A resolution in writing signed by all
of the directors entitled to vote on that resolution at a meeting of the Board is as
valid as if it had been passed at a meeting of the Board. In the event that an equal
number of votes are cast at a meeting both for and against a motion, the motion
shall be defeated.
(q) Board Duties. Subject to those matters requiting Shareholder approval as set
out in Section '0,94 the Board shall supervise the management of the
business and affairs of VC and,without limiting the generality of the foregoing,the
Board shall be responsible for,but not limited to,overseeing the following specific
matters:
(i) the establishment of appropriate reserves and a dividend policy for VC and
the Subsidiaries consistent with sound financial principles, all with the
intention of providing the Shareholders with a reasonable rate of return on
their investment while maintaining reasonable rates for customers; 91,1
(ii) tlt declaration of any dividend or distribution of capital in respect of the
Shares or the shares of any Subsidiary-_autj
(iii) ttae.tj twat -rti 11.4 opfsathils OinAatialinmakitm ►.i ttcctuti.vi
c,40.4 an. 51jh_aiij r);tc tt�t,tv ;Eu)ah ►t,_.?��,
ttl
It-Indemnification and Insurance for Directors and Officers. Each of the
Corporations shall indemnify and save its directors and officers harmless from and
•
against any and all liability,damages,costs(including any income tax payable as a
result of receiving such indemnity, reasonable counsel fees and disbursements),
charges and expenses arising out of or related to any act or omission done or
65
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permitted by them to be done in connection with the execution of the duties of their
office as directors or officers of any one or more of the Corporations or by reason of
their being or having been directors of any one or more of the Corporations.
(15) rowpell .alitttt -r gtt! col-.sill stars(Alb I3�►ar L
shill! !mike recommen tili rte. t t i • ►_• I y,t:1;iai _tI y eS.!olp,c -41_ic,i) t„t
thetIttAi .52141,1 ,,, ltl tl};_ It tit, tc�t_ll itr oI SI tiiwi j.4 _t?11lttli11 ijt(.W(1 Lz_4114
yn ta,.4 airersm, ltt 1_�t<_ [?1 f _ 13 arci __thle panted agree
thilLtlxslatom ui PCs.ele4 KULe Lig 11 1_04144_11n II ti*Sgc IWi
/24,j).WI itleitAle b4112_Ilic t Iw r,t Jam• to jcc-0) 4 11.ovi(led. iI :ii)tt`ui
V 1ce-S 11 Lr t i�_c� 1l?i?_a lit ? t1 . rnelith4§-910.41 c ontlittlive,
3.3 Board Committees
The Board may establish Board Committees from time to time and delegate certain duties
to them llt+ iulsi t4jlttg�_will u ut:(!si. 4_ pu _csanni t. eti descrihhd h Ai
(a) Nominating Committee. The Board shall appoint members to the Nominating
Committee. 1)t±ti 914 Tires _peri-'d ire +-?titih iht4 4r3tt71i elol�ket r rr�ri t 1e
the jl1e Nominating Committee shall be comprised ,stfj 4 directors,
and each of the -1 4l
h;i= l hii I�sf ,, all_.i� ve=.a . Win.+_.ntit fityttl Alw Shareholder:
mgatisull. t ac h lt�►i:�t�t;; t,viat lic .4_ In the event that one or more Initial
Shareholders amalgamate but the Shareholders are still the torsi l--Shareholders
only but in their amalgamated form, the Nominating Committee shall remain
comprised of 4 directors and the directors shall be nominees of each Shareholder in
the same manner as if there was no amalgamation. F arraref crt�r=t�#y -ii
tlt,.Eiii and--AjaH-:anal mated. ntity would-be to-tia-ve s
f axtt i a th, : appoint-M- -the-Nom iry,tit1 C4)1}1t01 t The purpose of the
Nominating Committee shall be to make recommendations to the Shareholders
concerning candidates for the Board-_rtntt-h e-viintpetHitthm 41.4 t+aetial is ,-,t the
t1rvoi1t_-fi be, :41rt}t. Vite- '4 Hir mid 1.00i.11.0 c,.stiii./.1+14ve Mein t tr
66
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(2) General Provisions Relatin&to Board Committees, The quorum for meetings
of Board Committees shall be a majority of the members from time to time of each
Board Committee. Decisions of all Board Committees shall be made by a majority
of the members of the respective Board Committee. Except as otherwise provided
in this Section 3.3 and subject to the supervision of the Board, each Board
Committee shall establish its own rules of procedure for operating in an efficient
and expeditious manner. A Transferee Shareholder shall not acquire the rights of
any I tits tttl Shareholder to designate nominees to any Board Committee except with
the agreement of all of the other Shareholders. ,it .t+tt�l �t�=f�uf.i4���. ate>I+ ,N�,.►,
#ettAin-iis-ff its ,-tleXivit te-thit+thee,- -ill?-I f lF,t-1 *13if2+i{E c' i+ t'I{ - .
rltl+e'it iii?iiC!'-:1- M4-441 ft'1tt-Iiii l lit l}.;.1-t.. s.�it;:�� ,_'.tftta;{-:,I
3.4 Shareholders'Meetings
A quorum for a meeting of Shareholders shall be at least two individuals representing,by
proxy or as otherwise permitted by the Act,both(i)a majority in number of the Shareholders; and
(ii) not less than 51%of the Shares then issued and outstanding.
