EXHIBIT 1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
XXXXX XXXXX & SONS INC.,
BIRKS MERGER CORPORATION
and
MAYOR'S JEWELERS, INC.
Dated as of April 18, 2005
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
SECTION 1.01 The Merger ..................................................... 2
SECTION 1.02 Effective Time; Closing ........................................ 2
SECTION 1.03 Effect of the Merger ........................................... 2
SECTION 1.04 Certificate of Incorporation; By-laws .......................... 2
SECTION 1.05 Directors and Officers ......................................... 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities ....................................... 3
SECTION 2.02 Exchange of Certificates ....................................... 3
SECTION 2.03 Stock Transfer Books ........................................... 6
SECTION 2.04 Company Stock Options. ......................................... 6
SECTION 2.05 Restricted Stock ............................................... 8
SECTION 2.06 Company Warrants. .............................................. 8
SECTION 2.07 No Appraisal Rights ............................................ 9
SECTION 2.08 Affiliates ..................................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Authority Relative to this Agreement ........................... 9
SECTION 3.02 No Conflict; Required Filings and Consents ..................... 10
SECTION 3.03 Board Approval; Vote Required .................................. 11
SECTION 3.04 [Reserved] ..................................................... 11
SECTION 3.05 Opinion of Financial Advisor ................................... 11
SECTION 3.06 Brokers ........................................................ 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01 Corporate Organization ......................................... 12
SECTION 4.02 Certificate of Amalgamation and By-laws ........................ 12
SECTION 4.03 Capitalization ................................................. 13
SECTION 4.04 Authority Relative to this Agreement ........................... 14
SECTION 4.05 No Conflict; Required Filings and Consents ..................... 14
SECTION 4.06 Permits; Compliance ............................................ 15
SECTION 4.07 SEC Filings .................................................... 15
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SECTION 4.08 Financial Statement; Undisclosed Liabilities ................... 16
SECTION 4.09 Absence of Certain Changes or Events ........................... 16
SECTION 4.10 Internal Controls .............................................. 16
SECTION 4.11 Absence of Litigation .......................................... 17
SECTION 4.12 Employee Benefit Plans ......................................... 17
SECTION 4.13 Labor and Employment Matters ................................... 18
SECTION 4.14 Real Property; Title to Assets ................................. 19
SECTION 4.15 Intellectual Property .......................................... 20
SECTION 4.16 Taxes .......................................................... 20
SECTION 4.17 Environmental Matters .......................................... 21
SECTION 4.18 Material Contracts ............................................. 21
SECTION 4.19 Insurance ...................................................... 22
SECTION 4.20 Customers and Suppliers ........................................ 23
SECTION 4.21 Certain Business Practices ..................................... 23
SECTION 4.22 Interested Party Transactions .................................. 23
SECTION 4.23 No Vote Required ............................................... 23
SECTION 4.24 Accounts Receivable ............................................ 23
SECTION 4.25 Inventories .................................................... 24
SECTION 4.26 Operations of Merger Sub ....................................... 24
SECTION 4.27 Brokers ........................................................ 24
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger .......... 24
SECTION 5.02 Conduct of Business by Parent Pending the Merger ............... 25
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Registration Statement; Proxy Statement ........................ 27
SECTION 6.02 Company Stockholders' Meeting .................................. 29
SECTION 6.03 Access to Information; Confidentiality ......................... 29
SECTION 6.04 Directors' and Officers' Indemnification and Insurance ......... 29
SECTION 6.05 Notification of Certain Matters ................................ 30
SECTION 6.06 Company Affiliates ............................................. 30
SECTION 6.07 Further Action; Reasonable Efforts ............................. 31
SECTION 6.08 Plan of Reorganization ......................................... 31
SECTION 6.09 Obligations of Merger Sub ...................................... 32
SECTION 6.10 Consents of Accountants ........................................ 32
SECTION 6.11 AMEX Listing ................................................... 32
SECTION 6.12 Public Announcements ........................................... 32
SECTION 6.13 Board of Directors of Parent ................................... 32
SECTION 6.14 Company Stock Held by Parent ................................... 32
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party .................... 33
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub ......... 33
SECTION 7.03 Conditions to the Obligations of the Company ................... 34
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination .................................................... 36
SECTION 8.02 Effect of Termination .......................................... 37
SECTION 8.03 Fees and Expenses .............................................. 37
SECTION 8.04 Amendment ...................................................... 38
SECTION 8.05 Waiver ......................................................... 38
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements ..... 38
SECTION 9.02 Notices ........................................................ 39
SECTION 9.03 Certain Definitions ............................................ 40
SECTION 9.04 Severability ................................................... 44
SECTION 9.05 Entire Agreement; Assignment ................................... 44
SECTION 9.06 Parties in Interest ............................................ 45
SECTION 9.07 Specific Performance ........................................... 45
SECTION 9.08 Governing Law .................................................. 45
SECTION 9.09 Waiver of Jury Trial ........................................... 45
SECTION 9.10 Headings ....................................................... 45
SECTION 9.11 Counterparts ................................................... 46
SECTION 9.12 Special Committee .............................................. 46
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of April
18, 2005 (this "Agreement"), among Xxxxx Xxxxx & Sons Inc., a Canadian
corporation ("Parent"), Birks Merger Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Mayor's Jewelers, Inc., a
Delaware corporation (the "Company").
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Parent and the Company will enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
the Company (the "Merger");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has established a special committee composed of independent members of the
Company Board (the "Special Committee") to review and evaluate the terms and
conditions, and determine the advisability, of a possible business combination
with Parent;
WHEREAS, the Special Committee has negotiated the terms and
conditions of this Agreement on behalf of the Company and has (i) determined
that the Merger is consistent with and in furtherance of the long-term business
strategy of the Company and advisable, fair to, and in the best interests of the
stockholders of the Company (other than Parent and its affiliates and
associates) and (ii) recommended the approval and adoption of this Agreement by
the Company Board;
WHEREAS, the Company Board has, based upon the recommendation of the
Special Committee, (i) determined that the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and advisable,
fair to, and in the best interests of the stockholders of the Company (other
than Parent and its affiliates and associates), (ii) approved and adopted this
Agreement and declared its advisability and approved the Merger and the other
transactions contemplated by this Agreement and (iii) recommended the approval
and adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of Parent (the "Parent Board") has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and fair to, and in the best interests of,
Parent and its stockholders and has approved and adopted this Agreement, the
Merger and the other transactions contemplated by this Agreement; and
WHEREAS, for federal income tax purposes, the Merger is intended to
qualify as a reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms of this Agreement and
subject to the conditions set forth in Article VII, and in accordance with the
DGCL, at the Effective Time (as defined in Section 1.02), Merger Sub shall be
merged with and into the Company. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.02 Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII (but in no event earlier than August 21, 2005), the parties hereto
shall cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL (the date and time of such filing of the Certificate of
Merger (or such later time as may be agreed by each of the parties hereto and
specified in the Certificate of Merger) being the "Effective Time"). Immediately
prior to such filing of the Certificate of Merger, a closing (the "Closing")
shall be held at the offices of Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties shall agree, for
the purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VII.
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; By-laws. (a) At the
Effective Time the Certificate of Incorporation of the Company shall be amended
and restated to be the same as the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time until thereafter amended as
provided by law and such Certificate of Incorporation; provided, however, that,
at the Effective Time, Article I of the Certificate of Incorporation of the
Surviving Corporation shall read as follows: "The name of the corporation is
Mayor's Jewelers, Inc."
(b) Unless otherwise determined by Parent prior to the Effective
Time, and subject to Section 6.04(a), at the Effective Time, the By-laws of the
Company shall be amended and restated to be the same as the By-laws of Merger
Sub, as in effect immediately prior to the Effective Time until thereafter
amended as provided by law, the Certificate of Incorporation of the Surviving
Corporation and such By-laws.
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SECTION 1.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or approval.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) each share of common stock, par value $0.0001 per share
("Company Common Stock"), of the Company issued and outstanding
immediately prior to the Effective Time, excluding any shares of Company
Common Stock (i) held directly by Parent and (ii) to be canceled pursuant
to Section 2.01(b), being hereinafter collectively referred to as the
"Shares", shall be canceled and shall be converted automatically, subject
to Section 2.02, into the right to receive 0.08695 (the "Exchange Ratio")
Class A Voting Shares ("Parent Common Stock") of Parent (the "Merger
Consideration"), payable upon surrender, in the manner provided in Section
2.02, of the certificate that formerly evidenced such Share;
(b) each share of Company Common Stock held in the treasury of the
Company and each share of Company Common Stock held by any direct or
indirect subsidiary of the Company immediately prior to the Effective Time
shall be canceled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) each share of common stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
be canceled and shall be converted automatically into the right to receive
one share of Company Common Stock, and no payment or distribution shall be
made with respect thereto.
SECTION 2.02 Exchange of Certificates. (a) Exchange Agent. Parent
shall deposit, or shall cause to be deposited, with SunTrust Bank or such other
bank or trust company that may be designated by Parent and is reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of Shares, for exchange in accordance with this Article II through the
Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Section 2.01 as of the Effective Time, and cash, from time
to time as required to make payments in lieu of any fractional shares pursuant
to Section 2.02(e) (such cash and certificates for shares of Parent Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the shares of Parent Common Stock
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contemplated to be issued pursuant to Section 2.01 out of the Exchange Fund.
Except as contemplated by Section 2.02(g) hereof, the Exchange Fund shall not be
used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, (but in no event later than five (5) business days after the
Effective Time), Parent shall cause the Exchange Agent to mail to each person
who was, at the Effective Time, a holder of record of Shares entitled to receive
the Merger Consideration pursuant to Section 2.01(a): (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the certificates evidencing
such Shares (the "Certificates") shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Exchange Agent of a Certificate for cancellation, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive in
respect of the Shares formerly represented by such Certificate (after taking
into account all Shares then held by such holder), cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock, cash in lieu of any fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c) may
be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to the Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 2.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, tax or other
applicable Laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares
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of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Parent Common Stock.
(d) No Further Rights in Shares. All shares of Parent Common Stock
issued upon conversion of the Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 2.02(c) or (e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a shareholder of Parent.
Each holder of a fractional share interest shall be paid an amount in cash
(without interest and subject to the amount of any withholding taxes as
contemplated in Section 2.02(i)) equal to the product obtained by multiplying
(i) such fractional share interest held, directly or indirectly, by such holder
(after taking into account all fractional share interests then held, directly or
indirectly, by such holder) by (ii) the average closing price of a share of
Parent Common Stock as reported by the American Stock Exchange (the "AMEX") in
the twenty (20) consecutive trading days beginning on (and including) the
trading day immediately following the date of the Effective Time. As promptly as
practicable after the determination of the amount of cash, if any, to be paid to
holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Sections 2.02(b) and
(c).
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Shares for one year after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article II shall thereafter
look only to Parent for the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which they are entitled pursuant to
Section 2.02(e) and any dividends or other distributions with respect to the
Parent Common Stock to which they are entitled pursuant to Section 2.02(c). Any
portion of the Exchange Fund remaining unclaimed by holders of Shares as of a
date which is immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the extent
permitted by applicable Law, become the property of Parent free and clear of any
claims or interest of any person previously entitled thereto.
(h) No Liability. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Shares for any such
Shares (or dividends or
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distributions with respect thereto), or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(i) Withholding Rights. Each of the Exchange Agent, the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code, the Income Tax Act (Canada) (the "ITA"),
or any provision of state, provincial, local or other, United States or foreign,
tax Law. To the extent that amounts are so deducted or withheld by the Exchange
Agent, the Surviving Corporation or Parent, as the case may be, such deducted or
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Shares in respect of which such deduction and
withholding was made by the Exchange Agent, the Surviving Corporation or Parent,
as the case may be.
(j) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 2.02(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.02(c).
SECTION 2.03 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
From and after the Effective Time, the holders of Certificates representing
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares, except as otherwise provided in this
Agreement or by Law. On or after the Effective Time, any Certificates presented
to the Exchange Agent or Parent for any reason shall be converted into shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to which the holders thereof are entitled pursuant to Section 2.02(e) and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.02(c).
SECTION 2.04 Company Stock Options. (a) All options to purchase
shares of Company Common Stock (the "Company Stock Options") outstanding,
whether or not exercisable and whether or not vested, at the Effective Time,
issued under the Company's 1991 Stock Option Plan, the Company's 2004 Long-Term
Incentive Plan and any other plan or agreement pursuant to which Company Stock
Options have been issued, in each case as such may have been amended,
supplemented or modified (collectively, the "Company Stock Option Plans"), shall
remain outstanding following the Effective Time. At the Effective Time, the
Company Stock Options shall, by virtue of the Merger and without any further
action on the part of the Company or the holder thereof, be assumed by Parent in
such manner that Parent (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section 424
of the Code and the regulations thereunder or (ii) to the extent that Section
424 of the Code does not apply to any such Company Stock Options, would be such
a
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corporation were Section 424 of the Code applicable to such Company Stock
Options. From and after the Effective Time, all references to the Company in the
Company Stock Option Plans and the applicable stock option agreements issued
thereunder shall be deemed to refer to Parent, which shall have assumed the
Company Stock Option Plans as of the Effective Time by virtue of this Agreement
and without any further action. Each Company Stock Option assumed by Parent
(each, a "Substitute Option") shall be exercisable upon the same terms and
conditions as under the applicable Company Stock Option Plan and the applicable
option agreement issued thereunder, except that (A) each such Substitute Option
shall be exercisable for, and represent the right to acquire, that whole number
of shares of Parent Common Stock (rounded downward to the nearest whole share)
equal to the number of shares of Company Common Stock subject to such Company
Stock Option multiplied by the Exchange Ratio; and (B) the option price per
share of Parent Common Stock shall be an amount equal to the option price per
share of Company Common Stock subject to such Company Stock Option in effect
immediately prior to the Effective Time divided by the Exchange Ratio (the
option price per share, as so determined, being rounded upward to the nearest
full cent). Such Substitute Option shall otherwise be subject to the same terms
and conditions as such Company Stock Option. For illustrative purposes only, if,
immediately prior to the Effective Time, a holder owns 100 Company Stock
Options, each of which represents the right to acquire one (1) share of Company
Common Stock at an exercise price of $0.50 per share of Company Common Stock, at
the Effective Time such holder's Company Stock Options shall be converted into
eight (8) Substitute Options, each of which will represent the right to acquire
one (1) share of Parent Common Stock at an exercise price of $5.75 per share of
Parent Common Stock.
(b) As soon as practicable after the Effective Time, Parent shall
deliver, or cause to be delivered, to each holder of a Substitute Option an
appropriate notice setting forth such holder's rights pursuant thereto and such
Substitute Option shall continue in effect on the same terms and conditions
(including any antidilution provisions, and subject to the adjustments required
by this Section 2.04 after giving effect to the Merger). Parent shall comply
with the terms of all such Substitute Options and ensure, to the extent required
by, and subject to the provisions of, the Company Stock Option Plans, that
Substitute Options that qualified as incentive stock options under Section 422
of the Code prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Substitute Options pursuant to the terms set
forth in this Section 2.04. As soon as practicable after the Effective Time, the
shares of Parent Common Stock subject to Substitute Options will be covered by
an effective registration statement on Form S-8 (or any successor form) or
another appropriate form, and Parent shall use its reasonable best efforts to
maintain the effectiveness of such registration statement or registration
statements for so long as Substitute Options remain outstanding. In addition,
Parent shall use its reasonable best efforts to cause the shares of Parent
Common Stock subject to Substitute Options to be listed on the AMEX and such
other exchanges as Parent shall determine.
(c) On or after the date of this Agreement and prior to the
Effective Time, each of Parent and the Company shall take all necessary action
such that, with respect to each member of the Company Board and each employee of
the Company that is subject to Section 16 of the Exchange Act (as defined in
Section 3.02(b)) the acquisition by such person of Parent Common Stock or
Substitute Options in the Merger and the disposition by any such person of
Company
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Common Stock or Company Stock Options pursuant to the transactions contemplated
by this Agreement shall be exempt from the short-swing profit liability rules of
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
SECTION 2.05 Restricted Stock. At the Effective Time, any shares of
Company Common Stock outstanding immediately prior to the Effective Time that
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition under the Company Stock Option Plans or any applicable restricted
stock purchase agreement or other agreement with the Company (a "Company
Restricted Stock Award") shall be exchanged for shares of Parent Common Stock
pursuant to Section 2.01 that shall be unvested and subject to the same
repurchase option, risk of forfeiture or other condition to which the applicable
Company Restricted Stock Award is subject, and the certificates representing
such shares of Parent Common Stock may accordingly be marked with appropriate
legends. The Company shall take all actions that may be necessary to ensure
that, from and after the Effective Time, Parent or the Surviving Corporation is
entitled to exercise any such repurchase options or other rights set forth in
any such restricted stock purchase or other agreement.
SECTION 2.06 Company Warrants. (a) All warrants to purchase shares
of Company Common Stock, excluding any warrants to purchase shares of Company
Common Stock held directly by Parent (the "Company Warrants") outstanding at the
Effective Time shall remain outstanding following the Effective Time. At the
Effective Time, the Company Warrants shall, by virtue of the Merger and without
any further action on the part of the Company or the holder thereof, be assumed
by Parent. From and after the Effective Time, all references to the Company in
the applicable warrant agreements pursuant to which such Company Warrants were
issued (the "Company Warrant Agreements") shall be deemed to refer to Parent,
which shall have assumed the Company Warrants and Company Warrant Agreements as
of the Effective Time by virtue of this Agreement and without any further
action. Each Company Warrant assumed by Parent (each, a "Substitute Warrant")
shall be exercisable upon the same terms and conditions as under the applicable
Company Warrant Agreements, except that (A) each such Substitute Warrant shall
be exercisable for, and represent the right to acquire, that whole number of
shares of Parent Common Stock (rounded downward to the nearest whole share)
equal to the number of shares of Company Common Stock subject to such Company
Warrant multiplied by the Exchange Ratio; and (B) the exercise price per share
of Parent Common Stock shall be an amount equal to the exercise price per share
of Company Common Stock subject to such Company Warrant in effect immediately
prior to the Effective Time divided by the Exchange Ratio (the exercise price
per share, as so determined, being rounded upward to the nearest full cent).
Such Substitute Warrants shall otherwise be subject to the same terms and
conditions as such Company Warrants. For illustrative purposes only, if,
immediately prior to the Effective Time, a holder owns 100 Company Warrants,
each of which represents the right to acquire one (1) share of Company Common
Stock at an exercise price of $0.50 per share of Company Warrant, at the
Effective Time such holder's Company Warrants shall be converted into eight (8)
Substitute Warrants, each of which will represent the right to acquire one (1)
share of Parent Common Stock at an exercise price of $5.75 per share of Parent
Common Stock.
(b) As soon as practicable after the Effective Time, Parent shall
deliver, or cause to be delivered, to each holder of a Substitute Warrant an
appropriate notice setting forth such holder's rights pursuant thereto and such
Substitute Warrant shall continue in effect on the same
9
terms and conditions (including any antidilution provisions, and subject to the
adjustments required by this Section 2.06 after giving effect to the Merger).
Parent shall comply with the terms of all such Substitute Warrants. Parent shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of Substitute
Warrants pursuant to the terms set forth in this Section 2.06. Parent shall use
its reasonable best efforts to cause the shares of Parent Common Stock subject
to Substitute Warrants to be listed on the AMEX and such other exchanges as
Parent shall determine.
SECTION 2.07 No Appraisal Rights. In accordance with Section 262 of
the DGCL, no appraisal rights shall be available to holders of shares of Company
Common Stock in connection with the Merger.
SECTION 2.08 Affiliates. Notwithstanding anything to the contrary
herein, no Merger Consideration shall be delivered to a Company Affiliate (as
defined in Section 6.06) until such person has executed and delivered to Parent
an executed copy of the affiliate letter contemplated in Section 6.06 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Merger Sub to enter into this
Agreement, the Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 3.01 Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement (collectively, the "Transactions").
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than the Required Company Vote and the Disinterested
Stockholder Vote, each as defined herein, and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency (including, without limitation, all Laws relating to
fraudulent transfers), reorganization, moratorium or similar Laws affecting
creditors' rights generally and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding at law or in equity).
