Alberta Take-over Offer to Purchase Common Shares by Megadox

VIEWS: 80 PAGES: 38

More Info
									This document is important and requires your immediate attention. If you are in doubt as to how to deal with it, you should
consult your investment dealer, stockbroker, bank manager, lawyer or other professional advisor.


                                                                                                           [date of offer]

                                                    [OFFEROR]

                               OFFER TO PURCHASE FOR CASH
                                       all outstanding common shares of

                                               [CORPORATION]

                                for $[purchase price] cash for each common share

The offer (the “Offer”) by [OFFEROR] (the “Offeror”) to purchase all common shares (“Shares”) of
[CORPORATION] (the “Corporation”) currently outstanding will be open for acceptance until [time]
([city] time) on [termination date], unless withdrawn or extended. The Offer is conditional (unless waived
or amended by the Offeror) upon, among other things, there being validly deposited under the Offer and
not withdrawn a number of Shares which constitutes at least 90% of the outstanding Shares (calculated
on a fully diluted basis).

The board of directors of the Corporation has determined and advised that it UNANIMOUSLY
RECOMMENDS that the Corporation Shareholders ACCEPT the Offer. (See “Pre-Acquisition
Agreement”.)

Holders of Shares who wish to accept the Offer must deposit the certificate or certificates representing
their Shares, together with a properly completed and executed Letter of Transmittal, at the principal
office of the Corporation set forth in the Letter of Transmittal for the Shares and on the last page of the
offer and Circular in accordance with the instructions in the Letter of Transmittal. Alternatively, a holder
of Shares who wishes to deposit Shares and whose certificates representing such Shares are not
immediately available may accept the Offer by following the procedures for guaranteed delivery set forth
under Section 3 of the Offer, “Procedure for Guaranteed Delivery”.

Persons whose Shares are registered in the name of a nominee should contact their stockbroker,
investment dealer, bank, trust company or other nominee for assistance in depositing their Shares if they
wish to accept the Offer. Questions and requests for assistance may be directed to the Corporation, the
Depositary for the Offer. Additional copies of the Offer and Circular, the Letter of Transmittal and the
Notice of Guaranteed Delivery are available at the principal office of the Depositary set forth in the Letter
of Transmittal and on the last page of the Offer and Circular.

Pursuant to Lock-Up Agreements, certain Shareholders, including the directors and officers of the
Corporation, who hold Shares have agreed to accept the Offer and deposit               Shares,
including Shares issuable on exercise of options, (or approximately    % of the outstanding Shares on
a fully-diluted basis) subject to the right to withdraw such shares in certain events. See “Lock-Up
Agreements” in the Circular.

The Shares are not listed and posted for trading on any stock exchange.

This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or
solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of holders of
                                                      -2-


Shares in any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Offeror may, in its sole discretion, take such action as it may deem necessary to
extend the Offer to holders of Shares in such jurisdiction.
                                                             TABLE OF CONTENTS

                                                       OFFER TO PURCHASE FOR CASH
SUMMARY .................................................................................................................................................................1
DEFINITIONS ...........................................................................................................................................................4
OFFER TO PURCHASE............................................................................................................................................6
 1.    THE OFFER ............................................................................................................................................. 6
 2.    MANNER AND TIME OF ACCEPTANCE ........................................................................................ 6
 3.    PROCEDURE FOR GUARANTEED DELIVERY ............................................................................... 8
 4.    EXTENSION OF TERMINATION DATE AND VARIATION OF OFFER ..................................... 8
 5.    SHAREHOLDER’S RIGHT OF WITHDRAWAL ............................................................................... 9
 6.    CONDITIONS OF THE OFFER .......................................................................................................... 10
 7.    PAYMENT FOR DEPOSITED SHARES ............................................................................................ 12
 8.    SALES ..................................................................................................................................................... 13
 9.    MAIL SERVICE INTERRUPTION ..................................................................................................... 13
 10.   NOTICE .................................................................................................................................................. 14
 11.   RETURN OF SECURITIES ................................................................................................................... 14
 12.   DIVIDENDS AND DISTRIBUTIONS ................................................................................................ 14
 13.   ACQUISITION OF SHARES NOT DEPOSITED .............................................................................. 15
 14.   OTHER TERMS OF THE OFFER ........................................................................................................ 15
                                                                           CIRCULAR
RELIANCE ON THE CORPORATION............................................................................................................... 17
BACKGROUND TO THE OFFER ........................................................................................................................ 17
PRE-ACQUISITION AGREEMENT .................................................................................................................... 17
LOCK-UP AGREEMENTS ..................................................................................................................................... 20
THE OFFEROR ........................................................................................................................................................ 20
 Plans for the Corporation ................................................................................................................................ 20
OBJECT OF THE OFFER ........................................................................................................................................ 20
SOURCE OF FUNDS AND EXPENSES OF THE OFFER ................................................................................ 21
ARRANGEMENTS WITH DIRECTORS AND SENIOR OFFICERS OF THE CORPORATION ........... 21
OWNERSHIP OF SECURITIES OF THE CORPORATION ........................................................................... 21
TRADING IN SECURITIES .................................................................................................................................. 21
COMMITMENTS TO ACQUIRE SECURITIES OF THE CORPORATION ............................................... 21
THE CORPORATION ............................................................................................................................................ 22
INFORMATION CONCERNING SECURITIES OF THE CORPORATION .............................................. 22
  Authorized and Outstanding Capital ............................................................................................................ 22
  Prior Distributions ............................................................................................................................................ 22
  Dividends ........................................................................................................................................................... 22
  Price Range and Trading Volume of Shares ................................................................................................. 22
MATERIAL CHANGES AND OTHER INFORMATION ............................................................................... 22
ACQUISITION OF SHARES NOT DEPOSITED ............................................................................................. 22
 Compulsory Acquisition.................................................................................................................................. 22
 Subsequent Acquisition Transactions ............................................................................................................ 23
 Judicial Developments ..................................................................................................................................... 24
                                                                                 - ii -


CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ................................................... 24
 Introduction ....................................................................................................................................................... 24
 The Offer ............................................................................................................................................................ 25
 Subsequent Acquisition Transaction .............................................................................................................. 26
LEGAL MATTERS .................................................................................................................................................. 27
DEPOSITARY .......................................................................................................................................................... 27
ACCEPTANCE OF OFFER .................................................................................................................................... 27
STATUTORY RIGHTS........................................................................................................................................... 27
APPROVAL AND CERTIFICATE ....................................................................................................................... 28
CONSENT OF COUNSEL ..................................................................................................................................... 29
APPENDIX “A”
                                                 SUMMARY
The following is only a summary of selected information contained in the Offer and Circular, the Letter of
Transmittal and the Notice of Guaranteed Delivery and is qualified in its entirely by the more detailed information
and provisions contained in those documents. Shareholders are urged to read the Offer and the Circular in their
entirety.

The Offer

The Offeror offers to purchase, subject to the terms and conditions set forth in the Offer, all Shares
currently outstanding on the basis of $[purchase price] for each Share.

The Offer is open for acceptance until, but not later than, the Expiry Time unless withdrawn or extended
by the Offeror.

The Offer is made only for Shares and is not made for any options to purchase Shares or any securities
convertible into Shares. Any holder of such options or other securities who wishes to accept the Offer
should, to the extent permitted by the terms thereof and except to the extent such securities are
repurchased by the Corporation, exercise the options or convert such securities in order to obtain
certificates representing Shares and deposit the same in accordance with the Offer.

The board of directors of the Corporation has determined and advised that it UNANIMOUSLY
RECOMMENDS that the Corporation Shareholders ACCEPT the Offer.

The obligation of the Offeror to take up and pay for Shares pursuant to the Offer is subject to certain
conditions. See Section 6 of the Offer, “Conditions of the Offer”.

The Offer is not being made to, nor will deposits be accepted from, or on behalf of, Shareholders in any
jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Offeror or its respective agents may, in their sole discretion, take such action as
they may deem necessary to extend the Offer to Shareholders in any such jurisdiction.

The Offeror

The Offeror is a [jurisdiction] corporation and was incorporated under the Business Corporations Act
([province]) on [incorporation date]. The principal executive office of the Offeror is located at [offeror’s
head office address].

The Corporation

As indicated by information provided by the Corporation, the Corporation is a private [jurisdiction]
corporation, engaged in the [description of the Corporation’s business]. The principal corporate office of
the Corporation is located at [corporation’s head office address].

Object of the Offer

The object of the Offer is to enable the Offeror to acquire all of the equity interest in the Corporation. The
acquisition of the Corporation will provide the Offeror with the opportunity to [expand its
operations/other - provide information].

Pre-Acquisition Agreement

The Offeror and the Corporation have entered into the Pre-Acquisition Agreement relating to the Offer.
The Pre-Acquisition Agreement contains, among other things, covenants of the Offeror relating to the
                                                     -2-


making of the Offer, covenants of the Corporation relating to steps to be taken to support the Offer and
covenants of the Corporation relating to the conduct of its business pending completion of the Offer. See
“Pre-Acquisition Agreement” in the Circular.

Lock-Up Agreements

Pursuant to the Lock-Up Agreements, certain Shareholders, including the directors and officers of the
Corporation, who hold Shares have agreed to accept the Offer and deposit               Shares,
including Shares issuable on exercise of options, (or approximately    % of the outstanding Shares on
a fully-diluted basis) subject to the right to withdraw such shares in certain events. See “Lock-Up
Agreements” in the Circular.

Plans for the Corporation

After completion of the Offer, the Offeror will review the operations, assets and business of the
Corporation. It is possible that the Corporation could be amalgamated with or be wound-up into the
Offeror or an affiliate thereof.

Board of Directors

If the Offer is successful, the Corporation has represented in the Pre-Acquisition Agreement that the
board of directors of the Corporation has agreed that it will use its best efforts to enable the Offeror to
elect or appoint all of the directors of the Corporation as soon as possible after the Offeror takes up and
pays for sufficient Shares pursuant to the Offer so that it holds at least 90% of the outstanding Shares on a
fully diluted basis.

Manner and Time of Acceptance

The holders of Shares wishing to accept the Offer must deposit the certificates representing their Shares,
together with a properly completed and signed Letter of Transmittal and all other required documents, at
the principal office of the Depositary specified in the Letter of Transmittal, at or prior to the Expiry Time.

Shareholders whose Shares are registered in the name of a nominee should contact their stockbroker,
investment dealer, bank, trust company or other nominee for assistance in depositing their Shares if they
wish to accept the Offer.

If a holder of Shares is unable to deposit the certificates representing its Shares in a timely manner, the
holder may accept the Offer by following the procedures for guaranteed delivery set forth in Section 3 of
the Offer, “Procedure for Guaranteed Delivery”.

Conditions

The Offeror shall not be required to accept for payment, purchase or pay for any Shares tendered, and
may terminate the Offer or amend the Offer to postpone the acceptance for payment of and payment for,
Shares tendered, unless all of the conditions set out in Section 6 of the Offer, “Conditions of the Offer”,
have been satisfied or waived prior to the Expiry Time by the Offeror. The Offer is conditional (unless
waived or amended by the Offeror) upon, among other things:

        prior to the Expiry Time and at the time the Offeror shall first take up and pay for Shares under
        the Offer, there shall have been validly deposited under the Offer and not withdrawn at least 90%
        of the outstanding Shares calculated on a fully diluted basis (the “Minimum Condition”).

