MERGER AGREEMENT
Among
Fine Gold Recovery Systems Inc.,
a Nevada corporation,
Altair International Gold Inc.
an Ontario corporation,
and
Trans Mar, Inc.,
a Washington corporation,
dated as of
February 8, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1 - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . 1
(a) THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . 1
(b) EFFECT OF THE MERGER. . . . . . . . . . . . . . . . . . . 2
(c) ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . 2
(e) ESCROW OF SHARES. . . . . . . . . . . . . . . . . . . . . 2
(f) DISSENTERS' RIGHTS. . . . . . . . . . . . . . . . . . . . 3
(g) FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . 3
(h) ISSUANCE OF WARRANTS. . . . . . . . . . . . . . . . . . . 3
1.2 EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . 3
(a) ALTAIR TO PROVIDE COMMON STOCK. . . . . . . . . . . . . . 3
(b) EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . 4
(c) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF TMI . . . 4
(d) RESTRICTIONS ON TRANSFER. . . . . . . . . . . . . . . . . 4
(e) RESTRICTIVE LEGENDS . . . . . . . . . . . . . . . . . . . 4
1.3 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 TAKING OF NECESSARY ACTION; FURTHER ACTION . . . . . . . . . . 6
ARTICLE 2 - CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER . 6
2.2 CONDITIONS TO OBLIGATIONS OF FINE GOLD AND ALTAIR. . . . . . . 7
2.3 CONDITIONS TO OBLIGATIONS OF TMI . . . . . . . . . . . . . . . 9
ARTICLE 3 - COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . 11
3.1 PRE-MERGER COVENANTS . . . . . . . . . . . . . . . . . . . . . 11
(a) NOTICES AND CONSENTS. . . . . . . . . . . . . . . . . . . 11
(b) OPERATION OF BUSINESS . . . . . . . . . . . . . . . . . . 11
(c) AFFILIATED TRANSACTIONS . . . . . . . . . . . . . . . . . 11
(d) PRESERVATION OF BUSINESS. . . . . . . . . . . . . . . . . 11
(e) FULL ACCESS . . . . . . . . . . . . . . . . . . . . . . . 11
(f) NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . 11
(g) EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . 12
(h) REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 12
(i) INFORMATION REGARDING HOLDERS OF TMI COMMON STOCK . . . . 12
(j) XXXX-XXXXX-XXXXXX ACT EXEMPTION . . . . . . . . . . . . . 12
(k) RECOVERY OF SERIES 24 JIG . . . . . . . . . . . . . . . . 12
(l) REDUCTION OF LONG-TERM DEBT . . . . . . . . . . . . . . . 12
ARTICLE 4 - ADDITIONAL AGREEMENTS, REPRESENTATIONS AND WARRANTIES. . . . . 12
4.1 POST-MERGER COVENANTS. . . . . . . . . . . . . . . . . . . . . 12
(a) CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 12
(b) INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 13
(c) TAX TREATMENT . . . . . . . . . . . . . . . . . . . . . . 14
4.2 SECURITIES MATTERS . . . . . . . . . . . . . . . . . . . . . . 15
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(a) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) ASSISTANCE OF TMI . . . . . . . . . . . . . . . . . . . . 15
(c) NO ASSURANCES . . . . . . . . . . . . . . . . . . . . . . 15
4.3 FILES AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 15
5.1 REPRESENTATIONS AND WARRANTIES OF TMI. . . . . . . . . . . . . 15
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF TMI . . 16
(b) OUTSTANDING CAPITAL STOCK . . . . . . . . . . . . . . . . 16
(c) ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . 16
(d) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 16
(e) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . 16
(f) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 17
(g) CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . 17
(i) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . 17
(j) NO MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . 18
(k) COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . 18
(l) CONTRACTS AND COMMITMENTS . . . . . . . . . . . . . . . . 18
(m) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) TITLE TO PROPERTIES AND CONDITION OF ASSETS . . . . . . . 19
(o) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 20
(p) EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . 20
(q) CERTAIN INTERESTS . . . . . . . . . . . . . . . . . . . . 20
(r) ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . 20
(s) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . 21
(t) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 21
(u) TMI DISCLOSURE SCHEDULES. . . . . . . . . . . . . . . . . 21
5.2 REPRESENTATIONS AND WARRANTIES OF FINE GOLD. . . . . . . . . . 21
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF FINE
GOLD. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 22
(c) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 22
(d) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 REPRESENTATIONS AND WARRANTIES OF ALTAIR . . . . . . . . . . . 22
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF ALTAIR. 22
(b) AUTHORITY AND ENFORCEABILITY. . . . . . . . . . . . . . . 22
(c) CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . . . 23
(d) OWNERSHIP AND CONTROL OF FINE GOLD BY ALTAIR. . . . . . . 23
(e) CAPITAL STRUCTURE OF ALTAIR . . . . . . . . . . . . . . . 23
(f) SEC DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . 23
(g) NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 24
(h) COMPLIANCE WITH APPLICABLE LAWS . . . . . . . . . . . . . 24
(i) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . 24
(j) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 PRESS RELEASES AND ANNOUNCEMENTS . . . . . . . . . . . . . . . 26
6.3 NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . 26
6.4 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 26
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6.5 SUCCESSION AND ASSIGNMENT. . . . . . . . . . . . . . . . . . . 26
6.6 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 HEADINGS AND REFERENCES. . . . . . . . . . . . . . . . . . . . 26
6.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 28
6.10 AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . 28
6.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.13 INCORPORATION OF EXHIBITS AND SCHEDULES. . . . . . . . . . . . 28
6.14 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.15 ATTORNEY'S FEES. . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Altair Common Stock. . . . . . . . . . . . . . . . . . . . . . 29
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . 29
CCJ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Confidential Information . . . . . . . . . . . . . . . . . . . 29
Dissenting Shareholder . . . . . . . . . . . . . . . . . . . . 29
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . 29
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 29
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 30
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . 30
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . 30
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 30
Financial Statements . . . . . . . . . . . . . . . . . . . . . 30
Fine Gold Common Stock . . . . . . . . . . . . . . . . . . . . 30
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Governmental Authority . . . . . . . . . . . . . . . . . . . . 30
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . 30
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 30
Intellectual Property. . . . . . . . . . . . . . . . . . . . . 30
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Ordinary Course of Business. . . . . . . . . . . . . . . . . . 31
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . 31
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 31
Security Interest. . . . . . . . . . . . . . . . . . . . . . . 31
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
iii
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . 31
TMI Common Stock . . . . . . . . . . . . . . . . . . . . . . . 31
TMI Disclosure Schedules . . . . . . . . . . . . . . . . . . . 31
TMI Options. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Warrant Certificate. . . . . . . . . . . . . . . . . . . . . . 31
Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . 31
Washington Act . . . . . . . . . . . . . . . . . . . . . . . . 32
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MERGER AGREEMENT
THIS MERGER AGREEMENT (the "AGREEMENT") is entered into as of February 8,
1996 by and among FINE GOLD RECOVERY SYSTEMS INC., a Nevada corporation ("FINE
GOLD"), ALTAIR INTERNATIONAL GOLD INC., an Ontario corporation ("ALTAIR"), and
TRANS MAR, INC., a Washington corporation ("TMI"). Fine Gold, Altair and TMI
are referred to collectively herein as the "PARTIES" and individually as a
"PARTY".
Capitalized terms used herein and not otherwise defined herein have the
meanings set forth in Article 7.
The respective boards of directors of Fine Gold, Altair and TMI have
approved the transactions contemplated hereby and Fine Gold, Altair and TMI have
determined that it is advisable to consummate the merger described in Article 1
(the "MERGER") as a reorganization under Section 368(a)(1)(A) of the Code, as a
result of which: (i) TMI will be merged into Fine Gold in accordance with the
laws of the States of Nevada and Washington, (ii) all of the capital stock of
TMI issued and outstanding before the Merger will be converted into shares of
Altair Common Stock, and (iii) Fine Gold will be the surviving corporation after
the Merger, all of whose issued and outstanding capital stock will be owned by
Altair; all on the terms and subject to the conditions set forth in this
Agreement.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties hereby agree as follows.
ARTICLE 1 - THE MERGER
1.1 THE PLAN OF MERGER. In connection with the Merger and the
reorganization under Code Section 368(a)(1)(A), the respective boards of
directors of Fine Gold and Altair have duly adopted and approved, Altair, in its
capacity as the sole shareholder of Fine Gold, has approved, and the board of
directors of TMI approved and has resolved to submit to the shareholders of TMI
for approval, a plan of merger (the "PLAN OF MERGER") required by Xxxxxxx 00 xx
0000 Xxx. XX 433, 768th Sess. Nev. Leg., 1995 Nev. Stat. 586 (the "NEVADA ACT")
and the Washington Business Corporation Act (the "WASHINGTON ACT"), which Plan
of Merger includes, among other things, provisions to the following effect:
(a) THE MERGER. At the Effective Time, in accordance with this
Agreement, Section 33 of the Nevada Act, and Section 23B.11.070 of the
Washington Act, TMI shall be merged with and into Fine Gold, the separate
existence of TMI shall cease, and Fine Gold shall continue as the surviving
corporation. Fine Gold, in its capacity as the corporation surviving the
merger, sometimes is referred to herein as the "SURVIVING CORPORATION".
(b) EFFECT OF THE MERGER. At the Effective Time, the Merger shall
have the effect provided for in Section 33 of the Nevada Act and Section
23B.11.060 of the Washington Act.
(c) ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
The Articles of Incorporation and Bylaws of Fine Gold, as in effect immediately
prior to the Effective Time, shall, except as amended by the Articles of Merger
to be filed in respect of the Merger (which include the Plan of Merger attached
thereto as an exhibit), in the form set forth as Exhibit 1.1(c) hereto, in
accordance with Section 28 of the Nevada Act and Section 23B.11.050 of the
Washington Act (the "ARTICLES OF MERGER"), be the Articles of Incorporation and
Bylaws of the Surviving Corporation at the Effective Time and shall thereafter
continue to be its Articles of Incorporation and Bylaws until amended as
provided therein and under applicable law. The directors of Fine Gold holding
office immediately prior to the Effective Time shall be the directors of the
Surviving Corporation at the Effective Time. The officers of Fine Gold
holding office immediately prior to the Effective Time shall be the officers
of the Surviving Corporation at the Effective Time.
