Document:

Exhibit 10.2

 

SERVICES AGREEMENT

 

Between

 

KINDER MORGAN CANADA INC.

 

- and -

 

KINDER MORGAN CANADA LIMITED

 

- and -

 

KINDER MORGAN CANADA GP INC.

 

- and -

 

KINDER MORGAN CANADA LIMITED PARTNERSHIP

 

Dated as of May 30, 2017

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
ARTICLE 1 INTERPRETATION
    	
1
    
	
1.1
    	
Definitions
    	
1
    
	
1.2
    	
Headings for Reference Only
    	
3
    
	
1.3
    	
Construction and Interpretation
    	
3
    
	
1.4
    	
Accounting Principles
    	
4
    
	
1.5
    	
Date for Any Action
    	
4
    
	
ARTICLE 2 SERVICES AND POWERS
    	
4
    
	
2.1
    	
Appointment of KMCI
    	
4
    
	
2.2
    	
Services
    	
4
    
	
2.3
    	
Power and Authority of KMCI
    	
6
    
	
2.4
    	
Restrictions on Conduct of KMCI and   its Affiliates
    	
6
    
	
ARTICLE 3 FEES AND PAYMENT OF   EXPENSES
    	
7
    
	
3.1
    	
KM Canada Costs
    	
7
    
	
3.2
    	
KMI Group Affiliate Costs
    	
7
    
	
3.3
    	
Invoicing and Payment
    	
7
    
	
3.4
    	
Payment of GST
    	
8
    
	
3.5
    	
Failure to Pay When Due
    	
8
    
	
ARTICLE 4 ACTIVITIES OF KMCI
    	
8
    
	
4.1
    	
No Additional Duty
    	
8
    
	
4.2
    	
Other Activities
    	
8
    
	
ARTICLE 5 TERM
    	
9
    
	
5.1
    	
Term
    	
9
    
	
5.2
    	
Survival
    	
9
    
	
ARTICLE 6 GENERAL MATTERS
    	
9
    
	
6.1
    	
Further Assurances.
    	
9
    
	
6.2
    	
Severability.
    	
9
    
	
6.3
    	
No Partnership, Joint Venture or   Trust
    	
10
    
	
6.4
    	
Amendments
    	
10
    
	
6.5
    	
Non-Merger
    	
10
    
	
6.6
    	
Governing Law and Attornment
    	
10
    
	
6.7
    	
Waivers
    	
10
    
	
6.8
    	
Time of Essence
    	
10
    
	
6.9
    	
Entire Agreement
    	
10
    
	
6.10
    	
Enurement
    	
11
    
	
6.11
    	
Partnership Liability
    	
11
    
	
6.12
    	
Counterparts
    	
11
    
	
6.13
    	
Facsimile Execution
    	
11
    

 

i

 

SERVICES AGREEMENT

 

THIS AGREEMENT is made as of the 30th day of May, 2017

 

BETWEEN:

 

KINDER MORGAN CANADA INC., a corporation existing under the laws of the Province of Alberta (“KMCI”)

 

- and -

 

KINDER MORGAN CANADA LIMITED, a corporation existing under the laws of the Province of Alberta (the “Company”)

 

- and -

 

KINDER MORGAN CANADA GP INC., a corporation existing under the laws of the Province of Alberta (the “General Partner”)

 

- and -

 

KINDER MORGAN CANADA LIMITED PARTNERSHIP, a limited partnership existing under the laws of the Province of Alberta (the “Limited Partnership”)

 

WHEREAS the Company, the General Partner and the Limited Partnership have requested that KMCI provide Services to the KM Canada Group (each as defined herein);

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the Parties), the Parties hereto agree as follows:

 

ARTICLE 1
 INTERPRETATION

 

1.1                               Definitions

 

As used herein, the following terms shall have the meanings set forth below:

 

(a)                                 “Act” means the Business Corporations Act (Alberta);

 

(b)                                 “Affiliate” has the meaning assigned thereto in the Securities Act (Alberta); and for greater certainty, provided the foregoing requirements are satisfied, except to the extent expressly provided otherwise herein, any member of the KM Canada Group may be an Affiliate of KMI or other member of the KMI Group;

 

(c)                                  “Agreement” means this services agreement made as of the Effective Date, as amended, restated or modified from time to time in accordance with its terms;

 

(d)                                 “Applicable Laws” means all laws, rules, regulations, codes, policies, statutes, ordinances and orders, in effect from time to time, of all Governmental Authorities having jurisdiction with respect to the KM Canada Group;

 

(e)                                  “Board” means the board of directors of the Company, as constituted from time to time;

 

 

(f)                                   “Business Day” means any day, other than a Saturday, Sunday or a day on which the principal chartered banks located at Calgary, Alberta are not open for business;

 

(g)                                  “Control” means as follows: a Person (first person) is considered to Control another Person (second person) if (i) the first person beneficially owns, or controls or directs, directly or indirectly, securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation; (ii) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership; or (iii) the second person is a limited partnership and the first person (A) is the general partner of the limited partnership or (B) beneficially owns, or controls or directs, directly or indirectly, securities of the general partner of the limited partnership carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the general partner of the limited partnership;

 

(h)                                 “Cooperation Agreement” means the cooperation agreement dated May 30, 2017 among the Company, the General Partner, the Limited Partnership, Kinder Morgan Canada Company, KM Canada Terminals ULC and KMI (for the purposes of certain provisions only), as amended, restated or modified from time to time;

 

(i)                                     “Effective Date” means May 30, 2017;

 

(j)                                    “Governmental Authority” means any stock exchange or any court, tribunal or judicial or arbitral body or other governmental department, regulatory agency or body, commission, board, bureau, agency, or instrumentality of Canada, or of any state, province, territory, county, municipality, city, town or other political jurisdiction whether domestic or foreign and whether now or in the future constituted or existing;

 

(k)                                 “Income Tax Act” means the Income Tax Act (Canada), R.S.C. 1985, Chapter 1 (5th Supplement);

 

(l)                                     “Independent Director” means a director of the Company who is independent of, and has no material relationship with, any member of the KMI Group, and who is also “independent” within the meaning ascribed to such term in NI 52-110, as it applies to the Company;

 

(m)                             “KM Canada Costs” has the meaning ascribed thereto in Section 3.1 hereof;

 

(n)                                 “KM Canada Group” means the Company, the General Partner and the Limited Partnership and each Person that the Company, the General Partner or the Limited Partnership directly or indirectly Controls from time to time;

 

(o)                                 “KM Canada Parties” means, collectively, the Company, the General Partner and the Limited Partnership;