For a complete description of the conditions of the Offer, see Section 6 of the Offer, “Conditions of the
Offer”.
                                                     -3-



Payment for Deposited Shares

If all of the conditions under Section 6 of the Offer, “Conditions of the Offer”, have been satisfied,
complied with or waived at the Expiry Time, the Offeror will become obligated to take up and pay for the
Shares validly deposited under the Offer and not withdrawn not later than the third (3 rd) business day
after the Expiry Time. In accordance with applicable law, the Offeror will pay for any Shares deposited
under the Offer after the date which it first takes up the Shares deposited under the Offer within
days of the deposit of such Shares. See Section 7 of the Offer, “Payment for Deposited Shares”.

Acquisition of Shares Not Deposited

The purpose of the Offer is to enable the Offeror to acquire, directly or indirectly, all of the Shares. If
the Offeror acquires at least 90% of the Shares, the Offeror may acquire the remaining Shares pursuant
to the compulsory acquisition provisions of Part 16 of the Business Corporations Act (Alberta). If the
Offeror acquires less than 90% of the Shares, the Offeror may take such other corporate actions or
proceedings as may be legally available to acquire the remaining Shares without the consent of the
holders thereof. If such statutory right of compulsory acquisition is not available or if the Offeror elects
not to proceed by way of such statutory right, the Offeror will consider other means of acquiring, directly
or indirectly, all of the securities not deposited under the Offer including a Subsequent Acquisition
Transaction. The Offeror will cause the securities acquired under the Offer to be voted in favour of such a
transaction and, to the extent permitted under applicable corporate and securities laws, to be counted as
part of any minority or independent shareholder approval that may be required in connection with such
transaction. See “Acquisition of Shares Not Deposited” in the Circular.

Certain Canadian Federal Income Tax Considerations

Generally a Shareholder who is resident in Canada, who holds Shares as capital property and who
disposes of such shares to the Offeror under the Offer will realize a capital gain (or a capital loss) equal to
the amount by which the amount of cash received, net of any reasonable costs of disposition, exceeds (or
is less than) the aggregate adjusted cost base to the Shareholder of such Shares. Individuals resident in
Canada who have held their Shares for at least 24 months may be entitled to an exemption on up to
$500,000 of capital gains realized from the sale of such shares. See “Certain Canadian Federal Income Tax
Considerations” in the Circular.

Depositary

The Corporation is acting as Depositary under the Offer. The Depositary will receive deposits of
certificates representing the Shares and accompanying Letter of Transmittal at the office specified in the
Letter of Transmittal. The Depositary will receive the Notices of Guaranteed Delivery at its office
specified therein. The Offeror will be responsible for forwarding payment for Shares properly deposited
by Shareholders under the Offer.

No brokerage fees or commissions will be payable by any Shareholder who deposits Shares directly with
the Depositary. Shareholders should contact the Depositary or a broker or dealer for assistance in
accepting the Offer and in depositing Shares with the Depositary. See “Depositary” in the Circular.
                                                    -4-


                                            DEFINITIONS
In the Offer and in the accompanying Circular:

(a)     “ABCA” means the Business Corporations Act (Alberta), as amended;

(b)     “Acquisition Proposal” means any inquiry or proposal regarding any merger, amalgamation,
        arrangement, take-over bid to acquire more than 20% of the outstanding Shares, sale of
        substantial assets, sale of treasury shares (other than pursuant to the exercise of presently
        outstanding options) or any similar transaction involving the Corporation made by a third party
        prior to the Expiry Time;

(c)     “Affected Securities” has the meaning ascribed thereto in the Circular under the heading
        “Acquisition of Shares Not Deposited”;

(d)     “affiliate” has the meaning ascribed thereto in the Securities Act (Alberta), as amended, except as
        otherwise provided;

(e)     “associate” has the meaning ascribed thereto in the Securities Act (Alberta), as amended, except
        as otherwise provided;

(f)     “business day” means any day other than a Saturday, Sunday or statutory holiday in [city],
        Alberta;

(g)     “Corporation” means [CORPORATION];

(h)     “Cdn.” means, with reference to a dollar amount, Canadian dollars; unless otherwise expressly
        stated herein, all dollar amounts whether or riot including the reference “Cdn.” are in Canadian
        dollars;

(i)     “Circular” means the take-over bid circular accompanying, and forming part of, the Offer;

(j)     “Depositary” means the Corporation at its principal office in the City of [city], Alberta;

(k)     “Effective Date” has the meaning ascribed thereto in Section 2 of the Offer, “Manner and Time of
        Acceptance”;

(l)     “Eligible Institution” means a Canadian chartered Schedule I bank, a member of the investment
        Dealers Association of Canada, a member firm of The Toronto Stock Exchange, The Montreal
        Exchange, The Canadian Venture Exchange Inc., a member of a national securities exchange in
        the United States of America or a member of the National Association of Securities Dealers Inc.,
        who are members of the Securities Transfer Association Medallion (STAMP) Program;

(m)     “Expiry Time” means [time] ([city] time) on the Termination Date;

(n)     “fully diluted basis” means, with respect to a number of outstanding shares at any time, such
        number of shares calculated assuming that all options and other rights to acquire such shares are
        exercised;

(o)     “Letter of Transmittal” means the letter of transmittal in the form accompanying, and forming
        part of the Offer respecting the Shares;
                                                  -5-


(p)    “Lock-Up Agreements” means the agreements between the Offeror and certain Shareholders,
       including the directors and officers of the Corporation, with respect to the deposit of their Shares
       under the Offer;

(q)    “Minimum Condition” has the meaning ascribed thereto in Section 6 of the Offer, “Conditions of
       the Offer”;

(r)    “Notice of Guaranteed Delivery” means a notice of guaranteed delivery in the form
       accompanying, and forming part of the Offer;

(s)    “Offer” means the offer of the Offeror to acquire the Shares made hereby;

(t)    “Offeror” means [OFFEROR];

(u)    “Offer Period” means the period commencing on [commencement date] (which shall be deemed
       to be the date of the Offer) and ending at the Expiry Time;

(v)    “Other Securities” has the meaning ascribed thereto in Section 2 of the Offer, “Manner and Time
       of Acceptance”;