In the event that the ► ti;,.1 Shareholders amalgamate such that only two Shareholders in
g Y
number remain, the quorum for a meeting of shareholders shall be both the Shareholders
represented by proxy or as otherwise permitted by the Act.
The chair of any meeting of the Shareholders of VC shall be the Chair or, in the absence of
the Chair, the Vice-Chair, or in the absence of the Vice-Chair, the President of VC or, in the
absence of the President, such individual as the Shareholders represented at such meeting shall
determine.. Uie • atit:_QLineetiaut_t(rp sgf c_ re( j r ? y0_1;11141 14!AN. t1W
;t;4 .1K o. 'c 411,1kv -, ;1 n cif Vc').,
3.5 . Regular Sharehalders Meetings
Unless the Shareholders otherwise determine,the Shareholders shall meet at least annually
at the registered office of VC or at such other times or places as the Shareholders may determine.
67
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3.6 Decisions of the Shareholders
All decisions or resolutions of the Shareholders shall require, and shall be deemed to be
effective upon,the approval of at least two thirds of the votes cast at a meeting of Shareholders. A
Shareholders' resolution in writing signed by all of the Shareholders entitled to vote on that
resolution at a meeting of the Shareholders is as valid as if it had been passed at a meeting of the
Shareholders.
3.7 Shareholder Representative
Each Imit+►l-Shareholder shall designate the Mayor as the legal representative of that m a.xt
Shareholder (the "Shareholder Representative") for purposes of providing any consent or
approval required by this Agreement or by the Act. In the event that the Mayor is unable or
unwilling to act as the Shareholder Representative, the Chief Administrative Officer (or the
individual who performs the equivalent duties) shall be the Shareholder Representative for
purposes of this Agreement and of the Act unless the Shareholder determines otherwise.
lt (,4 Shareholder shall designate its Shareholder Representative(by proxy duly completed in
accordance with the Act)as its representative to attend and vote at any meeting of Shareholders.
3.8 Officers .
• (a) The officers of VC shall include a President and such other officers as the Board
may determine from time to time. The Board shall appoint the officers of VC from
time to time.
(b) For greater certainty the ('►i-ti_ recognize that in carrying on the ordinary
course of Business, it is not practicable for the Board to be involved in the day to
day affairs of VC. The Board will delegate responsibilities to the officers, who will
report to the Board and the Board Committees from time to time as required.
3.9 Matters Requiring Shareholder Approval
The Shareholders agree that, without Shareholder approval given in accordance with
Section 3.6, VC shall not:
68
_o4 _
(a) amend its articles(within the meaning of the Act) or enact, revoke, or amend any
by-law of VC;
(b) issue, or enter into any agreement to issue, any shares of VC' of any class, or any
securities convertible into any shares of any class;or grant any option or other right
to purchase any such shares or securities convertible into such shares;
(c) redeem,purchase for cancellation or otherwise retire any of its outstanding Shares;
(d) sell or otherwise dispose of by conveyance, transfer, lease, sale and leaseback,
merger or other reorganization. or transaction, mortgage, pledge, charge or
otherwise grant a security interest in, all or substantially all of the assets or
undertaking of VC; •
(e) enter into any contracts, commitments or transactions that would increase the
Debt/Equity Ratio to greater than 70% Debt! VI/0401Y;
(f) grant security for or guarantee,or otherwise become liable for any debt, liability or
obligation of any Person other than a Subsidiary;
(g) take or institute the proceedings for any winding up,reorganization or dissolution;
(h) enter into any amalgamation, arrangement or consolidation; and
(i) apply to continue as a corporation under the laws of another jurisdiction.
• 3.10 Unanimous Shareholder Agreement
Each of the Shareholders acknowledges that this Agreement is intended to operate as a
unanimous shareholder agreement with respect to VC within the meaning of the Act. Pursuant to
Section 108(2) of the Act, the discretion and powers of the Board to manage or supervise the
management of the business and affairs of VC are hereby restricted to the extent of the provisions
of Section 3.9 of this Agreement.
69
3.11 Agreement Binds Veridian Corporation and Subsidiaries
VC and the Subsidiaries, by their execution of or acknowledgement to be bound by this
Agreement, acknowledges that they have actual notice of the terms of this Agreement, consent to
this Agreement and by this Agreement covenant with each of the Shareholders that they will at all
times during the term of this Agreement:
(a) give or cause to be given such notices,execute or cause to be executed such deeds,
transfers and documents as may from time to time be necessary or conducive to the
carrying out of the terms and intent of this Agreement;
(b) do or cause to be done all such acts,matters and things as may from time to time be
necessary or conducive to the carrying out of the terms and intent of this
Agreement; and
(c) take no action that would constitute a contravention of any of the terms and
provisions of this Agreement.
3.12 Auditors
The Auditors shall he appointed by the Shareholders from time to time.