 

(p)                                 “KMI” means Kinder Morgan, Inc.;

 

(q)                                 “KMI Group” means KMI and each Person that KMI directly or indirectly controls, other than any member of the KM Canada Group;

 

(r)                                    “KMI Group Costs” has the meaning set forth in Section 3.2;

 

(s)                                   “NI 52-110” means National Instrument 52-110 — Audit Committees of the Canadian securities regulatory authorities, as amended or replaced from time to time;

 

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(t)                                    “Parties” means, collectively, KMCI, the Company, the General Partner and the Limited Partnership, and their respective successors and permitted assigns, and “Party” means any one of them;

 

(u)                                 “Permitted Activities” has the meaning ascribed thereto in subsection 4.2(a);

 

(v)                                 “Person” means any individual, partnership, limited partnership, limited or unlimited liability company, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal personal representative or Governmental Authority however designated or constituted;

 

(w)                               “Services” has the meaning ascribed thereto in Section 2.2;

 

(x)                                 “Services Costs” has the meaning ascribed thereto in Section 3.2;

 

(y)                                 “Shareholders” means the holders, from time to time, of Shares;

 

(z)                                  “Shares” means the restricted voting shares in the capital of the Company;

 

(aa)                          “Third Party” means a Person that is not a member of the KMI Group or a member of the KM Canada Group; and

 

(bb)                          “U.S. GAAP” has the meaning ascribed thereto in Section 1.4.

 

1.2                               Headings for Reference Only

 

The division of this Agreement into Articles, Sections, subsections, paragraphs and subparagraphs, the provision of a Table of Contents, and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

 

1.3                               Construction and Interpretation

 

The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party because of the authorship of any provision of this Agreement.

 

Words importing the singular number only shall include the plural and vice versa. Words importing gender shall include all genders. If a word is defined in this Agreement, a grammatical derivative of that word will have a corresponding meaning. Where the word “including” or “includes” is used in this Agreement it means “including without limitation” or “includes without limitation”, respectively. Any reference to any document shall include a reference to any schedule, amendment or supplement thereto or any agreement in replacement thereof, all as permitted under such document.

 

A reference herein to any statute includes every regulation (and other similar ancillary instrument having the force of law) made pursuant thereto, all amendments to the statute or to any such regulation (or other similar ancillary instrument) in force from time to time, and any statute or regulation (or other similar ancillary instrument) which supplements or supersedes such statute or regulation (or other similar ancillary instrument); and a reference to any section or provision of a statute includes all amendments to such section or provision, as made from time to time, and all sections or provisions which supplement or supersede such section or provision referred to herein.

 

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The terms “hereof’, “herein”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto.

 

1.4                               Accounting Principles

 

Wherever in this Agreement reference is made to generally accepted accounting principles, such reference shall be deemed to be to generally accepted accounting principles in the United States that the U.S. Securities and Exchange Commission has identified as having substantial authoritative support, as supplemented by Regulation S-X under the U.S. Securities Exchange Act of 1934, as amended from time to time, or “U.S. GAAP”, applicable as at the date on which such calculation is made or required to be made. Where the character or amount of any asset or liability or item of revenue or expense is required to be determined, or any consolidation or other accounting computation is required to be made for the purpose of this Agreement or any document, such determination or calculation shall, to the extent applicable, be made in accordance with U.S. GAAP applied on a consistent basis.  Notwithstanding the foregoing, to the extent the Company is not permitted to prepare and file its financial statements with the Canadian securities regulatory authorities in accordance with U.S. GAAP, the above references to “U.S. GAAP” shall be deemed to be the generally accepted accounting principles framework then applicable to the Company for the purposes of such filings.

 

1.5                               Date for Any Action

 

If any date on which any action is required to be taken hereunder by any of the Parties is not a Business Day, such action is required to be taken on the next succeeding day which is a Business Day.

 

ARTICLE 2
 SERVICES AND POWERS

 

2.1                               Appointment of KMCI

 

The KM Canada Parties hereby appoint KMCI, and KMCI hereby accepts the appointment to undertake on behalf of the KM Canada Parties, subject to and in accordance with the terms, conditions and limitations herein contained (including those set forth in Section 2.4), those aspects of the operation and administration of the KM Canada Group as more particularly set forth in Section 2.2 below.  Subject to and in accordance with the terms and conditions herein contained (including those set forth in Section 2.4), KMCI may, on its own initiative or at the request of another member of the KM Canada Group, request support and/or assistance from any of its Affiliates (which for greater certainty may include any other member of the KM Canada Group or any member of the KMI Group), in performing Services, or engage a Third Party (by subcontract, separate contract or otherwise) to perform Services.

 

2.2                               Services

 

KMCI shall provide or procure from Third Parties all operational and administrative services as may be required or advisable, from time to time, in order to manage the business and affairs of the KM Canada Group (the “Services”).  All Services provided hereunder shall be subject to the oversight and policies of the executive officers of the Company and the Board and may be terminated upon written request of the Company.  Services provided hereunder shall include:

 

(a)                                 preparing, or causing to be prepared, the annual audited and interim unaudited reviewed financial statements of the Company, as well as relevant tax information, which are to be made available to Shareholders;

 

(b)                                 preparing or causing to be prepared any annual budgets and other financial analyses and reports, which may include monthly management review packages, weekly forecasts, and weekly analyses of actual results against budget and prior week forecasts;

 

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(c)                                  if and to the extent required under Applicable Laws or by any agreement involving a member of the KM Canada Group, preparing or causing to be prepared, annual audited or unaudited and interim unaudited financial statements of other members of the KM Canada Group, and designing and implementing appropriate disclosure control and procedures, and internal control over financial reporting, as well as relevant tax information;

 

(d)                                 providing administration services for and on behalf of the KM Canada Group, including accounting, bookkeeping and reporting, preparation and filing of quarterly and annual reports, notices, financial reports and tax information relating to a member of the KM Canada Group, in each case as required under Applicable Laws or any agreement involving a member of the KM Canada Group;

 

(e)                                  arranging for the opening, operating and closing of bank accounts and making other similar credit, deposit and banking arrangements and negotiating banking, financing or hedging contracts and agreements;

 

(f)                                   advising on, implementing and/or making investment decisions on behalf of the KM Canada Group;

 

(g)                                  preparing all income tax, Canadian sales tax and property tax returns and filings of the members of the KM Canada Group and arranging for their filing within the time required by applicable tax law;

 

(h)                                 assisting the KM Canada Group to comply with all Applicable Laws, including without limitation, securities legislation and related regulation;