(w)    “Pre-Acquisition Agreement” means the agreement dated as of [date of pre-acquisition
       agreement], as amended, between the Offeror and the Corporation respecting the acquisition by
       the Offeror of all Shares;

(x)    “Purchased Shares” has the meaning ascribed thereto in Section 2 of the Offer, “Manner and
       Time of Acceptance”;

(y)    “Shareholder” means a holder of Shares;

(z)    “Shares” means, collectively, all voting common shares of the Corporation currently outstanding
       and all such common shares of the Corporation issued on the exercise of currently outstanding
       options to purchase common shares of the Corporation;

(aa)   “Subsequent Acquisition Transaction” has the meaning ascribed thereto in the Circular under the
       heading “Acquisition of Shares Not Deposited”;

(bb)   “Subsidiary” has the meaning ascribed thereto in the Securities Act (Alberta);

(cc)   “Superior Proposal” means an Acquisition Proposal for which adequate financial arrangements
       have been made which the board of directors of the Corporation determines in good faith would,
       if consummated in accordance with its terms, result in a transaction financially superior for the
       Corporation and the Shareholders than the Offer;

(dd)   “Tax Act” means the Income Tax Act (Canada), as amended; and

(ee)   “Termination Date” means [termination date] or such later date as may be fixed by notice of
       extension given under Section 2 of the Offer, “Manner and Time of Acceptance”.
                                                    -6-


                                       OFFER TO PURCHASE
[date]
To the holders of Shares of [Corporation]:

1.      THE OFFER

The Offeror hereby offers to purchase, subject to the terms and conditions set forth in the Offer, all Shares
of [Corporation] currently outstanding and all Shares issued on the exercise of currently outstanding
options to purchase Shares. The price to be paid is $[purchase price] for each Share on the terms set out in
the Offer.

The Offer is made only for Shares and is not made for any options to purchase Shares or any securities
convertible into Shares. Any holder of such options or other securities who wishes to accept the Offer
should, to the extent permitted by the terms thereof and to the extent such securities are not repurchased
by the Corporation, exercise the options or convert such securities in order to obtain certificates
representing Shares and deposit the same in accordance with the Offer.

The Offer is not being made, nor will deposits be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Offeror may, in its sole discretion, take such action as it may deem necessary to
extend the Offer to holders of Shares in any such jurisdiction.

The Offer, together with the Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery
which are incorporated into and form part of the Offer, contain important information which should be
read carefully before making a decision with respect to the Offer.

2.      MANNER AND TIME OF ACCEPTANCE

The Offer is open for acceptance until the Expiry Time, or until such later time or date to which the Offer
may be extended, unless the Offer is withdrawn by the Offeror.

The Offer may be accepted by a holder of Shares by depositing, during the Offer Period or until such later
time and date to which the Offer may be extended, and unless the Offer is withdrawn, with the
Depositary at the place of deposit specified in the Letter of Transmittal accompanying this Offer:

(a)     the certificate(s) representing the Shares in respect of which the Offer is being accepted;

(b)     a Letter of Transmittal (or facsimile thereof) in respect of the Shares duly completed and signed
        with the signature guaranteed by an Eligible Institution in accordance with the instructions set
        out in the Letter of Transmittal; and

(c)     any relevant documents required by the instructions set out in the Letter of Transmittal.

The Offeror reserves the right to permit holders of Shares to accept the Offer in a manner other than that
set out above.

Except as otherwise provided, the Offer will be deemed to have been accepted when the Depositary has
actually received certificates in respect of the Shares and the related Letter of Transmittal duly completed
and executed.
                                                     -7-


The deposit of Shares pursuant to the procedures described herein will constitute a binding agreement
between the depositing Shareholder and the Offeror upon the terms and subject to the conditions of the
Offer including the depositing Shareholder’s representation and warranty that: (i) such person has full
power and authority to deposit, sell, assign and transfer the Shares being deposited; (ii) such person owns
the Shares being deposited within the meaning of applicable securities laws; (iii) the deposit of such
Shares complies with applicable securities laws; and (iv) when such Shares are taken up and paid for by
the Offeror, the Offeror will acquire good title thereto free and clear of all liens, restrictions, charges,
encumbrances, claims, and equities whatsoever.

The execution of a Letter of Transmittal by a Shareholder irrevocably appoints the Offeror, the
Depositary, and any officer of the Offeror and each of them, and any other person designated by the
Offeror in writing as the true and lawful agent, attorney and attorney-in-fact and proxy of such holder
with respect to the Shares deposited therewith and purchased by the Offeror (the “Purchased Shares”)
and with respect to any dividends, stock dividends, securities, rights, warrants, payments, assets, or other
interest or distribution (collectively, as used in this paragraph, “Other Securities”), declared, paid, issued,
transferred or distributed on or in respect of the Purchased Shares on or after the date of the Offer,
effective from the date that the Offeror purchases the Purchased Shares (the “Effective Date”), with full
power of substitution, in the name and on behalf of a Shareholder to (a) register or record, transfer and
enter the transfer of Purchased Shares and any Other Securities on the books of the Corporation, and (b)
exercise any and all of the rights of such Shareholder in respect of the Purchased Shares and any Other
Securities including, without limitation, the right to vote, execute and deliver any and all instruments of
proxy, authorizations or consents in respect of any or all of the Purchased Shares and Other Securities,
revoke any such instruments, authorizations or consents given on or prior to or after the Effective Date
and designate in any such instruments of proxy any person or persons as the proxy or the proxy nominee
or nominees of the holder thereof including, without limitation, in connection with any meeting (whether
annual, special or otherwise) of holders of securities of the Corporation (or any adjournment thereof), and
execute, endorse and negotiate, for and in the name of and on behalf of the registered holder of Shares,
any and all cheques or other instruments respecting any distribution payable to or to the order of such
holder, all as set forth in the Letter of Transmittal. Further, a Shareholder who executes a Letter of
Transmittal agrees, from and after the Effective Date: (i) not to vote any of the Purchased Shares or Other
Securities at any meeting (whether annual, special or otherwise) of holders of securities of the
Corporation; (ii) not to exercise any other rights or privileges attached to any Purchased Shares or Other
Securities or otherwise act with respect thereto; and (iii) to execute and deliver to the Offeror (provided
the same is not contrary to applicable law) any and all instruments of proxy, authorization or consent, in
form and on terms satisfactory to the Offeror, in respect of any or all of the Purchased Shares or Other
Securities and to designate in any such instruments of proxy the person or persons specified by the
Offeror as the proxy or proxy nominee or nominees of the holder thereof. Upon such appointment all
prior proxies given by such Shareholder with respect to such Purchased Shares and to such Other
Securities shall be revoked and no subsequent proxies may be given by such holder with respect thereto.
A Shareholder who executes a Letter of Transmittal covenants to execute, upon request, any additional
documents necessary or desirable to complete the sale, assignment and transfer of Shares to the Offeror
and acknowledges that all authority therein conferred or agreed to be conferred shall survive the death or
incapacity, bankruptcy or insolvency of such Shareholder and all obligations of such Shareholder therein
shall be binding upon the heirs, personal representatives, successors and assigns of the Shareholder.