3.13 Banking
►) _ "� il � r : bankers shall be such financial institutional as the Board shall
from time to time determine. All resolutions respecting banking authority, the opening of bank
accounts and the drawing on such accounts shall require the consent of the Board before becoming
effective.
3.14 Financial Statements
VC shall cause to be prepared and delivered as soon as reasonably practicable and in no
event later than 180 days after the end of each fiscal year of VCt t ,VULannual audited
consolidated financial statements for such fiscal year prepared in accordance with
•°���r+ �q r+,:}ix}}?T i i t i A A t' and accompanied by a report of the Auditors.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and 1Varrantie.,
Each of the Shareholders represents and warrants as follows and acknowledges that each of
the other +rtIC:, hereto are relying on such representations and warranties in connection
with the entering into of this Agreement:
(a) it is the registered and beneficial owner of the Shares stated to be owned by such
Shareholder in the recitals hereto, free and clear of all Encumbrances and there are
no outstanding agreements, options, warrants or other rights capable of becoming
an agreement,option or warrant to purchase such Shares;
(b) it has the power and capacity to own its assets and to enter into and perform its
obligations hereunder and has taken all necessary action to authorize the execution
and delivery of this Agreement;
(c) this Agreement and the transactions contemplated herein have been duly authorized
by it and constitutes a valid and binding obligation of it enforceable against it in
accordance with its terms subject to the laws of bankruptcy and the availability of.
equitable remedies; and
(d) the execution, delivery and performance of this Agreement does not and will not
contravene the provisions of its articles, by-laws, constating documents or the
provisions of any agreement or other instrument to which it is a r i.rr1!:rtjy or may
be bound.
4.2 Covenants
Each ofthe Shareholders covenants and agrees with each other E 1.4 Play hereto that all of
the foregoing representations and warranties pertaining to it set forth in Article 4.1 will continue to
be hue and correct during the continuance of this Agreement
'71
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ARTICLE V
TRANSFER OF SHARES
5.1 Genera!Restriction on Transfer
Save and except for transfers made pursuant to and in accordance with Sections 5.3 and 5.4
of this Agreement,no Shares,nor the whole or any item or part of any right,title,benefit or interest
therein or thereto, may be sold, transferred, assigned, made subject to any Encumbrance or
otherwise disposed. No Shareholder shall he entitled to create or grant an Encumbrance on its
Shares.
5.2 Legend on Shares
All share certificates representing Shares of VC shall bear on their face the following
notation:
"The shares represented by this certificate are subject to the provisions of the
tl Shareholders' Agreement made as of September 28,2001 among all of the
shareholders of the Corporation as at that date, which agreement contains
restrictions on the right to sell,transfer,pledge,mortgage,assign,vote or otherwise
deal with or encumber such shares. Notice of such restrictions and the other
provisions of such agreement is hereby given. A copy of such agreement is
available for inspection from the Secretary of the Corporation on request."
5.3 Rights of First Refitsa!
If any Shareholder(in this Article V called the"Selling Shareholder") wishes to sell all,
but not less than all,of its Shares(subject to Section 5.5)to a Person with whom it deals at Arm's
Length, the other Shareholders and VC(in this Article V called the"Other Holders")shall have
the prior right to purchase such Shares in accordance with the following provisions:
(a) Notice of Offer. A Selling Shareholder shall give to the Secretary of VC and to
each Other Holder notice in writing of its desired intention to sell all, but not less
than all, of its Shares (in this Article V called the"Offered Shares"). The notice
(in this Article called the"Selling Notice")shall have annexed thereto a true copy
of the offer,agreement or similar document(the"Offer")containing the terms and
conditions pursuant to which the Selling Shareholder wishes to sell the Offered
Shares to the prospective purchaser (in this Article V called the "Prospective
•
72
-28
Purchaser"),who shall be identified, and the price and terms of payment which the
Selling Shareholder is willing to accept for the Offered Shares which shall be the .
same as set forth in the Offer;
(b) Offer Open During Notice Period. The Secretary of VC shall thereupon be
deemed to be the agent of the Selling Shareholder for the purposes of offering the
Offered Shares to the Other Holders on the terms of payment and for the price
contained in the Selling Notice and the offer by the Secretary shall be irrevocable
and remain open for acceptance,as hereinafter provided,for a period of 60 days(in
this Article V called the"Notice Period")after receipt of the Selling Notice by the
Secretary;
(c) Acceptance of Offer.Within 15 Business Days after receipt of the Selling Notice
by the Secretary, the Secretary shall offer the Offered Shares for sale to the Other
Holders as nearly may be in proportion to the number of Shares held by each such
Other Holder respectively as at the date of such offer. The offer by the Secretary
shall state that any Other Holder desiring to purchase a number of Offered Shares
less than or in excess of its proportion shall indicate in its notice to the Secretary(in
this Article V called.the"Purchase Notice") stating the number of Offered Shares
it desires to purchase. If,within the Notice Period,a Purchase Notice has not been
received by the Secretary of VC from an Other Holder,such Other Holder shall be
deemed to have declined to purchase the Offered Shares being offered;
(d) Excess Shares.If the Other Holders do not claim their respective proportions, any
unclaimed Offered Shares shall be used to satisfy the claims of such Other Holders
for Offered Shares in excess of their proportions. If the claims in excess are more
than sufficient to exhaust such unclaimed Offered Shares, the unclaimed Offered
Shares shall be divided pro rata among such Other Holders desiring Offered Shares
in excess of their proportion, in proportion to the number of Shares held by them
respectively as at the date of such offer, provided that any unclaimed Offered.