Pursuant to Section 203(b)(2) of the DGCL, in Article 7, Section 7 of the
Company's By-laws, the Company has validly elected not to be governed by Section
203 of the DGCL. To the knowledge of the Company, no other state takeover
statute is applicable to the Merger or the other transactions contemplated by
this Agreement.
SECTION 3.02 No Conflict; Required Filings and Consents. (a) Except
those set forth in the Company Disclosure Schedule (the "Company Disclosure
Schedule"),
10
which has been prepared by the Company and delivered by the Company to Parent
and Merger Sub prior to the execution and delivery of this Agreement, the
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or any equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 3.02(b) have been obtained and all filings and obligations
described in Section 3.02(b) have been made, conflict with or violate any United
States, non-Canadian or non-United States or Canadian statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment, decree or other
order ("Law") applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which, with notice or lapse of time or both, would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any property or
asset of either of them is bound or affected, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, prevent or
materially delay consummation of any of the Transactions or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and would not, individually or in the aggregate, have a Company
Material Adverse Effect (as defined in Section 9.03(a)).
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any United States federal, state, county or local or non-United States
government, governmental, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial or arbitral
body (a "Governmental Authority"), except (i) for applicable requirements, if
any, of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), state and provincial
securities or "blue sky" Laws ("Blue Sky Laws") and, filing and recordation of
appropriate merger documents as required by the DGCL, and (ii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
or materially delay consummation of any of the Transactions or otherwise prevent
or materially delay the Company from performing its obligations under this
Agreement, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.03 Board Approval; Vote Required. (a) The Special
Committee, by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way, has duly (i) determined that the Merger is advisable, fair to, and in the
best interests of the stockholders of the Company (other than Parent and its
affiliates and associates), and (ii) recommended the approval and adoption of
this Agreement by the Company Board.
11
(b) The Company Board, by resolutions duly adopted by unanimous vote
of those voting at a meeting duly called and held and not subsequently rescinded
or modified in any way, has duly (i) determined that the Merger is advisable,
fair to, and in the best interests of the stockholders of the Company (other
than Parent and its affiliates and associates), (ii) approved and adopted this
Agreement and declared its advisability and approved the Merger and the other
transactions contemplated by this Agreement, and (iii) recommended the approval
and adoption of this Agreement by the stockholders of the Company and directed
that this Agreement be submitted for consideration by the Company's stockholders
at the Company Stockholders' Meeting (as defined in Section 6.01(a)).
(c) Subject to Section 7.01(b), the only vote of the holders of any
class or series of capital stock of the Company necessary to approve this
Agreement, the Merger and the other Transactions is the Required Company Vote.
SECTION 3.04 [Reserved]
SECTION 3.05 Opinion of Financial Advisor. The Special Committee has
received the written opinion of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx (the "HLHZ
Fairness Opinion"), dated the date of this Agreement, to the effect that, as of
the date of this Agreement, the Exchange Ratio is fair, from a financial point
of view, to the Company's stockholders (other than Parent and its affiliates and
associates), a copy of which opinion has heretofore been furnished to Parent
prior to the execution and delivery of this Agreement.
SECTION 3.06 Brokers. No broker, finder or investment banker (other
than Xxxxxxxx Xxxxx Xxxxxx & Xxxxx) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and Xxxxxxxx Xxxxx Xxxxxx & Xxxxx pursuant to which such firm would be
entitled to any payment relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As an inducement to the Company to enter into this Agreement, Parent
and Merger Sub hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 4.01 Corporate Organization. (a) Each of Parent and each
subsidiary of Parent, excluding the Company and its subsidiaries (each a
"Subsidiary" and collectively, the "Subsidiaries"), is a corporation amalgamated
or incorporated, as applicable, validly existing and in good standing under the
laws of the jurisdiction of its amalgamation or incorporation, as applicable,
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and is
duly qualified to do business in each jurisdiction where the character of its
activities requires such qualification, except where the failure to be so
amalgamated or incorporated, as applicable, existing or in good standing, to
have such power and authority or to be so qualified would not, individually or
in the aggregate, prevent or materially delay consummation of any of the
12
Transactions or otherwise prevent or materially delay Parent or Merger Sub from
performing their obligations under this Agreement and would not, individually or
in the aggregate, have a Parent Material Adverse Effect (as defined in Section
9.03(a)).
(b) A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary and the percentage of the
outstanding capital stock of each Subsidiary owned by Parent and each other
Subsidiary, is set forth in Section 4.01(b) of the Parent Disclosure Schedule
(the "Parent Disclosure Schedule"), which has been prepared by Parent and
delivered by Parent to the Company prior to the execution and delivery of this
Agreement. Except as disclosed in Section 4.01(b) of the Parent Disclosure
Schedule, Parent does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, joint venture
or other business association or entity.
(c) Each Subsidiary that is material to the business, financial
condition or results of operations of Parent and the Subsidiaries taken as a
whole is so identified in Section 4.01(c) of the Parent Disclosure Schedule and
is referred to herein as a "Material Subsidiary".
SECTION 4.02 Certificate of Amalgamation and By-laws. Parent has
heretofore furnished to the Company a complete and correct copy of the Articles
of Amalgamation and the By-laws of Parent and the Articles of Incorporation or
Certificate of Amalgamation and By-laws of each Material Subsidiary, each as
amended to date. Such Articles of Amalgamation, Articles of Incorporation or
Certificate of Incorporation as applicable, and By-laws are in full force and
effect. Neither Parent nor any Material Subsidiary is in violation of any of the
provisions of its Articles of Amalgamation, Articles of Incorporation or
Certificate of Incorporation as applicable, or By-laws.
SECTION 4.03 Capitalization. (a) The authorized capital stock of
Parent consists of (i) an unlimited number of shares of Parent Common Stock,
(ii) an unlimited number of Class B Multiple Voting Shares ("Parent Class B
Shares"), (iii) 100,000 Class C Shares ("Parent Class C Shares"), (iv) an
unlimited number of non-voting common shares ("Parent Non-Voting Shares"), and
(v) 2,034,578 Series A preferred shares ("Parent Preferred Stock"). As of the
date of this Agreement, (i) 85,450 shares of Parent Common Stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable,
(ii) nil shares of Parent Common Stock are held in the treasury of Parent, (iii)
nil shares of Parent Common Stock are held by subsidiaries of Parent, (iv)
7,213,094 Parent Class B Shares are issued and outstanding, all of which are
validly issued, fully paid and non-assessable, (vi) nil Parent Class C Shares
are issued and outstanding, (vi) nil Parent Non-Voting Shares are issued and
outstanding, and (vii) 1,022,350 shares of Parent Preferred Stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable. As
of the date of this Agreement, no other shares of Parent Preferred Stock are
issued and outstanding. Except as set forth in this Section 4.03 and in Section
4.03(a) of the Parent Disclosure Schedule and except for stock options granted
pursuant to the stock option plan of Parent (the "Parent Stock Option Plan"),
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Parent or any Subsidiary or obligating Parent or any Subsidiary to issue or sell
any shares of capital stock of, or other equity interests in, Parent or any
Subsidiary. Section 4.03(a) of the Parent Disclosure Schedule sets forth a
correct and
13
complete list, as of the date hereof, of the holders of all stock options
granted pursuant to the Parent Stock Option Plan, the number of options held by
each such holder and the exercise price and the date of grant of each such
option. All shares of Parent Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
non-assessable. Except as disclosed in Section 4.03(a) of the Parent Disclosure
Schedule, there are no outstanding contractual obligations of Parent or any
Subsidiary to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or any capital stock of any Subsidiary. Except as disclosed in
Section 4.03(a) of the Parent Disclosure Schedule, there are no outstanding
contractual obligations of Parent to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Subsidiary or
any other person.
(b) Except as disclosed in Section 4.03(b) of the Parent Disclosure
Schedule, as of the Effective Time, (i) 1,623,644 shares of Parent Common Stock
will be issued and outstanding, all of which will be validly issued, fully paid
and non-assessable, (ii) nil shares of Parent Common Stock will be held in the
treasury of Parent, (iii) nil shares of Parent Common Stock will be held by
subsidiaries of Parent, (iv) 7,717,970 Parent Class B Shares will be issued and
outstanding, all of which will be validly issued, fully paid and non-assessable,
(v) nil Parent Class C Shares will be issued and outstanding, (vi) nil Parent
Non-Voting Shares will be issued and outstanding, and (vii) nil shares of Parent
Preferred Stock will be issued and outstanding.
(c) The authorized capital stock of Merger Sub consists of 200
shares of common stock, par value $0.01 per share, all of which are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereof and all of which are owned by Parent. Each
outstanding share of capital stock of Merger Sub is duly authorized, validly
issued, fully paid and non-assessable and each such share is owned by Parent or
Merger Sub free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Parent's or Merger
Sub's voting rights, charges and other encumbrances of any nature whatsoever.
(d) The shares of Parent Common Stock to be issued pursuant to the
Merger in accordance with Section 2.01 (i) will be duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive rights
created by statute, the Parent's Articles of Amalgamation or By-laws or any
agreement to which the Parent is a party or is bound and (ii) will, when issued,
be registered under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Exchange Act
and registered or exempt from registration under applicable Blue Sky Laws.
SECTION 4.04 Authority Relative to this Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Merger Sub and the consummation by Parent and Merger Sub of the Transactions
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by the DGCL). This Agreement has been duly and validly
executed and delivered by
14
Parent and Merger Sub and, assuming due authorization, execution and delivery by
the Company, constitutes a legal, valid and binding obligation of each of Parent
and Merger Sub, enforceable against each of Parent and Merger Sub in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency
(including, without limitation, all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors' rights generally
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
SECTION 4.05 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Articles of Amalgamation, Articles of Incorporation
or Certificate of Incorporation, as applicable, or By-laws of Parent or any
Subsidiary, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 4.05(b) have been obtained and all filings and
obligations described in Section 4.05(b) have been made, conflict with or
violate any Law applicable to Parent or any Subsidiary or by which any property
or asset of either of them is bound or affected, or (iii) result in any breach
of, or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any Subsidiary is a party or by which Parent or any
Subsidiary or any property or asset of either of them is bound or affected,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay consummation of
any of the Transactions or otherwise prevent or materially delay Parent and
Merger Sub from performing their obligations under this Agreement and would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except (i) for
applicable requirements of, or exemptions under, the Securities Act, Exchange
Act, Blue Sky Laws or Canadian securities laws and filing and recordation of
appropriate merger documents as required by the DGCL, and (ii) where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
or materially delay consummation of any of the Transactions or otherwise prevent
Parent or Merger Sub from performing, in all material respects, their
obligations under this Agreement.
SECTION 4.06 Permits; Compliance. Except as disclosed in Section
4.06 of the Parent Disclosure Schedule, each of Parent and its Subsidiaries is
in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Authority necessary for Parent or any Subsidiary to
own, lease and operate its material properties or to carry on its business as it
is now being conducted (the "Parent Permits"). As of the date of this Agreement,
no suspension or cancellation of any of the Parent Permits is pending or, to the
knowledge of Parent,
15
threatened. Neither Parent nor any Subsidiary is in conflict with, or in
default, breach or violation of, (a) any Law applicable to Parent or any
Subsidiary or by which any material property or asset of Parent or any
Subsidiary is bound or affected, or (b) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, franchise, Parent Permit or
other material instrument or obligation to which Parent or any Subsidiary is a
party or by which Parent or any Subsidiary or any property or asset of Parent or
any Subsidiary is bound.
SECTION 4.07 SEC Filings. Parent has filed all forms, schedules,
reports and documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since July 31, 2002 (collectively, the "Parent
SEC Reports"). The Parent SEC Reports (i) were prepared in all material respects
in accordance with either the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations promulgated thereunder,
and (ii) did not, at the time they were filed, or, if amended, as of the date of
such amendment, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 4.08 Financial Statement; Undisclosed Liabilities. (a)
Schedule 4.08 of the Parent Disclosure Schedule contains copies of (i) the
consolidated audited balance sheets and related consolidated audited annual
statements of operations and deficit and cash flows of Parent (as of and for the
fiscal years ended March 29, 2003 and March 27, 2004) (the "Audited Financial
Statements"); and (ii) the consolidated unaudited balance sheet of Parent as of
December 25, 2004 and the related consolidated unaudited statements of
operations and deficit and cash flows for the 39-week period then ended (the
"Unaudited Financial Statements"). The Audited Financial Statements and the
Unaudited Financial Statements are hereinafter referred to, collectively, as the
"Financial Statements." Each of the balance sheets included in the Financial
Statements (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of Parent, as of the date
thereof, and each of the statements of operations and deficit and cash flows
included in the Financial Statements (including any related notes and schedules)
fairly presents in all material respects the consolidated results of operations
and changes in cash flows, as the case may be, of Parent for the periods set
forth therein, in each case in accordance with GAAP (as defined in Section
4.10(a)), subject in the case of the Unaudited Financial Statements, to normal
recurring adjustments and the absence of footnotes.
(b) There are no liabilities or obligations of Parent or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability or obligation, other than: (i) liabilities fully reflected
or provided for in the most recent balance sheet included in the Financial
Statements and (ii) liabilities or obligations disclosed in the Parent
Disclosure Schedule.
SECTION 4.09 Absence of Certain Changes or Events. Since March 27,
2004, except as set forth in Section 4.09 of the Parent Disclosure Schedule, or
as expressly contemplated by this Agreement, (a) Parent has conducted its
business only in the ordinary course and in a manner consistent with past
practice, and (b) there has not been any Parent Material Adverse Effect and (c)
none of Parent or any Subsidiary has taken any action that, if
16
taken after the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 5.02.
SECTION 4.10 Internal Controls. (a) Parent's financial reporting is
in accordance with United States generally accepted accounting principles
("GAAP"). Parent and its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Parent has made available to the
Company complete and correct copies of, all written descriptions of, and all
policies, manuals and other documents promulgating, such internal accounting
controls.
(b) Since March 27, 2004, neither Parent nor any Subsidiary nor, to
Parent's knowledge, any director, officer, employee, auditor, accountant or
representative of Parent or any Subsidiary, has received or otherwise had or
obtained knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of Parent or any Subsidiary or their respective
internal accounting controls, including any complaint, allegation, assertion or
claim that Parent or any Subsidiary has engaged in questionable accounting or
auditing practices.
SECTION 4.11 Absence of Litigation. Except as set forth in Section
4.11 of the Parent Disclosure Schedule, there is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of Parent, threatened against Parent or any Subsidiary, or any property or asset
of Parent or any Subsidiary, before any Governmental Authority that (a)
individually or in the aggregate, is reasonably likely to have a Parent Material
Adverse Effect or (b) seeks to materially delay or prevent the consummation of
the Merger. Neither Parent nor any Subsidiary nor any material property or asset
of Parent or any Subsidiary is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of Parent, continuing investigation by, any Governmental Authority
that would, individually or in the aggregate, prevent or materially delay
consummation of any of the Transactions or otherwise prevent or materially delay
Parent or Merger Sub from performing its obligations under this Agreement or,
individually or in the aggregate, is reasonably likely to have a Parent Material
Adverse Effect.
SECTION 4.12 Employee Benefit Plans. (a) Section 4.12(a) of Parent
Disclosure Schedule lists all employee benefit plans and all bonus, stock
option, stock purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement, severance or other
benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements, whether legally enforceable or not,
to which Parent or any Subsidiary is a party, with respect to which Parent or
any Subsidiary has any obligation or which are maintained, contributed to or
sponsored by Parent or any Subsidiary for the benefit of any current or former
employee, officer or director of Parent or any Subsidiary (collectively, the
"Plans").
17
(b) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws. Parent and the Subsidiaries have performed all obligations required to be
performed by them under, are not in any respect in default under or in violation
of, and have no knowledge of any default or violation by any party to, any Plan.
Except as otherwise described in the Parent Disclosure Schedule, no Action is
pending or, to the knowledge of Parent, threatened with respect to any Plan
(other than claims for benefits in the ordinary course).
(c) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority.
(d) Except as noted in Section 4.12(d) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (either alone or in conjunction with any
other event, including termination of employment) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
severance, termination or other payment or benefit to any director, officer,
employee or consultant of Parent or any Subsidiary.
SECTION 4.13 Labor and Employment Matters. (a) Except as set forth
in Section 4.13(a) of Parent Disclosure Schedule, (i) there are no material
controversies pending or, to the knowledge of Parent, threatened between Parent
or any Subsidiary and any of their respective employees; (ii) neither Parent nor
any Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Parent or any Subsidiary, nor,
to the knowledge of Parent, are there any activities or proceedings of any labor
union to organize any such employees; and (iii) there are no unfair labor
practice complaints pending against Parent or any Subsidiary before any
Governmental Authority.
(b) Parent and the Subsidiaries are in material compliance with all
applicable Laws relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and have
withheld and paid to the appropriate Governmental Authority or are holding for
payment not yet due to such Governmental Authority all amounts required to be
withheld from employees of Parent or any Subsidiary and are not liable for any
arrears of wages, taxes, penalties or other sums for failure to comply with any
of the foregoing. Parent and the Subsidiaries have paid in full to all employees
or adequately accrued for in accordance with GAAP consistently applied all
wages, salaries, commissions, bonuses, benefits and other compensation due to or
on behalf of such employees and, except as described in the Parent Disclosure
Schedule, there is no material claim or group of related claims with respect to
payment of wages, salary or overtime pay that has been asserted or is now
pending or threatened before any Governmental Authority with respect to any
persons currently or formerly employed by Parent or any Subsidiary. Except as
described in Section 4.13(b) of the Parent Disclosure Schedule, neither Parent
nor any Subsidiary is a party to, or otherwise bound by, any consent decree
with, or citation by, any Governmental Authority relating to employees or
employment practices. Except as described in Section 4.13(b) of the Parent
Disclosure Schedule, there is no charge or proceeding with respect to a
violation of any occupational safety or health
18
standards that has been asserted or is now pending or threatened with respect to
Parent. Except as described in Section 4.13(b) of the Parent Disclosure
Schedule, there is no charge of discrimination in employment or employment
practices, for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, which has been asserted or is now
pending or threatened before any Governmental Authority in any jurisdiction in
which Parent or any Subsidiary has employed or employ any person.
SECTION 4.14 Real Property; Title to Assets. (a) Section 4.14(a) of
the Parent Disclosure Schedule lists each parcel of real property currently or
formerly owned by Parent or any Subsidiary. Except as disclosed in Section
4.14(a) of the Parent Disclosure Schedule, each parcel of real property owned by
Parent or any Subsidiary (i) is owned free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other encumbrance to title, or
any option, right of first refusal, or right of first offer (collectively,
"Liens"), other than (A) Liens for current taxes and assessments not yet past
due, (B) inchoate mechanics' and materialmen's Liens for construction in
progress, (C) supplier's, workmen's, repairmen's, warehousemen's and carriers'
Liens arising in the ordinary course of business of Parent or such Subsidiary
consistent with past practice, and (D) all matters of record, Liens and other
imperfections of title and encumbrances that would not, individually or in the
aggregate, have a Parent Material Adverse Effect (collectively, "Permitted
Liens"), and (ii) is neither subject to any governmental decree or order to be
sold nor is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor, to the
knowledge of Parent, has any such condemnation, expropriation or taking been
proposed.
(b) Section 4.14(b) of the Parent Disclosure Schedule lists each
parcel of real property currently leased or subleased by Parent or any
Subsidiary, pursuant to a lease agreement to which Parent and the Subsidiaries
are parties (collectively, the "Lease Documents"). True, correct and complete
copies of all Lease Documents have been delivered to the Company. All such
current leases and subleases are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default or event of default (or event
which, with notice or lapse of time, or both, would constitute a default) by
Parent or any Subsidiary.
(c) There are no contractual or legal restrictions that preclude or
restrict the ability to use any real property owned or leased by Parent or any
Subsidiary for the purposes for which it is currently being used. There are no
latent defects or adverse physical conditions affecting the real property, and
improvements thereon, owned or leased by Parent or any Subsidiary other than
those that would not, individually or in the aggregate, prevent or materially
delay consummation of any of the Transactions or otherwise prevent or materially
delay Parent or Merger Sub from performing its obligations under this Agreement
and would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
(d) Each of Parent and the Subsidiaries has good and valid title to,
or, in the case of leased properties and assets, valid leasehold or subleasehold
interests in, all of its properties and assets, tangible and intangible, real,
personal and mixed, used or held for use in its business, free and clear of any
Liens, except for such imperfections of title, if any, that do not materially
19
interfere with the present value of the subject property and that would not have
a Parent Material Adverse Effect.