The Offeror shall, in its sole discretion, be entitled to make a final and binding determination of all
questions relating to the deposit of Shares and to the completion and execution of the related Letter of
Transmittal including, without limitation, the validity, form, eligibility (including timely receipt) and
acceptance of Shares deposited pursuant to the Offer. Shareholders who deposit their Shares pursuant to
the Offer agree that such determination shall be final and binding. The Offeror reserves the absolute right
to reject any and all deposits which it determines to not be in proper form or which may be unlawful to
accept under the laws of any jurisdiction. The Offeror reserves the absolute right to waive any defect or
                                                     -8-


irregularity in the deposit of any Shares. There shall be no duty or obligation on the Offeror, the
Depositary or any other person to give notice of any defect or irregularity in any deposit and no liability
shall be incurred by any of them for failure to give any such notice. The Offeror’s interpretation of the
terms and conditions of the Offer (including the Circular, the Letter of Transmittal and the Notice of
Guaranteed Delivery) shall be final and binding.

The Offeror reserves the right to permit the Offer to be accepted in a manner other than that set out
above.

The method of delivery of certificates representing Shares and the related Letter of Transmittal and
other documents is at the option and risk of the Shareholder. If sent by mail, registered mail is
recommended. For the Shareholder’s protection it is recommended that the certificates and related
Letter of Transmittal be delivered by hand to the Depositary at the office specified in the Letter of
Transmittal, and a receipt therefor be obtained.

Shareholders whose Shares are registered in the name of a nominee should contact their stockbroker,
investment dealer, trust company or other nominee for assistance in depositing their Shares.

3.      PROCEDURE FOR GUARANTEED DELIVERY

If a Shareholder wishes to deposit Shares pursuant to the Offer and (i) the certificates representing the
Shares are not immediately available, or (ii) the Shareholder is not able to deliver the certificates to the
Depositary during the Offer Period, such Shares may nevertheless be deposited pursuant to the Offer
provided that all of the following conditions are met:

(a)     such deposit is made by or through an Eligible Institution;

(b)     a properly completed and duty executed Notice of Guaranteed Delivery in the form
        accompanying the Offer, or a manually signed facsimile thereof, is received by the Depositary at
        its principal office in [city], Alberta as set forth in the Notice of Guaranteed Delivery, prior to the
        Expiry Time; and

(c)     the certificates representing the deposited Shares, in proper form for transfer, together with a
        properly completed and duly executed Letter of Transmittal in the applicable form
        accompanying the Offer, or a manually signed facsimile thereof, and all other documents
        required by the Letter of Transmittal, are received by the Depositary at its principal office in
        [city], Alberta on or before 4:00 p.m. ([city] time) on the third business day after the Termination
        Date.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or
mail to the Depositary at the office specified above and must include a guarantee by an Eligible
Institution to deliver the Shares in the form set forth in the Notice of Guaranteed Delivery.

4.      EXTENSION OF TERMINATION DATE AND VARIATION OF OFFER

The Offer is open for acceptance until the Expiry Time, unless extended or withdrawn. The Offeror may,
in its sole discretion, extend the Termination Date or otherwise vary the Offer at any time and from time
to time during the Offer Period (or otherwise as permitted by applicable law) by giving written notice of
such extension or variation to the Depositary at its principal office in [city], Alberta. The Depositary shall
forthwith give notice of such extension or variation to registered holders of Shares whose Shares have not
been taken up prior to the extension or variation in the manner set out in Section 10 of the Offer,
“Notice”, and the Offeror shall, as soon as practicable thereafter, make a public announcement of the
                                                     -9-


extension or variation. Any notice of extension or variation shall be deemed to have been given and to be
effective on the day which it is delivered or otherwise communicated to the Depositary at its principal
office in [city], Alberta.

Notwithstanding the foregoing, the Offer may not be extended by the Offeror if all of the terms and
conditions of the Offer have been fulfilled, complied with or waived by the Offeror unless the Offeror
first takes up and pays for all Shares deposited under the Offer and not withdrawn.

Where the terms of the Offer are varied, the Offer shall not expire before 10 days after the notice of
variation in respect of such variation has been sent to holders of Shares unless otherwise permitted by
applicable law and subject to abridgement or elimination of that period pursuant to such orders as may
be granted by Canadian courts or securities regulatory authorities.

During any such extension or in the event of any variation, all Shares previously deposited and not taken
up or withdrawn will remain, subject to the Offer and may be accepted for purchase by the Offeror in
accordance with the terms hereof, subject to Section 5 of the Offer, “Shareholder’s Right of Withdrawal”.
An extension of the Expiry Time or a variation of the Offer does not constitute a waiver by the Offeror of
its rights under Section 6 of the Offer, “Conditions of the Offer”. If the consideration being offered for the
Shares under the Offer is increased, the increased consideration will be paid to all holders whose Shares
are taken up under the Offer.