(d) CONVERSION OF SECURITIES.
(i) Subject to the provisions of Section 1.1(e), at the
Effective Time, by virtue of the Merger and without any further action on the
part of Fine Gold, Altair, TMI or the holder of any TMI Common Stock, all of the
shares of the capital stock of TMI issued and outstanding, other than the
Dissenting Shares, shall automatically be exchanged for an aggregate number of
shares of Altair Common Stock calculated by subtracting (A) the number of shares
of Altair Common Stock for which any Dissenting Shares could have been exchanged
at the Effective Time, from (B) One Million Nine Hundred Twenty Thousand
(1,920,000) shares and such shares of TMI Common Stock so exchanged shall remain
outstanding as additional shares of the Surviving Corporation. Each outstanding
share of the TMI Common Stock exchanged pursuant to this Section 1.1(d) will be
exchanged for 0.33311 of a share of Altair Common Stock (the "EXCHANGE RATIO")
and, subject to the provisions of Section 1.1 (e), the holder of each such share
shall be endowed with the right, as of the Effective Time, to be treated as a
registered holder of such shares of Altair Common Stock as of the Effective Time
with all rights to dividends and other distributions made to registered holders
of Altair Common Stock as of such date.
(ii) At the Effective Time, by virtue of the Merger and without
any further action on the part of Fine Gold, Altair, TMI or the holder of any
TMI Common Stock, all shares of capital stock of TMI that are owned directly or
indirectly by TMI or any Subsidiary of TMI shall be canceled and no stock of
Altair or other consideration shall be delivered in exchange therefor.
(iii) Each share of Fine Gold Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted, by
operation of law, into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(e) ESCROW OF SHARES.
(i) Pursuant to the terms of an Escrow Agreement substantially
in the form of EXHIBIT 1.1(E) attached to this Agreement (the "ESCROW
AGREEMENT") to be executed by and between Altair and the Escrow Agent, and
subject to the approval of the ASE, Altair shall, consistent with the provisions
of Section 1.2, transfer and deliver to the Escrow Agent for the benefit of the
holders of the TMI Common Stock all of the Shares. The Shares shall be held by
the Escrow Agent for distribution to the holders of the TMI Common Stock at the
times and in the manner set forth in the Escrow Agreement. During the period
that the Escrow Agent shall hold the Shares, all cash dividends received by the
Escrow Agent shall be paid to the holders of the Shares entitled thereto. Any
shares of Altair Common Stock received by the Escrow Agent in respect of the
Shares shall be held in escrow pending distribution of the Shares pursuant to
the terms of the Escrow Agreement and this Agreement. During such period, the
Escrow Agent shall take such other actions as are necessary or appropriate in
order to achieve the purposes contemplated under this Agreement.
(ii) The Escrow Agent shall have the exclusive authority to act on behalf
of the holders of the Shares for all purposes under the terms of this Agreement
including, without limitation, providing such consents, waivers, amendments, and
modifications as the Escrow Agent may consider appropriate.
(f) DISSENTERS' RIGHTS. If holders of the capital stock of TMI are
entitled to dissenters' rights in connection with the Merger under the
Washington Act, any Dissenting Shares shall not be converted into shares of
Altair Common Stock but shall be converted into the right to receive such
2
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to the Washington Act. Each Dissenting Shareholder who,
pursuant to the provisions of the Washington Act, becomes entitled to payment of
the value of shares of capital stock of TMI shall receive payment therefor (but
only after the value therefor shall have been agreed upon or finally determined
pursuant to such provisions). In the event of legal obligation, after the
Effective Time, to deliver shares of Altair Common Stock to any holder of shares
of capital stock of TMI who shall have failed to make an effective purchase
demand or shall have lost his status as a Dissenting Shareholder, Altair shall
issue and deliver, upon surrender by such Dissenting Shareholder of all
certificates representing shares of capital stock of TMI, the shares of Altair
Common Stock to which such Dissenting Shareholder is then entitled under this
Section 1.1.
(g) FRACTIONAL SHARES. No fractional shares of Altair Common Stock
shall be issued, but in lieu thereof each holder of shares of TMI Common Stock
who would otherwise be entitled to receive a fraction of a share of Altair
Common Stock shall receive from Altair an amount of cash equal to: (i) the
fraction of a share of Altair Common Stock to which such holder would otherwise
be entitled, multiplied by (ii) the closing bid price of a share of Altair
Common Stock as of the date of this Agreement, as reported by the ASE. The
fractional share interests of each TMI shareholder shall be aggregated, so that
no TMI shareholder shall receive cash in an amount greater than the value of one
full share of Altair Common Stock.
(h) ISSUANCE OF WARRANTS. At the Effective Time and on the terms set
forth in a warrant certificate substantially in the form of EXHIBIT 1.1(H)
attached to this Agreement, Altair shall issue to the individuals identified on
SCHEDULE 1.1(H) attached hereto warrants (the "WARRANTS") to purchase an
aggregate of Five Hundred Eighty Thousand (580,000) shares of Altair Common
Stock (the "WARRANT SHARES"). In furtherance of the foregoing obligation,
Altair shall reserve for issuance upon the exercise of the Warrants not less
than Five Hundred Eighty Thousand (580,000) shares of Altair Common Stock. The
Warrants will be exercisable for the number of Warrant Shares identified on
SCHEDULE 1.1(H) attached hereto, the per share exercise price for the Warrant
Shares shall be equal to Two Canadian Dollars (Cdn$2.00), and the Warrants shall
be exercisable for a period of one year from the date of the Closing, upon which
date any unexercised portion of the Warrants shall expire in its entirety. The
Warrants shall be issued in full satisfaction of all obligations of TMI with
respect to the TMI Options and any "L" shares of TMI and shall supersede any and
all rights of any holder of TMI Options, any "L" shares or any other option or
similar obligation of TMI.
1.2 EXCHANGE OF CERTIFICATES.
(a) ALTAIR TO PROVIDE COMMON STOCK. Promptly after the Effective
Time (but in no event later than twenty (20) business days thereafter), Altair
shall make available for exchange in accordance with Section 1.1(e) and this
Section 1.2, through such reasonable procedures as Altair may adopt, the shares
of Altair Common Stock issuable pursuant to Section 1.1 in exchange for all of
the outstanding shares of TMI Common Stock.
(b) EXCHANGE PROCEDURES. Within ten days after the Effective Time,
Altair shall deliver to Xxxxxxx X. Xxxxxx, as agent for the holders of the TMI
Common Stock, instructions for effecting the surrender of the certificates
representing the shares of TMI Common Stock to be exchanged pursuant to Section
1.1 (the "CERTIFICATES") in exchange for certificates representing the Shares.
Upon surrender of a Certificate for cancellation to Altair or to such other
agent or agents as may be appointed by Altair, the Escrow Agent, on behalf of
the holder thereof, shall be entitled to receive in exchange therefor the number
of Shares to which the holder thereof is entitled pursuant to Section 1.1
hereof. The Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of TMI
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Common Stock which is not registered on the transfer records of TMI, a
certificate representing the appropriate number of Shares may be delivered to
the Escrow Agent, on behalf of the holder thereof, if the Certificate
representing such TMI Common Stock is presented to Altair and accompanied by
all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid, as determined by
Altair in its discretion. Until surrendered as contemplated by this Section
1.2, each Certificate shall be deemed at any time after the Effective Time to
represent the right to receive upon such surrender the number of Shares as
provided by this Article I and the provisions of the Nevada and Washington
Acts.
(c) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF TMI. All Altair
Common Stock delivered upon the surrender for exchange of shares of TMI Common
Stock in accordance with the terms hereof shall be deemed to have been delivered
in full satisfaction of all rights pertaining to such shares of TMI Common
Stock. There shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of TMI Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be exchanged and canceled as provided in this Article I.
(d) RESTRICTIONS ON TRANSFER. The Shares and the Warrant Shares will
not be registered under the Securities Act or any state securities law and a
prospectus will not be filed with respect to the distribution of the Shares and
the Warrant Shares pursuant to the securities laws, regulations or policies of
any province of Canada. Each Person (and his, her or its successor in interest)
obtaining any Shares or Warrant Shares in connection with the Merger shall not
sell, pledge, assign, transfer, hypothecate, dispose of or convey in any manner
such shares other than (i) by will or by the laws of descent or distribution, or
(ii) in compliance with all applicable United States, Canadian, state and
provincial securities laws and the rules and regulations of the ASE.
Furthermore, and without in any manner limiting, the foregoing restrictions,
each such Person (and his, her or its successor in interest) shall not sell,
pledge, assign, transfer, hypothecate, dispose of or convey in any manner during
any calendar quarter commencing after the Effective Time any shares of Altair
Common Stock in excess of the greater of (y) fifteen thousand (15,000) shares,
or (z) the sum of (A) five percent (5%) of the aggregate number of Shares to be
received by such Person in the Merger, plus (B) ten percent (10%) of the
aggregate number of Warrant Shares then held by such Person; PROVIDED, HOWEVER,
that commencing one year from the Closing, the number of shares of Altair Common
Stock described in subsection (A) above shall be increased to ten percent (10%)
of the aggregate number of Shares to be received by such Person in the Merger.
(e) RESTRICTIVE LEGENDS.
(i) Each Certificate issued pursuant to the Merger and each
certificate of Altair issued in respect of the Shares (unless no longer required
in the opinion of counsel for Altair) shall be stamped or otherwise imprinted
with legends substantially in the following form, in addition to any legend that
may now or hereafter be required by United States, Canadian, state or provincial
securities law or regulation or by the ASE:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE LAW, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT IS SUBSEQUENTLY
4
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE."
