In accordance with the rules applicable to most senior issuers in Canada, in the event of a take-over bid, the holders of the company will be entitled to participate on an equal footing with holders of Series A Preferred Shares.
The Principals will enter into a customary coattail agreement with the Resulting Issuer and a trustee. The Coattail Agreement will contain provisions customary for dual-class, listed corporations designed to prevent transactions that otherwise would deprive the holders of rights under applicable provincial take-over bid legislation to which they would have been entitled if the Series A Preferred Shares had been Resulting Issuer Shares.
The undertakings in the Coattail Agreement will not apply to prevent a sale by any Principal of Series A Preferred Shares if concurrently an offer is made to purchase shares.
(i) offers a price per Resulting Issuer Share at least as high as the highest price per share paid pursuant to the take-over bid for the Series A Preferred Shares.
(ii) provides that the percentage of outstanding Resulting Issuer Shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of Series A Preferred Shares to be sold.
(iii) has no condition attached other than the right not to take up and pay for Resulting Issuer Shares tendered if no shares are purchased pursuant to the offer for Series A Preferred Shares.
(iv) is in all other material respects identical to the offer for Series A Preferred Shares. In addition, the Coattail Agreement will not prevent the transfer of Series A Preferred Shares by a Principal to a Permitted Holder.
Under the Coattail Agreement, any disposition of Series A Preferred Shares (including a transfer to a pledgee as security) by a holder of Series A Preferred Shares party to the agreement will be conditional upon the transferee or pledgee becoming a party to the Coattail Agreement.
The Coattail Agreement will contain provisions for authorizing action by the trustee to enforce the rights under the Coattail Agreement on behalf of the holders of the Resulting Issuer Shares or of the Series A Preferred Shares. The obligation of the trustee to take such action will be conditional on the Resulting Issuer or holders of the Resulting Issuer Shares or of the Series A Preferred Shares, as the case may be, providing such funds and indemnity as the trustee may require.
No holder of Resulting Issuer Shares or of Series A Preferred Shares, as the case may be, will have the right, other than through the trustee, to institute any action or proceeding or to exercise any other remedy to enforce any rights arising under the Coattail Agreement unless the trustee fails to act on a request authorized by holders of not less than ten percent (10%) of the outstanding Resulting Issuer Shares or of Series A Preferred Shares, as the case may be, and reasonable funds and indemnity have been provided to the trustee.
The Resulting Issuer will agree to pay the reasonable costs of any action that may be taken in good faith by holders of Resulting Issuer Shares or of Series A Preferred Shares, as the case may be, pursuant to the Coattail Agreement. The Coattail Agreement will provide that it may not be amended, and no provision thereof may be waived, unless, prior to giving effect to such amendment or waiver, the following have been obtained:
(a) The consents of any applicable securities regulatory authority in Canada
(b) The approval of at least 66-2/3% of the votes cast by holders of Resulting Issuer Shares and 66-2/3% of the votes cast by holders of Series A Preferred Shares excluding Page 98 of 111 votes attached to Resulting Issuer Shares and to Series A Preferred Shares, if any, held by the Principal Shareholders, their affiliates and any persons who have an agreement to purchase Resulting Issuer Shares on terms which would constitute a sale or disposition for purposes of the Coattail Agreement other than as permitted thereby. No provision of the Coattail Agreement will limit the rights of any holders of Resulting Issuer Shares or of Series A Preferred Shares under applicable law.
* All of the information in this article is taken directly from the December 2019 Prospectus, and edited for simplification.