5.      SHAREHOLDER’S RIGHT OF WITHDRAWAL

Except as otherwise stated in this Section 5, deposits of Shares are irrevocable. Unless otherwise required
or permitted by applicable law, any Shares deposited in acceptance of the Offer may be withdrawn by or
on behalf of the depositing Shareholder:

        (i)     at any time where the Shares have not been taken up by the Offeror;

        (ii)    if the Shares have not been paid for by the Offeror within three (3) business days after
                having been taken up; or

        (iii)   at any time before the expiration of ten (10) days from the date upon which either:

        (a)     a notice of change relating to a change which has occurred in the information contained
                in the Offer or the Circular, as amended from time to time, that would reasonably be
                expected to affect the decision of the Shareholder to accept or reject the Offer (other than
                a change that is not within the control of the Offeror or of an affiliate of the Offeror) in
                the event that such change occurs before the Expiry Time or after the Expiry Time but
                before the expiry of all rights of withdrawal in respect of the Offer; or

        (b)     a notice of variation concerning a variation in the terms of the Offer (including any
                extension of the period during which the Shares may be deposited under the Offer or the
                modification of a term or condition of the Offer, but excluding, unless otherwise required
                by applicable law, a variation consisting solely of an increase in the consideration offered
                under the Offer where the Expiry Time is not extended for a period of greater than 10
                days);

        is mailed, delivered or otherwise properly communicated, but subject to abridgement of that
        period pursuant to such order or orders as may be granted by applicable courts or securities
        regulatory authorities and only if such deposited Shares have not been taken up by the Offeror at
        the date of the notice.
                                                   - 10 -



Notice of withdrawal of any Shares deposited pursuant to the Offer must be in writing (which includes
facsimile or telegraphic communication), must be made by the depositing Shareholder thereof or his or
her agent, and must be actually received by the Depositary at the place of deposit within the time limits
indicated above. Any such notice of withdrawal must be signed by the person who deposited the Shares
to be withdrawn (or Notice of Guaranteed Delivery in respect thereof), and must specify such person’s
name, the number of Shares to be withdrawn and the name of the registered holder of each certificate
representing the Shares to be withdrawn. Any signature on a notice of withdrawal must be guaranteed
by an Eligible Institution in the same manner as in the Letter of Transmittal or Notice of Guaranteed
Delivery (as described in the instructions set out therein), except where such notice is in respect of Shares
deposited for the account of an Eligible Institution. The withdrawal shall take effect upon receipt of the
written notice by the Depositary.

All questions as to the validity (including timely receipt) and form of notices of withdrawal shall be
determined by the Offeror in its sole discretion, and such determination shall be final and binding. There
shall be no duty or obligation on the Offeror, the Depositary or any other person to give notice of any
defect or irregularity in any notice of withdrawal and no liability shall be incurred by any of them for
failure to give any such notice.

Withdrawals may not be rescinded and any Shares withdrawn will be deemed not validly deposited for
the purposes of the Offer, but may be redeposited at any subsequent time prior to the Expiry Time by
following any of the applicable procedures described in Section 2 of the Offer, “Manner and Time of
Acceptance”.

6.      CONDITIONS OF THE OFFER

Notwithstanding any other provision of the Offer, the Offeror shall not be required to accept for
payment, purchase or pay for any Shares tendered, and may terminate the Offer or amend the Offer to
postpone the acceptance for payment of, and payment for, Shares tendered, unless all of the following
conditions are satisfied or waived prior to the Expiry Time:

(a)     prior to the Expiry Time and at the time the Offeror shall first take up and pay for Shares under
        the offer, there shall have been validly deposited under the Offer and not withdrawn at least 90%
        of the outstanding Shares calculated on a fully diluted basis (the “Minimum Condition”);

(b)     any and all other applicable waiting periods under any competition, merger control or similar
        law, regulation or other governmental authority having jurisdiction over the Offeror, or the
        Corporation or the Offer or any other transaction contemplated by the Offer with respect to any
        such matters shall have expired or been terminated in respect of such transactions;

(c)     all regulatory approvals, orders, rulings, exemptions and consents (including, without limitation,
        those of any stock exchanges or securities or other regulatory authorities) which, in the sole
        judgment of the Offeror acting reasonably are necessary or desirable shall have been obtained on
        terms and conditions satisfactory to the Offeror in its sole discretion, acting reasonably;

(d)     no act, action, suit or proceeding shall have been threatened or taken before or by any domestic
        or foreign court or tribunal or governmental agency or other regulatory authority or
        administrative agency or commission by any elected or appointed public official or by any
        private person in Canada or elsewhere, whether or not having the force of law, and no law,
        regulation or policy shall have been proposed, enacted, promulgated or applied, whether or not
        having the force of law:
                                                  - 11 -


(a)   which, in the sole judgment of the Offeror acting reasonably, has the effect or may have the effect
      to cease trade, enjoin, prohibit or impose material limitations, damages or conditions on the
      purchase by, or the sale to, the Offeror, of the Shares or the right of the Offeror to own or exercise
      full rights of ownership of the Shares, or the ability of the Offeror to complete a compulsory
      acquisition or any subsequent acquisition transaction, or

(b)   which, in the sole judgement of the Offeror acting reasonably, has had or may have a material
      adverse effect on the Corporation;

(e)   the Offeror shall have determined in its sole judgment there shall not exist any prohibition at law
      against the Offeror making the Offer or taking up and paying for all of the Shares under the Offer
      or completing any compulsory acquisition or subsequent acquisition transaction;