Shares after such pro rata division shall be divided pro rata among Other Holders in
proportion to their claims in excess of their respective proportions determined as
aforesaid. Notwithstanding anything to the contrary, no Other Holder shall be
73
bound to purchase any Offered Shares in excess of the amount indicated in its
Purchase Notice;
(e) No Fractions. If the Offered Shares are not capable, without division into
fractions of Shares;of being offered to or being divided among the Other Holders in
the proportions above mentioned,the same shall be offered to or divided among the
Other Holders as nearly as.may be in the proportions hereinbeibre mentioned and
any balance shall be offered to or divided among the Other Holders or some of them
in such equitable manner as may be determined by the Board;
(f) Sale. If all, but not less than all, of the Offered Shares are accepted by the Other
Holders pursuant to the provisions of this Section 5.3, the Offered Shares shall be
sold to the Other Holders for the price and for the terms contained in the Selling
Notice;
(g) Deemed Refusal,. If Purchase Notices have not been received by the Secretary in
respect of all of the Offered Shares within the Notice Period,the Other Holders,and
each of them,shall be deemed to have declined to purchase the Offered Shares and,
subject to the provisions of paragraph (h), the Selling Shareholder may within 60
days after the expiration of the Notice Period sell all, but not less than all, of the
Offered Shares to the Prospective Purchaser at the price,and upon terms of payment
which are not more favourable than those specified in the Selling Notice; and
(h) Prospective Purchaser Bound. The Selling Shareholder shall sell the Offered
Shares to a Person who is not a + Py hereto only if such other Person
simultaneously with any such sale executes and delivers to each of the other
e,uner-,ratties hereto a counterpart of this Agreement in which case such Person
shall have the rights of a Transferee Shareholder and shall be subject to the same
obligations as a ,.;.-`YI'atty to this Agreement as if it were an original signatory in
place of the Selling Shareholder or its predecessor in title originally E3ert y(' y to
this Agreement, as applicable. Without limiting the generality of the foregoing, a
Transferee Shareholder shall agree to be bound by the provisions of Section 7.1.
74
. 30
(1) Veridian Corporation as Purchaser.The Other Holders,except VC, may cause
VC to act as an Other Holder.
5.4 Piggyback Right
In the event one or more Sellin g Shareholders receives an Offer and,in accordance with the
procedures set forth in Section 5.3, the Other I lolders decline to purchase the Offered Shares from
the Selling Shareholder(s),and the Shares which the Selling Shareholder(s) wish to sell under the
Offer(s) would result in a Person owning more than 49% of all of the issued and outstanding
Shares, then each Other Holder except VC shall have the right to require that all, but not less than
all,of its Shares be sold to the Prospective Purchaser,on the same terms and conditions as those set
out in the Offer;provided that,if the Prospective Purchaser will not purchase the aggregate amount
of Shares which the Selling Shareholder(s)and the Other Holders except VC requested to be sold
pursuant to the immediately preceding sentence, the number of Shares which the Selling
Shareholder(s) and the Other Holders except VC shall be permitted to sell to the Prospective
Purchaser shall be proportionately reduced so that each may sell the same percentage of its Shares.
The Other Holders except VC may only exercise their right under this Section 5.4 by written notice
given to the Secretary of VC within the Notice Period.
5.5 Amalgamated Shareholder
An Amalgamated Shareholder is entitled to sell its Shares in accordance with this
Agreement in the same manner as if the Amalgamated Shareholder had not been amalgamated
and, may for the purposes of Section 5.3 offer to sell less than all of its Shares (only if such
Amalgamated Shareholder sells its Shares in the original blocks held by it prior to amalgamation)
provided that each offer is otherwise made in compliance with Section 5.3.
ARTICLE VI
CLOSING OF PURCHASE TRANSACTION
6.1 Time and Place of Closing
The closing of any purchase and sale of Shares contemplated by Sections 5.3 or 5.4 of this
Agreement shall unless otherwise agreed upon by the to such transaction,take place
at the registered office of VC on the date specified in the Selling Notice.