SECTION 4.15 Intellectual Property. (a) To the knowledge of Parent,
the conduct of the business of Parent and the Subsidiaries as currently
conducted does not infringe upon or misappropriate the Intellectual Property
rights of any third party in any material respect, and no claim has been
asserted to Parent that the conduct of the business of Parent and the
Subsidiaries as currently conducted infringes upon or may infringe upon or
misappropriates the Intellectual Property Rights of any third party in any
material respect; (b) Parent and the Subsidiaries own, or have the right to use
pursuant to licenses, sublicenses, agreements, or permissions, all Intellectual
Property material to the operation of the business of Parent and the
Subsidiaries as presently conducted; (c) with respect to each item of
Intellectual Property owned by Parent or a Subsidiary and material to the
business, financial condition or results of operations of Parent and the
Subsidiaries taken as a whole ("Parent Owned Intellectual Property"), Parent or
a Subsidiary is the owner of the entire right, title and interest in and to such
Parent Owned Intellectual Property and is entitled to use such Parent Owned
Intellectual Property in the continued operation of its respective business; (d)
with respect to each item of Intellectual Property licensed to Parent or a
Subsidiary that is material to the business of Parent and the Subsidiaries as
currently conducted ("Parent Licensed Intellectual Property"), Parent or a
Subsidiary has the right to use such Parent Licensed Intellectual Property in
the continued operation of its respective business in accordance with the terms
of the license agreement governing such Parent Licensed Intellectual Property;
(e) Parent Owned Intellectual Property is valid and enforceable, and has not
been adjudged invalid or unenforceable in whole or in part; (f) to the knowledge
of Parent, no person is engaging in any activity that infringes upon Parent
Owned Intellectual Property in any material respect; (g) to the knowledge of
Parent, each license of Parent Licensed Intellectual Property is valid and
enforceable, is binding on all parties to such license, and is in full force and
effect; (h) to the knowledge of Parent, no party to any license of Parent
Licensed Intellectual Property is in material breach thereof or default
thereunder; and (i) neither the execution of this Agreement nor the consummation
of any Transaction shall adversely affect any of Parent's material rights with
respect to Parent Owned Intellectual Property or Parent Licensed Intellectual
Property.
SECTION 4.16 Taxes. Parent and the Subsidiaries have filed all
material Tax returns and reports required to be filed by them and have paid and
discharged all material Taxes required to be paid or discharged by them, other
than such payments as are being contested in good faith by appropriate
proceedings. No taxing authority or agency is now asserting or, to the knowledge
of Parent, threatening to assert against Parent or any Subsidiary any deficiency
or claim for any Taxes or interest thereon or penalties in connection therewith.
Section 4.16 of the Parent Disclosure Schedule describes all Tax audits and
investigations currently being conducted by any Governmental Authority. The
accruals and reserves for Taxes reflected in the March 27, 2004 balance sheet of
Parent are adequate to cover all Taxes accruable through such date (including
interest and penalties, if any, thereon) in accordance with GAAP. There are no
Tax liens upon any property or assets of Parent or any of the Subsidiaries
except liens for current Taxes not yet due. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action that
would prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code. Parent is not aware of any agreement, plan or
other circumstance that would (i) prevent the Merger from qualifying as a
20
reorganization within the meaning of Section 368(a) of the Code or (ii) cause
Section 367(a)(1) of the Code to apply to any person other than a five-percent
transferee shareholder.
SECTION 4.17 Environmental Matters. Except as described in Section
4.17 of Parent Disclosure Schedule (a) none of Parent nor any of the
Subsidiaries has violated in any material respect or is in material violation of
any Environmental Law; (b) none of Parent nor any of the Subsidiaries has
received any written notice of actual or alleged material violations of any
Environmental Law; (c) none of the properties owned, leased or operated by
Parent or any Subsidiary (including, without limitation, soils and surface and
ground waters) are materially contaminated with any Hazardous Substance; (d)
none of Parent or any of the Subsidiaries is actually or allegedly liable in any
material respect for any material contamination by Hazardous Substances; (e)
none of Parent or any of the Subsidiaries is actually or allegedly liable in any
material respect under any Environmental Law; (f) none of the real property
owned, operated or leased by Parent or any Subsidiary contains any asbestos in
any form or polychlorinated biphenyls in any form; (g) none of the real property
owned, operated or leased by Parent or any Subsidiary has ever or currently has
any underground storage tanks used to hold Hazardous Substances; (h) each of
Parent and each Subsidiary has all material permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
and (i) none of Parent nor any of the Subsidiaries has received any written
notice from any Governmental Authority proposing to or threatening to revoke,
cancel, rescind, materially modify or refuse to renew any Environmental Permit.
SECTION 4.18 Material Contracts. (a) Subsections (i) through (viii)
of Section 4.18(a) of Parent Disclosure Schedule lists the following types of
contracts and agreements to which Parent or any Subsidiary is a party (such
contracts and agreements as are required to be set forth in Section 4.18(a) of
Parent Disclosure Schedule being the "Material Contracts"):
(i) each "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC) with respect to Parent and its
Subsidiaries;
(ii) each contract and agreement which is likely to involve consideration
of more than $2,500,000, in the aggregate, over the remaining term
of such contract or agreement;
(iii) all material broker, distributor, supply, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to
which Parent or any Subsidiary is a party;
(iv) all management contracts (excluding contracts for employment) and
contracts with other consultants, including any contracts involving
the payment of royalties or other amounts calculated based upon the
revenues or income of Parent or any Subsidiary or income or revenues
related to any product of Parent or any Subsidiary to which Parent
or any Subsidiary is a party;
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(v) all material contracts and agreements under which it has created,
incurred, assumed, or guaranteed any material indebtedness or under
which it has imposed a material Lien on any of its assets, tangible
or intangible;
(vi) all material contracts and agreements with any Governmental
Authority to which Parent or any Subsidiary is a party;
(vii) all contracts and agreements that materially limit, or purport to
materially limit, the ability of Parent or any Subsidiary to compete
in any line of business or with any person or entity or in any
geographic area or during any period of time;
(viii) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to Parent or the
conduct of its business, or the absence of which would, individually
or in the aggregate, prevent or materially delay consummation of any
of the Transactions or otherwise prevent or materially delay Parent
or Merger Sub from performing its obligations under this Agreement
or would, individually or in the aggregate, have a Parent Material
Adverse Effect;
(ix) any material agreement concerning a partnership or joint venture;
and
(x) any agreement under which it has advanced or loaned any amount to
any of its stockholders, affiliates, directors, officers, or
employees other than in the ordinary course of business.
(b) Except as would not, individually or in the aggregate, prevent
or materially delay consummation of any of the Transactions or otherwise prevent
or materially delay Parent or Merger Sub from performing its obligations under
this Agreement and would not, individually or in the aggregate, have a Parent
Material Adverse Effect, (i) each Material Contract is a legal, valid and
binding agreement, and none of the Material Contracts is in default by its terms
or has been canceled by the other party; (ii) to Parent's knowledge, no other
party is in breach or violation of, or default under, any Material Contract;
(iii) Parent and the Subsidiaries have not received any claim of default under
any such agreement; and (iv) neither the execution of this Agreement nor the
consummation of any Transaction shall constitute a default under, give rise to
cancellation rights under, or otherwise adversely affect any of the rights of
Parent or any Subsidiary under any Material Contract. Parent has furnished or
made available to the Company true and complete copies of all Material
Contracts, including any amendments thereto.
SECTION 4.19 Insurance. Parent and its Subsidiaries maintain
insurance coverage with reputable insurers in such amounts and covering such
risks as are in accordance with normal industry practice for companies engaged
in businesses similar to that of Parent and its Subsidiaries. There is no claim
pending under any of such policies as to which coverage has been denied or
disputed by the underwriters of such policies. All premiums due and payable
under all such policies have been paid, and Parent and its Subsidiaries are
otherwise in compliance in all material respects with the terms of such
policies. To the knowledge of Parent, there has been no threatened termination
of, or material premium increase with respect to, any of such policies.
22
SECTION 4.20 Customers and Suppliers. As of the date of this
Agreement, none of the Parent's ten largest customers accounted for more than
ten percent of Parent's consolidated revenues during the 12-month period ended
as of December 25, 2004 and no material supplier of Parent and its Subsidiaries,
(i) has cancelled or otherwise terminated any Material Contract with Parent or
any Subsidiary prior to the expiration of its term, or (ii) to Parent's
knowledge, has threatened, or indicated its intention, to cancel or otherwise
terminate its relationship with Parent or its Subsidiaries or to reduce
substantially its purchase from or sale to Parent or any Subsidiary of any
products, equipment, goods or services.
SECTION 4.21 Certain Business Practices. None of Parent, any
Subsidiary or, in connection with the operation of the business of Parent or any
Subsidiary, any directors or officers, agents or employees of Parent or any
Subsidiary, has (i) directly or indirectly given or agreed to give any funds for
unlawful contributions, payments, gifts, entertainment or other unlawful
expenses related to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any payment in the nature of
criminal bribery.
SECTION 4.22 Interested Party Transactions. Except as disclosed in
Section 4.22 of the Parent Disclosure Schedule, no director, officer or other
affiliate of Parent or any Subsidiary has or has had, directly or indirectly,
(i) an economic interest in any person that has furnished or sold, or furnishes
or sells, services or products that Parent or any Subsidiary furnishes or sells,
or proposes to furnish or sell; (ii) an economic interest in any person that
purchases from or sells or furnishes to, Parent or any Subsidiary, any goods or
services; (iii) a beneficial interest in any contract or agreement disclosed in
Section 4.18(a) of the Parent Disclosure Schedule; or (iv) any contractual or
other arrangement with Parent or any Subsidiary.
SECTION 4.23 No Vote Required. No vote of the stockholders of Parent
is required by Law, Parent's Articles of Amalgamation or By-laws or otherwise in
order for Parent and Merger Sub to consummate the Transactions.
SECTION 4.24 Accounts Receivable. All accounts receivable of Parent
and its Subsidiaries reflected in the Financial Statements arose from, and such
accounts receivable existing as of the Effective Time will have arisen from, the
sale of goods or services in the ordinary course of business consistent with
past practice and, to the knowledge of Parent, constitute only valid and
undisputed claims of Parent or a Subsidiary not subject to valid claims of
setoff or other defenses or counterclaims other than normal cash discounts
accrued in the ordinary course of business consistent with past practice. Such
accounts receivable are collectible in a manner consistent with Parent's past
practice.
SECTION 4.25 Inventories. Subject to amounts reserved therefore on
the Financial Statements, the values at which all inventory, merchandise,
finished goods, work in process and raw materials of Parent and its Subsidiaries
("Inventories") are carried on the Financial Statements reflect the historical
inventory valuation policy of Parent and the Subsidiaries of stating such
Inventories at the lower of cost (determined in a manner consistent with the
valuation of Inventories in the Financial Statements) or market value. Except as
set forth in Section 4.25 of the Parent Disclosure Schedule:
23
(a) Parent or a Subsidiary, as the case may be, has good and
marketable title to the Inventories free and clear of all Liens other than
Permitted Liens.
(b) Parent has adequately provided for obsolescence and returns and
the provision for obsolescence and returns is accurately reflected, in all
material respects, in the Financial Statements.
(c) Neither Parent nor any Subsidiary has acquired or committed to
acquire or manufacture Inventory for sale which is not of a quality and quantity
usable in the ordinary course of business within a reasonable period of time and
consistent with past practice. The Inventories are in good and merchantable
condition in all material respects, are suitable and usable for the purposes for
which they are intended and are in a condition such that they can be sold in the
ordinary course of the business of Parent and its Subsidiaries consistent with
past practice.
SECTION 4.26 Operations of Merger Sub. Merger Sub is a direct,
wholly owned subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, has engaged in no other
business activities and has conducted its operations only as contemplated by
this Agreement. Except for obligations and liabilities incurred in connection
with its organization and the transactions contemplated by this Agreement,
Merger Sub has no obligations or liabilities.
SECTION 4.27 Brokers. No broker, finder or investment banker (other
than Bear Xxxxxxx) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Parent or Merger Sub. Parent has heretofore furnished to the
Company a complete and correct copy of all written agreements between Parent and
Bear Xxxxxxx pursuant to which such firm would be entitled to any payment
relating to the Transactions.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger.
Except as expressly contemplated by any other provision of this Agreement or at
the direction of, or as consented to by, Parent or its affiliates or associates,
the Company agrees that, between the date of this Agreement and the Effective
Time, the businesses of the Company and its subsidiaries shall be conducted, and
the Company and its subsidiaries shall not take any action except, in all
material respects, in the ordinary course of business and in a manner consistent
with past practice.
SECTION 5.02 Conduct of Business by Parent Pending the Merger.
Except as expressly contemplated by any other provision of this Agreement,
Parent agrees that from the date of this Agreement until the earlier of the
termination of this Agreement and the Effective Time, Parent shall not except as
disclosed in Section 5.02 of the Parent Disclosure Schedule, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of the Company:
24
(a) conduct the businesses of Parent and the Subsidiaries in a manner, or
take any action with respect to the businesses of Parent and the Subsidiaries,
that is not in the ordinary course of business and consistent with past practice
or that would cause Parent to be in default of the Amended and Restated Accounts
Receivable Management, Loan and Security Agreement between GMAC Commercial
Finance Corporation - Canada and Parent (as in effect on the date hereof,
irrespective of any subsequent waiver or amendment);
(b) change nor amend the charter documents or By-laws of Parent;
(c) issue, sell, or grant any shares of capital stock (except Parent
Common Stock issued upon exercise of options outstanding on the date of the
Agreement), or any options, warrants, or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance or sale of,
any of the capital stock of Parent or any Subsidiary or rights or obligations
convertible into or exchangeable for any such shares of capital stock;
(d) split, combine or reclassify any of its capital stock or otherwise
make any changes in the capital structure of Parent;
(e) declare, pay, or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
Parent or any Subsidiary or redeem, purchase, or otherwise acquire any shares of
the capital stock or other securities of Parent or any Subsidiary or rights or
obligations convertible into or exchangeable for any shares of the capital stock
or other securities of Parent or any Subsidiary or obligations convertible into
such, or any options, warrants, or other rights to purchase or subscribe to any
of the foregoing;
(f) (i) except for normal increases made in the ordinary course of
business consistent with past practice, or as required by applicable Law or an
agreement in existence as of the date of this Agreement, increase the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable
to any officer, employee, or director of Parent or any Subsidiary or pay any
benefit not contemplated by any Plan as in effect on the date hereof, (ii) pay
any pension or retirement allowance not required by any existing Plan or by
applicable Law, (iii) except for bonuses paid in the ordinary course of business
consistent with past practice, or as required by an agreement in existence as of
the date of this Agreement, pay any bonus, (iv) except for agreements entered or
amended in the ordinary course of business consistent with past practice, become
a party to, amend or commit itself to, any pension, retirement, profit-sharing
or welfare benefit plan or agreement or employment, consulting, indemnification,
severance or termination agreement with or for the benefit of any employee,
other than as required by applicable law or an existing agreement set forth in
Section 4.12(a) of the Parent Disclosure Schedule, or (v) except as required
under any existing Plan, grant, or agreement, accelerate the vesting of, or the
lapsing of restrictions with respect to, any stock options granted pursuant to
any Parent Stock Option Plan or any other Parent stock-based awards;
25
(g) sell, license, lease, encumber, assign or otherwise dispose of,
abandon or fail to maintain any of its material assets, properties (including
Intellectual Property) or other rights or agreements other than in the ordinary
course of business consistent with past practice;
(h) enter into any new line of business;
(i) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof;
(j) create, renew, amend or terminate, fail to perform any material
obligations under, waive or release any material rights under or give notice of
a proposed renewal, amendment, waiver, release or termination of, any material
contract, agreement or lease for goods, services or office space to which Parent
or any of the Subsidiaries is a party or by which Parent or any of the
Subsidiaries or their respective properties is bound, other than any of the
foregoing arising in the ordinary course of business (and as to which Parent
shall provide prior notice thereof to the Company);
(k) (i) cause any material insurance policy naming it as a beneficiary or
a loss payable payee to be canceled or terminated, or (ii) cause Parent's
directors and officers liability insurance policy, and any excess liability
policy related thereto, to be canceled, terminated or otherwise not be renewed
or replaced with at least an equivalent amount of coverage and on other terms no
less favorable to Parent and its officers and directors;
(l) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of Parent
or any of its Subsidiaries;
(m) make any material election relating to Taxes or change any Tax
accounting method, or settle any material liability relating to Taxes (other
than in the ordinary course of business);
(n) engage in any action that could reasonably be expected to cause the
Merger (i) to fail to qualify as a "reorganization" under Section 368(a) of the
Code or (ii) to result in the application of Section 367(a)(1) of the Code to
any person other than a five-percent transferee shareholder;
(o) take any action to cause Parent's representations and warranties set
forth in Article IV to be untrue in any material respect;
(p) take any action that would reasonably be likely to materially delay
the Merger; or
(q) agree to take, make any commitment to take, or adopt any resolutions
of its board of directors in support of, any of the foregoing actions.
26
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Registration Statement; Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, (i) Parent and
the Company shall prepare and file with the SEC the proxy statement to be sent
to the stockholders of the Company relating to the meeting of the Company's
stockholders (together with any adjournments or postponements thereof, the
"Company Stockholders' Meeting") to be held to consider approval and adoption of
this Agreement (such proxy statement, as amended or supplemented, being referred
to herein as the "Proxy Statement") and (ii) Parent shall prepare and file with
the SEC a registration statement on Form F-4 (together with all amendments
thereto, the "Registration Statement") in which the Proxy Statement shall be
included as a prospectus, in connection with the registration under the
Securities Act of the shares of Parent Common Stock to be issued to holders of
Shares pursuant to the Merger. Parent and the Company each shall use their
reasonable best efforts to cause the Registration Statement to become effective
as promptly as practicable, and, prior to the effective date of the Registration
Statement, Parent shall take all action required under any applicable federal,
state or Canadian securities Laws in connection with the issuance of shares of
Parent Common Stock pursuant to the Merger. The Company shall furnish all
information concerning the Company as Parent may reasonably request in
connection with such actions and the preparation of the Registration Statement
and Proxy Statement. As promptly as practicable after the Registration Statement
shall have become effective, the Company shall mail the Proxy Statement to its
stockholders.
(b) The Company covenants that neither the Company Board nor the
Special Committee shall withdraw or modify, or propose to withdraw or modify, in
a manner adverse to Parent or Merger Sub, the approval or recommendation by the
Company Board and the Special Committee of this Agreement, the Merger or the
Transactions (the "Company Recommendation"), and the Proxy Statement shall
include the recommendation of the Special Committee to the Company Board and of
the Company Board to the stockholders of the Company in favor of approval and
adoption of this Agreement. Notwithstanding the foregoing, if the Company Board
or the Special Committee determines, in its good faith judgment prior to the
Required Company Vote and the Disinterested Stockholder Vote and after
consultation with outside legal counsel (who may be the Company's regularly
engaged outside legal counsel), that the failure to make a change in the Company
Recommendation would be inconsistent with its fiduciary obligations to the
Company and its stockholders under applicable Law, the Company Board or the
Special Committee may withdraw or modify or propose to withdrawal or modify the
Company Recommendation. The Company shall have the right to notify the
stockholders of the Company of any such withdrawal or modification.
(c) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Parent or the Company without the
approval of the other party (such approval not to be unreasonably withheld or
delayed). Parent and the Company each will advise the other, promptly after they
receive notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC
27
for amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
(d) Parent represents that the information supplied by Parent for
inclusion in the Registration Statement and the Proxy Statement shall not, at
(i) the time the Registration Statement is declared effective, (ii) the time the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the stockholders of the Company, (iii) the time of the Company Stockholders'
Meeting and (iv) the Effective Time, contain any untrue statement of a material
fact or fail to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If, at any time prior to the
Effective Time, any event or circumstance relating to Parent or Merger Sub, or
their respective officers or directors, should be discovered by Parent which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Parent shall promptly inform the Company. All
documents that Parent is responsible for filing with the SEC in connection with
the Merger or the other transactions contemplated by this Agreement will comply
as to form and substance in all material aspects with the applicable
requirements of the Securities Act and the Exchange Act.