 

(i)                                     assisting in the development, implementation and monitoring of operational plans for the KM Canada Group;

 

(j)                                    assisting the Company with the calling and holding of all annual and/or special meetings of Shareholders or other securityholders in accordance with Applicable Laws, and preparing and arranging for the distribution of all materials (including notices of meetings and information circulars) in respect thereof;

 

(k)                                 assisting with preparation, planning and coordination of meetings and actions by written consent of the Board, the directors of the General Partner and the directors or securityholders of other members of the KM Canada Group;

 

(l)                                     undertaking and performing all acts, duties and responsibilities in connection with acquiring or disposing of assets and property, for and on behalf of the KM Canada Group, of whatsoever nature or kind;

 

(m)                             undertaking and performing all acts, duties and responsibilities as considered necessary or desirable for the purpose of any debt or equity financing for and on behalf of the KM Canada Group;

 

(n)                                 assisting the Company and the General Partner in the implementation of any dividend or distribution reinvestment plans, share purchase plans, and incentive and other compensation plans as may be authorized by the Board and the board of directors of the General Partner, as applicable, from time to time, and to attend to all matters in connection with the operation of such plans;

 

(o)                                 providing information technology services and making available all information technology equipment as may be reasonably necessary to provide the Services;

 

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(p)                                 providing office space, equipment and personnel as may be reasonably necessary;

 

(q)                                 providing human resources administration, including payroll compliance, benefits administration, recruiting and training and employee development;

 

(r)                                    managing litigation and other legal services furnished by counsel and providing advice and recommendations with respect thereto;

 

(s)                                   arranging such audit, legal, insurance and other Third Party professional or non-professional services as are required;

 

(t)                                    administering contracts, including any existing operating agreements, to which any member of the KM Canada Group is a party; causing the KM Canada Group to perform and satisfy their contractual obligations and enforce their contractual rights;

 

(u)                                 providing operational, management and maintenance services;

 

(v)                                 providing procurement and logistical services;

 

(w)                               providing engineering, technical and evaluation services;

 

(x)                                 providing environment, health and safety services;

 

(y)                                 providing appropriate training of personnel and the provision of necessary equipment and services;

 

(z)                                  obtaining and maintaining all material permits, authorities and consents required for the conduct of business by the KM Canada Group; and

 

(aa)                          generally providing all other services as may be necessary, or as requested by the KM Canada Group, for the management, administration and operation of the KM Canada Group or any member thereof.

 

Subject to the limitation set forth in Section 2.4, upon the request of KMCI, the KM Canada Parties shall notify such parties as requested by KMCI of this Agreement, and the KM Canada Parties shall execute (or cause the applicable member of the KM Canada Group to execute) all directions and other instruments as may be necessary to evidence, document or otherwise give effect to matters set forth in this Agreement.

 

2.3                               Power and Authority of KMCI

 

Subject to and in accordance with the terms, conditions and limitations herein contained (including Section 2.4), KMCI is hereby granted by the KM Canada Parties full and absolute right, power and authority to provide, or cause to be provided, for and on behalf of the KM Canada Parties and the other members of the KM Canada Group, all of the Services and to take and do, for and on behalf of the KM Canada Parties and the other members of the KM Canada Group, in connection with the provision of all such Services, all such actions and all such things which KMCI deems appropriate, in its sole discretion, in connection with the provision of such Services.

 

2.4                               Restrictions on Conduct of KMCI and its Affiliates

 

In the performance of the Services hereunder, KMCI shall not, and shall not permit, to the extent within its control, any of its Affiliates to:

 

6

 

(a)                                 execute any material contract, lease, license, agreement, document or other instrument for, on behalf of or in the name of, any of the Company, the General Partner or the Limited Partnership, unless authorized to do so by the Board or the board of directors of the General Partner, as applicable;

 

(b)                                 pay fees or expense reimbursement for the performance of the Services other than the amounts and expense reimbursement as contemplated pursuant to Article 3 hereof, unless the prior written approval of a majority of the Independent Directors is obtained; or

 

(c)                                  enter into or commit to any transaction which, in accordance with Applicable Laws, or pursuant to the requirements of any other written agreement between KMCI and a KM Canada Party or any of the other members of the KM Canada Group or any member of the KMI Group, as applicable, requires the approval of (i) the Shareholders, (ii) the Board or the board of directors of the General Partner, or (iii) a majority or all of the Independent Directors, in each case without first obtaining such approval.

 

ARTICLE 3
 FEES AND PAYMENT OF EXPENSES

 

3.1                               KM Canada Costs

 

KMCI shall be paid or reimbursed by or on behalf of the applicable member of the KM Canada Group for the fair value of such applicable KM Canada Group member’s share of (a) all compensation, benefits, payroll taxes, and related employer costs and overhead incurred by KMCI , and (b) all out-of-pocket and Third Party fees, costs and expenses reasonably incurred by KMCI or in carrying out KMCI’s obligations and duties hereunder in connection with the provision and performance of the Services and KMCI’s other duties and obligations to be provided hereunder (hereinafter, “KM Canada Costs”). Any KM Canada Costs shall be invoiced and paid or reimbursed in accordance with Section 3.3.

 

3.2                               KMI Group Affiliate Costs

 

To the extent KMCI or another member of the KM Canada Group so requests and an Affiliate that is a member of the KMI Group provides support and/or assistance with any Services, such member of the KMI Group shall be reimbursed for the fair value thereof by or on behalf of the applicable member of KM Canada Group for such KM Canada Group member’s share of (a) all compensation, benefits, payroll taxes, and related employer costs and overhead incurred by such KMI Group member, and (b) all out-of-pocket and Third Party fees, costs and expenses reasonably incurred by the KMI Group member, in connection with providing such support and/or assistance (“KMI Group Costs” and collectively with KM Canada Costs, “Services Costs”). The reimbursement of KMI Group Costs is not intended to provide such KMI Group member with any financial gain or loss, unless otherwise required under Applicable Laws.  Any KMI Group Cost shall be invoiced and reimbursed in accordance with Section 3.3.

 

3.3                               Invoicing and Payment

 

Services Costs payable or reimbursable pursuant to Section 3.1 or Section 3.2 shall be invoiced on a monthly basis. KMCI or its Affiliate (with invoices delivered care of KMCI), as applicable, shall invoice the applicable members of the KM Canada Group (or any of them, as applicable), promptly following the end of each month for the Services Costs incurred during such month. Each invoice shall set out the amount of Services Costs then payable, together with any applicable goods and services tax. Each invoice shall provide reasonably sufficient detail pertaining to the composition of the Services Costs set forth therein. KMCI or its Affiliate, as applicable, shall furnish such additional detail as is requested by any KM Canada Group member, acting reasonably, and within the possession of KMCI or such Affiliate. Invoices shall be paid by or on behalf of the applicable KM Canada Party generally within 30 days of receipt.