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6.2 Documents to be delivered by the Vendor
On or before the closing of a purchase and sale of Shares contemplated hereunder, the
vendor shall deliver to the purchaser the following(each in tbrm and substance satistactory to the
purchaser):
(a) a share certificate or certificates representing the Shares being sold, duly endorsed
in blank for transfer or newly issued in the name of the purchaser;
(b) a certificate of a senior officer certifying that any representations and warranties made
by such vendor in this Agreement are true and correct as of the Closing Date;
(c) the written resignation of such vendor's nominee(s)to the Board and a release by such
nominee(s) of all claims against VC with respect to any matter or thing arising as a
result of being a director;
(d) the written release of the vendor of all claims against VC and the Subsidiaries,any
of the other Shareholders with respect to any matter or thing arising up to and
including the Closing Date as a result of being a Shareholder; and
6.3 Documents to be delivered by the Purchaser
On or before the closing of a purchase and sale of Shares contemplated hereunder, the
purchaser shall deliver to the vendor the following:
(a) a certified cheque or bank draft in an amount equal to the purchase price for the
Shares being purchased;
(b) in the event Shares are sold to a Person who is not a Shareholder pursuant to
Sections 5.3 or 5.4 hereof, a duly executed counterpart of this Agreement or other
agreement pursuant to which such Person agrees to be bound by the provisions
hereof; and
(c) such other documents as may be reasonably required by any v,-j+t∎P_rty to such
purchase and sale to properly complete the purchase and sale of the Shares.
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6.4 Failure to Complete Sale
In the event the vendor fails to complete the subject, purchase and sale transaction, the
purchaser shall have the right to deposit the purchase price for the subject Shares for the account of
the vendor in an interest-bearing account at a branch of VC's bankers. Thereafter,notwithstanding
that the documents required pursuant to Section 6.2 have not been delivered by the vendor, the
purchase and sale of the subject Shares shall be deemed to be fully completed and all right, title,
benefit and interest,both at law and in equity, in and to the subject Shares shall he deemed to have
been transferred and assigned to and become vested in the purchaser and all right,title,benefit and
interest,both at law and in equity,of the vendor or any other Person having an interest in and to the
subject Shares shall cease and the records of VC shall be amended accordingly.
ARTICLE VII
NON-COMPETITION AND CONFIDENTIALITY
7.1 Non-Competition
(a) Each Shareholder covenants and agrees that it shall not, except through VC or
otherwise with the consent of all Shareholders, or as provided in Section 7.1(b),
directly or indirectly, from the elate hereof until 2 years after file 0--,,-1d,}'urty ceases
to he a Shareholder,compete within(a)Ontario;or(b)South Central Ontario; with
the Business, whether by carrying on or engaging in or being concerned with or
interested in or advising,lending money to,guaranteeing the debts or obligations of
or permitting the 1,,+r )?atjy's name or any part thereof to be used or employed by
any Person engaged in or concerned with or interested in any business within (c)
Ontario; or (d) South Central Ontario that is competitive with the Business, or
otherwise.
(b) The t.tit,-.-.Fades acknowledge that (i) a municipality other than the Shareholder
which is a shareholder of one or more corporations incorporated under the Act for
the purposes of generating,transmitting,distributing or retailing electricity,and(ii)
a person which holds a portfolio investment of less than 5% of the shares of a
corporation whose shares are publicly traded which competes with the Business is
77
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permitted to become a Shareholder in accordance with the provisions of this
Agreement.
7.2 Confidentiality
Each Shareholder shall not use or disclose to any Person other than in the ordinary course
of the Business of the Corporations, directly or indirectly, any Confidential Information at any
time other than to employees, officers or directors of such Shareholder provided that all such
Persons shall treat such information as confidential and not disclose same to any Third Party nor
use the same for any purpose other than for the purposes of the Corporations or in respect of a
Shareholder's investment in the Corporations,provided, however, that nothing in this Article ViI
shall preclude a Shareholder from disclosing or using Confidential Information if:
(a) the Confidential Information is available to the public or in the public domain at the
time of such disclosure or use, without breach of this Agreement;
(b) disclosure of Confidential Information is required to be made by any law,
regulation,governmental body or authority or by court order;
(c) disclosure of Confidential Information is made in connection with any arbitration
pursuant to Section 11---1 I 2.4;
(d) disclosure of Confidential Information is made to a court which is determining the
rights of the 14,11;k,':,vartio under this Agreement;
(e) the Confidential Information is properly within the legitimate possession of a
Shareholder prior to its disclosure hereunder and without any obligation of
confidentiality;
(f) after disclosure,the Confidential Information is lawfully received by a Shareholder
from another Person who is lawfully in possession of such information and such
other Person is not restricted from disclosing the information to the Shareholder;
(g) the disclosure of Confidential Information is necessary to complete a transfer of
Shares in accordance with this Agreement;
78
- 34 .
(h) the Confidential information is independently developer]by a Shareholder through
Persons who have not had access to,or knowledge of,the Confidential Information,
other than as permitted in(a) through(g)above or(i)below;or
(i) the Confidential Information is approved by the Corporations for disclosure prior to
its actual disclosure.
Each Shareholder acknowledges and agrees that the obligations under this Section 7.2 shall
remain in effect for the period of two(2)years after it ceases to be a Shareholder. Notwithstanding
the foregoing restrictions, the nominees of the Shareholders on the Board shall be entitled to
discuss the affairs of the Corporations with the officers, directors, employees and representatives
of such Shareholder.
73 Injunctive Relief
Each Shareholder understands and agrees that VC, and consequently the other
. bill te , will suffer irreparable harm in the event that the Shareholder breaches any of the
obligations set out in this Article VII and that monetary damages shall he inadequate to
compensate for the breach. Accordingly,each Shareholder agrees that, in the event of a breach or
threatened breach by it of any of the provisions of this Article VII,VC and the other riHr;'ttA)alt1v
hereto, in addition to and not in limitation of any other rights, remedies or damages available to
them at law or in equity, shall he entitled to an interim injunction, interlocutory injunction and
permanent injunction in order to prevent or to restrain any such breach by the Shareholder.