(e) The Company represents that the information supplied by the
Company for inclusion in the Registration Statement and the Proxy Statement
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the Company Stockholders' Meeting and (iv) the Effective Time, contain any
untrue statement of a material fact or fail to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, no representation is made by the Company with
respect to information included in the Registration Statement or Proxy Statement
based on information supplied by Parent or its affiliates or associates. If, at
any time prior to the Effective Time, any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company which should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement, the Company shall
promptly inform Parent. All documents that the Company is responsible for filing
with the SEC in connection with the Merger or the other transactions
contemplated by this Agreement will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
SECTION 6.02 Company Stockholders' Meeting. The Company shall call
and hold the Company Stockholders' Meeting as promptly as practicable for the
purpose of voting upon the approval and adoption of this Agreement and the
Company shall use its reasonable efforts to hold the Company Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective. The Company shall use its reasonable efforts to
solicit from its stockholders proxies in favor of the approval and adoption of
this Agreement, and shall take all other action necessary or advisable to secure
the required vote or consent of its stockholders, except in the event and to the
extent that the Company Board or the Special Committee, in accordance with the
last sentence of Section 6.01(b), withdraws or modifies the Company
Recommendation.
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SECTION 6.03 Access to Information; Confidentiality. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which the Company or Parent or any of their respective
subsidiaries is a party or pursuant to applicable Law, from the date of this
Agreement until the Effective Time, the Company and Parent shall (and shall
cause their respective subsidiaries to): (i) provide to the other party (and the
other party's officers, directors, employees, accountants, consultants,
financial advisors, legal counsel, agents and other representatives,
collectively, "Representatives") access at reasonable times upon prior notice to
the officers, employees, agents, properties, offices and other facilities of
such party and its subsidiaries and to the books and records thereof; and (ii)
furnish promptly to the other party such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of such
party and its subsidiaries as the other party or its Representatives may
reasonably request.
(b) All information obtained by the parties pursuant to this Section
6.03 shall be kept confidential in accordance with the confidentiality
agreement, dated August 30, 2004 (the "Confidentiality Agreement"), between
Parent and the Company.
(c) No investigation pursuant to this Section 6.03 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.04 Directors' and Officers' Indemnification and Insurance.
(a) The By-laws of the Surviving Corporation shall, and Parent shall cause such
By-laws to contain provisions no less favorable with respect to indemnification
than are set forth in Article Five of the By-laws of the Company, which
provisions shall not be amended, repealed or otherwise modified after the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by Law.
(b)The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, maintain in effect for six years from the Effective
Time the current directors' and officers' liability insurance policies
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies with an insurer of equal or greater claims paying
ratings and of at least the same coverage containing terms and conditions that
are not materially less favorable) with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation or Parent be required to expend pursuant to this Section 6.04(b)
more than an amount per year equal to 200% of current annual premiums paid by
the Company for such insurance.
(c) The provisions set forth in this Section 6.04 shall not be
exclusive of any other rights with respect to indemnification, insurance or
expense advancement which any person may have or hereafter acquire under any
Law, agreement or otherwise. Following the Effective Time, the Surviving
Corporation shall, and Parent shall cause the Surviving Corporation to, assume,
honor and comply with all agreements and contracts between the Company and its
directors, officers, employees, fiduciaries or agents requiring the Company to
provide indemnification, insurance or expense advancement.
29
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.04.
SECTION 6.05 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which could reasonably be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any failure of the Company, Parent or
Merger Sub, as the case may be, to comply with or satisfy in any material
respect any covenant or agreement to be complied with or satisfied by it
hereunder; provided, however, that the Company's obligation pursuant to this
Section 6.05 shall be limited to those matters as to which the Special Committee
has knowledge; and provided, further, that the delivery of any notice pursuant
to this Section 6.05 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.06 Company Affiliates. No later than 5 days after the date
of this Agreement, the Company shall deliver to Parent a list of names and
addresses of those persons who were, in the Company's reasonable judgment, on
such date, affiliates (within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act (each such person being a
"Company Affiliate")) of the Company. The Company shall provide Parent with such
information and documents as Parent shall reasonably request for purposes of
reviewing such list. The Company shall use its reasonable efforts to deliver or
cause to be delivered to Parent, prior to the Effective time, an affiliate
letter in the form attached hereto as Exhibit 6.06, executed by each of the
Company Affiliates identified in the foregoing list and any person who shall, to
the knowledge of the Company, have become a Company Affiliate subsequent to the
delivery of such list.
SECTION 6.07 Further Action; Reasonable Efforts. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other required
submissions, under applicable Laws with respect to the Transactions and (ii) use
its reasonable efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws or otherwise to consummate and make effective the Transactions,
including, without limitation, using its reasonable efforts to obtain all
Permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with Parent, the Subsidiaries,
the Company and the Company's subsidiaries as are necessary for the consummation
of the Transactions and to fulfill the conditions to the Merger; provided that
neither Merger Sub nor Parent will be required by this Section 6.07 to take any
action, including entering into any consent decree, hold separate orders or
other arrangements, that (A) requires the divestiture of any assets of any of
Merger Sub, Parent, the Company or any of their respective subsidiaries or (B)
limits Parent's freedom of action with respect to, or its ability to retain, the
Company and its subsidiaries or any portion thereof or any of Parent's or its
affiliates'
30
other assets or businesses. In case, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable efforts to take all such action.
SECTION 6.08 Plan of Reorganization. (a) This Agreement is intended
to constitute a "plan of reorganization" within the meaning of section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time, each party hereto
shall use its reasonable efforts to cause the Merger to qualify, and will not
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken which action or failure to act could
prevent the Merger from qualifying as a "reorganization" within the meaning of
Section 368(a) of the Code to which, in the case of any person other than a
five-percent transferee shareholder, Section 367(a)(1) of the Code does not
apply. Following the Effective Time, neither the Surviving Corporation, Parent
nor any of their affiliates shall knowingly take any action, cause any action to
be taken, fail to take any action or cause any action to fail to be taken, which
action or failure to act could cause the Merger (i) to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code or (ii) result
in the application of Section 367(a)(1) of the Code to any person other than a
five-percent transferee shareholder.
(b) As of the date hereof, Parent does not know of any reason (i)
why it would not be able to deliver to counsel to the Company, at the date of
the legal opinion required by Section 7.03(d), certificates substantially in
compliance with Internal Revenue Service ("IRS") published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable such
firm to deliver such opinion, and Parent hereby agrees to deliver such
certificates effective as of the date of such opinion or (ii) why counsel to the
Company would not be able to deliver the opinion required by Section 7.03(d).
Parent will deliver such certificates to counsel to the Company.
(c) Following the Effective Time, Parent shall cause the Company to
comply with the U.S. tax reporting requirements described in Section
1.367(a)-3(c)(6) of the income tax regulations promulgated under the Code.
SECTION 6.09 Obligations of Merger Sub. Parent shall take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and subject to the conditions set
forth in this Agreement.
SECTION 6.10 Consents of Accountants. Parent and the Company will
each use all reasonable efforts to cause to be delivered to each other consents
from their respective independent auditors, in form reasonably satisfactory to
the recipient and customary in scope and substance for consents delivered by
independent public accountants in connection with registration statements on
Form F-4 under the Securities Act.
SECTION 6.11 AMEX Listing. Parent shall promptly prepare and submit
to the AMEX a listing application covering the shares of Parent Common Stock
outstanding and those to be issued in the Merger and pursuant to Substitute
Options, and shall use its reasonable efforts to obtain, prior to the Effective
Time, approval for the listing of such Parent Common
31
Stock, subject to official notice of issuance to the AMEX, and the Company shall
cooperate with Parent with respect to such listing.
SECTION 6.12 Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Parent and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of the AMEX, each of Parent and
the Company shall each use its reasonable efforts to consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement, the Merger or any of the other Transactions.
SECTION 6.13 Board of Directors of Parent. Within one year following
the Effective Time, a majority of the members of the Parent Board shall be
independent within the rules of AMEX.
SECTION 6.14 Company Stock Held by Parent. From the date hereof
until the Effective Time, Parent shall not transfer, sell or otherwise dispose
of any of the shares of Company Common Stock, Company Preferred Stock or
warrants to purchase Company Common Stock owned by Parent. At the Company
Stockholders' Meeting, Parent shall vote all shares of Company Common Stock and
Company Preferred Stock owned by Parent in favor of the approval and adoption of
this Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) Registration Statement. The Registration Statement shall have
been declared effective by the SEC under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC.
(b) Company Stockholder Approval. The Company shall have obtained
the Disinterested Stockholder Vote at the Company Stockholders' Meeting.
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, judgment,
decree, executive order or award (an "Order") which is then in effect and
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(d) AMEX Listing. The shares of Parent Common Stock shall have been
authorized for listing on the AMEX, subject to official notice of
issuance.
(e) HLHZ Opinion. The HLHZ Fairness Opinion shall not have been
withdrawn, revoked, annulled or materially modified.
32
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects as of the Effective Time, as though made
on and as of the Effective Time, except to the extent expressly made as of
an earlier date, in which case as of such earlier date (provided that any
representation or warranty that is qualified by materiality or Company
Material Adverse Effect shall be true and correct in all respects as of
the Effective Time, or as of such particular earlier date, as the case may
be); provided, however, this condition shall not apply to any
representation or warranty of the Company that, to the knowledge of
Parent, was not true and correct as of the date hereof; and provided,
further, this condition shall not apply to any representation or warranty
of the Company if the failure of such representation or warranty to be so
true and correct is attributable to any action or inaction on the part of
Parent or its affiliates or associates.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time; provided, however, this condition shall not
apply to any agreement or covenant of the Company if the failure by the
Company to so perform or comply is attributable to any action or inaction
on the part of Parent or its affiliates or associates.
(c) Officer Certificate. The Company shall have delivered to Parent
a certificate, dated the date of the Closing, signed by the Chief
Administrative Officer of the Company, certifying as to the satisfaction
of the conditions specified in Sections 7.02(a) and 7.02(b).
(d) Consents. All consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been obtained
from and made with all Governmental Authorities, and all consents from the
third parties listed in Section 7.02(d) of the Parent Disclosure Schedule
shall have been obtained.
(e) Material Adverse Effect. No Company Material Adverse Effect
shall have occurred since the date of this Agreement.
SECTION 7.03 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be
true and correct in all material respects as of the Effective Time, as
though made on and as of the Effective Time, except to the extent
expressly made as of an earlier date, in which case as of such earlier
date (provided that any representation or warranty that is qualified by
materiality
33
or Parent Material Adverse Effect shall be true and correct in all
respects as of the Effective Time, or as of such particular earlier date,
as the case may be).
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
it on or prior to the Effective Time.
(c) Officer Certificate. Parent shall have delivered to the Company
a certificate, dated the date of the Closing, signed by the President or
any Vice President of Parent, certifying as to the satisfaction of the
conditions specified in Sections 7.03(a) and 7.03(b).
(d) Tax Opinion. The Company shall have received the opinion of
Holland & Knight LLP, counsel to the Company, based upon customary
representations of Parent, Merger Sub and the Company, and normal
assumptions, to the effect that, for United States federal income tax
purposes, (i) the Merger will qualify as a "reorganization" within the
meaning of Section 368(a) of the Code and each of Parent and the Company
will be a "party to the reorganization" within the meaning of section
368(b) of the Code, and (ii) the conversion of Company Common Shares into
Parent Common Stock in the Merger will not result in the recognition of
gain under Section 367 of the Code to any person who is not a five percent
transferee shareholder, which opinion shall not have been withdrawn or
modified in any material respect; provided, however, that if such counsel
is unable or unwilling to deliver such opinion this condition shall be
satisfied by delivery to the Company of a similar opinion of King &
Spalding LLP. The issuance of such opinion shall be conditioned on receipt
by Holland and Knight LLP or King & Spalding LLP, as the case may be, of
representation letters from each of Parent and Company as contemplated in
Section 6.08 of this Agreement. Each such representation letter shall be
dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect as of the Effective Time.
(e) Company Stockholder Approval. The Company shall have obtained
the Required Stockholder Vote at the Company Stockholders' Meeting.
(f) Articles of Amalgamation and By-laws. The Articles of
Amalgamation and By-laws of Parent in effect shall be in the form attached
hereto as Exhibit 7.03(f)(i) and Exhibit 7.03(f)(ii), respectively.
(g) Material Adverse Effect. No Parent Material Adverse Effect shall
have occurred since the date of this Agreement.
(h) Consents. All consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been obtained
from and made with all Governmental Authorities, and all consents from the
third parties listed in Section 7.02(d) of the Parent Disclosure Schedule
shall have been obtained.
(i) Conversion of Parent Securities. All of the issued and
outstanding Series A Preferred Shares of Parent Preferred Stock and
$5,000,000 aggregate principal amount of Secured Convertible Notes of
Parent ("Secured Convertible Notes") shall have been
34
converted into 512,015 shares of Parent Common Stock and 504,876 Parent
Class B Shares; nil Series A Preferred Shares of Parent Preferred Stock
and nil Secured Convertible Notes shall be issued and outstanding.
(j) Anti-Dilution Provisions.
(i) Each Company Warrant shall have been amended, for no
additional consideration to the holder, to (A) provide that
the definition of "Additional Shares of Common Stock" shall
specifically exclude any stock options or other securities
exercisable for, convertible into or exchangeable into capital
stock (or shares issued upon exercise, conversion or exchange
thereof), any restricted stock or any other equity granted or
issued for a compensatory purpose following the Effective Time
to employees, officers, directors or consultants, and (B)
delete the last two sentences of Section 1 thereof.
(ii) The employment agreement dated October 24, 2001
between Parent and Xxxxxx X. Xxxxxxxxxxxx (the "Xxxxxxxxxxxx
Employment Agreement") shall have been amended, in form
reasonably satisfactory to the Company, for no additional
consideration to Xx. Xxxxxxxxxxxx, to provide that any stock
options or other securities exercisable for, convertible into
or exchangeable into capital stock (or shares issued upon
exercise, conversion or exchange thereof), any restricted
stock or any other equity granted or issued for a compensatory
purpose following the Effective Time to employees, officers,
directors or consultants shall be disregarded for purposes of
calculating two percent (2%) of the issued and outstanding
shares in the capital stock of Parent (on a fully diluted
basis) pursuant to Section 5.1 of the Andruskevich Employment
Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company, as follows:
(a) by mutual written consent of Parent and the Company duly
authorized by the Board of Directors of Parent and the Special Committee;
or
(b) by either Parent or the Company if the Effective Time shall not
have occurred on or before December 31, 2005; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose material breach of any representation,
warranty, covenant or agreement under this
35
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date; or
(c) by either Parent or the Company if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making
consummation of the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger; or
(d) by Parent or the Company if a Company Triggering Event (as
defined below) shall have occurred; or
(e) by either Parent or the Company if this Agreement shall fail to
receive the requisite vote for approval at the Company Stockholders'
Meeting as set forth in Section 7.01(b) (other than by reason of a breach
by Parent of Section 6.14 hereof); or
(f) by Parent upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in
Section 7.02(a) and Section 7.02(b) would not be satisfied ("Terminating
Company Breach"); provided, however, that, if such Terminating Company
Breach is curable by the Company, Parent may not terminate this Agreement
under this Section 8.01(f) for so long as the Company continues to
exercise its best efforts to cure such breach, unless such breach is not
cured within 15 days after notice of such breach is provided by Parent to
the Company; provided, further, that Parent may not terminate this
Agreement under this Section 8.01(f) if such Terminating Company Breach is
attributable to action or inaction on the part of Parent or its affiliates
or associates; or
(g) by the Company upon a breach of any representation, warranty,
covenant or agreement on the part of Parent and Merger Sub set forth in
this Agreement, or if any representation or warranty of Parent and Merger
Sub shall have become untrue, in either case such that the conditions set
forth in Section 7.03(a) and Section 7.03(b) would not be satisfied
("Terminating Parent Breach"); provided, however, that, if such
Terminating Parent Breach is curable by Parent and Merger Sub, the Company
may not terminate this Agreement under this Section 8.01(g) for so long as
Parent and Merger Sub continue to exercise their best efforts to cure such
breach, unless such breach is not cured within 15 days after notice of
such breach is provided by the Company to Parent.
For purposes of this Agreement, a "Company Triggering Event" shall be deemed to
have occurred if: (i) the Company Board or the Special Committee withdraws,
modifies or changes the Company Recommendation in a manner adverse to Parent or
shall have resolved to do so; (ii) the Company shall have failed to include in
the Proxy Statement the recommendation of the Company Board or Special Committee
in favor of the approval and adoption of this Agreement by the Company Board; or
(iii) the HLHZ Fairness Opinion shall have been withdrawn, revoked, annulled or
materially modified.
36
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability under this Agreement on the part of
any party hereto, except (a) as set forth in Section 8.03 and (b) nothing herein
shall relieve any party from liability for any willful breach of any of its
representations, warranties, covenants or agreements set forth in this Agreement
prior to such termination; provided, however, that the Confidentiality Agreement
shall survive any termination of this Agreement.
SECTION 8.03 Fees and Expenses. All Expenses (as defined below)
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the Merger or any other transaction is consummated, except that the Company
and Parent shall each pay one-half of all Expenses relating to printing, filing
and mailing the Registration Statement and the Proxy Statement and all SEC and
other regulatory filing fees incurred in connection with the Registration
Statement and the Proxy Statement; provided, however, that in the event this
Agreement is terminated by the Company pursuant to Section 8.01(b) if (i) the
Registration Statement has not been declared effective by the SEC for reasons
unrelated to the Company and its subsidiaries or (ii) the Parent Common Stock
has not been authorized for listing on the AMEX for reasons unrelated to the
Company and its subsidiaries, Parent shall reimburse the Company for all the
Company's Expenses. "Expenses", as used in this Agreement, shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party (which in the case of the
Company shall be deemed to include the Special Committee) or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement and the Proxy Statement, the
solicitation of stockholder approvals and all other matters related to the
closing of the Merger and the other Transactions.
SECTION 8.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
approval and adoption of this Agreement and the Transactions by the stockholders
of the Company, no amendment may be made which by applicable Law or in
accordance with the rules of the AMEX requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of any other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of any other party or any condition to its own obligations contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
37
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto shall terminate at the Effective
Time, except that the agreements set forth in Articles I and II, Section 6.04
and Section 6.08 and this Article IX shall survive the Effective Time.
SECTION 9.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or email or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Merger Sub:
Xxxxx Xxxxx & Sons Inc.
0000 Xxxxxx Xxxxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx, Esq.
xxxxxxxxx@xxxxx.xxx
with a copy to:
Shearman & Sterling LLP
000 Xxx Xxxxxx
Xxxxxxxx Xxxxx Xxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0 XXXXXX
Attention: Xxxxx X. Xxxxx, Esq.
xxxxxx@xxxxxxxx.xxx
and
Xxxx X. Xxxxxxx, Esq.
xxxxxxxx@xxxxxxxx.xxx
if to the Company:
Mayor's Jewelers, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
xxxxxxxxxx@xxxxxx.xxx
and
38
Xxx Xxxxxxx Lieff, Chairperson of the Special
Committee
xxxxxxxx@xxx.xxx
with a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
xxxxxx.xxxx@xxxxx.xxx
and
King & Spalding LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxx, Esq.
xxxxxxx@xxxxx.xxx
SECTION 9.03 Certain Definitions. (a) For purposes of this
Agreement:
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified person.
"associate" of a specified person has the meaning ascribed to such
term under Rule 12b-2 of the Exchange Act.
"business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in The City of New York and/or Montreal,
Quebec.