 

7

 

3.4                               Payment of GST

 

Unless otherwise provided in this Agreement, all Services Costs expressed herein to be payable to KMCI and/or Affiliates of the KMI Group pursuant to this Agreement are exclusive of any applicable Canadian goods and services tax required to be paid thereon pursuant to the Excise Tax Act (Canada) (“GST”) and all GST payable is the responsibility and for the account of the applicable member of the KM Canada Group.  If KMCI and/or Affiliates of the KMI Group are required by law or by administration thereof to collect any applicable GST from the applicable member of the KM Canada Group, the applicable member of the KM Canada Group shall pay such GST to KMCI  and/or Affiliates of the KMI Group concurrent with the payment of the Services Costs payable pursuant to this Agreement, unless the applicable member of the KM Canada Group qualifies for an exemption from any such applicable GST, in which case the particular member of the KM Canada Group shall, in lieu of payment of such applicable GST to KMCI and/or Affiliates of the KMI Group, deliver to KMCI and/or Affiliates of the KMI Group, as applicable, such certificates, elections or other documents required by law or the administration thereof to substantiate and affect the exemption claimed by the applicable member of the KM Canada Group. Notwithstanding the foregoing, no interest shall accrue to a member of the KM Canada Group in respect of the failure to pay GST if the failure to pay GST is attributable to an action taken, or a failure to take an action, by KMCI.

 

3.5                               Failure to Pay When Due

 

Any amount payable or reimbursable by a KM Canada Party to KMCI or its Affiliates hereunder and which is not remitted to KMCI or its Affiliates when due shall remain due (whether on demand or otherwise) and interest will accrue on such overdue amounts (both before and after judgement), at a rate per annum equal to the prime rate or reference rate on commercial loans in Canada, as posted and charged by KMCI’s principal banker, plus 1% per annum from the date payment is due until the date payment is made.

 

ARTICLE 4
 ACTIVITIES OF KMCI

 

4.1                               No Additional Duty

 

Except the Services contemplated in Section 2.2, no other obligation or duty (fiduciary or otherwise) in respect to KMCI or any of its Affiliates shall be implied as a result of this Agreement or any action taken or omitted to be taken hereunder.

 

4.2                               Other Activities

 

The Parties acknowledge and agree that:

 

(a)                                 subject to Section 4.3 of the Cooperation Agreement, any Affiliate of KMCI that is not a member of the KM Canada Group may be engaged in, or hereafter become engaged in, any business or activities whatsoever (the “Permitted Activities”), and such Permitted Activities may be in competition or conflict with the business carried on by, and/or the interests of, the KM Canada Group and, for further certainty, may include (i) the provision of services, to any Persons whomsoever which are the same as or similar to the Services, (ii) engaging in the business of or pertaining to, and/or the direct and indirect ownership, management, operation or lease of, assets and property in connection with energy infrastructure and terminals (and all activities related thereto), (iii) acquiring and otherwise dealing with investments and other direct or indirect rights in Persons involved in the business of or pertaining to energy infrastructure and terminals, and (iv) engaging in all activities ancillary or incidental to any of the foregoing; and the KM Canada Parties hereby expressly consent to the conduct of any and all such Permitted Activities by an Affiliate of KMCI that is not a member of the KM Canada Group, and agrees that, subject to Section 4.3 of the Cooperation Agreement, nothing herein or in the Cooperation

 

8

 

Agreement shall prevent any member of the KMI Group, or any of their respective officers, directors, or employees, from having business interests or from engaging in any business activities whatsoever even though such business interests or activities may be similar to or competitive with the interests or activities of any member of the KM Canada Group, or from rendering services to any other Person even though such Person may have investment or business interests similar to, or competitive with, those of a member of the KM Canada Group; and

 

(b)                                 Subject to 4.3 of the Cooperation Agreement, nothing contained in this Agreement or the Cooperation Agreement shall prohibit or restrain, or be construed as prohibiting or restraining, any member of the KMI Group from continuing to carry-on, be engaged in, and develop any business or activity whatsoever where same is being carried on, engaged in, or developed as at the Effective Date, irrespective of whether or not such business or activity may be otherwise prohibited or limited by this Section 4.2.

 

ARTICLE 5
 TERM

 

5.1                               Term

 

This Agreement shall become effective as of the Effective Date and shall continue in full force and effect until it is terminated by mutual agreement of the Parties in writing.

 

5.2                               Survival

 

Notwithstanding any termination of this Agreement, any obligation or liability of the Parties which arises pursuant to the terms hereof and which occurred or is attributable to the period prior to the termination of this Agreement shall survive such termination, including, for further certainty, all payment obligations of the KM Canada Parties in respect of amounts accrued to and in favour of KMCI or any Affiliate hereunder, provided that the subject matter of such claims relate to or arise out of events, conditions or circumstances which occurred or are attributable to the period prior to the termination of this Agreement.

 

ARTICLE 6
 GENERAL MATTERS

 

6.1                               Further Assurances.

 

Each of the Parties hereto will promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as any other Party hereto may reasonably require from time to time for the purpose of giving effect to this Agreement and will use reasonable commercial efforts to implement to their full extent the provisions of this Agreement.

 

6.2                               Severability.

 

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party. Upon any determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement will negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the fullest extent possible.

 

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6.3                               No Partnership, Joint Venture or Trust

 

The Parties are not and shall not be deemed to be partners or joint venturers with one another and nothing herein shall be construed so as to impose any liability as such on any of them. The Parties agree that KMCI shall perform the Services as an independent contractor (with its duties and obligations as expressly provided herein) for and on behalf of the KM Canada Group, and it is acknowledged and agreed that only where KMCI undertakes execution of contracts or other instruments for and on behalf of the KM Canada Group (in accordance with Section 2.4(a)) may KMCI then be acting as an agent of the applicable member of the KM Canada Group. In no circumstances shall KMCI be, or be deemed to be, a fiduciary or trustee for any Person, whether or not a Party, in connection with the discharge by KMCI of such Services.