7.4 Accounting for Profits
Each Shareholder agrees that in the event of a violation of any of its covenants or
agreements under this Article VIi, VC shall be entitled to an accounting and repayment of all
profits, compensation, royalties, commissions, remunerations or benefits which the Shareholder
directly or indirectly shall have realized or may realize relating to,growing out of or in connection
with any such violation(s); this remedy shall be in addition to and not in limitation of any
injunctive relief or other rights or remedies to which VC and the other , Pitt lies are or may be
entitled at law or in equity or otherwise under this Article VII.
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7.5 lzeasmuableness of Restrictions
•
Each Shareholder acknowledges that it has given careful consideration to the provisions of
Sections 7,1 to 7.4 above and,having done so,agrees that the restrictions set forth in those sections
are fair and reasonable and are reasonably required for the protection of the other Shareholders'
investments in VC and for the protection of the interests of VC and its Business,and that it is being
reasonably compensated for the imposition of such restrictions.
ARTICLE VIII
SALE OF SURPLUS ASSETS
8.1 Right of First Refusal
In the event that VC or any.Subsidiary intends to sell any Surplus Assets, the municipal
Shareholder in whose legal boundaries the Surplus Assets are located shall have a first right of
refusal to purchase the Surplus Assets at their Fair Market Value. Such municipal Shareholder
shall be entitled to receive written notice of any proposed disposition 90 days from the date of such
notice to exercise its right to purchase, failing which the Surplus Assets may be sold by VC or any
Subsidiary as the case may be.
ARTICLE IX
BOOKS, RECORDS AND RIGHT TO INFORMATION
9.1 Books and Records
VC shall at all times maintain at its registered office proper books of account, which shall
contain accurate and complete records of all transactions,receipts, expenses, assets and liabilities
of VC.
9.2 Right to Information
The perriesealjg covenant and agree that each Shareholder of VC shall have rights of
inspection as set out in Sections 140, 141, 144 and 145 of the Act.
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ARTICLE X
TERM
10.1 Term-trrf f irr{f,,r�ertfc l�.,r= H„J
This Agreement shall come into force and effect as - ul--ti,,,m the date §,_ t t c
Iirstpav,of this Agreement, and shall continue in force t 4—t+ --{ r-$*t: Miele 4i me
L E tf�t�t ball lie uti#et i. ilk=�;:3�; �!t;r tt�s tlu'r � +ve terns=,f tie 4_ ) rear ed )-u t'
1 VAI# at
(a) tLi .da twelial Ji id* .I.L -th4 Sh4 LAtv
(11) th4 4..41e a tv licjLt t'Agreentetit et! h •Wri IIMAPAcingill.ti1.tl_1 of 11w
�t �1t?lc�t�s,
ARTICLE XI
PROMISSORY NOTES
11.1 Promissory Notes.
Each of the Promissory Notes shall rank equally.
- t---ot- : No Shareholder may take any step to amend, convert, exchange or
enforce those Promissory Notes issued by VC in favour of the Shareholders(in this
section, the"VC Notes") without the agreement of each other Shareholder which
holds VC Notes on the identical terms and conditions. A Shareholder which
proposes such a step shall give notice in writing of its proposal and the agreement
of a Shareholder to such proposal shall be given in writing by the Treasurer of that
Shareholder. In the event that all Shareholders do not agree with the proposal, no
Shareholder shall proceed with the proposed action.
(0 No Shareholder may take any step to amend or exchange those
Promissory Notes issued by VCI in favour of the Shareholders(in this section, the
"VCI Notes") without the agreement of each other Shareholder which holds VCI
Notes on the identical terms and conditions. A Shareholder which proposes such a
step to amend or exchange shall give notice in writing of its proposal and the
•
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agreement of a Shareholder to such proposal shall be given in writing by the
Treasurer of that Shareholder. In the event that all Shareholders do not agree with
the proposal, no Shareholder shall proceed with the proposed action.
Notwithstanding the foregoing and for greater clarity, any Shareholder may
demand repayment in accordance with the terms thereof, in whole or in part, of the
aggregate amount outstanding(principal plus interest) on its respective VCI Note
without having to consult with or obtain the agreement of the other Shareholders
holding VCI Notes.