"Company Material Adverse Effect" means any event, circumstance,
change or effect that, individually or in the aggregate with all other
events, circumstances, changes and effects, is or is reasonably likely to
be materially adverse to (i) the business, condition (financial or
otherwise), assets, liabilities or results of operations of the Company
and its subsidiaries taken as a whole or (ii) the ability of the Company
to consummate the transactions contemplated by this Agreement; provided,
however, that clause (i) shall not include any event, circumstance, change
or effect resulting from (x) changes in general economic conditions,
changes in the stock price of the Company, or changes in securities
markets in general that do not have a materially disproportionate effect
(relative to other industry participants) on the Company or its
subsidiaries, (y) general changes in the industries in which the Company
and its subsidiaries operate, except those events, circumstances, changes
or effects that adversely affect the Company and its subsidiaries to a
materially greater extent than they affect other entities operating
39
in such industries or (z) the public announcement or pendency of the
transactions contemplated hereby.
"Company Preferred Stock" means the shares of preferred stock, par
value $0.0001 per share, of the Company designated as "Series A-1
Convertible Preferred Stock."
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise.
"Disinterested Stockholder Vote" means the affirmative vote in favor
of the approval and adoption of this Agreement by at least a majority of
the outstanding shares of Company Common Stock voted, in person or by
proxy (but not including a vote that is not counted as either affirmative
or negative), at the Company Stockholder meeting by persons other than
Parent or any person that is an affiliate or associate of Parent.
"Environmental Laws" means any United States federal, state or local
or Canadian federal, provincial or local or non-United States or Canadian
Laws relating to (i) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or
(iii) pollution or protection of the environment, health, safety or
natural resources.
"five-percent transferee shareholder" means any person who owns at
least five percent of either the total voting power or total value of the
stock of Parent immediately after the Merger after applying the rules of
Section 1.367(a)-3(c)(4) of the income tax regulations promulgated under
the Code.
"Hazardous Substances" means (i) petroleum and petroleum products,
including crude oil and any fractions thereof; (ii) natural gas, synthetic
gas, and any mixtures thereof; (iii) polychlorinated biphenyls, asbestos
and radon; (iv) any other contaminant; and (v) any substance, material or
waste regulated by any Governmental Authority pursuant to any
Environmental Law.
"Intellectual Property" means (i) United States, Canadian and
international patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, trade dress, logos, trade
names, corporate names and other source identifiers, and registrations and
applications for registration thereof, (iii) copyrightable works,
copyrights, and registrations and applications for registration thereof,
and (iv) confidential and proprietary information, including trade secrets
and know-how.
"knowledge" when used in reference to Parent, means actual knowledge
of any executive officer of Parent who is also an executive officer of the
Company.
40
"Parent Material Adverse Effect" means any event, circumstance,
change or effect that, individually or in the aggregate with all other
events, circumstances, changes and effects, is or is reasonably likely to
be materially adverse to (i) the business, condition (financial or
otherwise), assets, liabilities or results of operations of Parent and the
Subsidiaries taken as a whole or (ii) the ability of Parent to consummate
the transactions contemplated by this Agreement; provided, however, that
clause (i) shall not include any event, circumstance, change or effect
resulting from (x) changes in general economic conditions or changes in
securities markets in general that do not have a materially
disproportionate effect (relative to other industry participants) on
Parent or the Subsidiaries, (y) general changes in the industries in which
Parent and the Subsidiaries operate, except those events, circumstances,
changes or effects that adversely affect Parent and the Subsidiaries to a
materially greater extent than they affect other entities operating in
such industries or (z) the public announcement or pendency of the
Transactions.
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
"Required Company Vote" means the affirmative vote in favor of the
approval and adoption of this Agreement by the holders of the Company
Common Stock and the Company Preferred Stock, voting as a single class,
representing at least a majority of the sum of (i) the outstanding shares
of Company Common Stock and (ii) the shares of Company Common Stock into
which the outstanding shares of Company Preferred Stock are convertible.
"subsidiary" or "subsidiaries" means, with respect to any person,
any corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are directly or
indirectly owned by such person.
"Taxes" shall mean any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect
to income, franchise, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees;
and customers' duties, tariffs and similar charges.
41
(b) Unless otherwise noted, all references to "$" or "dollars" shall
mean U.S. dollars.
(c) The following terms have the meaning set forth in the Sections
set forth below:
Defined Term Location of Definition
------------ ----------------------
Action............................................. Section 4.11
Agreement.......................................... Preamble
AMEX............................................... Section 2.02(e)
Audited Financial Statements....................... Section 4.08
Blue Sky Laws...................................... Section 3.02(b)
Certificate of Merger.............................. Section 1.02
Certificates....................................... Section 2.02(b)
Closing............................................ Section 1.02
Code............................................... Recitals
Company............................................ Preamble
Company Board...................................... Recitals
Company Common Stock............................... Section 2.01(a)
Company Disclosure Schedule........................ Section 3.02
Company Recommendation............................. Section 6.01(b)
Company Restricted Stock Award..................... Section 2.05
Company Stock Options.............................. Section 2.04(a)
Company Stock Option Plans......................... Section 2.04(a)
Company Stockholders' Meeting...................... Section 6.01(a)
Company Triggering Event........................... Section 8.01
Company Warrants................................... Section 2.06(a)
Company Warrant Agreements......................... Section 2.06(a)
Confidentiality Agreement.......................... Section 6.03(b)
DGCL............................................... Recitals
Effective Time..................................... Section 1.02
Environmental Permits.............................. Section 4.17
Exchange Act....................................... Section 3.02(b)
Exchange Agent..................................... Section 2.02(a)
Exchange Fund...................................... Section 2.02(a)
Exchange Ratio..................................... Section 2.01(a)
Expenses........................................... Section 8.03
Financial Statements............................... Section 4.08
GAAP............................................... Section 4.10(a)
Governmental Authority............................. Section 3.02(b)
HLHZ Fairness Opinion.............................. Section 3.05
Inventories........................................ Section 4.25
IRS................................................ Section 6.08(b)
ITA................................................ Section 2.02(i)
Law................................................ Section 3.02(a)
Lease Documents.................................... Section 4.14(b)
42
Defined Term Location of Definition
------------ ----------------------
Liens.............................................. Section 4.14(a)
Material Contracts................................. Section 4.18(a)
Material Subsidiary................................ Section 4.01(c)
Merger............................................. Recitals
Merger Consideration............................... Section 2.01(a)
Merger Sub......................................... Preamble
Order.............................................. Section 7.01(c)
Parent............................................. Preamble
Parent Board....................................... Recitals
Parent Class B Shares ............................. Section 4.03(a)
Parent Common Stock................................ Section 2.01(a)
Parent Disclosure Schedule......................... Section 4.01(b)
Parent Licensed Intellectual Property.............. Section 4.15
Parent Owned Intellectual Property................. Section 4.15
Parent Permits..................................... Section 4.06
Parent Preferred Stock............................. Section 4.03(a)
Parent SEC Reports................................. Section 4.07
Parent Stock Option Plan........................... Section 4.03(a)
Permitted Liens.................................... Section 4.14(a)
Plans.............................................. Section 4.12(a)
Proxy Statement.................................... Section 6.01(a)
Registration Statement............................. Section 6.01(a)
Representatives.................................... Section 6.03(a)
SEC................................................ Section 4.07
Secured Convertible Notes.......................... Section 7.03(i)
Securities Act..................................... Section 4.03(d)
Shares............................................. Section 2.01(a)
Special Committee.................................. Recitals
Subsidiary......................................... Section 4.01
Subsidiaries....................................... Section 4.01
Substitute Option.................................. Section 2.04(a)
Substitute Warrant................................. Section 2.06(a)
Surviving Corporation.............................. Section 1.01
Terminating Company Breach......................... Section 8.01(f)
Terminating Parent Breach.......................... Section 8.01(g)
Transactions....................................... Section 3.01
Unaudited Financial Statements..................... Section 4.08
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as
43
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05 Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 6.03(b), all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned or delegated (whether pursuant to a merger, by operation of Law or
otherwise).
SECTION 9.06 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.04 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in any Delaware Chancery Court. The parties hereto hereby
(a) submit to the exclusive jurisdiction of the Delaware Chancery Court for the
purpose of any Action arising out of or relating to this Agreement brought by
any party hereto, and (b) irrevocably waive, and agree not to assert by way of
motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the Delaware Chancery Court, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the Transactions may not be enforced in or by the
Delaware Chancery Court.
SECTION 9.09 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable Law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the Transactions. Each of
the parties hereto (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it and the other hereto have been induced to enter into
this Agreement and the Transactions, as applicable, by, among other things, the
mutual waivers and certifications in this Section 9.09.
SECTION 9.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
44
SECTION 9.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 9.12 Special Committee. Prior to the Effective Time, any
consent, waiver or other determination to be made, or action to be taken, by the
Company under this Agreement shall be made or taken only upon the approval of
the Special Committee, including, without limitation, pursuant to or under
Section 5.02, Section 7.03 or Article VIII.
45
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
XXXXX XXXXX & SONS INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President &
Chief Executive Officer
BIRKS MERGER CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President
MAYOR'S JEWELERS, INC.
By: /s/ Xxxx Xxxxxxxxx
___________________________________
Name: Xxxx Xxxxxxxxx
Title: SVP &
Chief Administrative Officer
EXHIBIT 6.06
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[___] [_], 0000
Xxxxx Xxxxx & Sons Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Mayor's Jewelers, Inc., (the "Company"), as the
term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145
of the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of Merger
and Reorganization, dated as of April 18, 2005 (the "Merger Agreement"), among
Xxxxx Xxxxx & Sons Inc., a Canadian corporation ("Parent"), Birks Merger
Corporation, a Delaware corporation ("Merger Sub"), and the Company, Merger Sub
will be merged with and into the Company (the "Merger"). Capitalized terms used
in this letter agreement without definition shall have the meanings assigned to
them in the Merger Agreement.
As a result of the Merger, I may receive shares of common stock,
without par value, of Parent (the "Parent Shares"). I would receive such Parent
Shares in exchange for shares (or upon exercise of options for shares) owned by
me of common stock, par value $0.0001 per share, of the Company (the "Company
Shares").
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Parent Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the
Parent Shares, to the extent I felt necessary, with my counsel or counsel
for the Company.
C. I have been advised that the issuance of the Parent Shares to
me pursuant to the Merger has been registered with the Commission under
the Act on a Registration Statement on Form F-4. However, I have also been
advised that, because at the time the Merger is submitted for a vote of
the shareholders of the Company, (a) I may be deemed to be an affiliate of
the Company and (b) the distribution by me of the Parent Shares has not
been registered under the Act, I may not sell, transfer or otherwise
dispose of the Parent Shares issued to me in the Merger unless (i) such
sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer or
other disposition has been registered under the Act or (iii) in the
opinion of counsel reasonably acceptable to Parent, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Shares by me or on
my behalf under the Act or, except as provided in paragraph 2(A) below, to
take any other action necessary in order to make compliance with an
exemption from such registration available.
E. I understand that there will be placed on the certificates for
the Parent Shares issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY
BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
[______], 2005 BETWEEN THE REGISTERED HOLDER HEREOF AND XXXXX XXXXX
& SONS INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF XXXXX XXXXX & SONS INC."
F. I understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933.
G. Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter, nor as a waiver of any rights I may have
to object to any claim that I am such an affiliate on or after the date of
this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with me
as follows:
A. For so long as and to the extent necessary to permit me to
sell the Parent Shares pursuant to Rule 145 and, to the extent applicable,
Rule 144 under the Act, Parent
Exhibit 6.06 - 2
shall (a) use its reasonable efforts to (i) file, on a timely basis, all
reports and data required to be filed with the Commission by it pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) furnish to me upon request a written statement
as to whether Parent has complied with such reporting requirements during
the 12 months preceding any proposed sale of the Parent Shares by me under
Rule 145, and (b) otherwise use its reasonable efforts to permit such
sales pursuant to Rule 145 and Rule 144. Parent hereby represents to me
that it has filed all reports required to be filed with the Commission
under Section 13 of the Exchange Act during the preceding 12 months.
B. It is understood and agreed that certificates with the legends
set forth in paragraphs I(E) and l(F) above will be substituted by
delivery of certificates without such legends if (i) one year shall have
elapsed from the date the undersigned acquired the Parent Shares received
in the Merger and the provisions of Rule 145(d)(2) are then available to
the undersigned, (ii) two years shall have elapsed from the date the
undersigned acquired the Parent Shares received in the Merger and the
provisions of Rule 145(d)(3) are then applicable to the undersigned, or
(iii) Parent has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Parent, or a "no action"
letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no
longer apply to the undersigned.
Very truly yours,
_______________________________________
Name:
Agreed and accepted this [___] day
of [_________], 2005, by
XXXXX XXXXX & SONS INC.
By: ________________________________
Name:
Title:
Exhibit 6.06 - 3
EXHIBIT 7.03(f)(i)
CANADA BUSINESS
CORPORATIONS ACT
ARTICLES
1. NAME OF THE CORPORATION
XXXXX XXXXX & SONS INC.
2. THE PROVINCE OR TERRITORY IN CANADA WHERE THE REGISTERED OFFICE IS
SITUATED
Province of Quebec
3. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE
The attached Schedule 1 is forming part hereof.
4. RESTRICTIONS, IF ANY, ON SHARE TRANSFERS
None
5. NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS
A minimum of three (3) directors and a maximum of fifteen (15) directors.
6. RESTRICTIONS, IF ANY, ON THE BUSINESS THE CORPORATION MAY CARRY ON
None.
7. OTHER PROVISIONS, IF ANY
(a) Meetings of shareholders of the Corporation may be held in the
greater metropolitan area of any city having a population of more
than 80,000 inhabitants in the United States, in any member-country
of the European Union or in Asia.
(b) A director's term of office shall be from the date of the meeting at
which he is elected or appointed until the first annual meeting next
following his election or nomination or, if an election of the board
of directors is not held at such meeting or if such meeting does not
occur, at the date on which his successor is elected or appointed,
or earlier if he dies or resigns, is removed or disqualified, or if
his term of office ends for any other reason.
(c) The directors may appoint one or more directors, who shall hold
office for a term expiring no later than the close of the next
annual meeting of shareholders, but the total number of directors so
appointed may not exceed one-third of the number of directors
elected at the previous annual meeting of shareholders.
SCHEDULE 1
3. THE CLASSES AND MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE:
Unlimited number of Class A Voting Shares without nominal or par value;
Unlimited number of Class B Multiple Voting Shares without nominal or par
value; and Unlimited number of Preferred Shares without nominal or par
value, issuable in series.
The Class A Voting Shares and the Class B Multiple Voting Shares are
sometimes referred to herein collectively as the "Common Shares". Any
capitalized term shall have the meaning assigned to such term in these
Articles. Any reference herein to the Act is a reference to the Canada
Business Corporations Act as it now exists and as it may be amended from
time to time and any reference herein to a section of the Act is a
reference to a section of the Act as such section is presently numbered or
as it may be renumbered from time to time.
I. THE CLASS A VOTING SHARES SHALL HAVE ATTACHED THERETO THE FOLLOWING
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:
(b) Voting. Each Class A Voting Share shall entitle the holder thereof
to one (1) vote at all meetings of the shareholders of the
Corporation (except meetings at which only holders of another
specified class of shares are entitled to vote pursuant to the
provisions hereof or pursuant to the provisions of the Act).
(c) Ranking on Liquidation. In the event of the liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary,
or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, subject to
the rights, privileges, restrictions and conditions attaching to any
other class of shares ranking prior to the Class A Voting Shares or
the Class B Multiple Voting Shares, the holders of the Class A
Voting Shares and the holders of the Class B Multiple Voting Shares
shall be entitled to receive the remaining property of the
Corporation. The holders of the Class A Voting Shares and the
holders of the Class B Multiple Voting Shares shall rank equally
with respect to the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of
the Corporation among shareholders for the purpose of winding-up its
affairs.
(d) Dividends and Distributions. In addition to any dividend or
distribution declared by the directors of the Corporation in respect
of Class A Voting Shares, holders of Class A Voting Shares shall be
entitled to receive a dividend or distribution, whether cash,
non-cash or some combination thereof, equal (on a per share basis)
to any dividend or distribution declared by the directors of the
Corporation in respect of the Class B Multiple Voting Shares.
Dividends and distributions on Class A Voting Shares shall be
payable on the date fixed for payment of the dividend or
distribution in respect of Class A Voting Shares or, if applicable,
on the date fixed for payment of any dividend or distribution in
respect of Class B Multiple Voting Shares.
-3-
(e) Right of Participation in a Sale Transaction.
(i) No holder of Class B Multiple Voting Shares (a "Selling
Holder") shall sell, transfer or otherwise dispose of Class B
Multiple Voting Shares if, immediately following such sale,
transfer or disposition of Class B Multiple Voting Shares,
such Selling Holder and its Affiliates shall control less than
a majority of the total voting rights attached to the Common
Shares issued and outstanding on the date of such sale,
transfer or disposition (a "Sale Transaction"), unless all
other holders of Common Shares shall have the right (A) to
receive the same consideration (on a per share basis), whether
cash, non-cash or some combination thereof, as that to be
received by the Selling Holder pursuant to the Sale
Transaction and (B) to participate in such Sale Transaction on
the same terms as the Selling Holder in all other material
respects, including in respect of the conditions to such Sale
Transaction. Written notice of any Sale Transaction, which
notice shall specify the terms of such Sale Transaction and
the right of all holders of Common Shares to participate in
such Sale Transaction, shall be provided to the holders of
Common Shares by first class mail, at least twenty (20)
business days prior to the consummation of such Sale
Transaction.
(ii) Any Sale Transaction not in compliance with subsection (e)(i)
above shall be null and void and shall not be registered in
the books of the Corporation.
(iii) Notwithstanding the foregoing, none of the following shall
constitute a Sale Transaction: (A) any pledge, mortgage,
hypothecation, lien or similar encumbrance, whether by
possession or registration, of Class B Multiple Voting Shares
which creates a security interest in favor of another person
or entity, and (B) any sale, transfer or other disposition of
Class B Multiple Voting Shares to Affiliates, Associates or
shareholders of the transferor of such Class B Multiple Voting
Shares. For purposes of these Articles, an "Affiliate" means a
person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified person. For purposes of these
Articles, an "Associate", when used to indicate a relationship
with any person, means (x) any trust or other estate in which
such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary
capacity and (y) a spouse or child of such person.
(f) Right of Participation in a Business Combination.
(i) The Corporation shall not consummate a Business Combination
unless the holders of Class A Voting Shares shall have the
right (A) to receive the same consideration (on a per share
basis), whether cash, non-cash or some combination thereof, as
that to be received by the holders of Class B Multiple Voting
Shares in connection with such Business Combination
-4-
and (B) to participate in such Business Combination on the
same terms as the holders of Class B Multiple Voting Shares in
all other material respects, including in respect of the
conditions to such Business Combination.
(ii) "Business Combination" as used herein shall mean, whether in
one or a series of related transactions:
(A) any merger, amalgamation, recapitalization or
consolidation involving the Corporation, other than a
merger, amalgamation, recapitalization, consolidation or
similar transaction with a wholly-owned subsidiary of
the Corporation or which is solely for the purpose of
continuance of the Corporation as a corporation in
another jurisdiction;
(B) any sale, lease, exchange, transfer or other disposition
involving 50% or more of the assets of the Corporation
and its subsidiaries, on a consolidated basis; or
(C) any agreement, contract or other arrangement having the
same purpose or effect as the transactions described in
(A) and (B) above.
(g) Transactions or Actions Requiring Special Approval.
(i) In addition to any other approvals required under the Act,
prior to consummating a Related Party Transaction, the
Corporation shall obtain (A) the consent of the majority of a
committee of independent directors of the Corporation and (B)
with respect to clauses (x) and (y) of the definition of
Related Party Transaction below, the affirmative vote in favor
of the approval of the Related Party Transaction by the
majority of the holders of Class A Voting Shares (exclusive of
Class A Voting Shares held by the Related Person (and its
Affiliates and Associates) which is or would be a party to
such Related Party Transaction) that cast a vote, in person or
by proxy (but not including any vote that is not counted as
either an affirmative or negative vote), at the annual or
special shareholders meeting at which such Related Party
Transaction is considered.