(ii) Each Warrant certificate of Altair and each certificate of
Altair issued in respect of the Warrant Shares (unless no longer required in the
opinion of counsel for Altair) shall be stamped or otherwise imprinted with
legends substantially in the following form, in addition to any legend that may
now or hereafter be required by United States, Canadian, state or provincial
securities law or regulation or by the ASE:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE (THE "WARRANTS") AND THE
COMMON SHARES OF ALTAIR INTERNATIONAL GOLD INC. (THE "CORPORATION")
ISSUABLE UPON THE EXERCISE THEREOF (THE "COMMON SHARES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE LAW, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT IS SUBSEQUENTLY REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE COMMON SHARES AND WARRANTS ARE ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON SALE, TRANSFER AND DISPOSAL AS SET FORTH IN A MERGER
AGREEMENT BETWEEN THE CORPORATION, FINE GOLD RECOVERY SYSTEMS INC.,
TRANS MAR, INC. AND CERTAIN HOLDERS OF THE CAPITAL STOCK OF TRANS MAR,
INC. COPIES OF SUCH AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION AND WILL BE FURNISHED UPON REQUEST TO SUCH REGISTERED
HOLDER.
1.3 CLOSING. Subject to the provisions of Section 6.1, the closing of the
Merger (the "CLOSING") shall take place at the offices of Xxxxxxx, Parr,
Waddoups, Xxxxx & Gee, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxx, Xxxx
on a date and at such time on or prior to March 1, 1996 as Fine Gold, Altair and
TMI shall agree following the fulfillment or waiver of each of the conditions
set forth in Article 2, or at such other time and place or on such other date as
Fine Gold, Altair and TMI may mutually agree.
5
1.4 TAKING OF NECESSARY ACTION; FURTHER ACTION.
(a) Fine Gold and Altair on the one hand, and TMI on the other hand,
shall use reasonable efforts to take all such action (including, without
limitation, action to cause the satisfaction of the conditions of the other to
effect the Merger) as may be necessary or appropriate in order to effectuate the
Merger, and to cause the Effective Time to occur by March 1, 1996.
(b) As soon as practicable after the satisfaction or waiver of the
conditions set forth in Article 2, and in no event later than five (5) business
days after such satisfaction or waiver, the Parties will cause the Articles of
Merger to be properly executed and delivered to the Secretaries of State of the
States of Nevada and Washington for filing.
(c) The Merger shall be effective upon the filing of Articles of
Merger with the Secretaries of State of Nevada and Washington and the acceptance
of such Articles of Merger by such Secretaries of State or at such later time as
the Parties may agree as specified in such Articles of Merger (the "EFFECTIVE
TIME").
(d) At the Effective Time, the stock transfer books of TMI shall be
closed and no transfer of shares of TMI Common Stock issued and outstanding
immediately prior to the Effective Time shall thereafter be made.
(e) If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full possession of all the rights, privileges,
immunities and franchises of TMI and Fine Gold (the "CONSTITUENT CORPORATIONS"),
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, and the officers of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take, and
shall take, all such actions.
ARTICLE 2 - CONDITIONS
2.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each Party to effect the Merger and to consummate the
other transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:
(a) There shall have been no law, statute, rule or regulation,
domestic or foreign, enacted or promulgated which would make consummation of the
Merger illegal;
(b) No action, suit or proceeding (a "PROCEEDING") shall be pending
or threatened before any Governmental Authority wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would (i) prevent consummation
of the Merger, or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation of the Merger (and no such
judgment, order, decree, stipulation, injunction or charge shall be in effect);
and
(c) No Party shall have terminated this Agreement pursuant to Section
6.1.
Any Party may waive any condition, in whole or in part, specified in this
Section 2.1 if such Party executes a writing so stating at or prior to the
Effective Time.
6
2.2 CONDITIONS TO OBLIGATIONS OF FINE GOLD AND ALTAIR. The obligations of
Fine Gold and Altair to effect the Merger, to consummate the other transactions
contemplated hereby and to perform their respective obligations hereunder is
also subject to satisfaction at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of TMI identified in Section
5.1 shall be true and correct in all material respects at and as of the
Effective Time;
(b) TMI shall have performed and complied with all of its covenants
hereunder in all material respects through the Effective Time, including,
without limitation the obligations of TMI set forth in Section 3.2;
(c) TMI shall have procured all of the third party consents and
approvals necessary in order that the Merger and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of TMI's assets pursuant
to the provisions of, any agreement, contract, arrangement or understanding or
any license, franchise or permit, in any such case which is material to TMI;
(d) At the Effective Time, the total long-term and short-term debt of
TMI, as determined pursuant to GAAP, together with all other financial
commitments of TMI shall not exceed One Million Three Hundred Thousand Dollars
($1,300,000), and the total short-term debt of TMI, also as determined pursuant
to GAAP, shall not exceed Ten Thousand Dollars ($10,000);
(e) At all times between the execution of this Agreement and the
Effective Time, the number of holders (record or beneficial) of the capital
stock of TMI who are not "accredited investors," as such term is defined in Rule
501 promulgated under the Securities Act, shall not exceed thirty-five (35)
Persons;
(f) At the Effective Time, (i) the number of holders (record or
beneficial) of the capital stock of TMI shall not exceed fifty (50) persons,
exclusive of holders who are employed by TMI or who were formerly employed by
TMI and who, while in that employment of TMI were, and have continued after that
employment to be, security holders of TMI, (ii) TMI shall not be a reporting
issuer under the securities laws of any province of Canada, and (iii) there
shall not be a published market for the TMI Common Stock;
(g) At the Effective Time, the holders of not more than three percent
(3%) of the outstanding shares of TMI Common Stock shall have taken steps
necessary to enforce their dissenters' rights pursuant to the Washington Act.
(h) TMI shall have delivered to Altair subscription documents, in
form and substance acceptable to Altair and its counsel, executed by each of the
holders of TMI Common Stock and each recipient of the Warrants, which contain
representations, warranties and covenants of the holders of TMI Common Stock and
the recipients of the Warrants acceptable to Altair, together with all other
agreements, certificates and documents as Altair shall reasonably request in
connection with the issuance of the Shares and the Warrants.
(i) TMI shall have filed with the Internal Revenue Service and all
applicable state and local Governmental Authorities all Tax Returns for all
periods prior to and including the year ended December 31, 1995, and shall have
provided to Altair copies of all such Tax Returns.
7
(j) TMI shall have used its best efforts to recover possession of the
Series 24 Xxxxxxxx Centrifugal Jig (the "Series 24 Jig") from Energy
International, Inc., and shall have entered into arrangements for the recovery
of the Series 24 Jig in a manner acceptable to Altair in its discretion;
(k) TMI shall have delivered to Altair non-competition agreements, in
form and substance acceptable to Altair and its counsel, executed by each of the
following holders of the Altair Common Stock: Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxx.
(l) TMI shall have delivered to Altair copies of the Escrow Agreement
executed by each holder of shares of TMI Common Stock who will receive shares of
Altair Common Stock in the Merger, in form and substance acceptable to Altair in
its discretion.
(m) TMI shall have delivered to Altair warrant certificates
evidencing the Warrants executed by each proposed recipient of the Warrants in
the Merger, in form and substance acceptable to Altair in its discretion.
(n) Prior to the Closing, TMI shall have delivered to Altair and Fine
Gold all of the Financial Statements, such Financial Statements shall not
deviate materially from the financial information delivered by TMI to Altair and
Fine Gold prior to the execution of this Agreement, and Altair shall have
approved the Financial Statements and shall have determined, in its discretion,
that the Financial Statements are acceptable in form and content.
(o) The chief executive officer and chief financial officer of TMI
shall have delivered to Fine Gold and Altair (i) a certificate signed by each
such officer to the effect that each of the conditions specified above in
Section 2.2(a) through (n), inclusive, is satisfied in all respects, and (ii)
except with respect to any Dissenting Shares, certificates in form and substance
satisfactory to Fine Gold and Altair representing all issued and outstanding
shares of the capital stock of TMI (which TMI, on behalf of the holders of the
TMI Common Stock, authorizes the Surviving Corporation to cancel, at the
Effective Time, upon issuance of the Shares to the holders of the TMI Common
Stock as provided by the Plan of Merger);
(p) TMI shall have delivered to Fine Gold and Altair (i) a certified
copy of the text of the resolutions by which the corporate action on the part of
TMI necessary to approve this Agreement, the Plan of Merger and the Merger were
taken, (ii) an incumbency certificate signed by an chief executive officer of
TMI certifying the signature and office of each officer executing this Agreement
or any other agreement, certificate or other instrument executed pursuant
hereto, (iii) Articles of Merger and the Plan of Merger duly executed by TMI,
(iv) resignations executed by all officers, directors and agents of TMI, and (v)
duly executed terminations of any and all powers of attorney or authorizations
to any Person to act for or on behalf of TMI;
(q) Altair and Fine Gold shall have received from counsel to TMI an
opinion in form and substance reasonably satisfactory to Altair and Fine Gold,
to the effect that:
(i) TMI is a corporation validly existing and in good standing under
the laws of the State of Washington, and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(ii) TMI has all requisite corporate power and authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby. The execution, delivery
8
and performance by TMI of the Merger Agreement has been duly authorized
by all necessary corporate action, including shareholder approval, and
the Merger Agreement does not conflict with or result in a breach of any
of the provisions of the Articles of Incorporation or Bylaws of TMI.
(iii) The authorized, issued and outstanding capitalization of TMI is
as represented in the Merger Agreement; the outstanding shares of capital
stock of TMI are duly authorized and validly issued, are fully paid and
nonassessable.
(iv) To the knowledge of counsel to TMI, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to TMI in connection
with the execution and delivery of the Merger Agreement and the
consummation by TMI of the transactions contemplated thereby, other than
(i) such as have been obtained or accomplished , and (ii) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a material adverse effect on the business
and financial condition of TMI.
(v) To the knowledge of counsel to TMI, TMI has received no notice of
any pending or threatened action, suit or other proceeding involving TMI or
any of its businesses, properties or assets before or by any Governmental
Authority.
(r) All actions to be taken by TMI in connection with consummation of
the transactions contemplated hereby and all certificates, opinions, instruments
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to Fine Gold and Altair; and
(s) Fine Gold and Altair shall have received from the ASE all
necessary approvals, consents and authorizations with respect to the Merger, the
issuance of the Shares and the Warrants and the other transactions contemplated
hereby.
Each of Fine Gold and Altair may waive, in whole or in part, any condition
specified in this Section 2.2 by executing a writing so stating at or prior to
the Effective Time.