ARTICLE XII
GENERAL
12.1 Notices
(4) All notices, requests, demands, consents or other communications required to he
given or made or provided for in this Agreement shall be in writing and shall be
deemed to have been given if delivered, if n--h re,:i-,tt: nay=it-ttr-i - n. by
�,1N•c+ts+ •=c if iei isitlrfti ret- �t'c�iciii {inii-+iti�tiiiiti ft}:: {I) d hverted 1]
t(t e. t1*5 iip1.t . V1 t ikr rrtes.1 with LLCIPoq.?. :IIt1. (!i ti, 0 4.1- ar 1c
1 ,1p li ►�Ie add[v4 -Kt l? _ -br ' t _ :l�re1T4)i41 �4� e�secvi ?t'
t2�1t1 sql) i1t►_gis>umujonded disruption ,f pL mvic -ti t)
itat14111.1$st911, sil r1 I tII i.11 ?tLa2.Y41?-e
I raP4.111 ining- 4111111 111 4s ctIll, iv1 hY a-mail
1j,i�j11 has t 1 a. l tuAjnX iiNiv§§0 1Q I1 at:
Corporation of the Town of Ajax
65 Harwood Avenue South
Ajax,ON L 1 S 2H9
14'l.gyPt
Fax Number: 905-683-1061
1 -Mail, :_ 441cvc..Pilti4a.it.WAS4
ilacja144110isitilo
Etwiri, ,,- } Belleville at1d•essatq_1l at:
82
- 38 -
Corporation of the City of Belleville
459 Sidney Street
Belleville,ON K8N 2Y7
Align110.16.- __NOM
Fax Number: 613-967-3209
AtE ono-fig:144d: MayorAb cU.6.14,11e
ttiiXOW2fa.9,a,cW.Clarington
Corporation of the Municipality of Clarington
40 Temperance Street
Bowman vile,ON Li C 3A6
AttentK.?n;
Fax Number: 905-623-5717
I -I JAI
Corporation of the City of Pickering
1 The Esplanade
Pickering, ON LI V 3P4
ageiJANt ._ _May_Qt
• Fax Number: 905-420-9695
lolliguto_Veridian Corporation and/or SubsidiaryatjAkond tojj
55 Taunton Road E.
Ajax,ON LIT 3V3
Attention: President,Veridian Corporation
mhc 9Q5-427:bai
„maignmaysj-Wj.
it4 :)th,er ti4 th rt4 *h+-.- tiItiee ttl he .::Ariff:in ay-1113,4!tit,--01,14,N14)s
“tli A r
chugo,tulddres:_f _ iv in notice to the othet
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- 39
shall be deemed to have been
hkw the-date-eft Ite-titai!nig t4:4111. iifite-trui4
detiveredrgegaysA
(ij iftdixtrej_prios to or Avang norintbminos."Tours Q1lA,13VinP-A-PAY 111
place whet-011e not tee is received,on the date of delivery i4444 aryntie
given by-tete+..,,opier., tit +I
WI if sent timili wilgrOw notive is
regived,all.er rimillugakin_thcz.lp_ofi.Apostul scryieg,Antthe
ILO u-. oft.latiiikrupt
Cm) if sefit_bv_f Ijnes DAY in the
pine.e where the I tnis feceivgit daY that it w;is
tacintic Iron wincji_thg,...,145ittnle_ms_sent indimesalm4lic
fao.inii le was, suLjii.,Wj svilay..„19.Jbuil.clantscutilbv
iflllhi
(ivj Roma' buliaes lion's lin a BuinesstyJiUh
tnailis,islca(Len_atual,alhit ogles-4ved tty
enmailar
magthquAamtictdeiiverectikpexlmugabuimissim_gri now_d
atI4j1 _ islmalloiness h itBiD. .-4 eacjictiNOnAhc
glace wherejtmiam ce* e shall be deemed to have been received on the
Btis.iitcss Day44l inghet *si whien-suelr trainission-it, vow-le-tett am-1411e
approprate-confirmation reEeive4.10.aomggssidjug,_ qpies§ p.z1,441,
Wbere the not ee is reecived
12.2 Assignment and Binding Effect
This Agreement is not assignable by any partyParty except insofar as its benefit and burden
pass with the Shares transferred in accordance with its provisions. 'ibis Agreement shall be
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binding on and enure to the benefit of the - .-F«.=1' !iltes hereto and their respective successors and
permitted assigns. Reference in this Agreement to any _:_., 'nrty shall be deemed to include
reference to such and its respective successors and assigns as permitted hereunder.
12.3 Amalgamation of Municipal,S'ltureltolders
Two or more t++iIitit Shareholders that amalgamate("Amalgamated Shareholder") shall
retain the same rights granted under this Agreement as if the respective Initial-Shareholders had
not amalgamated except as otherwise provided herein.
12.4 Arbitration
(a) Selection of Single Arbitrator. The Shareholders agree that any controversy,
dispute or claim between them or any of them arising out of or relating to this
Agreement or the performance, enforcement, breach, termination or validity of it,
including the determination of the scope of the Agreement to arbitrate, shall he
determined by arbitration before a single arbitrator(the"Arbitrator")agreed to by
all of the Shareholders. If the Shareholders are unable to agree on the Arbitrator,
then, an application may be made under the Arbitration Act to a judge for the
. appointment.
(h) Referring Dispute. Any Shareholder may refer a dispute to the Arbitrator by
providing notice in writing to the Arbitrator and to all of the shareholders hereto
expressing its intention to refer the dispute to arbitration and briefly describing the
nature of the dispute.