(ii) For purposes of these Articles, (A) "Related Party
Transaction" shall mean (x) consummation of a Business
Combination with a Related Person; (y) amending, repealing or
altering in anyway any provision of these Articles or the
By-laws of the Corporation, except for matters not having an
adverse effect on the holders of Class A Voting Shares; or (z)
the issuance, sale, exchange, transfer or other disposition
(in one transaction or a series of related transactions) by
the Corporation or any wholly-owned subsidiary of the
Corporation of any securities of the Corporation or of
-5-
such subsidiary to a Related Person (other than pursuant to:
an employee or director stock incentive plan or other
compensation arrangements approved by the Compensation
Committee of the Corporation; an offering made to all holders
of Class A Voting Shares; or a public offering); and (B)
"Related Person" shall mean any individual, corporation,
partnership, group, association or other person or entity
that, together with its Affiliates and Associates,
beneficially owns Class A Voting Shares and/or Class B
Multiple Voting Shares which, in the aggregate, equal twenty
percent (20%) or more of the total voting rights attached to
the Common Shares issued and outstanding at the time the
definitive agreement with respect to a Related Party
Transaction is executed.
(h) Subdivision, Consolidation, Reclassification or other Change. No
subdivision, consolidation or reclassification of, or other change
to, the Class A Voting Shares shall be carried out, either directly
or indirectly unless, at the same time, the Class B Multiple Voting
Shares are subdivided, consolidated, reclassified or changed in the
same manner and on the same basis.
(i) Equal Status. Except as otherwise expressly provided in these
Articles, Class A Voting Shares and Class B Multiple Voting Shares
shall have the same rights and privileges and shall rank equally,
share ratably and be equal in all respects as to all matters.
II. THE CLASS B MULTIPLE VOTING SHARES SHALL HAVE ATTACHED THERETO THE
FOLLOWING RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:
(a) Voting. Each Class B multiple voting share shall entitle the holder
thereof to ten (10) votes at all meetings of the shareholders of the
Corporation (except meetings at which only holders of another
specified class of shares are entitled to vote pursuant to the
provisions hereof or pursuant to the provisions of the Act).
(b) Ranking on Liquidation. In the event of the liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary,
or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, subject to
the rights, privileges, restrictions and conditions attaching to any
other class of shares ranking prior to the Class B Multiple Voting
Shares or the Class A Voting Shares, the holders of the Class B
Multiple Voting Shares and the holders of the Class A Voting Shares
shall be entitled to receive the remaining property of the
Corporation. The holders of the Class B Multiple Voting Shares and
the holders of the Class A Voting Shares shall rank equally with
respect to the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of
the Corporation among shareholders for the purpose of winding-up its
affairs.
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(c) Dividends and Distributions. In addition to any dividend or
distribution declared by the directors in respect of Class B
Multiple Voting Shares, holders of Class B Multiple Voting Shares
shall be entitled to receive a dividend or distribution, whether
cash, non-cash or some combination thereof, equal (on a per share
basis) to any dividend or distribution declared by the directors of
the Corporation in respect of Class A Voting Shares. Dividends and
distributions on Class B Multiple Voting Shares shall be payable on
the dated fixed for payment of the dividend or distribution in
respect of Class B Multiple Voting Shares or, if applicable, on the
date fixed for payment of a dividend or distribution in respect of
Class A Voting Shares
(d) Conversion by Holder into Class A Voting Shares. Each Class B
multiple voting share may at any time and from time to time, at the
option of the holder, be converted into one (1) fully paid and
non-assessable Class A voting share. Such conversion right shall be
exercised as follows:
(i) the holder of Class B Multiple Voting Shares shall send to the
transfer agent of the Corporation a written notice,
accompanied by a certificate or certificates representing the
Class B Multiple Voting Shares in respect of which the holder
desires to exercise such conversion right. Such notice shall
be signed by the holder of the Class B Multiple Voting Shares
in respect of which such right is being exercised, or by the
duly authorized representative thereof, and shall specify the
number of Class B Multiple Voting Shares which such holder
desires to have converted. The holder shall also pay any
governmental or other tax, if any, imposed in respect of such
conversion. The conversion of the Class B Multiple Voting
Shares into Class A Voting Shares shall take effect upon
receipt by the transfer agent of the Corporation of the
conversion notice accompanied by the certificate or
certificates representing the Class B Multiple Voting Shares
in respect of which the holder desires to exercise such
conversion right.
(ii) upon receipt of such notice and certificate or certificates by
the transfer agent of the Corporation, the Corporation shall,
effective as of the date of such receipt, issue or cause to be
issued a certificate or certificates representing Class A
Voting Shares into which Class B Multiple Voting Shares are
being converted. If less than all of the Class B Multiple
Voting Shares represented by any certificate are to be
converted, the holder shall be entitled to receive a new
certificate representing the Class B Multiple Voting Shares
represented by the original certificate which are not to be
converted.
(e) Subdivision, Consolidation, Reclassification or other Change. No
subdivision, consolidation or reclassification of, or other change
to, the Class B Multiple Voting Shares shall be carried out unless,
at the same time, the Class A Voting Shares are subdivided,
consolidated, reclassified or changed in the same manner and on the
same basis.
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(f) Equal Status. Except as otherwise expressly provided in these
Articles, Class B Multiple Voting Shares and Class A Voting Shares
shall have the same rights and privileges and shall rank equally,
share ratably and be equal in all respects as to all matters.
III. THE PREFERRED SHARES SHALL HAVE ATTACHED THERETO, AS A CLASS, THE
FOLLOWING RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS:
(a) Issuance of Preferred Shares, in Series. The directors of the
Corporation may, at any time and from time to time, issue Preferred
Shares in one (1) or more series, each series to consist of such
number of Preferred Shares as may, before issuance thereof, be
determined by the directors.
(b) Determination of Rights, Privileges, Restrictions, Conditions and
Limitations attaching to Series of Preferred Shares. The directors
of the Corporation may, subject to the following, from time to time
fix, before issuance, the designation, rights, privileges,
restrictions, conditions and limitations to attach to the Preferred
Shares of each series including, without limiting the generality of
the foregoing,
(i) the rate, amount or method of calculation of preferential
dividends of the Preferred Shares of such series, if any,
whether cumulative or non-cumulative or partially cumulative,
and whether such rate, amount or method of calculation shall
be subject to change or adjustment in the future, the currency
or currencies of payment, the date or dates and place or
places of payment thereof and the date or dates from which
such preferential dividends shall accrue; provided, that, the
dividends payable with respect to any series of Preferred
Shares, whether cumulative or non-cumulative or partially
cumulative, shall not exceed five (5) percent of the
liquidation preference of such series of Preferred Shares;
(ii) the redemption price and terms and conditions of redemption,
if any, of the Preferred Shares of such series; provided,
that, without the approval by a majority of the votes cast at
a meeting of shareholders of the Company duly called, the
redemption price shall not exceed the liquidation preference
of such shares;
(iii) the rights of retraction, if any, vested in the holders of
Preferred Shares of such series, and the prices and the other
terms and conditions of any rights of retraction, and whether
any additional rights of retraction may be vested in such
holders in the future; provided, that, without the approval by
a majority of the votes cast at a meeting of shareholders of
the Company duly called, the retraction price shall not exceed
the liquidation preference of such shares;
(iv) the voting rights, if any, of the Preferred Shares of such
series; provided, that, the approval by a majority of the
votes cast at a meeting of
-8-
shareholders of the Corporation duly called shall be required
for the issuance of any series of Preferred Shares with voting
rights;
(v) the conversion rights and terms and conditions of conversion,
if any, of the Preferred Shares of such series; provided,
that, the approval by a majority of the votes cast at a
meeting of shareholders of the Company duly called shall be
required for the issuance of any series of Preferred Shares
which are convertible into securities with voting rights;
(vi) any sinking fund, purchase fund or other provisions attaching
to the Preferred Shares of such series; and
(vii) any other relative rights, preferences and limitations of the
Preferred Shares of such series,
the whole subject to the issue of a certificate of amendment in
respect of articles of amendment in the prescribed form to designate
a series of Preferred Shares.
(c) Cumulative Dividends or Return of Capital not Paid in Full. Pursuant
to section 27(2) of the Act, when any cumulative dividends or
amounts payable on a return of capital in respect of a series of
Preferred Shares are not paid in full, the Preferred Shares of all
series shall participate ratably in respect of such dividends
including accumulations, if any, in accordance with the sums which
would be payable on the Preferred Shares if all such dividends were
declared and paid in full, and on any return of capital in
accordance with the sums which would be payable on such return of
capital if all sums so payable were paid in full.
(d) Payment of Dividends and Other Preferences. The Preferred Shares
shall be entitled to preference over the Class A Voting Shares, the
Class B Multiple Voting Shares and any other shares of the
Corporation ranking junior to the Preferred Shares with respect to
the payment of dividends, and may also be given such other
preferences over the Class A Voting Shares, the Class B Multiple
Voting Shares and any other shares of the Corporation ranking junior
to the Preferred Shares, as may be fixed by the directors of the
Corporation, as to the respective series authorized to be issued.
(e) Procedure for Payment of Dividends. No dividends shall at any time
be declared or paid or set apart for payment on any shares of the
Corporation ranking junior to the Preferred Shares, unless all
dividends up to and including the dividends payable for the last
completed period for which such dividends shall be payable on each
series of Preferred Shares then issued and outstanding shall have
been declared and paid or set apart for payment at the date of such
declaration or payment or setting apart for payment on such shares
of the Corporation ranking junior to the Preferred Shares, nor shall
the Corporation call for redemption or redeem or purchase for
cancellation or reduce or otherwise pay off any of the Preferred
Shares (less than the total amount then outstanding) or any shares
of
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the Corporation ranking junior to the Preferred Shares, unless all
dividends up to and including the dividend payable for the last
completed period for which such dividends shall be payable on each
series of the Preferred Shares then issued and outstanding shall
have been declared and paid or set apart for payment at the date of
such call for redemption, purchase, reduction or other payment.
(f) Ranking for Payment of Dividends and Liquidation, Dissolution or
Winding-up. The Preferred Shares of each series shall rank on a
parity with the Preferred Shares of every other series with respect
to priority in payment of dividends and in the distribution of
assets in the event of liquidation, dissolution or winding-up of the
Corporation whether voluntary of involuntary.
(g) Liquidation, Dissolution or Winding-up. In the event of the
liquidation, dissolution or winding-up of the Corporation or other
distribution of assets of the Corporation among shareholders for the
purpose of winding-up its affairs, the holders of the Preferred
Shares shall, before any amount shall be paid to or any property or
assets of the Corporation distributed among the holders of the Class
A Voting Shares, the Class B Multiple Voting Shares or any other
shares of the Corporation ranking junior to the Preferred Shares, be
entitled to receive:
(i) an amount equal to the consideration received by the
Corporation upon the issuance of such shares together with, in
the case of cumulative Preferred Shares, all unpaid cumulative
dividends (which for such purpose shall be calculated as if
such cumulative dividends were accruing from day to day for
the period from the expiration of the last period for which
cumulative dividends have been paid-up to and including the
date of distribution) and, in the case of non-cumulative
Preferred Shares, all declared and unpaid non-cumulative
dividends; and
(ii) if such liquidation, dissolution, winding-up or distribution
shall be voluntary, an additional amount equal to the premium,
if any, which would have been payable on the redemption of the
said Preferred Shares respectively if they had been called for
redemption by the Corporation on the date of distribution and,
if said Preferred Shares could not be redeemed on such date,
then an additional amount equal to the greatest premium, if
any, which would have been payable on the redemption of said
Preferred Shares respectively.
(h) Purchase by the Corporation. The Preferred Shares of any series may
be purchased for cancellation or made subject to redemption by the
Corporation at such times and at such prices and upon such other
terms and conditions as may be specified in the rights, privileges,
restrictions and conditions attaching to the Preferred Shares of
such series as set forth in the articles of amendment relating to
such series.
(i) Amendments. The provisions of this section III may be deleted or
varied in whole or in part by a certificate of amendment, but only
with the prior approval
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of the holders of the Preferred Shares, given as hereinafter
specified, in addition to any other approval required by the Act (or
any other statutory provision of the like or similar effect, from
time to time in force). The approval of the holders of the Preferred
Shares with respect to any and all matters hereinbefore referred to,
may be given by at least two-thirds (2/3) of the votes cast at a
meeting of the holders of the Preferred Shares duly called for that
purpose and held upon at least twenty-one (21) days notice at which
the holders of a majority of the outstanding Preferred Shares are
present or represented by proxy. If at any such meeting the holders
of a majority of the outstanding Preferred Shares are not present or
represented by proxy within thirty (30) minutes after the time
appointed for such meeting, then the meeting shall be adjourned to
such date being not less than thirty (30) days later and to such
time and place as may be determined by the chairman of the meeting
and not less than twenty-one (21) days notice shall be given of such
adjourned meeting but it shall not be necessary in such notice to
specify the purpose for which the meeting was originally called. At
such adjourned meeting the holders of Preferred Shares, present or
represented by proxy, may transact the business for which the
meeting was originally called and a resolution passed thereat by not
less than two-thirds (2/3) of the votes cast at such adjourned
meeting, shall constitute the authorization of the holders of the
Preferred Shares referred to above. The formalities to be observed
in respect of the giving of notice of any such meeting or adjourned
meeting and the conduct thereof shall be those from time to time
prescribed by the by-laws of the Corporation with respect to
meetings of shareholders. On every poll taken at every such meeting
or adjourned meeting, every holder of Preferred Shares shall be
entitled to one (1) vote in respect of each preferred share held.
EXHIBIT 7.03(f)(ii)
XXXXX XXXXX & SONS INC. / XXXXX XXXXX ET FILS INC.
BY-LAW NO. ONE
PAGE
----
DEFINITIONS..............................................................................................1
Act.................................................................................................1
Articles............................................................................................1
By-law..............................................................................................1
REGISTERED OFFICE........................................................................................1
CORPORATE SEAL...........................................................................................2
DIRECTORS................................................................................................2
Number..............................................................................................2
Vacancies...........................................................................................2
Vacation of Office..................................................................................2
Election............................................................................................3
Consent to be Elected or Appointed Director.........................................................3
MEETINGS OF DIRECTORS....................................................................................3
Place and Calling of Meetings.......................................................................3
Notice..............................................................................................4
Waiver of Notice....................................................................................4
Participation by Communication Facilities...........................................................4
Adjournment.........................................................................................4
Quorum and Voting...................................................................................5
Resolution in lieu of Meeting.......................................................................5
REMUNERATION OF DIRECTORS................................................................................5
SUBMISSION OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL.....................................6
CHAIRMAN OF THE BOARD....................................................................................6
OFFICERS.................................................................................................6
Appointment of Officers.............................................................................6
Remuneration and Removal of Officers................................................................7
Duties of Officers may be Delegated.................................................................7
President...........................................................................................7
Vice-President......................................................................................7
Secretary...........................................................................................8
Treasurer...........................................................................................8
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Assistant Secretary and Assistant Treasurer.........................................................8
COMMITTEES...............................................................................................8
Appointment of Committees...........................................................................8
Audit Committee.....................................................................................9
Nominating Committee................................................................................9
Corporate Governance Committee......................................................................9
Executive Committee................................................................................10
Compensation Committee.............................................................................10
DISCLOSURE OF INTEREST..................................................................................10
INDEMNIFICATION AND PROTECTION OF DIRECTORS, OFFICERS AND OTHERS........................................12
Liability..........................................................................................12
Indemnification....................................................................................12
Insurance..........................................................................................13
MEETINGS OF SHAREHOLDERS................................................................................13
Annual Meeting.....................................................................................13
Special Meetings...................................................................................13
Place of Meetings..................................................................................13
Notice.............................................................................................14
Omission of Notice.................................................................................14
Record Date........................................................................................14
Participation by Communication Facilities..........................................................15
Votes..............................................................................................15
Proxies............................................................................................16
Adjournment........................................................................................18
Quorum.............................................................................................18
SECURITIES..............................................................................................18
Certificates.......................................................................................18
Registrar and Transfer Agent.......................................................................18
Surrender of Share Certificates....................................................................19
Defaced, Destroyed, Stolen or Lost Certificates....................................................19
DIVIDENDS...............................................................................................19
NOTICES.................................................................................................20
Method of Giving Notices...........................................................................20
Shares registered in more than one (1) name........................................................20
Persons becoming entitled by operation of law......................................................20
Deceased Shareholder...............................................................................20
Signatures to Notices..............................................................................21
Computation of Time................................................................................21
Proof of Service...................................................................................21
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CHEQUES, DRAFTS, NOTES, ETC.............................................................................21
CUSTODY OF SECURITIES...................................................................................21
EXECUTION OF CONTRACTS, ETC.............................................................................22
DECLARATIONS............................................................................................23
FISCAL YEAR.............................................................................................23
EXHIBIT 7.03(f)(ii)
BY-LAW NO. ONE
being a by-law relating generally to the transaction of the business and
affairs of Xxxxx Xxxxx & Sons Inc./Xxxxx Xxxxx et Fils Inc. (the
"CORPORATION").
DEFINITIONS
1. In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
(a) "ACT" means the Canada Business Corporations Act, R.S.C., 1985,
chapter C-44, any statute that may be substituted therefore and any
regulations thereunder, as from time to time amended; and any
reference to a section of the Act is a reference to a section of the
Act as such section is presently numbered or as it may be renumbered
from time to time;
(b) "ARTICLES" means the articles of the Corporation, as from time to
time amended or restated;
(c) "BY-LAW" means this by-law and all other by-laws of the Corporation
from time to time in force and effect;
(d) words importing the singular number only shall include the plural
and vice versa; words importing the masculine gender shall include
the feminine and neuter genders and vice versa; words importing
persons shall include bodies corporate, corporations, companies,
partnerships, syndicates, trusts and any number or aggregate of
individuals;
(e) the headings used in this by-law are inserted for reference purposes
only and are not to be considered or taken into account in
construing the terms or provisions thereof or to be deemed in any
way to clarify, modify or explain the effect of any such terms or
provisions; and
(f) all terms contained in this by-law and which are defined in the Act
shall have the meanings given to such terms in the Act.
REGISTERED OFFICE
2. The Corporation may from time to time (i) by resolution of the board of
directors, change the place and/or address of the registered office of the
Corporation within the province specified in its articles and (ii) by articles
of amendment, change the province in which its registered office is situated to
another province of Canada.
-2-
CORPORATE SEAL
3. The Corporation may have one or more corporate seals which shall be such as
the board of directors may by resolution from time to time adopt and change.
DIRECTORS
4. Number
There shall be a board of directors consisting of such fixed number, or
minimum and maximum number of directors as may be set out in the articles. If
any of the issued securities of the Corporation are or were part of a
distribution to the public, remain outstanding and are held by more than one
person, the Corporation shall not have fewer than three (3) directors, at least
two (2) of whom are not officers or employees of the Corporation or its
affiliates.
5. Vacancies
If a fixed number of directors is set out in the articles and if such
fixed number is higher than the number of directors in office at the time of the
amendment to the articles, or if such fixed number is thereafter increased, the
resulting vacancies shall be filled at a meeting of shareholders duly called for
that purpose. Notwithstanding the provisions of this by-law and subject to the
provisions of the Act, if a vacancy should otherwise occur in the board, the
remaining directors, if constituting a quorum, may appoint a qualified person to
fill the vacancy for the remainder of the term, except a vacancy resulting from
the fixing, in the articles, of a number of directors that is higher than the
number of directors in office at the time of the amendment to the articles, from
a subsequent increase of such fixed number or from a failure of the shareholders
to elect the number or minimum number of directors specified in the articles. In
the absence of a quorum or if the vacancy has arisen from a failure by the
shareholders to elect the number or minimum number of directors specified in the
articles, the remaining directors shall forthwith call a meeting of shareholders
to fill the vacancy pursuant to subsection 111(2) of the Act. If the directors
fail to call such a meeting or if there are no directors then in office, any
shareholder may call the meeting. Where a vacancy or vacancies exist in the
board, the remaining directors may exercise all of the powers of the board so
long as a quorum remains in office.
6. Vacation of Office
The office of a director shall ipso facto be vacated if:
(a) he dies;
(b) by notice in writing to the Corporation, he resigns his office and
such resignation, if not effective immediately, becomes effective in
accordance with its terms;
-3-
(c) he is removed from office in accordance with section 109 of the Act;
or
(d) he ceases to be qualified to be a director.
7. Election
Directors shall be elected by the shareholders by ordinary resolution in a
general meeting unless the articles of the Corporation confer upon the directors
the right to appoint additional directors in which case, the dispositions of the
Act apply. A vote by ballot shall not be necessary for the election of the
directors unless it is required by someone present and entitled to vote at the
meeting.