2.3 CONDITIONS TO OBLIGATIONS OF TMI. The obligation of TMI to effect the
Merger, to consummate the other transactions contemplated hereby and to perform
its obligations hereunder is also subject to satisfaction at or prior to the
Effective Time of the following conditions:
(a) The representations and warranties of Fine Gold and Altair set
forth in Sections 5.2 and 5.3, respectively, shall be true and correct in all
material respects at and as of the Effective Time;
(b) Each of Fine Gold and Altair shall have performed and complied
with all of its covenants hereunder in all material respects through the
Effective Time;
(c) Fine Gold and Altair shall have delivered to TMI a certificate
signed by the chief executive officers of Fine Gold and of Altair to the effect
that each of the conditions specified above in Sections 2.3(a) and (b) are
satisfied in all respects;
(d) Fine Gold and Altair shall have delivered to TMI (i) a certified
copy of the text of the resolutions by which the corporate action on the part of
Fine Gold and Altair necessary to adopt
9
and approve (A) this Agreement, the Merger and the Plan of Merger, and (B)
the issuance, delivery and registration of the Shares as required by Section
1.1 hereof, (ii) an incumbency certificate signed by an officer of Fine Gold
and an incumbency certificate signed by an officer of Altair certifying the
signature and office of each officer executing this Agreement or any other
agreement, certificate or other instrument executed pursuant hereto on behalf
of Fine Gold or Altair, (iii) Articles of Merger duly executed by Fine Gold,
and (iv) the Plan of Merger duly executed by Fine Gold and Altair;
(e) TMI shall have received from counsel to Altair and Fine Gold an
opinion in form and substance reasonably satisfactory to TMI, to the effect
that:
(i) Altair is a corporation validly existing under the laws of the
Province of Ontario, and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted. Fine Gold is a corporation validly existing and in good
standing under the laws of the State of Nevada, and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(ii) Each of Altair and Fine Gold has all requisite corporate power
and authority to enter into the Merger Agreement and to consummate the
transactions contemplated thereby. The execution, delivery and performance
by Altair and Fine Gold of the Merger Agreement has been duly authorized by
all necessary corporate action, including shareholder approval, and the
Merger Agreement does not conflict with or result in a breach of any of the
provisions of the Articles of Incorporation or Bylaws of Altair or Fine
Gold, respectively.
(iii) The authorized, issued and outstanding capitalization of Altair
and Fine Gold are as represented in the Merger Agreement; the Shares to be
issued to the holders of TMI Common Stock will be, upon issuance, duly
authorized, validly issued, fully paid and nonassessable.
(iv) To the knowledge of counsel to Altair and Fine Gold, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required by or with respect to Altair
or Fine Gold in connection with the execution and delivery of the Merger
Agreement and the consummation by Altair and Fine Gold of the transactions
contemplated thereby, other than (A) filings as required by the Ontario
Securities Commission following consummation of the Merger, (B) such as
have been obtained or accomplished, and (C) such other consents,
authorizations, filings, approvals and registrations which if not obtained
or made would not have a material adverse effect on the business and
financial condition of Altair and Fine Gold taken as a whole.
(v) To the knowledge of counsel to Altair and Fine Gold, neither
Altair nor Fine Gold has received any notice of any pending or threatened
action, suit or other proceeding involving Altair or Fine Gold or any of
their respective businesses, properties or assets before or by any
Governmental Authority.
(f) All actions to be taken by Fine Gold and Altair in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
TMI.
TMI may waive, in whole or in part, any condition specified in this Section 2.3
by executing a writing so stating at or prior to the Effective Time.
10
ARTICLE 3 - COVENANTS OF THE PARTIES
3.1 PRE-MERGER COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Effective Time:
(a) NOTICES AND CONSENTS. TMI will give any notices to third
parties, and use its reasonable efforts to obtain any third party consents or
assignments necessary to consummate the Merger and any other consents or
assignments that Fine Gold or Altair reasonably may request in connection with
the matters pertaining to TMI disclosed or required to be disclosed in the TMI
Disclosure Schedules. Each of the Parties will take all additional actions that
may be necessary, proper or advisable in connection with any other notices to,
filings with, and authorizations, consents, and approvals of, Governmental
Authorities and third parties that it may be required to give, make, or obtain.
(b) OPERATION OF BUSINESS. TMI will not engage in any practice, take
any action, embark on any course of inaction, or enter into any transaction
outside the Ordinary Course of Business.
(c) AFFILIATED TRANSACTIONS. TMI will not enter into any
transaction, arrangement or contract with, or distribute or transfer any
property or other assets to or for the benefit of, any officer, director,
shareholder or other insider or Affiliate of TMI, whether for payment of salary,
wages or otherwise.
(d) PRESERVATION OF BUSINESS. TMI will use reasonable efforts to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions and relationships with
lessors, licensors, suppliers and venture partners.
(e) FULL ACCESS. TMI will permit representatives of Fine Gold and
Altair to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of TMI, to all business operations
of TMI, to all premises, properties, books, records, contracts, Tax records and
documents of or pertaining to TMI.
(f) NOTICE OF DEVELOPMENTS. TMI will give prompt written notice to
Fine Gold and Altair of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of TMI. Each Party will give prompt written notice to the
other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by
any Party pursuant to this Section 3.1(f), however, shall be deemed to amend or
supplement the TMI Disclosure Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. TMI will not at any time prior to the termination
of this Agreement pursuant to Section 6.1: (i) solicit, initiate or encourage
the submission of any proposal or offer from any Person relating to any (A)
liquidation, dissolution or recapitalization, (B) merger, consolidation or
reorganization, (C) acquisition or purchase of securities or assets, or (D)
similar transaction or purchase combination involving TMI, or (ii) participate
in discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other matter any effort or
attempt by any Person to do or seek any of the foregoing. TMI will notify Fine
Gold and Altair immediately if any Person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
(h) REPRESENTATIONS AND WARRANTIES. TMI will not take any action
which would cause or would reasonably likely cause a breach of any
representation or warranty set forth in this Agreement.
11
Neither Fine Gold nor Altair will take any actions which would cause or would
reasonably likely cause a breach of any representation or warranty set forth
in this Agreement.
(i) INFORMATION REGARDING HOLDERS OF TMI COMMON STOCK. TMI shall
furnish to Altair such written information regarding the holders of the TMI
Common Stock, the proposed distribution of the Shares and the Warrants,
including the states in which the holders of the TMI Common Stock reside, and
the transactions described herein as Altair may reasonably request.
(j) XXXX-XXXXX-XXXXXX ACT EXEMPTION. The Parties have jointly made a
determination, after reasonable inquiry and investigation, that the transactions
contemplated by this Agreement and the Plan of Merger are exempt from compliance
with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
(k) RECOVERY OF SERIES 24 JIG. TMI shall use its best efforts to
recover possession of the Series 24 Jig identified in Section 2.2(j) and shall
provide, upon Altair's request, all information relating to the status of the
Series 24 Jig and TMI's efforts to recover the Series 24 Jig.
(l) REDUCTION OF LONG-TERM DEBT. TMI and its officers will in good
faith assist Altair in its efforts to negotiate the repayment and cancellation
of certain long-term debt owing to the Cripple Creek group at a discounted
price.
ARTICLE 4 - ADDITIONAL AGREEMENTS, REPRESENTATIONS AND WARRANTIES
4.1 POST-MERGER COVENANTS. The Parties agree as follows with respect to
the period following the Effective Time:
(a) CONFIDENTIALITY. TMI and each of the Shareholders will treat and
hold as such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with the Merger and the
transactions contemplated hereunder, and deliver promptly to the Surviving
Corporation or destroy, at the request and option of the Surviving Corporation,
all tangible embodiments (and all copies) of the Confidential Information which
are in his, her or its possession or control. In the event that TMI or any of
the Shareholders is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, TMI or such Shareholder will notify the Surviving Corporation
promptly of the request or requirement so that the Surviving Corporation may
seek an appropriate protective order or waive compliance with the provisions of
this Section 4.1(a). If, in the absence of a protective order or the receipt of
a waiver hereunder, TMI or any of the Shareholders is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, TMI or such Shareholder may disclose the Confidential
Information to the tribunal; PROVIDED, HOWEVER, that TMI or the disclosing
Shareholder shall use his, her or its best efforts to obtain, at the reasonable
request and sole expense of the Surviving Corporation or Altair, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Surviving
Corporation or Altair shall designate.
(b) INDEMNIFICATION.
(i) SURVIVAL. The representations and warranties of TMI set
forth in this Agreement shall survive for a period of one (1) year from the
Effective Time and then terminate and be of no further force or effect (even if
Fine Gold or Altair knew or had reason to know of a misrepresentation or breach
at the Effective Time); provided, however, that the representations and
12
warranties of TMI set forth in Section 5.1(m) shall survive until the expiration
of any applicable statute of limitations plus ninety (90) days. The
representations and warranties of Fine Gold and Altair shall survive for a
period of one (1) year from the Effective Time and then terminate and be of no
further force or effect (even if TMI knew or had reason to know of a
misrepresentation or breach at the Effective Time). All of the covenants of
Fine Gold, Altair and TMI shall survive consummation of the Merger (even if Fine
Gold, Altair or TMI, as the case may be, knew or had reason to know of a breach
of a covenant at the Effective Time) and continue in full force and effect.
(ii) INDEMNIFICATION BY TMI
(A) Subject to the provisions of subsection (ii)A) below, TMI will
indemnify and hold harmless Altair, Fine Gold, and their respective
Affiliates, from and against any and all losses, claims, damages, expenses,
Liabilities or actions to which any of them may become subject under
applicable law (including the Securities Act) and will reimburse them for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any claim or action, whether or
not resulting in any Liability, insofar as such losses, claims, damages,
expenses, Liabilities or actions arise out of or are based upon (1) any
misrepresentation or omission of TMI set forth in this Agreement or
contained in any information provided by TMI to Altair or Fine Gold in
connection with the Merger, or (2) any untrue statement or alleged untrue
statement of a material fact contained in any report or other document
filed with a Governmental Authority or the ASE, provided that such claim or
action is not based on, and does not arise out of, information furnished by
Fine Gold or Altair for inclusion in such report or other document, or (3)
the omission or alleged omission to state in any such report or document a
material fact required to be stated therein, or necessary in order to make
the statements therein not misleading, provided that such claim or action
is not based on, and does not arise out of, information furnished by Fine
Gold or Altair for inclusion in such report or other document. The
indemnity agreement contained in this Section 4.1(b)(ii) shall survive the
consummation of the transactions contemplated hereby and shall remain
operative and in full force and effect for a period of one year from the
Closing, regardless of any investigation made by or on behalf of Altair or
Fine Gold, upon which time such indemnity agreement shall terminate.