 

6.4                               Amendments

 

This Agreement shall not be amended or varied in its terms by oral agreement or by representations or otherwise except by instrument in writing executed by the duly authorized representatives of the Parties hereto or their respective successors or assigns.  In the case of an amendment that constitutes, or could reasonably be expected to constitute, a conflict of interest or potential conflict of interest between one or more members of the KMI Group, on the one hand, and one or more members of the KM Canada Group, on the other hand, subject to applicable laws, such amendment must be approved on behalf of the General Partner or the Company, as applicable, by both the Board or the board of directors of the General Partner, as applicable, as a whole, and the Independent Directors of the Company or the General Partner, as applicable.

 

6.5                               Non-Merger

 

Each Party hereby agrees that, except as specifically provided for herein, all provisions of this Agreement shall forever survive the execution and delivery of this Agreement and any and all documents delivered in connection herewith.

 

6.6                               Governing Law and Attornment

 

The provisions of this Agreement shall be governed by and interpreted in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein. Any legal actions or proceedings with respect to this Agreement shall be brought in the courts of the Province of Alberta. Each Party hereby attorns to and accepts the jurisdiction of such courts.

 

6.7                               Waivers

 

No waiver of any breach of any term or provision of this Agreement shall be effective or binding unless made in writing and signed by the Party purporting to give the same and, unless otherwise provided, such waiver shall be limited to the specific breach waived.

 

6.8                               Time of Essence

 

Time shall be of the essence in respect of this Agreement.

 

6.9                               Entire Agreement

 

This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and cancels and supersedes any prior understanding and agreements among the Parties with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory with respect to the subject matter hereof among the Parties, other than as expressly set forth in this Agreement.

 

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6.10                        Enurement

 

This Agreement shall enure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.

 

6.11                        Partnership Liability

 

Kinder Morgan Canada Limited Partnership is a limited partnership formed under the Partnership Act (Alberta).  A limited partner of Kinder Morgan Canada Limited Partnership is not liable for the obligations of Kinder Morgan Canada Limited Partnership except in respect of the value of money and other property the limited partner contributes or agrees to contribute to the limited partnership.

 

6.12                        Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

6.13                        Facsimile Execution

 

Execution and delivery of this Agreement may be effected by any Party by facsimile or other electronic transmission of the execution page hereof to the other Parties. A Party delivering this Agreement by facsimile or other electronic transmission shall thereafter forthwith deliver to each of the other Parties an original execution page hereof with its original execution located thereon; provided, however, that any failure by a Party to so deliver such original signature page shall not affect the validity or enforceability hereof by or against that Party.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF the Parties hereto have executed this Agreement by their proper officers duly authorized in that behalf as of the day and year first above written.

 

	
KINDER MORGAN CANADA LIMITED
    	
KINDER MORGAN CANADA INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
Per:
    	
 
    
	
 
    	
Scott Stoness
    	
 
    	
Melanie Blair
    
	
 
    	
Vice President, Finance and Corporate
    	
 
    	
Assistant Secretary
    
	
 
    	
Secretary
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
Per:
    	
 
    
	
 
    	
Dax A. Sanders
    	
 
    	
Scott Stoness
    
	
 
    	
Chief Financial Officer
    	
 
    	
Vice President, Finance and Corporate Secretary
    
	
 
    	
 
    	
 
    
	
KINDER MORGAN CANADA GP INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
 
    
	
 
    	
Steven J. Kean
    	
 
    
	
 
    	
Chief Executive Officer
    	
 
    
	
 
    	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
 
    
	
 
    	
Scott Stoness
    	
 
    
	
 
    	
Vice President, Finance and Corporate Secretary
    	
 
    
	
 
    	
 
    	
 
    
	
KINDER MORGAN CANADA LIMITED PARTNERSHIP,   by its General Partner, Kinder Morgan Canada GP Inc.
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
 
    
	
 
    	
Steven J. Kean
    	
 
    
	
 
    	
Chief Executive Officer
    	
 
    
	
 
    	
 
    	
 
    
	
Per:
    	
 
    	
 
    	
 
    
	
 
    	
Scott   Stoness
    	
 
    
	
 
    	
Vice   President, Finance and Corporate Secretary
    	
 
    
						

 

[Signature Page to Services Agreement]Exhibit 10.4

 

KINDER MORGAN CANADA LIMITED

 

2017 RESTRICTED SHARE UNIT PLAN FOR EMPLOYEES

 

1.                                      PURPOSE OF THE PLAN. The purpose of the 2017 Restricted Share Unit Plan for Canadian Employees (the “Plan”) of Kinder Morgan Canada Limited, an Alberta corporation (the “Company”), its Affiliates and Entities (as defined below) selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest, is to provide certain Employees (as defined below) incentive for future endeavors and to advance the interests of the Company and its shareholders and to enable the Company to compete effectively with other enterprises for the services of such new employees as may be needed for the continued improvement of the Company’s business, through the grant of hypothetical Restricted Voting Shares of the Company (a “Restricted Share Unit”).

 

2.                                      PARTICIPANTS.

 

Awards may be granted under the Plan to any Employees of the Company, its Affiliates (as defined below, including Affiliates that become such after adoption of the Plan) and Entities (as defined below) selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest, all as shall be determined by the Board (each, a “Grantee”).

 

3.                                      EFFECTIVE DATE. The Plan is effective as of May 23, 2017 (the “Effective Date”).

 

4.                                      DEFINITIONS.

 

(a)                                 “Affiliate” means any Person that is directly or indirectly controlled by the Company.  As used in this definition of “Affiliate,” referred to in the last proviso of the preceding sentence, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or contract.

 

(b)                                 “Award” means a grant of Restricted Share Units under the Plan.

 

(c)                                  “Award Agreement” means a written agreement between the Company and a Grantee evidencing the terms and conditions of an individual Award grant.  Each Award Agreement shall be subject to the terms and conditions of the Plan.

 

(d)                                 “Board” means the Board of Directors of the Company.