(f)   the Offeror shall have determined in its sole judgment acting reasonably that the Corporation has
      not taken or proposed to take any action, or publicly disclosed that it intends to take any action,
      and the Offeror shall not have otherwise learned of any previous action taken by the Corporation
      which has not been publicly disclosed or disclosed in writing to the Offeror prior to the
      announcement of the Offer, that would be materially adverse to the business of the Corporation
      or the value of the Shares to the Offeror or that would make it inadvisable for the Offeror to
      proceed with the Offer and/or with taking up and paying for Shares under the Offer or
      completing any compulsory acquisition or subsequent acquisition transaction including, without
      limiting the generality of the foregoing, any action with respect to any agreement, proposal, offer
      or understanding relating to any material sale, disposition or other dealing with any of the assets
      of the Corporation, any issue of shares, options or other securities of the Corporation to any
      person or any material acquisition from a third party of assets or securities by the Corporation or
      any material capital expenditure by the Corporation not in the ordinary course of business;

(g)   there shall not have occurred (and there shall not have been publicly disclosed, and the Offeror
      shall not have otherwise learned of, it previously not publicly disclosed or previously disclosed
      in writing to the Offeror) any change (or any condition, event or development involving a
      prospective change) not publicly disclosed or disclosed in writing to the Offeror prior to the
      announcement of the Offer in the business, operations, assets, capitalization, financial condition,
      licences, permits, rights, liabilities, prospects or privileges, whether contractual or otherwise, of
      the Corporation which, in the sole judgment of the Offeror, is materially adverse to the business
      of the Corporation or to the value of the Shares to the Offeror, and no change (or condition, event
      or development involving a prospective change) shall have occurred or have been threatened in
      the general economic, financial, currency exchange, securities or commodity market conditions in
      Canada or elsewhere which, in the sole judgement of the Offeror, is materially adverse to the
      business of the Corporation or to the value of the Shares to the Offeror;

(h)   the Offeror shall have determined in its sole judgment, acting reasonably, that: (i) no material
      right, franchise or licence of the Corporation has been or may be impaired (which impairment has
      not been cured or waived) or otherwise materially adversely affected, whether as a result of the
      making of the Offer, the taking up and paying for Shares deposited under the Offer or otherwise
      which might make it inadvisable for the Offeror to proceed with the Offer and/or with the taking
      up and paying for the Shares under the Offer and/or completing a compulsory acquisition or a
      subsequent acquisition transaction, and (ii) no covenant, term. or condition of any instruments or
      agreements of the Corporation which have not been previously disclosed in writing to the
      Offeror exists which might make it inadvisable for the Offeror to proceed with the Offer and/or
      with the taking up and paying for the Shares under the Offer and/or completing a compulsory
      acquisition or a subsequent acquisition transaction (including, without limitation, any default,
      acceleration or other adverse event that may ensue as a result of the Offeror taking up and paying
                                                   - 12 -


        for the Shares under the Offer and/or completing a compulsory acquisition or subsequent
        acquisition transaction);

(i)     there shall not have occurred any actual or threatened change (including any proposal by the
        Minister of Finance (Canada) to amend the Income Tax Act (Canada) or any announcement,
        governmental or regulatory initiative, condition, event or development involving a change or a
        prospective change) that, in the sole judgment of the Offeror, acting reasonable, directly or
        indirectly, has or may have material adverse significance with respect to the current or
        anticipated business or operations of any of the Offeror or the Corporation or entities in which
        either of them has a material interest or with respect to the regulatory regime applicable to their
        respective businesses and operations or with respect to completing any compulsory acquisition
        or subsequent acquisition transaction or with respect to any potential integration of the
        Corporation with the Offeror, an associate or affiliate of the Offeror or any reorganization of the
        Offeror or the Corporation in connection with any such potential integration;

(j)     the Offeror shall be satisfied in its sole judgment that all outstanding options or other rights to
        purchase Shares or other securities of the Corporation have been exercised or terminated on a
        basis acceptable to the Offeror;

(k)     the Offeror shall be satisfied in its sole judgment that there shall not have occurred any material
        breach by the Corporation of any of the terms of the Pre-Acquisition Agreement or any
        termination in accordance with its terms.

The foregoing conditions are for the exclusive benefit of the Offeror and may be waived by the Offeror, in
whole or in part, in its sole discretion, at any time and from time to time, both before or after the Expiry
Time, provided that the Minimum Condition may only be waived with the consent of the Corporation,
such consent not to be unreasonably withhold.

Any waiver of a condition or the withdrawal of the Offer shall be effective upon written notice or other
communication confirmed in writing by the Offeror to that effect to the Corporation at its principal office
in [city], Alberta. If required by law, the Offeror shall forthwith after giving any such notice make a
public announcement of such waiver or withdrawal and shall use reasonable commercial efforts to cause
the Depositary to notify holders of Shares in the manner set forth in Section 10 of the Offer, “Notice”. If
the Offer is withdrawn for failure to satisfy the conditions set forth above, the Offeror shall not be
obligated to take up and pay for any Shares deposited under the Offer and the Depositary will promptly
return all certificates for deposited Shares, Letter of Transmittal, Notices of Guaranteed Delivery and
related documents to the parties by whom they were deposited.

7.      PAYMENT FOR DEPOSITED SHARES

If all the conditions referred to under Section 6 of the Offer, “Conditions of the Offer”, have been
satisfied, complied with or waived at the Expiry Time, the Offeror will become obligated to take up and
pay for the Shares validly deposited under the Offer and not withdrawn not later than the third (3 rd)
business day after the Expiry Time. In accordance with applicable law, the Offeror will pay for any Shares
deposited under the Offer after the date on which it first takes up Shares deposited under the Offer
within ten (10) days of the deposit of such Shares.