A retiring director shall retain office until the adjournment or
termination of the meeting at which his successor is elected, unless such
meeting was called for the purpose of removing him from office as a director in
which case the director so removed shall vacate office forthwith upon the
passing of the resolution for his removal.
8. Consent to be Elected or Appointed Director
An individual who is elected or appointed to hold office as a director is
not a director and is deemed not to have been elected or appointed to hold
office as a director unless:
(a) the said individual was present at the meeting when the election or
appointment took place and he did not refuse to hold office as a
director; or
(b) the said individual was not present at the meeting when the election
or appointment took place and the said individual consented to hold
office as a director in writing before the election or appointment
or within ten (10) days after it, or the said individual has acted
as a director pursuant to the election or appointment.
MEETINGS OF DIRECTORS
9. Place and Calling of Meetings
Subject to the articles, meetings of directors may be held at any place
within or outside Canada as the directors may from time to time determine or the
person convening the meeting may give notice. A meeting of the board of
directors may be convened by the chairman of the board, if any, the president,
if any, or any director at any time. The secretary, if any, shall, upon
direction of any of the foregoing, convene a meeting of the board of directors.
-4-
10. Notice
Notice of the time and place for the holding of any such meeting shall be
delivered, mailed, faxed or emailed to each director at his latest address as
shown on the records of the Corporation no less than two (2) days or twelve (12)
days if mailed (exclusive of the day on which the notice is sent, but inclusive
of the day for which notice is given) before the date of the meeting; provided
that meetings of the board of directors may be held at any time without notice,
if all the directors have waived notice.
For the first meeting of the board of directors, to be held immediately
following the election of directors at any annual or special meeting of the
shareholders, no notice of such meeting need be given to the newly elected or
appointed director or directors in order for the meeting to be duly constituted,
provided a quorum of the directors is present.
A notice of a meeting of directors shall specify any matter referred to in
subsection 115(3) of the Act that is to be dealt with at the meeting but
otherwise need not specify the purpose of or the business to be transacted at
the meeting.
11. Waiver of Notice
Notice of any meeting of the board of directors or any irregularity in any
meeting or in the notice thereof may be waived by any director, and such waiver
may be validly given either before or after the meeting to which such waiver
relates. The attendance of a director at a meeting of directors is a waiver of
notice of the meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called.
12. Participation by Communication Facilities
A director may, if all the directors of the Corporation consent thereto
(either before, during or after the meeting), participate in a meeting of the
board of directors or of any committee thereof, if any, by means of a
telephonic, electronic or other communication facility that permits all
participants to communicate adequately with each other, and a director
participating in such manner is deemed to be present at that meeting. A consent
may be given with respect to all meetings of the board and/or of the committees
of the board, if any.
13. Adjournment
Any meeting of the board of directors may be adjourned from time to time
by the chairman of the meeting, with the consent of the meeting, to a fixed time
and place and no notice of the time and place for the continuance of the
adjourned meeting need be given to any director in such a case. Any adjourned
meeting shall be duly constituted if held in accordance with the terms of the
adjournment and a quorum is present at the meeting. The directors who formed a
quorum at the original meeting are not required to form the quorum at the
adjourned meeting. If there is no quorum present at the
-5-
adjourned meeting, the original meeting shall be deemed to have terminated
forthwith after its adjournment.
14. Quorum and Voting
Subject to the articles, a majority of the number of directors in office
shall constitute a quorum for the transaction of business. Subject to subsection
117(1) of the Act, no business shall be transacted by the directors, except at a
meeting of directors at which a quorum of the board is present. The directors
shall not transact business at a meeting unless the number of Canadian directors
required by the law are present, except where:
(a) a resident Canadian director who is unable to be present approves in
writing, or by telephonic, electronic or other communication
facility, the business transacted at the meeting; and
(b) the required number of resident Canadian directors would have been
present had that director been present at the meeting.
Questions arising at any meeting of the board of directors shall be
decided by a majority of votes cast. In case of an equality of votes, the
chairman of the meeting, in addition to his original vote, shall not have a
second or casting vote.
15. Resolution in lieu of Meeting
A resolution in writing, signed by all the directors entitled to vote on
that resolution at a meeting of directors or a committee of directors, if any,
is as valid as if it had been passed at a meeting of directors or committee of
directors, if any.
A copy of every such resolution shall be kept with the minutes of the
proceedings of the directors or committee of directors, if any.
REMUNERATION OF DIRECTORS
16. Subject to the articles, the remuneration to be paid to the directors shall
be such as the board of directors shall from time to time determine and such
remuneration shall not be in addition to the salary paid to any officer of the
Corporation who is also a member of the board of directors. The directors may
also by resolution award special remuneration to any director undertaking any
special services on the Corporation's behalf other than the routine work
ordinarily required of a director by the Corporation. The confirmation of any
such resolution or resolutions by the shareholders shall not be required. The
directors concerned shall not vote on such resolutions. The directors shall be
entitled to be paid their traveling and other expenses properly incurred by them
in connection with the affairs of the Corporation.
-6-
SUBMISSION OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL
17. The board of directors, in its discretion, may submit any contract, act or
transaction for approval, ratification or confirmation at any annual meeting of
the shareholders or at any special meeting of the shareholders called for the
purpose of considering the same and any contract, act or transaction that shall
be approved, ratified or confirmed by resolution passed by a majority of the
votes cast at any such meeting (unless any different or additional requirement
is imposed by the Act or by the Corporation's articles or the by-law) shall be
as valid and as binding upon the Corporation and upon all the shareholders as
though it had been approved, ratified or confirmed by every shareholder of the
Corporation.
CHAIRMAN OF THE BOARD
18. The chairman of the board, if any, shall, if present, preside at all
meetings of the board of directors and of shareholders. He shall sign such
contracts, documents or instruments in writing as require his signature and
shall have such other powers and duties as may from time to time be assigned to
him by resolution of the board of directors.
OFFICERS
19. Appointment of Officers
Subject to the articles, the board of directors, annually or as often as
may be required, may appoint among themselves a chairman of the board and may
appoint a president and a secretary and, if deemed advisable, may appoint a vice
chairman, one (1) or more vice-presidents (to which title may be added words
indicating seniority or function), a treasurer and one (1) or more assistant
secretaries and/or one (1) or more assistant treasurers. None of such officers,
except the chairman of the board, need be a director of the Corporation. The
board of directors may from time to time designate such other offices and
appoint such other officers, employees and agents as it shall deem necessary,
who shall have such authority and shall perform such functions and duties, as
may from time to time be prescribed by resolution of the board of directors. Any
two (2) or more offices may be held by the same person. In case and whenever the
same person holds the offices of secretary and treasurer he may, but need not,
be known as the secretary-treasurer.
20. Remuneration and Removal of Officers
Subject to the articles, the remuneration of all officers, employees and
agents elected or appointed by the board of directors may be determined from
time to time by resolution of the board of directors. The fact that any officer,
employee or agent is a director or shareholder of the Corporation shall not
disqualify him from receiving such
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remuneration as may be so determined. The
board of directors may, by resolution, remove any officer, employee or agent at
any time, with or without cause, subject to his rights under any employment
contract in force between the Corporation and such individual.
21. Duties of Officers may be Delegated
In case of the absence or inability or refusal to act of any officer of
the Corporation or for any other reason that the board of directors or the
President, as applicable, may deem sufficient, the board of directors or the
President, as applicable, may delegate all or any of the powers of such officer
to any other officer or to any director for the time being.
22. President
The president, if any, shall be the chief executive officer of the
Corporation and shall exercise general supervision over the business and affairs
of the Corporation. In the absence or inability of the chairman of the board, if
any, the president shall, when present, preside at all meetings of the board of
directors and shareholders; he shall sign such contracts, documents or
instruments in writing as require his signature and shall have such other powers
and shall perform such other duties as may from time to time be assigned to him
by resolution of the board of directors or as are incident to his office.
23. Vice-President
The vice-president or, if more than one (1), the vice-presidents, in order
of seniority, shall be vested with all the powers and shall perform all the
duties of the president in the absence or inability or refusal to act of the
president, provided, however, that a vice-president, who is not a director,
shall not preside as chairman at any meeting of shareholders. The vice-president
or, if more than one (1), the vice-presidents, in order of seniority, shall sign
such contracts, documents or instruments in writing as require his or their
signatures and shall also have such other powers and duties as may from time to
time be assigned to him or them by resolution of the board of directors or, to
the extent permitted by the Act, by the president of the Corporation.
24. Secretary
The secretary, if any, shall give or cause to be given notices for all
meetings of the board of directors, of committees thereof, if any, and of
shareholders when directed to do so and shall have charge, subject to the
provisions of this by-law, of the records referred to in section 20 of the Act
(except the accounting records) and of the corporate seal or seals, if any,
except when some other officer or agent has been appointed for that purpose. He
shall sign such contracts, documents or instruments in writing as require his
signature and shall have such other powers and duties as may from time to time
be assigned to him by resolution of the board of directors or as are incident to
his office.
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25. Treasurer
Subject to the provisions of any resolution of the board of directors, the
treasurer, if any, shall have the care and custody of all the funds and
securities of the Corporation and shall deposit the same in the name of the
Corporation in such bank or banks or with such other depositary or depositaries
as the board of directors may, by resolution, direct. He shall prepare, maintain
and keep or cause to be kept adequate books of accounts and accounting records.
He shall sign such contracts, documents or instruments in writing as require his
signature and shall have such other powers and duties as may from time to time
be assigned to him by resolution of the board of directors or as are incident to
his office. He may be required to give such bond for the faithful performance of
his duties as the board of directors, in their absolute discretion, may require,
and no director shall be liable for failure to require any such bond or for the
insufficiency of any such bond or for any loss by reason of the failure of the
Corporation to receive any indemnity thereby provided.
26. Assistant Secretary and Assistant Treasurer
The assistant secretary or, if more than one (1), the assistant
secretaries, in order of seniority, and the assistant treasurer or, if more than
one (1), the assistant treasurers, in order of seniority, shall respectively
perform all the duties of the secretary and treasurer, respectively, in the
absence or inability to act of the secretary or treasurer, as the case may be.
The assistant secretary or assistant secretaries, if more than one (1), and the
assistant treasurer or assistant treasurers, if more than one (1), shall sign
such contracts, documents or instruments in writing as require his or their
signatures respectively and shall have such other powers and duties as may from
time to time be assigned to them by resolution of the board of directors.
COMMITTEES
27. Appointment of Committees
The board of directors may from time to time appoint from their number one
(1) or more committees consisting of one (1) or more individuals and delegate to
such committee or committees any of the powers of the directors, except as
provided in subsection 115(3) of the Act. Unless otherwise ordered by the board,
a committee of directors shall have power to fix its quorum and to regulate its
proceedings. Meetings of any such committee may be held at any place in or
outside of Canada.
28. Audit Committee
The Corporation shall have an Audit Committee composed of not fewer than
three (3) directors. If any of the issued securities of the Corporation are or
were part of a distribution to the public, remain outstanding and are held by
more than one (1) person, each of the directors composing the Audit Committee
must be independent and none of them must be an employee of the Corporation or
any of its affiliates. The members of the
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Audit Committee shall be appointed annually by the board of directors from its
number. The Audit Committee shall be responsible for reviewing the scope and
results of the annual audit of the Corporation's consolidated financial
statements conducted by the Corporation's independent auditors, the scope of
other services provided by the Corporation's independent auditors, the proposed
changes in the Corporation's policies and procedures with respect to its
internal accounting, auditing, auditing and financial controls and shall have
such other powers and duties as may be provided in the Act or specified by the
board of directors.
29. Nominating Committee
The board of directors may appoint a Nominating Committee composed of not
fewer than three (3) directors. If any of the issued securities of the
Corporation are or were part of a distribution to the public, remain outstanding
and are held by more than one (1) person, each of the directors composing the
Nominating Committee must be independent and none of them must be an employee of
the Corporation or any of its affiliates. The Nominating Committee shall be
responsible for nominating potential nominees to the board of directors. The
members of the Nominating Committee shall be appointed annually by the board of
directors from its number. The Nominating Committee shall have the powers and
duties as may be specified by the board of directors.
30. Corporate Governance Committee
The board of directors shall have a Corporate Governance Committee
composed of not fewer than three (3) directors. If any of the issued securities
of the Corporation are or were part of a distribution to the public, remain
outstanding and are held by more than one (1) person, each of the directors
composing the Corporate Governance Committee must be independent and none of
them must be an employee of the Corporation or any of its affiliates. The
Corporate Governance Committee shall be responsible for overseeing all aspects
of the Corporation's corporate governance policies. The members of the Corporate
Governance Committee shall be appointed annually by the board of directors from
its number. The Corporate Governance Committee shall have such other powers and
duties that may be specified by the board of directors. No agreement or
arrangement between the Corporation and any affiliate of the Corporation shall
be entered into by the Corporation without the approval of the Corporate
Governance Committee; provided, however, that the foregoing prohibition shall
not apply to any agreement or arrangement that does not exceed any applicable
threshold which may be established by the Corporate Governance Committee from
time to time.
31. Executive Committee
The board of directors may appoint an Executive Committee composed of at
least three (3) members of the board of directors and responsible for
facilitating the efficient operation of the Corporation. The members of the
Executive Committee shall be appointed annually by the board of directors from
its number. The Executive Committee shall have the powers and duties as may be
specified by the board of directors.
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32. Compensation Committee
The board of directors shall appoint a Compensation Committee composed of
not fewer than three (3) directors. If any of the issued securities of the
Corporation are or were part of a distribution to the public, remain outstanding
and are held by more than one (1) person, each of the directors composing the
Compensation Committee must be independent and none of them must be an employee
of the Corporation or any of its affiliates. The Compensation Committee shall be
responsible for recommending to the board of directors executive compensation,
including base salaries, bonuses and long-term incentive awards for the
executive officers of the Corporation. The members of the Compensation Committee
shall be appointed annually by the board of directors from its number. The
Compensation Committee shall have the powers and duties as may be specified by
the board of directors.
DISCLOSURE OF INTEREST
33. A director or officer of the Corporation shall disclose to the Corporation,
in writing, or by requesting to have it entered in the minutes of meetings of
directors or of meetings of committees of directors, if any, the nature and
extent of any interest that he has in a material contract or material
transaction, whether made or proposed, with the Corporation: if the director or
officer is a party to the contract or the transaction; if he is a director or
officer, or an individual acting in a similar capacity of a party to the
contract or transaction; or if he has a material interest in a party to the
contract or transaction.
In the case of a contract or transaction or a proposed contract or
transaction involving a director, the disclosure shall be made at the meeting of
directors at which the question of entering into the contract or transaction is
first considered. If the director was not at the time of the meeting referred to
previously interested in the proposed contract or transaction, the disclosure
shall be at the first meeting of the directors held after he becomes so
interested. If the director becomes interested in a contract or transaction
after it is made, the disclosure shall be made at the first meeting of directors
held after the director becomes so interested. If an individual who is
interested in a contract or transaction later becomes a director, the disclosure
shall be made at the first meeting after he becomes a director.
If a material contract or material transaction, whether entered into or
proposed, is one that, in the ordinary course of the Corporation's business,
would not require approval by the directors or shareholders, a director or
officer shall disclose, in writing to the Corporation or request to have it
entered in the minutes of meetings of directors or of meetings of committees of
directors, if any, the nature and extent of his interest immediately after he
becomes aware of the contract or transaction.
In the case of a contract or transaction or proposed contract or
transaction involving an officer who is not a director, the disclosure shall be
made immediately after he becomes aware that the contract, transaction or
proposed contract or proposed
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transaction is to be considered or has been considered at a meeting. If the
officer becomes interested after a contract or transaction is made, the
disclosure shall be made immediately after he becomes so interested. If an
individual who is interested in a contract or transaction later becomes an
officer, the disclosure shall be made immediately after he becomes an officer.
A general notice to the directors declaring that a director or an officer
is to be regarded as interested, for any of the following reasons, in a contract
or transaction made with a party, is a sufficient declaration of interest in
relation to the contract or transaction:
(a) the director or officer is a director or officer or acting in a
similar capacity, of a party to the contract or transaction, or of a
party who has a material interest in a party to the contract or
transaction;
(b) the director or officer has a material interest in the party; or
(c) there has been a material change in the nature of the director's or
the officer's interest in the party.
A director required to make a disclosure of interest shall not vote on any
resolution to approve the contract or transaction unless the contract or
transaction:
(a) relates primarily to his remuneration as a director, officer,
employee or agent of the Corporation or an affiliate; or
(b) is for indemnity or insurance under section 124 of the Act.
INDEMNIFICATION AND PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
34. Liability
No director or officer shall be liable for the acts, receipts, neglects or
defaults of any other director, officer or employee of the Corporation, or for
joining any receipt or other act for conformity, or for any loss, damage or
expense happening to the Corporation through the insufficiency or deficiency of
title to any property acquired for or on behalf of the Corporation, or for the
insufficiency or deficiency of any security in or upon which any of the moneys
of the Corporation shall be invested, or for any loss or damage arising from the
bankruptcy, insolvency or tortuous acts of any person with whom any of the
moneys, securities or effects of the Corporation shall be deposited, or for any
loss occasioned by any error of judgment or oversight on his part, or for any
other loss, damage or misfortune which shall happen in the execution of the
duties of his office or in relation thereto, provided that nothing herein shall
relieve any director or officer from the duty to act in accordance with the Act
or from liability for any breach thereof.
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35. Indemnification
Subject to the Act, the Corporation shall indemnify a director or officer
of the Corporation, a former director or officer of the Corporation, or another
individual who acts or acted at the Corporation's request as a director or
officer, or an individual acting in a similar capacity, of another entity
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the individual in respect
of any civil, criminal, administrative, investigative or other proceeding in
which the individual is involved because of that association with the
Corporation or other entity if:
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation, or, as the case may be, to the best
interests of the other entity for which the individual acted as a
director of officer or in a similar capacity at the Corporation's
request; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the individual had
reasonable grounds for believing that the individual's conduct was
lawful.
The Corporation shall advance the necessary moneys to a director, officer
or other individual for the costs, charges and expenses of a proceeding referred
to previously. The individual shall repay the moneys if the individual does not
fulfill the previously named conditions.
The Corporation shall also indemnify such person in such other
circumstances as the Act permits or requires. Nothing in this by-law shall limit
the right of any person entitled to indemnity to claim indemnity apart from the
provisions of this by-law.
36. Insurance
Subject to the Act, the Corporation may purchase and maintain insurance
for the benefit of an individual referred to in section 35 against any liability
incurred by the individual in his capacity as a director or officer of the
Corporation or in the individual's capacity as a director or officer, or similar
capacity, of another entity (as such term is defined in the Act), if the
individual acts or acted in that capacity at the Corporation's request.
MEETINGS OF SHAREHOLDERS
37. Annual Meeting
Subject to compliance with section 133 of the Act, the annual meeting of
the shareholders shall be convened on such day in each year and at such time as
the board of directors may by resolution determine. The directors of the
Corporation shall call an annual meeting of shareholders not later than fifteen
(15) months after holding the last
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preceding annual meeting but no later than six (6) months after the end of the
Corporation's preceding financial year.
38. Special Meetings
Other meetings of the shareholders may be convened by order of the
chairman of the board, the president or a vice-president who is a director or by
the board of directors, to be held at such time and place as may be specified in
such order.
Special meetings of shareholders may also be called by written requisition
to the board of directors signed by shareholders holding between them not less
than five percent (5%) of the outstanding shares of the capital of the
Corporation entitled to vote thereat. Such requisition shall state the business
to be transacted at the meeting and shall be sent to each director and to the
registered office of the Corporation.
Except as otherwise provided in subsection 143(3) of the Act, it shall be
the duty of the board of directors, on receipt of such requisition, to cause the
meeting to be called by the secretary of the Corporation.
If the board of directors does not, within twenty-one (21) days after
receiving such requisition call a meeting, any shareholder who signed the
requisition may call the meeting.
39. Place of Meetings
Meetings of shareholders of the Corporation shall be held at the
registered office of the Corporation or at such other place in Canada as may be
specified in the notice convening such meeting. Notwithstanding the foregoing, a
meeting of shareholders may be held at a place outside Canada if the place does
not contravene the articles.