 

(e)                                  “Change in Control” means:

 

(i)                                     the acquisition by any Person (other than a Permitted Holder) or group acting jointly or in concert, in a single transaction or a series of related transactions, by way of merger, amalgamation, consolidation or other business combination or purchase of beneficial ownership  of more than 50% of the total voting power of the Company (or the surviving or resulting entity thereof) after giving effect to such transaction;

 

 

(ii)                                  a sale, merger or similar transaction or related series of transactions involving the Company, as a result of which the Permitted Holders do not collectively hold (either directly or indirectly) more than 50% of the voting power of the Company (or the surviving or resulting entity thereof) after giving effect to such transaction or related series of transactions; provided, however, that such sale, merger or similar transaction shall not constitute a Change in Control in the event that, following such sale, merger or similar transaction (a) the Permitted Holders continue to collectively own at least 35% of the voting power of the Company (or the surviving or resulting entity thereof), (b) no other Person or group acting jointly or in concert owns more than 35% of the voting power of the Company (or the surviving or resulting entity thereof), and (c) Steven Kean is a senior executive officer of the Company (or the surviving or resulting entity thereof);

 

(iii)                               the sale or transfer of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, in a single transaction or a series of related transactions, in any case, other than to an entity of which more than 50% of the voting power is held (either directly or indirectly) by the Permitted Holders or by Persons who held (either directly or indirectly) more than 50% of the voting power of the Company immediately prior to such transaction (or in each case their Affiliates);

 

(iv)                              during any period of two consecutive years following the closing of the IPO, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason other than normal retirement, death or disability to constitute at least a majority of the Board then in office; or

 

(v)                                 the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

 

(f)                                   “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

 

(g)                                  “Company” means Kinder Morgan Canada Limited, an Alberta corporation.

 

(h)                                 “Company Voting Shares” means, collectively, the Restricted Voting Shares and the Special Voting Shares.

 

(i)                                     “Date of Grant” means the date on which the Board adopts a resolution, or takes other appropriate action, expressly granting an Award to a Grantee that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution or other appropriate action, then such date as is set forth in such resolution or other appropriate action.  In no event shall a Date of Grant be a date prior to the date of any such action by the Board.

 

(j)                                    “Director” means a member of the Board.

 

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(k)                                 “Employee” means any individual who is employed by the Company, an Affiliate or an Entity selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest.

 

(l)                                     “Entity” means a corporation, limited liability company, venture, partnership (general or limited), trust, unincorporated organization, cooperative, association or other entity.

 

(m)                             “Fair Market Value” means, as of any date, the value of the Restricted Voting Shares as determined below.  The Fair Market Value on any date on which the Restricted Voting Shares are listed on any national securities exchange shall be the closing price of a Restricted Voting Share on any national securities exchange on such date (if such national securities exchange is not open for trading on such date, then the closing price per Restricted Voting Share on such national securities exchange on the next preceding day on which the national securities exchange was open for trading), and thereafter (i) if the Restricted Voting Shares are admitted to quotation on the over the counter market or any interdealer quotation system, the Fair Market Value on any given date shall not be less than the average of the highest bid and lowest asked prices of the Restricted Voting Shares reported for such date or, if no bid and asked prices were reported for such date, for the last day preceding such date for which such prices were reported, or (ii) in the absence of an established market for the Restricted Voting Shares, the Fair Market Value determined in good faith by the Board and such determination shall be conclusive and binding on all persons.  Notwithstanding the foregoing, the determination of fair market value in all cases shall be in accordance with the requirements set forth under Code Section 409A and the regulations thereunder.

 

(n)                                 “Grantee” means an Employee to whom an Award is granted pursuant to the Plan or, if applicable, such other Employee who holds an outstanding Award.

 

(o)                                 “Income Tax Act” means the Income Tax Act (Canada).

 

(p)                                 “Insider” has the meaning ascribed to this term for the purposes of the TSX rules relating to Securities Based Compensation Arrangements.

 

(q)                                 “IPO” means the initial underwritten public offering of Restricted Voting Shares for cash pursuant to a prospectus offering filed by the Company.

 

(r)                                    “Kinder Morgan, Inc.” means Kinder Morgan, Inc., a Delaware corporation.

 

(s)                                   “Performance Criteria” means the criterion or criteria that the Board shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Restricted Share Units.  The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division or operational unit of the Company) and which may include one or more of the following:

 

(i)                                     the price of a Restricted Voting Share or of the equities of a subsidiary or business unit designated by the Board;

 

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(ii)                                  the earnings per share or earnings per share of a subsidiary or business unit designated by the Board;

 

(iii)                               the total shareholder or unitholder value of the Company or a subsidiary or business unit designated by the Board;

 

(iv)                              dividends or distributions of the Company or a subsidiary or business unit designated by the Board;

 

(v)                                 revenues of the Company or a subsidiary or business unit designated by the Board;

 

(vi)                              debt/equity, interest coverage, or indebtedness/earnings before or after interest, taxes, depreciation and amortization ratios of the Company or a subsidiary or business unit designated by the Board;

 

(vii)                           cash coverage ratio of the Company or a subsidiary or business unit designated by the Board;

 

(viii)                        net income (before or after taxes) of the Company or a subsidiary or business unit designated by the Board;

 

(ix)                              cash flow or cash flow return on investment of the Company or a subsidiary or business unit designated by the Board;

 

(x)                                 earnings before or after interest, taxes, depreciation, and/or amortization of the Company or a subsidiary or business unit designated by the Board;

 

(xi)                              economic value added by the Company or a subsidiary or business unit designated by the Board;

 

(xii)                           distributable cash flow of the Company or a subsidiary or business unit designated by the Board (on a Company, subsidiary, business unit or per share basis);

 

(xiii)                        return on shareholders’ or unitholders’ equity achieved by the Company or a subsidiary or business unit designated by the Board; or

 

(xiv)                       any other performance measure established by the Board.

 

Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure the performance of the Company and/or an Affiliate as a whole or any business unit of the Company and/or an Affiliate or any combination thereof, as the Board may deem appropriate, or any of the above Performance Criteria may be used on a comparison basis to measure the performance of the Company and/or an Affiliate as a whole or any business unit of the Company and/or an Affiliate or any combination thereof against a group of comparable companies, or published or special index that the Board, in its sole discretion, deems appropriate.  The Board also has the authority to provide for accelerated vesting of Restricted Share Units

 

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based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph.

 

(t)                                    “Performance Formula” means, for a Performance Period, one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Restricted Share Units of a particular Grantee, whether all, some portion but less than all, or none of the Restricted Share Units shall vest in respect of such Performance Period.

 

(u)                                 “Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria.  The Board is authorized, in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period.

 

(v)                                 “Performance Period” means one or more periods of time as the Board may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining the vesting of a Grantee’s Restricted Share Units.

 

(w)                               “Permitted Holder” means, at any time, Kinder Morgan, Inc., or any entity that is directly or indirectly controlled by Kinder Morgan, Inc., where the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or contract.

 

(x)                                 “Person” means a natural person or an entity.

 

(y)                                 “Plan” means this Kinder Morgan Canada Limited 2017 Restricted Share Unit Plan for Canadian Employees.

 

(z)                                  “Restricted Period” has the meaning set forth in Section 7(a).