(B) Altair, Fine Gold and TMI acknowledge and agree that the
indemnification obligation of TMI set forth in subsection 4.1(b)(ii)(A)
above shall be secured by the Shares held pursuant to the terms of the
Escrow Agreement. The Escrow Agreement shall provide that (1) in the event
of any claim of Altair or Fine Gold against TMI arising out of the
indemnity set forth in subsection 4.1(b)(i)(A) above, Altair or Fine Gold,
as the case may be, shall be entitled to satisfy the full amount of that
claim against the Shares then held under the Escrow Agreement; (2) the
amount of the claim of Altair and/or Fine Gold, as the case may be, shall
be assessed against the Shares then held in escrow on a pro rata basis,
based upon the fair market value of the Altair Common Stock on the date
such claim is paid by the Escrow Agent (but in no event shall a share of
TMI Common Stock be valued at less than One and 80/100 Canadian Dollars
(Cdn$1.80)); (3) the recourse of Fine Gold and TMI for any claim arising
pursuant to subsection 4.1(b)(i)(A) shall be limited to the aggregate value
of the Shares held in escrow at the time such claim is presented by Altair
or Fine Gold, as the case may be, to the Escrow Agent, and (4) Neither Fine
Gold nor Altair may exercise any claim against the Shares held under the
Escrow Agreement until the aggregate amount of all such claims of Altair
and Fine Gold exceeds Fifty Thousand Dollars ($50,000), and then Altair
and/or Fine Gold may recover with respect to all claims pursuant to
subsection 4.1(b)(i)(A) up to the full value of the Shares then held under
the Escrow Agreement.
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(iii) INDEMNIFICATION BY ALTAIR AND FINE GOLD. Fine Gold and Altair,
jointly and severally, will indemnify and hold harmless TMI and its Affiliates,
from and against any and all losses, claims, damages, expenses, Liabilities or
actions to which any of them may become subject under applicable law (including
the Securities Act) and will reimburse them for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any claim or action, whether or not resulting in Liability, insofar as
such losses, claims, damages, expenses, Liabilities or actions arise out of or
are based upon (1) any misrepresentation or omission of Altair or Fine Gold set
forth in this Agreement or contained in any information provided by Altair or
Fine Gold to TMI in connection with the Merger, or (2) any untrue statement or
alleged untrue statement of a material fact contained in any report or other
document filed with a Governmental Authority or the ASE, provided that such
claim or action is not based on, and does not arise out of, information
furnished by TMI for inclusion in such report or other document, or (3) the
omission or alleged omission to state in any such report or document a material
fact required to be stated therein, or necessary in order to make the statements
therein not misleading, provided that such claim or action is not based on, and
does not arise out of, information furnished by TMI for inclusion in such report
or other document. The indemnity agreement contained in this Section
4.1(b)(iii) shall survive the consummation of the transactions contemplated
hereby and shall remain operative and in full force and effect for a period of
one year from the Closing, regardless of any investigation made by or on behalf
of TMI, upon which time such indemnity agreement shall terminate.
(c) TAX TREATMENT.
(i) Each of the Parties agrees to treat the Merger as a
reorganization within the meaning of Code Section 368(a)(1)(A) and to prepare
and file all Tax returns and related reports and schedules consistent with such
treatment and to take no action intended to disqualify or to be inconsistent
with such treatment. Each of the Parties agrees to cooperate with, and make
available all necessary documents and records (with appropriate measures to
preserve confidentiality) to, any Party as requested (at the requesting Person's
sole cost and expense) to assist such requesting Person in the defense or
substantiation of such tax treatment. It is expressly understood and agreed,
however, that no representation or warranty is being made or legal opinion given
by any Party regarding the treatment of this transaction for federal, state or
foreign income taxation purposes. Although this transaction has been structured
in an effort to qualify for treatment under Code Section 368(a)(1)(A), there is
no assurance that any part of this transaction in fact meets the requirements
for such qualification. Each Party has relied exclusively on its own legal,
accounting and other tax advisors regarding the treatment of this transaction
for federal, state and foreign income tax purposes and on no representation,
warranty or assurance from any other Party or such other Party's legal,
accounting or other advisors that this transaction in fact meets the
requirements for such qualification. The Parties hereby acknowledge that a
transfer by Altair to a direct wholly owned subsidiary of Altair after the
Effective Time of the stock of the Surviving Corporation shall not constitute a
breach of any representation, warranty or covenant in this Agreement.
4.2 SECURITIES MATTERS. The consummation of the Merger and the other
transactions contemplated under this Agreement, including the issuance of the
Shares and the Warrants as contemplated by Section 1.1, constitutes the offer
and sale of securities under the Securities Act and applicable Canadian, state
and provincial statutes. Such transactions shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements of such
statutes which depend, among other items, on the circumstances under which the
holders of the TMI Common Stock and the Warrants acquire such securities.
14
(a) NOTICES. In connection with the Merger and the transactions
contemplated hereby, TMI, Fine Gold and Altair shall file, with the assistance
of the others and their respective legal counsel, such notices, applications,
reports or other instruments as may be deemed by them to be necessary or
appropriate in an effort to document reliance on applicable exemptions from the
registration requirements of the Securities Act and all other applicable
securities laws and regulations with the appropriate Governmental Authorities,
all to the extent and in the manner as may be deemed by such Parties to be
appropriate.
(b) ASSISTANCE OF TMI. In order to more fully document reliance on
the exemptions described above, TMI shall cause the holders of the TMI Common
Stock and the Warrants to execute and deliver to Altair, at or prior to the
Closing, such subscription agreements, letters of representation,
acknowledgment, suitability or the like, as Altair and its counsel may
reasonably request in connection with reliance on exemptions from registration
under applicable securities laws or as required by the ASE.
(c) NO ASSURANCES. TMI and each of the Shareholders acknowledge that
the basis for relying on exemptions from registration or qualifications are
factual, depending on the conduct of the various parties, and that no legal
opinion or other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from registration or
qualification.
4.3 FILES AND RECORDS. Promptly after the Effective Time, TMI will
deliver, arrange for the delivery of, or make available for Altair or Fine Gold
or their respective representatives to pick up, all files, records,
correspondence, maps, technical data, analyses, reports, financial and tax
information, tax returns (including tax returns of all partnerships of which TMI
is a partner), account ledgers, corporate records, computer or electronically
recorded data and other documents, data, and things owned by or related to TMI
or its assets, that are in the possession or control of the holders of TMI
Common Stock, including without limitation, any of such items that are held by
the attorneys, accountants, contractors or consultants of TMI.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF TMI. TMI hereby represents and
warrants to Fine Gold and Altair that all of the statements contained in this
Section 5.1 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Effective Time (as though made at the
Effective Time and as though the Effective Time were substituted for the date of
this Agreement throughout this Section 5.1), except as exceptions are permitted
to be set forth in the disclosure schedules prepared by TMI, delivered to Fine
Gold and Altair, and attached to this Agreement (the "TMI DISCLOSURE
SCHEDULES"). The TMI Disclosure Schedules will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
5.1.
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF TMI. TMI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington and has all requisite corporate power and lawful
authority to own, lease and operate its assets, properties and business and to
carry on its business as now being conducted. TMI is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership of its properties or both make such qualification necessary. TMI has
no Subsidiaries or other equity interest in any Person, nor is TMI subject to
any obligation or requirement to contribute funds to or make any investment in
any Person.
15
(b) OUTSTANDING CAPITAL STOCK. The authorized capital stock of TMI
consists solely of Ten Million (10,000,000) shares of TMI Common Stock, of which
Five Million Seven Hundred Sixty-Three Thousand Nine Hundred Forty-Seven
(5,763,947) shares and no more are issued and outstanding. SCHEDULE 5.1(b)
identifies all holders of the TMI Common Stock, (b) the number of shares held by
each holder, (c) all holders of the TMI Options and any other option,
subscription, warrant, call, right or other agreement of any kind to acquire any
shares of TMI Common Stock, and (d) the number of shares of TMI Common Stock
subject to each such TMI Option and each other option, subscription, warrant,
call, right, or agreement. Not more than thirty-five (35) holders of the TMI
Common Stock are not "accredited investors," as such term is defined in Rule 501
promulgated under the Securities Act. No shares of TMI Common Stock are held in
TMI's treasury. Except as identified on SCHEDULE 5.1(b), there is no
outstanding right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement of any kind to purchase, subscribe for or otherwise to
receive from TMI any of the outstanding, authorized but unissued, unauthorized
or treasury shares of TMI Common Stock or any other security of TMI and there is
no outstanding security of any kind convertible into such capital stock or
security representing an equity interest. Except as identified on SCHEDULE
5.1(b), there are no outstanding contractual obligations of TMI to repurchase,
redeem, or otherwise acquire any outstanding shares of TMI Common Stock, nor are
there any voting trusts or other agreements to which TMI is a party with respect
to the voting of the TMI Common Stock.
(c) ARTICLES OF INCORPORATION AND BYLAWS. Included in the TMI
Disclosure Schedules are true and complete copies of TMI's Articles of
Incorporation and Bylaws (certified by TMI's corporate secretary) as in effect
on the date of this Agreement and as of the Effective Time.
(d) AUTHORITY AND ENFORCEABILITY. TMI has full power and authority
to execute and deliver this Agreement and, upon approval of the holders of the
TMI Common Stock, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of TMI and, except for approval by the shareholders of TMI,
no other proceedings on the part of TMI are necessary to authorize this
Agreement or to authorize the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed by TMI and
constitutes the legal, valid, and binding obligation of TMI, enforceable against
TMI in accordance with its terms.