(c) Attempted Settlement. Upon service of the notice referred to above, the
Shareholders who are party to the dispute (the "Disputing Shareholders") will
attempt to negotiate a settlement of the dispute amongst themselves. In the event
that the - : ..•i' itie are unable to reach settlement by themselves within 10 days
of the service of the notice referred to above,the Shareholders will proceed with the
• arbitration and any Disputing Shareholders shall be free to apply to the Arbitrator
for directions as to the scheduling of the arbitration itself and the pre-hearing
procedures.
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(d) Decision Final and Binding. The Shareholders agree that the award of the
Arbitrator shall be final and binding without any right of appeal and shall be the
sole and exclusive remedy between them regarding any claims, counterclaims,
issues or disputes referred to the Arbitrator.
• (e) Powers of Arbitrator. The Shareholders agree that the Arbitrator shall have the
powers and jurisdiction of an arbitrator pursuant to the Arbitration Act and such
power shall include the power to award interim and interlocutory injunctions and
other equitable relief.
(I) Costs. The Arbitrator shall have the power to award the costs of the Arbitrator's
services and related costs against either partyc)•'arty;however,each ,ii.tyrigly will
bear the costs of their own counsel and witness fees.
(g) Written Notices. All notices by one Shareholder to the other in connection with
the arbitration shall be in writing and shall be deemed to have been duly given or
made if delivered or sent by facsimile transmission to the addresses provided in this
Agreement.
12.5 Farther Assurances
Each .. ,ti t artty hereto shall do such acts and shall execute such further documents,
conveyances,deeds, assignments, transfers and the like, and will cause the doing of such acts and
will cause the execution of such further documents as are within its power as any other q•.•w )'attti
may in writing at any time and from time to time reasonably request be done and or executed, in
order to gave hill effect to the provisions of this Agreement.
12.6 Severability
If any provision of this Agreement is detennined to be invalid or unenforceable by a court
of competent jurisdiction from which no further appeal lies or is taken, that provision shall be
deemed to be severed herefrom, and the remaining provisions of this Agreement shall not be
affected thereby and shall remain valid and enforceable.
86
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12.7 Amendment, Modification and Waiver
This Agreement may not be modified, amended, terminated or supplemented except as
agreed,in writing,by Shareholders both comprising a majority in number of the Shareholders and
holding not less than 51%of the Shares then issued arid outstanding. In the event that the
Shareholders amalgamate such that only two Shareholders remain, this Agreement may not be
modified, amended, terminated or supplemented except as agreed, in writing, by all the
Shareholders. Any waiver of,or consent to depart from, the requirements of any provision of this
Agreement shall he effective only if it is in writing and signed by the t,»f4-i Pally giving it,and only
in the specitic.instance and for the specific purpose for which it has been given. No failure on the
part of any poi t-!=rally to exercise,and no delay in exercising, any right under this Agreement shall
operate as a waiver of such right. No single or partial exercise of any such right shall preclude any
other or further exercise of such right or the exercise of any other right.
12.8 Time of Essence
Time is of the essence of this Agreement.
12.9 counterparts
This Agreement may be executed in any number of counterparts, each of which shall he
deemed to be an original and all of which taken together shall constitute one agreement.
12.10 No Partnership
Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any
i-'Party a partner of or a joint venture with any other ;
12.11 Proceedings
The covenants,agreements and obligations herein expressed to be observed and performed
by lhe; I' lc hereto may be enforced by any of the, hereto pursuant to Section
without joining the remaining r ++ . �L'jrii as parties in any proceedings.
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1242 prectittAftte
rattie eçJJt1 Aphy41140101001w_vuittliktok.thilligtvgill oltsulaul
thi.$„AwNwsall,11101,1119,9tigimiLSIllughillihn' WItucl
Jilowtty. A.2915,
Ih'KiNA EIRE PAGE FULL.O_WISI
-44 -
IN WITNESS WHEREOF the ii-ii,u-esPtute,5 hereto have duly executed this Agreement
as of the date first above written.
`.F-1 E!-C= RPOI-XIO N-0 E-TOW N-Ols-A4 :
By:
Steve Parish, Maync
eW •
t y+ M;*rt #ekond, Clerk
13 "PION OF THE CITY ---OF
BELLEVILLE
I3-x:
THE CORPORATION OF THE TOWN OF AJAX
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THE CORPORATION OF THE CITY OF BELLEYILLE
THE MUNICIPALITY OF CLARINGTON
y.E
By:
c/s
J 14ii en tayor
Mar i4 g t Stanley. Doty-Clefk
90
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THE CORPORATION OF THE CITY OF PICKERING
Lly;
By:
cis
Wizt5-ne Aftliurs,Mayer
VERIDIAN CORPORATION
cis
By: Ratce
VERIDIAN CONNECTIONS INC,
c./.§
VERIDIAN ENERGY INC.
LIKM;„54.4.14.
91
-47 -
ik-ERIDIAN CORP ZI 'I0N
e
John Wiersma, Presi4eat
B James 1. Masw+ t-3iwee4er
V1 RImr!#€-ONN1 TIONS INC.
ers
,John Wiersma, President
e
By, J4 er, Director
92
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ERI I; F li"liA It-1- l-
By
els
Johil-Wiersrtia;-Fresh
43/s
By: J-rn-Witt`', Director
93