 

(aa)                          “Restricted Voting Shares” means restricted voting shares of Kinder Morgan Canada Limited.

 

(bb)                          “Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, share unit plan, deferred share unit plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Company Voting Shares, including a share purchase from treasury which is financially assisted by the Company by way of loan, guarantee or otherwise.

 

(cc)                            “Special Voting Shares” means special voting shares of Kinder Morgan Canada Limited.

 

(dd)                          “TSX” means The Toronto Stock Exchange.

 

5.                                      ADMINISTRATION OF THE PLAN.

 

(a)                                 The Plan shall be administered by the Board.

 

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(b)                                 The Board shall have the power and authority: (i) to construe and interpret the Plan and apply its provisions; (ii) to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; (iii) to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (iv) to delegate its authority to one or more officers of the Company with respect to awards; (v) to determine when Awards are to be granted under the Plan and the applicable Date of Grant; (vi) from time to time to select, subject to the limitations set forth in this Plan, those Grantees to whom Awards shall be granted and to make any such grants; (vii) to determine the number of Restricted Share Units to be made subject to each Award; (viii) to prescribe the terms and conditions of each Award, including, without limitation, method of settlement of Restricted Share Units, vesting provisions and to specify the provisions of the Award Agreement relating to the grant of Restricted Share Units; (ix) to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; (x) to determine the duration and purpose of leaves of absences which may be granted to a Grantee without constituting termination of his or her employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies; (xi) to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments; and (xii) to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for administration of the Plan.

 

(c)                                  The interpretation and construction of any provision of the Plan or of any Award granted under it by the Board shall be final, conclusive and binding upon all parties, including the Company and its shareholders and Directors, and the executives and employees of the Company, the Company’s Affiliates and Entities in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest.  No member of the Board shall be liable to the Company, any shareholder, any Grantee or any employee of the Company, its Affiliates or Entities in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest for any action or determination made in good faith with respect to the Plan or any Award granted under it.  No member of the Board may vote on any Award to be granted to him or her.

 

(d)                                 The expenses of administering the Plan shall be borne by the Company.

 

6.                                      SHARES SUBJECT TO THE PLAN

 

(a)                                 Subject to adjustment as provided for in Section 8 hereof, the maximum number of Restricted Voting Shares that may be issued or issuable under the Plan shall be 5,000,000, provided that the number of Restricted Voting Shares issued or issuable under all Share Compensation Arrangements shall not exceed 5,000,000.  If any Award is terminated, cancelled, or is settled for cash, any unissued Restricted Voting Shares which have been reserved to be issued upon the settlement of the Award shall become available to be issued upon the settlement of Restricted Share Units subsequently granted under the Plan.

 

(b)                                 No fractional Restricted Voting Shares shall be issued upon the settlement of any Award and, if as a result of any adjustment, a Grantee would become entitled to a fractional Restricted Voting Share, such Grantee shall have the right to receive only the next lowest whole

 

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number of Restricted Voting Shares and no payment or other adjustment will be made for the fractional interest.

 

(c)                                  Notwithstanding any other provision of this Plan or any Award Agreement, no Restricted Share Units shall be granted under this Plan if, together with any other Share Compensation Arrangement established or maintained by the Company, such grant of Restricted Share Units could result, at any time, in the aggregate number of Restricted Voting Shares (i) issued to Insiders, within any one-year period and (ii) issuable to Insiders, at any time, exceeding the lesser of 5,000,000 or 10% of the issued and outstanding Restricted Voting Shares.

 

7.                                      RESTRICTED SHARE UNITS

 

(a)                                 A Restricted Share Unit is an award of a hypothetical Restricted Voting Share having a value equal to the Fair Market Value of one Restricted Voting Share. The terms and conditions of a grant of Restricted Share Units shall be reflected in a written Award Agreement.  Restricted Share Units granted under an Award will be subject to forfeiture and may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) as the Board shall determine.  No Restricted Voting Shares shall be issued at the time an Award is made, and the Company will not be required to set aside a fund for the payment of any such Award.  At the discretion of the Board, each Restricted Share Unit (representing one Restricted Voting Share) may be paid or credited with cash dividend equivalents and stock dividend equivalents paid by the Company in respect of one Restricted Voting Share (“Dividend Equivalents”).  At the discretion of the Board, Dividend Equivalents may be either currently paid to the Grantee or withheld by the Company for the Grantee’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Board.  Dividend Equivalents credited to a Grantee’s account and attributable to any particular Restricted Share Unit (and earnings thereon, if applicable) shall be distributed in cash equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Grantee upon settlement of such Restricted Share Unit and, if such Restricted Share Unit is forfeited, the Grantee shall have no right to such Dividend Equivalents.

 

(b)                                 Restricted Share Units awarded to any Grantee shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Share Units are forfeited, all rights of the Grantee to such Restricted Share Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

 

(c)                                  Each Grantee granted Restricted Share Units shall execute and deliver to the Company an Award Agreement with respect to the Restricted Share Units setting forth the restrictions and other terms and conditions applicable to such Restricted Share Units.  If a Grantee shall fail to execute an agreement evidencing an Award, the Award shall be null and void.

 

(d)                                 Upon termination of employment with or service to the Company, any of its Affiliates or any Entity in which the Company and/or any of its Affiliates directly or indirectly

 

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has an ownership interest (including by reason of such Affiliate or other Entity ceasing to be an Affiliate of the Company or an Entity in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest), during the applicable Restricted Period, Restricted Share Units shall be forfeited; provided, that the Board may provide in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Board may in other cases waive in whole or in part the forfeiture restrictions of Restricted Share Units.

 

(e)                                  With respect to Restricted Share Units, the Restricted Period shall commence on the Date of Grant and end at the time or times set forth on a schedule established by the Board in the applicable Award Agreement.

 

(f)                                   Upon the expiration of the Restricted Period with respect to any outstanding Restricted Share Units, and subject to the satisfaction of any Performance Goals applicable to such Restricted Share Units (as adjusted, if necessary, to reflect the achievement of the Performance Goals, the “Vested Units”), the Company shall, subject to Section 9, deliver to the Grantee, or his beneficiary, in settlement of such Restricted Share Units either (i) a number of Restricted Voting Shares equal to the number of Vested Units issued from the treasury of the Company, or (ii) a cash amount equal to the Fair Market Value of a Restricted Voting Share as of the date on which the Restricted Period lapsed multiplied by the number of Vested Units, and an amount equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7(a) hereof and the interest thereon.  The Board may specify, in a particular Award Agreement, the method of settlement of such Award in advance, or retain the discretion to determine the method of settlement upon the expiration of the Restricted Period.