Subject to applicable law, the Offeror may, in its sole discretion, delay taking up or paying for any Shares
or terminate the offer and not take up or pay for any Shares, if any condition specified in Section 6 of the
Offer, “Conditions of the Offer”, is not satisfied or waived, in whole or in part, by giving written notice
thereof or other communication confirmed in writing to the Depositary at its principal office in [city],
Alberta. In particular, the Offeror expressly reserves the right, in its sole discretion and notwithstanding
                                                   - 13 -


any other condition of the Offer, to delay taking up and paying for Shares in order to comply, in whole or
in part, with any applicable law, including, without limitation, such period of time as may be necessary to
obtain any necessary regulatory approval. The Offeror will be deemed to have taken up and accepted for
payment, Shares validly deposited arid not withdrawn pursuant to the Offer if, as and when the Offeror
gives written notice or other communication confirmed in writing to the Depository at its principal office
in [city], Alberta, of its acceptance for payment of such Shares pursuant to the Offer.

The Offeror will pay for the Shares validly deposited pursuant to the Offer and not withdrawn by
directly issuing cheques to the holders of such deposited Shares. Subject to the foregoing and unless
otherwise directed by the related Letter of Transmittal, the cheque will be issued in the name of the
registered holder of the Shares so deposited. Unless the person depositing the Shares instructs the
Depositary to hold the cheque for pick-up by checking the appropriate box in the related Letter of
Transmittal, cheques will be forwarded by first class registered mail to such persons at the address
specified in the related Letter of Transmittal. If no address is specified, cheques will be forwarded to the
address of the Shareholder as shown on the registers maintained by the Corporation. Cheques which are
mailed in accordance with this paragraph shall be deemed to have been delivered at the time of delivery
to the post office. In the event of an interruption of mail service, cheques will be made available in
accordance with Section 9 of the Offer. Concurrently with payrnent, the Depositary will deliver to the
Offeror, or its nominee, certificates representing the Shares so taken up, and paid for by it.

If a Shareholder deposits more than one certificate for Shares which are taken up under the Offer, the
cash consideration payable to such Shareholder will be computed on the basis of the aggregate number of
Shares deposited by such Shareholder.

No interest will be paid to a depositing Shareholder notwithstanding any delay in making payment.

If the Offeror extends the Offer, is delayed in taking up or paying for Shares or is unable to take up and
pay for Shares for any reason, then, without prejudice to the Offeror’s other rights, deposited Shares may
be retained by the Depositary on behalf of the Offeror and no Shares may be withdrawn except to the
extent that depositing Shareholders are entitled to withdraw their Shares as set out in Section 5 of the
Offer or pursuant to applicable laws. The reservation by the Offeror of the rights to delay the purchase of
or payment for Shares is limited by the securities laws of certain Canadian provinces.

8.      SALES

Although the Offeror has no present intention to sell Shares taken up under the Offer, it reserves the right
to make or enter (or cause an affiliate to make or enter) into an arrangement, commitment or
understanding at or prior to the Expiry Time to sell Shares after the Expiry Time.

9.      MAIL SERVICE INTERRUPTION

Notwithstanding the provisions of the Offer, the Letter of Transmittal or the Notice of Guaranteed
Delivery, cheques will not be mailed if the Offeror determines that delivery thereof by mail may be
delayed by the post office or otherwise. The persons entitled to such cheques which have not been mailed
for any reason may take delivery thereof at the office of the Depositary at which they deposited their
Shares on request to the Depositary until such time as the Offeror has determined that delivery by mail
will no longer be delayed. Notwithstanding Section 7 of the Offer, “Payment for Shares Purchased”, any
cheque not mailed for the foregoing reason shall be conclusively deemed to have been delivered on the
first day on which it was available at the principal office of the Depositary for the person entitled thereto
to take delivery thereof. Notice of such determination by the Offeror shall be given to Shareholders in
accordance with Section 10 of the Offer, “Notice”. Notwithstanding Section 7 of the Offer, “Payment for
Shares Purchased”, the deposit of cheques with the Depositary for delivery to the depositing
                                                    - 14 -


Shareholders in such circumstances shall constitute delivery to the persons entitled thereto and the Shares
shall be deemed to have been paid for immediately upon such deposit.

10.     NOTICE

Without limiting any other lawful means of giving notice, the Offeror or the Depositary may give or
cause to be given any notice pursuant to the Offer by mailing such notice by first class mail, postage
prepaid, to the registered holders of the Shares at their respective addresses appearing on the books of
the Corporation and any notice so given will be deemed to have been received on the business day
following such mailing. These provisions apply notwithstanding any accidental omission to give notice to
any one or more Shareholders and notwithstanding any interruption of mail service in Canada or
elsewhere following mailing. In the event of any interruption of postal service following mailing, the
Offeror intends to make reasonable efforts to disseminate the notice by other means, such as publication.
Except as otherwise required or permitted by law, if post offices in Canada are not open for the deposit of
mail or there is reason to believe there is or could be a disruption in all or part of the postal service, any
notice which the Offeror, except as otherwise provided herein, will be deemed to have been properly
given to and to have been received by holders of Shares, as the case may be, if it is published once in the
national edition of The Globe and Mail or The National Post, provided that if the national edition of The
Globe and Mail and The National Post is not being generally circulated, publication thereof shall be made
in any other daily newspaper of general circulation published in the cities of Toronto and [city].

Wherever the Offer calls for documents to be delivered to the Depositary, such documents will not be
considered delivered unless and until they have been physically received at the address listed for the
Depositary in the Letter of Transmittal or Notice of Guaranteed Delivery, as applicable. Whenever the
Offer calls for documents to be delivered to the office of the Depositary, such documents will not be
considered delivered unless and until they have been physically received at the office at the address
listed in the Letter of Transmittal or Notice of Guaranteed Delivery, as applicable.

11.     RETURN OF SECURITIES

If deposited Shares are not taken up and paid for by the Offeror for any reason, or if certificates are
submitted for more Shares than are deposited, certificates for Shares not taken up and paid for or not
deposited will be returned at the Offeror’s expense by either sending new certificates representing
securities not purchased or returning the deposited certificates (and other relevant documents) as
appropriate. The deposited certificates (and other relevant documents) will be forwarded by first class
mail in the name of and to the address specified by the holder in the related Letter of Transmittal or, if
such name or address is not so specified, in such name and to such address as shown on the registers
maintained by
								
To top