(e) CAPITALIZATION. All of the issued and outstanding shares of TMI
Common Stock have been duly authorized and validly issued, are fully paid,
nonassessable and free of preemptive rights, and have been issued in compliance
with all applicable federal and state securities laws. To the Knowledge of TMI,
each of the holders of TMI Common Stock has good and marketable title to all of
the shares of TMI Common Stock identified with respect to that holder on
SCHEDULE 5.1(b) and, none of such shares of TMI Common Stock is subject to any
lien, pledge, hypothecation, assignment, encumbrance, security interest or
charge of any kind whatsoever, whether voluntary, involuntary or by operation of
law. To the Knowledge of TMI, no holder of TMI Common Stock owns or holds, is
obligated under or a party to, or has any Knowledge of any option, right of
first refusal or other contractual right to purchase, acquire, sell, assign or
dispose of any shares of TMI Common Stock except as set forth on SCHEDULE
5.1(b).
(f) CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on
SCHEDULE 5.1(f), neither the execution and delivery of this Agreement by TMI nor
the consummation by TMI of the transactions contemplated hereby, nor compliance
by TMI with any of the provisions hereof, will (i) require TMI to file or
register with, notify or obtain any permit, authorization, consent or approval
of any Governmental Authority; (ii) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of TMI; (iii) violate or
breach any provision of, or constitute a default (or
16
an event which, with notice or lapse of time or both, would constitute a
default) under, any term, covenant, condition or provision of any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
TMI is a party, or by which TMI or any of its properties or assets may be
bound; or (iv) violate any order, writ, injunction, decree, judgment,
statute, law or ruling of any Governmental Authority applicable to TMI or any
of its properties or assets.
(g) CLAIMS. Except as set forth on SCHEDULE 5.1(g), there is no
claim, dispute, action, suit, proceeding or investigation pending or threatened
by, against or affecting TMI, any its properties or any shares of TMI Common
Stock, at law or in equity, before any court or other Governmental Authority or
before any arbitrator of any kind.
(h) INTELLECTUAL PROPERTY. TMI owns or has a valid right to use any
Intellectual Property currently being used in its business as now operated,
expressly including, without limitation, all patents, licenses and rights
necessary to use, operate, manufacture, sell, develop and modify the CCJ. All
such Intellectual Property and related rights are fully and accurately
identified on SCHEDULE 5.1(h), are currently valid and no default exists with
respect thereto. TMI is not in default under any license agreement with respect
to any Intellectual Property right, and TMI has not received any notice that it
is in conflict with the rights of others relating to any such Intellectual
Property right.
(i) FINANCIAL STATEMENTS.
(i) Prior to Closing, TMI will deliver to Fine Gold and Altair
the following financial statements (collectively, the "FINANCIAL STATEMENTS"):
(A) a reviewed balance sheet as of December 31, 1995;
(B) an audited balance sheet as of December 31, 1995, together with
related audited statements of income, shareholders' equity and cash
flows for the year ended December 31, 1995;
(C) an audited balance sheet as of April 30, 1995, together with
related audited statements of income, shareholders' equity and cash
flows for the year ended April 30, 1995; and
(D) unaudited balance sheets as of April 30, 1992, 1993 and 1994,
together with unaudited statements of income, shareholders' equity and
cash flows for the fiscal years ended April 30, 1992, 1993 and 1994.
The Financial Statements fairly present the financial condition and the results
of operation, changes in shareholder equity and cash flows of TMI, and all
audited Financial Statements have been prepared in accordance with GAAP,
consistently applied. The balance sheets contained in the Financial Statements
present fairly the financial condition of TMI as of the dates thereof and
reflect all Liabilities relating to TMI's business as of the dates thereof, and
the statements of income related thereto present fairly the results of the
operations of TMI for the periods to which they pertain.
(ii) Except as set forth on SCHEDULE 5.1(i) attached hereto, all
accounts receivable of TMI are current and collectible and, to the Knowledge of
TMI, are not subject to any valid counterclaim or set-off, except to the extent
reserved against in the Financial Statements. TMI has not given or made any
warranty to third parties with respect to the products sold, licensed, or
distributed by
17
it except as fully and accurately described on SCHEDULE 5.1(i) and such
warranties as may arise by operation of law. TMI does not have any material
obligation or Liability (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to TMI or whether due or to become due),
arising out of any transaction entered into prior to the date of this
Agreement or any action or inaction at or prior to the date of this Agreement
or any condition existing at or prior to the date of this Agreement, except
(a) Liabilities accurately reflected and fully described in the Financial
Statements, and (b) Liabilities or obligations arising pursuant to this
Agreement.
(iii) The total long-term and short-term debt of TMI, as
determined pursuant to GAAP, together with all other financial commitments of
TMI, does not exceed One Million Three Hundred Thousand Dollars ($1,300,000),
and the total short-term debt of TMI, also as determined pursuant to GAAP, does
not exceed Ten Thousand Dollars ($10,000). SCHEDULE 5.1(i) identifies the
creditor, amount and all material terms of all Liabilities and other debts of
TMI (to the Knowledge of TMI and its officers and directors) as of the date of
this Agreement, regardless of whether any such Liability or debt is identified
in the Financial Statements. The Parties agree that TMI may update SCHEDULE
5.1(i) prior to the Effective Date; provided, however, that no such update shall
be permitted for information within the Knowledge of TMI or any of its officers
or directors as of the date of this Agreement or any information which
constitutes a material deviation from the representations and warranties of TMI
set forth in this Agreement.
(j) NO MATERIAL ADVERSE CHANGES. Since the date of the Financial
Statements, there has been no material adverse change in TMI's financial
condition, operations, operating results, business prospects, employee
relations, customer relations or otherwise.
(k) COMPLIANCE WITH LAWS. TMI has not received any notice of TMI's
asserted failure to comply with, and TMI has complied with, all laws, statutes,
ordinances, rules, regulations, policies and guidelines promulgated, and with
all judgments entered, by any Governmental Authority affecting it, any of its
properties, or any shares of TMI Common Stock. TMI has previously delivered to
Fine Gold and Altair copies of all pending or existing permits, approvals,
authorizations, consents, licenses and registrations issued or granted to TMI by
any Governmental Authority with respect to the conduct of TMI's business.
(l) CONTRACTS AND COMMITMENTS.
(i) TMI has performed all material obligations required to be
performed by it and is not in receipt of any claim or notice of default under
any material agreement to which TMI is a party or to which any of its assets or
properties are subject; TMI does not have any present intention of not
performing fully all of such obligations as they become due; TMI does not have
any Knowledge of any breach or any anticipated breach of the other parties to
any material contract or commitment; and TMI is not a party to any materially
adverse contract or commitment. No purchase commitment by TMI is in excess of
the normal, ordinary and usual requirements of TMI's business or at any
excessive price. TMI has no outstanding contract, agreement or arrangement with
any officer, director, employee, agent, consultant, advisor, sales
representative, distributor or dealer except as fully and accurately described
on SCHEDULE 5.1(l). TMI has not given any power of attorney to any Person for
any purpose whatsoever.
(ii) SCHEDULE 5.1(l) of the TMI Disclosure Schedules lists each
of the following contracts, agreements, and other written arrangements to which
TMI is a party or by which the assets or properties of TMI may be affected: (i)
any written arrangement concerning a partnership or joint venture; (ii) any
written arrangement (or group of related written arrangements) under which TMI
has (A) created, incurred, assumed, or guaranteed (or may create, incur, assume
or guarantee) Indebtedness
18
in excess of $10,000 or (B) imposed (or may impose) a Security Interest on
any of TMI's assets, tangible or intangible; (iii) any arrangement not
disclosed in the TMI Disclosure Schedules pursuant to any other provision in
this Section 5.1 under which the consequences of a default or termination
could have a material adverse effect on the assets, Liabilities, business,
financial condition, operations, results of operations or future prospects of
TMI; (iv) any contract for the employment of any officer, individual employee
or other person on a full-time, part-time or consulting basis; (v) any
guaranty of any obligation for borrowed money or otherwise; (vi) any
agreement or commitment with respect to the lending or investing of funds by
TMI to or in any other Person; (vii) any license or royalty agreement;
(viii) any contract for the purchase or sale of products, services or real or
personal property; or (ix) any other written arrangement or group of related
written arrangements not entered into by TMI in the Ordinary Course of
Business.
(iii) Except as fully and accurately described on the TMI
Disclosure Schedules, TMI is not a party to any verbal contract, agreement, or
other arrangement which, if reduced to written form, would be required to be
listed on SCHEDULE 5.1(l) of the TMI Disclosure Schedules under the terms of
this Section 5.1(l). All of the verbal agreements listed on SCHEDULE 5.1(l) of
the TMI Disclosure Schedules will be terminated on or before the Effective Time
and TMI will have no further Liability therefor.
(m) TAXES. SCHEDULE 5.1(m) sets forth copies of TMI's Tax Returns
for the years ended April 30, 1993, 1994 and 1995 and December 31, 1995. TMI
has timely and duly filed with the appropriate Governmental Authority all Tax
Returns required by it, and, except as set forth on SCHEDULE 5.1(m), all Taxes
and other assessments which TMI is required by law to withhold or collect have
been timely and duly withheld and collected, including, without limitation, all
payroll taxes and employee withholding obligations. Except as set forth on
SCHEDULE 5.1(m), TMI has no unpaid Tax liability relating to salaries or other
compensation paid or payable to TMI officers, directors or employees. No TMI
Tax Returns have been examined and settled, and no waiver of statutes of
limitations has been given or requested. All such Tax Returns have been
prepared on the same basis as those for previous years and all Taxes (and all
penalties and interest related thereto) payable for the periods covered thereby
have been timely and duly paid or adequately reserved or provided for. TMI's
Tax Returns have never been audited by the Internal Revenue Service, the
assessment of any additional Taxes for periods for which Tax Returns have been
filed is not expected, and there are no material unresolved questions or claims
concerning TMI's Tax Liability.
(n) TITLE TO PROPERTIES AND CONDITION OF ASSETS. With respect to the
properties and assets of TMI:
(i) TMI has good and marketable title to, or a valid leasehold
interest in, the material properties and assets used by it or located on its
premises, including land, buildings, machinery, equipment, fixtures, inventories
and other assets reflected in the Financial Statements. Such properties and
assets are owned by TMI free and clear of all security interests, liens,
encumbrances, and adverse claims of any nature whatsoever, except as reflected
in the Financial Statements.