 

8.                                      ADJUSTMENT OF AND CHANGES IN CAPITALIZATION.

 

(a)                                 In the event that the outstanding Restricted Voting Shares shall be changed in number or class by reason of split-ups, spin-offs, combinations, mergers, consolidations or recapitalizations, or by reason of stock dividends, the number of Restricted Share Units which thereafter may be issued pursuant to Awards granted under the Plan, both in the aggregate and as to any individual, and the number of Restricted Share Units then subject to Awards theretofore granted shall be adjusted so as to reflect such change, all as determined by the Board. In the event there shall be any other change in the number or kind of the outstanding Restricted Voting Shares, or of any stock or other securities or property into which such Restricted Voting Shares shall have been changed, or for which they shall have been exchanged, then if the Board shall determine that such change equitably requires an adjustment in any outstanding Award theretofore granted or which may be granted under the Plan, such adjustment shall be made in accordance with such determination.  Any adjustment to an Award made pursuant to this Section 8 shall be subject to the approval of the TSX.

 

(b)                                 Notice of any adjustment shall be given by the Company to each Grantee with an Award which shall have been so adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.

 

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(c)                                  Fractional Restricted Share Units resulting from any adjustment of Awards pursuant to this Section 8 may be settled in cash or otherwise as the Board may determine.

 

(d)                                 Notwithstanding the above, in the event of any of the following:  (i) the Company is merged or consolidated with another corporation or entity and, in connection therewith, consideration is received by shareholders of the Company in a form other than stock or other equity interests of the surviving entity or outstanding Awards are not to be assumed upon consummation of the proposed transaction; (ii) all or substantially all of the assets of the Company are acquired by another person; (iii) the reorganization or liquidation of the Company; or (iv) the Company shall consummate a transaction pursuant to a written agreement to undergo an event described in clause (i), (ii) or (iii) above, then the Board may, in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding Awards and cause the holders thereof to be paid in cash the value of such Awards based upon the price per Restricted Voting Share received or to be received by common shareholders of the Company in the event.  The terms of this Section 8 may be varied by the Board in any particular Award Agreement.

 

(e)                                  In the event of a Change in Control, the Board, in its discretion, may take any action with respect to outstanding Awards that it deems appropriate, which action may vary among Awards granted to individual Grantees; provided, however, that such action shall not reduce the value of an Award.

 

9.                                      WITHHOLDING OBLIGATIONS. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Board, the Company shall be entitled to satisfy any federal, state, provincial or local tax withholding obligation, including withholding obligations under the Income Tax Act, relating to the grant of Restricted Share Units and the payment of Restricted Share Unit amounts, including any Dividend Equivalents, in any form or manner satisfactory to the Company, including by deducting such taxes from any amount otherwise payable to the Grantee.

 

10.                               AMENDMENT OF THE PLAN AND AWARDS.

 

(a)                                 The Board may, at any time, without the approval of the holders of Company Voting Shares, suspend, discontinue or amend the Plan or an Award hereunder.  However, the Board may not amend the Plan or an Award without the approval of the holders of a majority of Company Voting Shares who vote at a shareholder meeting to:

 

(i)                                     increase the number of Restricted Voting Shares, or the percentage of the issued and outstanding Company Voting Shares, reserved for issuance pursuant to the Plan;

 

(ii)                                  expand the categories of individuals who are eligible to participate in the Plan;

 

(iii)                               remove or increase the limits on the number of Restricted Voting Shares issuable to any individual holder or to Insiders as described under Section 6(c) above;

 

9

 

(iv)                              permit the transfer or assignment of Restricted Share Units, except to permit a transfer to a family member, an entity controlled by the holder of the Restricted Share Units or a family member, a charity or for estate planning or estate settlement purposes; or

 

(v)                                 amend the amendment provisions of the Plan;

 

unless the change to the Plan or an Award results from the application of the customary anti-dilution provisions of the Plan. Additionally, no suspension, discontinuance or amendment may be made by the Board in respect of previously issued Awards that would adversely alter or impair those Awards without the consent of the affected Grantee.  For greater certainty, the exercise by the Board of any discretion provided for in the Plan, including to set or amend applicable Performance Goals, will not be considered to be an amendment to the Plan or an Award.  Any amendments to the Plan are also subject to the requirements of the TSX or other applicable regulatory bodies.

 

11.                               NO EMPLOYMENT OR OTHER SERVICE RIGHTS.  Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Grantee any right to continue to serve the Company,  an Affiliate, or an Entity in the capacity in effect at the time the Award was granted or shall affect the right of the Company, an Affiliate or an Entity in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest to terminate the employment of an Employee with or without notice and with or without cause, and any applicable provisions of the law of the jurisdiction in which the Company,  the Affiliate or the Entity is incorporated, as the case may be.

 

12.                               CHANGES IN LAW.  The Board may amend the Plan and any outstanding Awards granted thereunder in such respects as the Board shall, in its sole discretion, deem advisable in order to incorporate in the Plan or any such Awards any new provision or change designed to comply with or take advantage of requirements or provisions of the Income Tax Act, the Code or any other statute, or any federal, state, provincial or governmental agency enacted or promulgated after the adoption of the Plan.

 

13.                               CLAWBACKS.  To the extent required by applicable laws, rules, regulations or securities exchange listing requirements, the Company shall have the right, and shall take all actions necessary, to recover any amounts paid to any individual under this Plan.

 

14.                               LEGAL MATTERS.  This Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of the Province of Alberta (including the federal laws of Canada applicable therein) and any applicable provincial laws for Employees, applied without giving effect to any conflicts-of-law principles, and construed accordingly.

 

15.                               ELECTRONIC DELIVERY AND ACCEPTANCE.  The Company may, in its sole discretion, deliver any documents related to the Award by electronic means.  To participate in the Plan, a Grantee consents to receive all applicable documentation by electronic delivery and through an on-line (and/or voice activated) system established and maintained by the Company, or a third party vendor designated by the Company.

 

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16.                               FOREIGN EMPLOYEES.  Without the amendment of this Plan, the Board may provide for the participation in the Plan by employees who are subject to the laws of foreign countries or jurisdictions, and such participation may be on such terms and conditions different from those specified in this Plan as may be administratively necessary or necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Board or its designee may make such modifications, amendments, procedures, subprograms and the like as may be necessary or advisable to comply with the provisions of laws of other countries or jurisdictions in which Affiliates operate or have employees.

 

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