40. Notice
A notice stating the day, hour and place of meeting and, subject to
subsection 135(6) of the Act, the general nature of the business to be
transacted shall be served to each shareholder who is entitled to vote at such
meeting, each director of the Corporation and the auditor of the Corporation no
less than twenty-one (21) days or more than sixty (60) days before the meeting.
If such notice is served by mail, it shall be directed to the latest address, as
shown in the records of the Corporation, of the intended recipient. Notice of
any meeting of shareholders or any irregularity in any such meeting or in the
notice thereof may be waived by any shareholder, the duly appointed proxy of any
shareholder, any director or the auditor of the Corporation in any manner that a
notice can be given to the Corporation or by any other manner, and any such
waiver may be validly given either before or after the meeting to which such
waiver relates.
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41. Omission of Notice
The accidental omission to give notice of any meeting to or the
non-receipt of any notice by any person shall not invalidate any resolution
passed or any proceeding taken at any meeting of shareholders.
42. Record Date
The board of directors may, by resolution, fix in advance a date and time
as the record date for the determination of the shareholders entitled to receive
notice of a meeting of the shareholders and/or to vote at such meeting and/or to
receive the financial statements of the Corporation, but such record date shall
not precede by more than sixty (60) days or by less than twenty-one (21) days
the date on which the meeting is to be held and notice of such record date shall
be given not less than seven (7) days before such record date in the manner
prescribed in the Act unless waiver in accordance with the Act is obtained.
If the directors fail to fix in advance a date and time as the record date
in respect of all or any of the matters described above for any meeting of the
shareholders of the Corporation, the following provisions shall apply, as the
case may be:
(a) the record date for the determination of the shareholders entitled
to receive notice of a meeting of shareholders shall be at the close
of business on the day immediately preceding the day on which notice
is given or sent or, if no notice is given, the day on which the
meeting is held;
(b) the record date for the determination of the shareholders entitled
to vote at a meeting of shareholders shall be the day on which the
meeting is held or in accordance with subsection 138(3) of the Act,
if so determined by the directors; and
(c) the record date for the determination of the shareholders entitled
to receive the financial statements of the Corporation shall be the
close of business on the day on which the directors pass the
resolution relating thereto.
43. Participation by communication facilities
Any person entitled to attend a meeting of shareholders may participate in
the meeting by means of a telephonic, electronic or other communication facility
that permits all participants to communicate adequately with each other during
the meeting if the Corporation makes available such a communication facility. A
person participating in a meeting by such means is deemed to be present at that
meeting. A meeting of shareholders may be held, in accordance with the Act,
entirely by telephonic, electronic or other communication facility if the
requirements listed previously are met.
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44. Votes
Except in the case of a meeting held by telephonic, electronic or other
communication means, voting at a meeting of shareholders shall be by show of
hands, except where a ballot is demanded by a shareholder entitled to vote at
the meeting. A shareholder may demand a ballot either before or immediately
after any vote by show of hands.
Every question submitted to any meeting of shareholders shall be decided
in the first instance, unless a ballot is demanded, on a show of hands, and, in
case of an equality of votes, the chairman of the meeting shall not, both on a
show of hands and on a ballot, have a second or casting vote in addition to the
vote or votes to which he may be entitled as a shareholder.
At any meeting, unless a ballot is demanded, a declaration by the chairman
of the meeting that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact without proof of the number or proportion of
votes recorded in favour of or against the motion.
In the absence of the chairman of the board, the president and every
vice-president who is a director, the shareholders present entitled to vote
shall choose another director as chairman of the meeting, and if no director is
present or if all the directors present decline to take the chair, then the
shareholders present shall choose one of their number to be chairman of the
meeting.
If at any meeting a ballot is demanded on the election of a chairman or on
the question of adjournment or termination, it shall be taken forthwith without
adjournment. If a ballot is demanded on any other question or as to the election
of directors, it shall be taken in such manner and either at once or later at
the meeting or after adjournment as the chairman of the meeting directs. The
result of a ballot shall be deemed to be the resolution of the meeting at which
the ballot was demanded. A demand for a ballot may be withdrawn.
Where a person holds shares as a personal representative, such person or
his proxy is the person entitled to vote at all meetings of shareholders in
respect of the shares so held by him.
Where a person mortgages or hypothecates his shares, such person or his
proxy is the person entitled to vote at all meetings of shareholders in respect
of such shares unless, in the instrument creating the mortgage or hypothec, he
has expressly empowered the person holding the mortgage or hypothec to vote in
respect of such shares, in which case, subject to the articles, such holder or
his proxy is the person entitled to vote in respect of the shares.
Where two (2) or more persons hold the same share or shares jointly, any
one (1) of such persons present at a meeting of shareholders has the right, in
the absence of the
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other or others, to vote in respect of such share or shares, but if more than
one (1) of such persons are present or represented by proxy and vote, they shall
vote together as one (1) on the share or shares jointly held by them.
Any vote at a meeting held solely by telephonic, electronic or other
communication facility, may be exercised entirely by telephonic, electronic or
other communication facility in accordance with the Act.
45. Proxies
A shareholder, including a shareholder that is a body corporate, entitled
to vote at a meeting of shareholders may, by means of a proxy, appoint a
proxyholder or one (1) or more alternate proxyholders, who are not required to
be shareholders, to attend and act at the meeting in the manner and to the
extent authorized by the proxy and with the authority conferred by the proxy.
An instrument appointing a proxyholder shall be in writing and shall be
executed by the shareholder or his attorney authorized in writing or, if the
shareholder is a body corporate, either under its seal or by an officer or
attorney thereof, duly authorized. A proxy is valid only at the meeting in
respect of which it is given or any adjournment thereof.
Unless the Act requires another form, an instrument appointing a
proxyholder may be in the following form:
"The undersigned shareholder of hereby appoints of
or failing him, of , as the nominee of the undersigned to
attend and act for and on behalf of the undersigned at the meeting of the
shareholders of the said Corporation to be held on the day of ,
, and at any adjournment thereof to the same extent and with the same
power as if the undersigned were personally present at the said meeting or such
adjournment thereof.
Dated this day of , .
_______________________________________
Signature of Shareholder
NOTE:
This form of proxy must be signed by a shareholder or his attorney
authorized in writing or, if the shareholder is a body corporate, either under
its seal or by an officer or attorney thereof duly authorized."
The directors may from time to time adopt procedures regarding the deposit
of instruments appointing a proxyholder at some place or places other than the
place at which a meeting or adjourned meeting of shareholders is to be held and
for particulars
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of such instruments to be sent before the meeting or adjourned meeting to the
Corporation or any agent of the Corporation for the purpose of receiving such
particulars and providing that instruments appointing a proxyholder so lodged
may be voted upon as though the instruments themselves were produced at the
meeting or adjourned meeting and votes given in accordance with such regulations
shall be valid and shall be counted. The chairman of any meeting of shareholders
may, subject to any procedure adopted as aforesaid, in his discretion, accept
such a communication as to the authority of anyone claiming to vote on behalf of
and to represent a shareholder, notwithstanding that no instrument of proxy
conferring such authority has been lodged with the Corporation, and any votes
given in accordance with such a communication accepted by the chairman of the
meeting shall be valid and shall be counted.
46. Adjournment
The chairman of the meeting may, with the consent of the meeting, adjourn
any meeting of shareholders from time to time to a fixed time and place. If a
meeting of shareholders is adjourned less than thirty (30) days, it is not
necessary to give notice of the adjourned meeting other than by announcement at
the earliest meeting that is adjourned. If a meeting of shareholders is
adjourned by one (1) or more adjournments for an aggregate of thirty (30) days
or more, notice of the adjournment meeting shall be given as for an original
meeting but, unless the meeting is adjourned by one (1) or more adjournments for
an aggregate of more than ninety (90) days, the requirements of subsection
149(1) of the Act relating to mandatory solicitation of proxies do not apply.
Any adjourned meeting shall be duly constituted if held in accordance with
the terms of the adjournment and a quorum is present thereat. The persons who
formed a quorum at the original meeting are not required to form a quorum at the
adjourned meeting. If there is no quorum present at the adjourned meeting, the
original meeting shall be deemed to have terminated forthwith after its
adjournment. Any business may be brought before or dealt with at any adjourned
meeting which might have been brought before or dealt with at the original
meeting in accordance with the notice calling same.
47. Quorum
One (1) person present and holding or representing by proxy at least one
(1) issued voting share of the Corporation shall be the required quorum for the
choice of a chairman of the meeting and for the adjournment of the meeting; for
all other purposes, a quorum for any meeting (unless a different number of
shareholders and/or a different number of shares are required to be represented
by the Act or by the articles or by the by-law) shall be persons present being
not less than two (2) in number and holding or representing by proxy at least
50% of the shares entitled to vote at such meeting. If a quorum is present at
the opening of a meeting of the shareholders, the shareholders present may
proceed with the business of the meeting, notwithstanding that a quorum is not
present throughout the meeting. Where the Corporation has only one (1)
shareholder or only one (1) holder of any class or series of shares, the
shareholder, present in person or by proxy, constitutes a meeting.
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SECURITIES
48. Certificates
Share certificates (and the form of stock transfer power on the reverse
side thereof) shall (subject to compliance with section 49 of the Act) be in
such form and be signed by such director(s) or officer(s) as the board of
directors may from time to time, by resolution, determine.
49. Registrar and Transfer Agent
The board of directors may from time to time, by resolution, appoint or
remove one (1) or more registrars and/or branch registrars (which may, but need
not be, the same person) to keep the register of security holders and/or one (1)
or more transfer agents and/or branch transfer agents (which may, but need not
be, the same person) to keep the register of transfer, and (subject to the Act)
may provide for the registration of issues and the registration of transfers of
the securities of the Corporation in one (1) or more places and such registrars
and/or branch registrars and/or transfer agents and/or branch transfer agents
shall keep all necessary books and registers of the Corporation for the
registration of the issuance and the registration of transfers of the securities
of the Corporation for which they are so appointed. All certificates issued
after any such appointment representing securities issued by the Corporation
shall be countersigned by or on behalf of one of the said registrars and/or
branch registrars and/or transfer agents and/or branch transfer agents, as the
case may be.
50. Surrender of Share Certificates
No transfer of a share issued by the Corporation shall be recorded or
registered unless or until the certificate representing the share to be
transferred has been surrendered and cancelled or, if no certificate has been
issued by the Corporation in respect of such share, unless or until a duly
executed share transfer power in respect thereof has been presented for
registration.
51. Defaced, Destroyed, Stolen or Lost Certificates
If the defacement, destruction or apparent destruction, theft, or other
wrongful taking or loss of a share certificate is reported by the owner to the
Corporation or to a registrar, branch registrar, transfer agent or branch
transfer agent of the Corporation (hereinafter, in this paragraph, called the
"Corporation's transfer agent") and such owner gives to the Corporation or the
Corporation's transfer agent a written statement verified by oath or statutory
declaration as to the defacement, destruction or apparent destruction, theft, or
other wrongful taking or loss and the circumstances concerning the same, a
request for the issuance of a new certificate to replace the one so defaced,
destroyed, wrongfully taken or lost and a bond of a surety company (or other
security approved by the board of directors) in such form as is approved by the
board of directors or by the chairman of the board, the president, a
vice-president, the secretary or the treasurer of the Corporation, indemnifying
the Corporation (and the
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Corporation's transfer agent, if any), against all loss, damage or expense,
which the Corporation and/or the Corporation's transfer agent may suffer or be
liable for by reason of the issuance of a new certificate to such shareholder, a
new certificate may be issued in replacement of the one defaced, destroyed or
apparently destroyed, stolen or otherwise wrongfully taken or lost, if such
issuance is ordered and authorized by any one (1) of the chairman of the board,
the president, a vice-president, the secretary or the treasurer of the
Corporation or by resolution of the board of directors.
DIVIDENDS
52. Subject to the relevant provisions of the Act, the board of directors may
from time to time, by resolution, declare and the Corporation may pay dividends
on its issued shares, subject to the relevant provisions, if any, of the
articles.
NOTICES
53. Method of Giving Notices
Any notice or document to be given pursuant to the Act, the articles or
the by-law to a shareholder or director of the Corporation may be sent (a) by
prepaid mail addressed to, or may be delivered personally to, the shareholder at
the shareholder's latest address as shown in the records of the Corporation or
its transfer agent or branch transfer agent and the director at the director's
latest address as shown on the records of the Corporation or in the last notice
of directors or notice of change of directors filed under the Act, and a notice
or document sent in accordance with the foregoing to a shareholder or director
of the Corporation shall be deemed to be received by them at the time it would
be delivered in the ordinary course of mail unless there are reasonable grounds
for believing that the shareholder or director did not receive the notice or
document at the time or at all or (b) by electronic means as permitted by, and
in accordance with, the Act. The secretary may change or cause to be changed the
recorded address of any shareholder, director, officer, auditor or member of a
committee of the board, if any, in accordance with any information believed by
the secretary to be reliable. The foregoing shall not be construed so as to
limit the manner or effect of giving notice by any other means of communication
otherwise permitted by law.
54. Shares registered in more than one (1) name
All notices or other documents required to be sent to a shareholder by the
Act, the articles or the by-law of the Corporation shall, with respect to any
shares in the capital of the Corporation registered in more than one name, be
given to whichever of such persons is named first in the records of the
Corporation or its transfer agent or branch transfer agent and any notice or
other document so given shall be sufficient notice of delivery of such documents
to all the holders of such shares.
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55. Persons becoming entitled by operation of law
Every person, who by operation of law, transfer or by any other means
whatsoever shall become entitled to any shares in the capital of the
Corporation, shall be bound by every notice or other document in respect of such
shares which prior to his name and address being entered in the records of the
Corporation or its transfer agent or branch transfer agent shall have been duly
given to the person or persons from whom he derives his title to such shares.
56. Deceased Shareholder
Any notice or other document delivered or sent by post or left at the
address of any shareholder as the same appears in the records of the Corporation
or its transfer agent or branch transfer agent shall, notwithstanding that such
shareholder be then deceased and whether or not the Corporation has notice of
his decease, be deemed to have been duly served in respect of the shares held by
such shareholder (whether held solely or with other persons) until some other
person be entered in his stead in the records of the Corporation or its transfer
agent or branch transfer agent as the holder or one of the holders thereof and
such service shall, for all purposes, be deemed a sufficient service of such
notice or other document on his heirs, executors or administrators and all
persons, if any, interested with him in such shares.
57. Signatures to Notices
The signature of any director or officer of the Corporation to any notice
may be written, stamped, typewritten or printed or partly written, stamped,
typewritten or printed or, for the notice given by electronic means, in
accordance with section 252.7 of the Act. The foregoing shall not be construed
so as to limit the manner or effect of affixing a signature by any other means
otherwise permitted by law.
58. Computation of Time
Where a given number of days' notice or notice extending over any period
is required to be given under any provisions of the articles or by-law of the
Corporation, the day of service or posting of the notice shall, unless it is
otherwise provided, be counted in such number of days or other period and such
notice shall be deemed to have been given or sent on the day of service or
posting.
59. Proof of Service
A certificate of any officer of the Corporation in office at the time of
the making of the certificate or of a transfer officer of any transfer agent or
branch transfer agent of shares of any class of the Corporation as to facts in
relation to the mailing or delivery or service of any notice or other documents
to any shareholder, director, officer or auditor or publication of any notice or
other document, shall be conclusive evidence thereof and shall be binding on
every shareholder, director, officer or auditor of the Corporation, as the case
may be.
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CHEQUES, DRAFTS, NOTES, ETC.
60. All cheques, drafts or orders for the payment of money and all notes,
acceptances and bills of exchange shall be signed by such officer or officers or
other person or persons, whether or not officers of the Corporation, and in such
manner as the board of directors may from time to time designate by resolution.
CUSTODY OF SECURITIES
61. All securities, including warrants, owned by the Corporation shall be
lodged, in the name of the Corporation, with a chartered bank or a trust company
or in a safety deposit box or, if so authorized by resolution of the board of
directors, with such other depositaries or in such other manner as may be
determined from time to time by the board of directors.
All securities, including warrants, belonging to the Corporation may be
issued and held in the name of a nominee or nominees of the Corporation, and, if
issued or held in the names of more than one nominee, shall be held in the names
of the nominees jointly with right of survivorship and shall be endorsed in
blank with endorsement guaranteed in order to enable transfer thereof to be
completed and registration thereof to be effected.
EXECUTION OF CONTRACTS, ETC.
62. Contracts, documents or instruments in writing requiring the signature of
the Corporation may be signed by any director or any officer of the Corporation,
or by any person authorized by resolution of the board of directors. All
contracts, documents or instruments in writing so signed shall be binding upon
the Corporation without any further authorization or formality. The board of
directors is authorized from time to time, by resolution, to appoint any officer
or officers or any other person or persons on behalf of the Corporation, either
to sign contracts, documents or instruments in writing generally or to sign
specific contracts, documents or instruments in writing. Where the Corporation
has only one (1) director and officer being the same person, that person may
sign all such contracts, documents or other written instruments.
The corporate seal, if any, may, when required, be affixed to contracts,
documents or instruments in writing, signed as aforesaid, by an officer or
officers, person or persons, appointed as aforesaid by resolution of the board
of directors.
The term "contracts, documents or instruments in writing", as used in this
by-law, shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, immoveable or moveable,
agreements, releases, receipts and discharges for the payment of money or other
obligations, conveyances, transfers and assignments of shares, warrants, bonds,
debentures or other securities and all paper writings or their equivalent on all
electronic form.
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In particular, without limiting the generality of the foregoing, any
director or any officer of the Corporation, or any person authorized by
resolution of the board of directors, is hereby authorized to sell, assign,
transfer, exchange, convert or convey all shares, bonds, debentures, rights,
warrants or other securities owned by or registered in the name of the
Corporation and to sign and execute, under the seal of the Corporation or
otherwise, all assignments, transfers, conveyances, powers of attorney and other
instruments that may be necessary for the purpose of selling, assigning,
transferring, exchanging, converting or conveying or enforcing or exercising any
voting rights in respect of any such shares, bonds, debentures, rights, warrants
or other securities. Where the Corporation has only one (1) director and
officer, being the same person, that person may perform the functions and
exercise the powers herein contemplated.
The signature or signatures of any officer or director of the Corporation
and/or of any person or persons appointed as aforesaid by resolution of the
board of directors may, if specifically authorized by resolution of the
directors, be printed, engraved, lithographed, otherwise mechanically or
electronically reproduced or given in any manner permitted by the law, on all
contracts, documents or instruments in writing or in an electronic form, or,
subject to subsections 49(4) and 49(5) of the Act, on bonds, debentures or other
securities of the Corporation executed or issued by or on behalf of the
Corporation. All such contracts, documents or instruments in writing or in an
electronic form, or bonds, debentures or other securities of the Corporation on
which the signatures of any of the foregoing officers, directors or persons
shall be so reproduced, by authorization by resolution of the board of directors
shall, subject to subsections 49(4) and 49(5) of the Act, be deemed to have been
duly signed by such officers and shall be as valid to all intents and purposes
as if they had been signed manually and notwithstanding that the officers,
directors or persons whose signature or signatures is or are so reproduced may
have ceased to hold office at the date of the delivery or issue of such
contracts, documents or instruments in writing or in an electronic form or
bonds, debentures or other securities of the Corporation.
DECLARATIONS
63. Any director or any officer of the Corporation, or any person authorized by
resolution of the board of directors or any employee authorized by any officer
or director of the Corporation, is authorized and empowered to appear and make
answer for the Corporation to all writs, orders and interrogatories upon
articulated facts issued out of any court and to declare for and on behalf of
the Corporation any answer to writs of attachment by way of garnishment in which
the Corporation is garnishee, and to make all affidavits and sworn declarations
in connection therewith or in connection with any or all judicial proceedings to
which the Corporation is a party and to make demands of abandonment or petitions
for winding up or bankruptcy orders upon any debtor of the Corporation and to
attend and vote at all meetings of creditors of any of the Corporation's debtors
and grant proxies in connection therewith.
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FISCAL YEAR
64. The fiscal period of the Corporation shall terminate on such day in each
year as the board of directors may from time to time, by resolution, determine.