(ii) The properties and assets owned by TMI, or in which it has
an interest, or which it has in its possession are, in all material respects, in
good working order and are usable in the ordinary course of business, and no
notice of any violation of zoning, building or other laws, statutes, ordinances
or regulations relating to such properties and assets has been received by TMI
or is pending; and
19
(iii) All leases of any real or personal property entered into
by TMI are fully and accurately described on SCHEDULE 5.1(n). All such leases
are valid and enforceable and, except as set forth on such schedule, there is
not under any such lease any existing default or event of default or event which
with notice or lapse of time or both would constitute a default.
(o) INSURANCE. TMI currently maintains no insurance coverage with
respect to its business, properties and employees.
(p) EMPLOYEES. Except as identified on SCHEDULE 5.1(p), there is no
pension, profit-sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any officer,
director, shareholder or employee of TMI. TMI is not a participant in any
multi-employer plan within the meaning of Section 4001(a)(3) of ERISA. No
notice to any employee of TMI is required in connection with the consummation of
the Merger and the other transactions contemplated hereby.
(q) CERTAIN INTERESTS.
(i) Except as identified on SCHEDULE 5.1(q), no officer,
director, shareholder, employee or Affiliate of TMI, and no relative of any such
officer, director, shareholder, employee or affiliate, has acquired any interest
in any property of TMI (except as a shareholder of TMI through ownership of
shares of TMI Common Stock), has loaned money to or borrowed money from TMI, or
has entered into any business relationship with TMI (except as an officer,
director, employee or shareholder thereof) or has entered into any employment or
consulting agreement with TMI.
(ii) Except as identified on SCHEDULE 5.1(q), since January 1,
1995, neither TMI (nor any other Person on behalf of or for the benefit of TMI)
has paid to or for the benefit of, or accrued for the benefit of, any officer or
director of TMI, or any relative of any such officer or director, any
compensation or remuneration, except for the reimbursement of legitimate
business expenses incurred by such officer or director in the Ordinary Course of
Business for the benefit of TMI.
(r) ENVIRONMENTAL MATTERS. TMI has not transported, stored, used,
manufactured, released or exposed its employees or any other Person to, any
Hazardous Material in violation of any applicable statute, rule, regulation,
order or law, except as would not have a material adverse effect on the assets,
Liabilities, business, financial condition, operations, results of operations or
future prospects of TMI. TMI has obtained all material permits, licenses and
other authorizations required to be obtained by it under any Environmental Law.
TMI is (a) in compliance with all terms and conditions of such permits, licenses
and authorizations, and (b) in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder except as would not have a material adverse effect on the assets,
Liabilities, business, financial condition, operations, results of operations or
future prospects of TMI. TMI has not received any notice, nor does TMI possess
any Knowledge, of any past or present condition or practice of the businesses
conducted by TMI or its Affiliates which forms or could form the basis of any
material claim, action, suit, proceeding, hearing or investigation against TMI,
arising out of the manufacture, processing, distribution, use, treatment,
storage, spill, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous Material.
20
(s) LITIGATION. Except as disclosed on SCHEDULE 5.1(s), there is no
suit, action or proceeding pending or, to the Knowledge of TMI, threatened
against or affecting TMI, the effect of which might reasonably be expected to
have a material adverse effect on the business or operations of TMI (the "TMI
LITIGATION"), and TMI has no Knowledge of any facts which are likely to give
rise to any TMI Litigation which (in any case) might reasonably be expected to
have a material adverse effect on the business or operations of TMI, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Authority or arbitrator outstanding against TMI which might reasonably be
expected to have a material adverse effect on the business or operations of TMI
or TMI's ability to consummate the transactions contemplated by this Agreement.
(t) DISCLOSURE. No representation or warranty by TMI set forth
herein and no statement contained in any other document, financial statement,
certificate, exhibit, schedule or writing furnished or to be furnished by TMI to
Fine Gold or Altair or any of their respective representatives pursuant to the
provisions of this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
(u) TMI DISCLOSURE SCHEDULES. TMI has delivered to Fine Gold and
Altair the TMI Disclosure Schedules, which consist of separate schedules dated
as of the date of this Agreement and instruments and data as of such date, all
certified by the chief executive officer and financial or accounting officer of
TMI as complete, true and accurate. TMI shall cause the TMI Disclosure
Schedules and the instruments and data delivered to Fine Gold and Altair
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Effective Time. Such
updated TMI Disclosure Schedules, certified in the same manner as the original
TMI Disclosure Schedules, shall be delivered prior to the Closing and as a
condition precedent to the obligations of Fine Gold and Altair to close.
5.2 REPRESENTATIONS AND WARRANTIES OF FINE GOLD. Fine Gold hereby
represents and warrants to TMI that the statements contained in this Section 5.2
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Effective Time (as though made at the Effective Time and
as though the Effective Time were substituted for the date of this Agreement
throughout this Section 5.2).
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF FINE GOLD.
Fine Gold is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
lawful authority to own, lease and operate its assets, properties and business
and to carry on its business as now being conducted. Fine Gold is duly
qualified or otherwise authorized as a foreign corporation to transact business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership of its properties or both make such qualification necessary.
Fine Gold has no Subsidiaries or other equity interest in any Person, nor is
Fine Gold subject to any obligation or requirement to contribute funds to or
make any investment in any Person.
(b) AUTHORITY AND ENFORCEABILITY. Fine Gold has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Fine Gold and no other
proceedings on the part of Fine Gold are necessary to authorize this Agreement
or to authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Fine Gold
21
and constitutes the legal, valid and binding obligation of Fine Gold
enforceable against Fine Gold in accordance with its terms.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by Fine Gold nor the consummation by Fine Gold of the
transactions contemplated hereby, nor compliance by Fine Gold with any of the
provisions hereof, will (i) require Fine Gold to file or register with, notify
or obtain any permit, authorization, consent or approval of any Governmental
Authority; (ii) conflict with or result in any breach of any provision of the
Articles of Incorporation or Bylaws of Fine Gold; (iii) violate or breach any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, any of the terms, covenants,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which Fine Gold is a party, or by which Fine Gold or
any of its properties or assets may be bound; or (iv) violate any order, writ,
injunction, decree, judgment, statute, law or ruling of any Governmental
Authority applicable to Fine Gold or any of its properties or assets.
(d) DISCLOSURE. No representation or warranty by Fine Gold set forth
in this Agreement and no statement contained in any other writing furnished or
to be furnished by Fine Gold to TMI or any Shareholder or any of their
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
5.3 REPRESENTATIONS AND WARRANTIES OF ALTAIR. Altair hereby represents
and warrants to TMI that the statements contained in this Section 5.3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Effective Time (as though made at the Effective Time and as
though the Effective Time were substituted for the date of this Agreement
throughout this Section 5.3).
(a) DUE INCORPORATION, AUTHORITY AND QUALIFICATION OF
ALTAIR. Altair is a corporation duly organized, validly existing and in good
standing under the laws of the Province of Ontario and has all requisite
corporate power and lawful authority to own, lease and operate its assets,
properties and business and to carry on its business as now being conducted.
Altair is duly qualified or otherwise authorized as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
nature of its business or the ownership of its properties or both make such
qualification necessary.
(b) AUTHORITY AND ENFORCEABILITY. Altair has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Altair and no other proceedings
on the part of Altair are necessary to authorize this Agreement or to authorize
the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Altair and constitutes the
legal, valid and binding obligation of Altair enforceable against Altair in
accordance with its terms.
(c) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by Altair nor the consummation by Altair of the
transactions contemplated hereby, nor compliance by Altair with any of the
provisions hereof, will (i) require Altair to file or register with, notify or
obtain any permit, authorization, consent or approval of any Governmental
Authority other than the Ontario Securities Commission, the Alberta Securities
Commission, the British Columbia Securities
22
Commission and the ASE; (ii) conflict with or result in any breach of any
provision of the charter documents of Altair; (iii) violate or breach any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, any of the terms,
covenants, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which Altair is a party, or by
which Altair or any of its properties or assets may be bound; or (iv) violate
any order, writ, injunction, decree, judgment, statute, law or ruling of any
Governmental Authority applicable to Altair or any of its properties or
assets.
(d) OWNERSHIP AND CONTROL OF FINE GOLD BY ALTAIR. The entire
authorized capital stock of Fine Gold consists of One Million (1,000,000) shares
of Fine Gold Common Stock, of which One Hundred Thousand (100,000) shares are
issued and outstanding and owned of record and beneficially by Altair. Fine
Gold is not a party to any agreement or commitment providing for the issuance,
disposition or acquisition of any of its capital stock. Except as set forth in
this Agreement, Altair has no present plans, intentions or commitments to (i)
liquidate Fine Gold, (ii) merge Fine Gold with and into another corporation,
(iii) sell or otherwise dispose of any of the capital stock of Fine Gold to any
person other than a direct or indirect wholly owned subsidiary of Altair, or
(iv) cause Fine Gold to sell or otherwise dispose of any of the assets of TMI
acquired in the Merger, except for dispositions made in the Ordinary Course of
Business or transfers described in Code Section 368(a)(2)(C).
(e) CAPITAL STRUCTURE OF ALTAIR. The authorized capital stock of
Altair consisted at December 31, 1995 of an unlimited number of shares of Altair
Common Stock, of which 8,497,849 shares were issued and outstanding. All
outstanding shares of Altair capital stock have been duly issued and are validly
outstanding, fully paid and nonassessable. None of the shares of Altair's
capital stock has been issued in violation of the preemptive rights of any
person. The Shares to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Merger
Agreement and the Plan of Merger, will be validly issued, fully paid,
nonassessable and free and clear of any preemptive rights.
(f) SEC DOCUMENTS. Altair has made available to TMI a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Altair with the SEC (which includes the documents filed
with the Ontario Securities Commission) since January 1, 1994 and prior to the
date of this Agreement (the "ALTAIR SEC DOCUMENTS") which are all the documents
that Altair was required to file with the SEC since such date. As of their
respective dates, the Altair SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Altair SEC Documents, and none of the Altair SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Altair included in the Altair SEC Documents complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of Canadian
generally accepted accounting principles (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are material) the
consolidated financial position of Altair and its consolidated Subsidiaries as
of their respective dates and the consolidated results of operations and the
consolidated cash flows of Altair and its consolidated Subsidiaries for the
periods presented therein.
23
(g) NO DEFAULT. Neither Altair nor any of its significant
Subsidiaries is in material default or violation (and to the Knowledge of Altair
no event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any material term, condition or provision
of (i) in the case of Altair, its charter documents, (ii) any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which Altair or any of its significant Subsidiaries is now a party or by which
Altair or any of its significant Subsidiaries or any of their respective
properties or assets may be bound, or (iii) any order, writ, injunction, decree,
statute, rule or regulation applicable to Altair or any of its significant
Subsidiaries, except in the case of (ii) and (iii) for defaults or violations
which in the aggregate would not reasonably be expected to have a material
adverse effect on the business and operations of Altair and its Subsidiaries
taken as a whole.
(h) COMPLIANCE WITH APPLICABLE LAWS. Altair and its significant
Subsidiaries hold all material permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental entities necessary for the lawful
conduct of their respective businesses (the "ALTAIR PERMITS"), except where the
failure so to hold would reasonably be expected to not have a material adverse
effect on the business and operations of Altair and all of its Subsidiaries
taken as a whole. Altair and its Subsidiaries are in material compliance with
the terms of the Altair Permits, except where the failure so to comply would
reasonably be expected to not have a material adverse effect on the business and
operations of Altair and all of its Subsidiaries taken as a whole. Except as
disclosed in the Altair SEC Documents, the businesses of Altair and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Authority, except for possible violations which
would not reasonably be expected to have a material adverse effect on the
business or operations of Altair and its Subsidiaries taken as a whole.
(i) LITIGATION. Except as disclosed in the Altair SEC Documents,
there is no suit, action or proceeding pending or, to the Knowledge of Altair,
threatened against or affecting Altair or any Subsidiary of Altair the effect of
which might reasonably be expected to have a material adverse effect on the
business or operations of Altair and its Subsidiaries taken as a whole (the
"ALTAIR LITIGATION"), and Altair and its Subsidiaries have no Knowledge of any
facts which are likely to give rise to any Altair Litigation which (in any case)
might reasonably be expected to have a material adverse effect on the business
or operations of Altair and the Subsidiaries taken as a whole, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against Altair or any Subsidiary of Altair which might
reasonably be expected to have a material adverse effect on the business or
operations of Altair and its Subsidiaries taken as a whole or Altair's ability
to consummate the transactions contemplated by this Agreement.
(j) DISCLOSURE. No representation or warranty by Altair set forth in
this Agreement and no statement contained in any other writing furnished or to
be furnished by Altair to TMI or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
24
ARTICLE 6 - MISCELLANEOUS
6.1 TERMINATION.
(a) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time:
(i) By the mutual consent of Fine Gold, Altair and TMI through
action of their respective boards of directors; or
(ii) By any of Fine Gold, Altair or TMI if the Merger shall not
have become effective prior to March 15, 1996, or such later date as shall
have been approved by the boards of directors of each of Fine Gold, Altair
and TMI.
In the event of termination pursuant to this Section 6.1(a), no obligation,
right, remedy, or Liability shall arise hereunder, and Fine Gold, Altair and TMI
shall each bear its own costs incurred in connection with the preparation and
execution of this Agreement, the preparation and review of financial statements
required to be delivered pursuant hereto and the negotiation of the transactions
contemplated hereby.
(b) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
action of the board of directors of Fine Gold or Altair if TMI or any
Shareholder shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of TMI contained herein shall be inaccurate in any
material respect. In the event of termination pursuant to this Section 6.1(b),
no obligation, right, remedy, or Liability shall arise hereunder, except that
TMI shall bear all of its own costs and TMI shall promptly reimburse Fine Gold
and Altair for all reasonable costs incurred by Fine Gold and Altair in
connection with the preparation and execution of this Agreement, the preparation
and review of financial statements required to be delivered pursuant hereto, and
the negotiation of the transactions contemplated hereby.
(c) This Agreement, the Merger and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
action of the board of directors of TMI if Fine Gold or Altair shall fail to
comply in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of Fine Gold or
Altair contained herein shall be inaccurate in any material respect. In the
event of termination pursuant to this Section 6.1(c), no obligation, right,
remedy, or Liability shall arise hereunder, except that Fine Gold and Altair
shall bear all of their respective costs and shall promptly reimburse TMI for
all reasonable costs incurred by it in connection with the preparation and
execution of this Agreement, the preparation and review of financial statements
required to be delivered pursuant hereto, and the negotiation of the
transactions contemplated hereby.
6.2 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement without
the prior written approval of the other Parties; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing Party will advise the other
Parties prior to making the disclosure).
6.3 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
25
6.4 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules referred to herein), the Escrow Agreement and the Warrant Certificates
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, that may have related in any way to the subject matter hereof
(expressly excluding, however, that certain Definitive Option Agreement executed
by and between TMI, Mineral Recovery Systems, Inc. and certain holders of the
TMI Common Stock.
6.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties hereto.
6.6 COUNTERPARTS. This Agreement and the Plan of Merger may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
6.7 HEADINGS AND REFERENCES. The Table of Contents and the article and
section headings contained in this Agreement and the Plan of Merger are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement. References in this Agreement to Articles and
Sections shall refer to the articles and sections of this Agreement, unless
expressly indicated otherwise.
6.8 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) when delivered
personally, (ii) when sent by telecopier (with receipt confirmed), (iii) when
received by the addressee, if sent by Express Mail, overnight express delivery
service (receipt requested), or (iv) three business days after being sent by
registered or certified mail, return receipt requested, in each case to the
other Party at the following addresses and telecopier numbers (or to such other
address or telecopier number for a Party as shall be specified by like notice;
provided that notices of a change of address or telecopier number shall be
effective only upon receipt thereof):
if to Fine Gold, to:
C. Xxxxxxx Xxxxxx
Fine Gold Recovery Systems Inc.
0000 Xxxxxx Xxxxxx
Xxxx, Xxxxxx 00000
Fax No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx, Parr, Waddoups, Xxxxx & Gee
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax No.: (000) 000-0000
26
if to Altair, to:
Xxxxxxx X. Xxxx
Altair International Gold Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
with copies to:
Xxx Xxxxxxx, Esq.
Beach, Hepburn
00 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.: (000) 000-0000
and
Xxxxx X. Xxxxx, Esq.
Xxxxxxx, Parr, Waddoups, Xxxxx & Xxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax No. (000) 000-0000
if to TMI, to:
Xxxxxx X. Xxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax No. (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Xxxxx, X.X.
000 Xxxx Xxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Fax No. (000) 000-0000
6.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nevada, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Nevada.
6.10 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Fine
Gold, Altair, TMI and each of the Shareholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder or under
the Plan of Merger, whether intentional or not, shall be deemed to extend
27
to any prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
6.11 SEVERABILITY. Any term or provision of this Agreement, or the Plan of
Merger that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or thereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any term or
provision hereof or thereof is invalid or unenforceable, the Parties agree that
the court making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement and the Plan of Merger shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
6.12 CONSTRUCTION. The Parties have jointly participated in the
negotiation and drafting of this Agreement and the Plan of Merger. In the event
an ambiguity or question of intent or interpretation arises, this Agreement and
the Plan of Merger shall be construed as if drafted jointly by all Parties and
no presumptions or burdens of proof shall arise favoring any Party by virtue of
the authorship of any of the provisions of this Agreement or the Plan of Merger.
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The Parties acknowledge that certain of the
representations and warranties herein and in the Plan of Merger, together with
the indemnification provisions herein, are intended to allocate risk and
economic cost as between Fine Gold, Altair, TMI and the holders of the TMI
Common Stock in the event such representations, warranties and covenants are
breached.
6.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
6.14 REMEDIES. Each of the Parties acknowledges and agrees that each other
Party would be damaged irreparably in the event any of the provisions of this
Agreement or the Plan of Merger are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that each other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and the Plan of Merger
and to enforce specifically this Agreement and the Plan of Merger and the terms
and provisions hereof and thereof in any action instituted in any court of the
United States or any state thereof, or in any courts of Canada or any province
thereof, having jurisdiction over the Parties and the matter, in addition to any
other remedy to which it may be entitled, at law or in equity.
6.15 ATTORNEY'S FEES. If any legal action or other proceeding is brought
for enforcement of this Agreement or the Plan of Merger because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement or the Plan of Merger, the successful or prevailing
party shall be entitled to recover reasonable attorney's fees and costs
incurred, both before and after judgment, in addition to any other relief to
which they may be entitled.
28
ARTICLE 7 - DEFINITIONS
7.1 DEFINITIONS. For purposes of this Agreement, unless the context
otherwise clearly requires, the following terms shall have the meanings
specified or referred to below:
"ASE" means the Alberta Stock Exchange.
"AFFILIATE" means, with respect to any particular Person, any Person
controlling, controlled by or under common control with such Person.
"ALTAIR COMMON STOCK" means the voting common shares in the capital of
Altair, no par value.
"ARTICLES OF MERGER" has the meaning set forth in Section 1.1(c).
"CCJ" means the Xxxxxxxx Centrifugal Jig, a mineral processing device
incorporating technology for the separation and recovery of fine heavy mineral
particles which are not presently recoverable utilizing conventional
technologies or processes, which device and technology are covered by U.S.
Patents Nos. 4279741 and 4998986 and the other patent rights described on
SCHEDULE 5.1(h).
"CLOSING" means the closing of the Merger as contemplated pursuant to
Section 1.3.
"CODE" means the Internal Revenue Service Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of Fine Gold, Altair or TMI other than any such information that (i)
is generally available to or known by the public immediately prior to the time
of disclosure (except through the actions or inactions of TMI or any holder of
TMI Common Stock), (ii) is available on a non-confidential basis (except through
the actions or inactions of TMI or any holder of TMI Common Stock) or (iii) has
been acquired or developed independent from TMI or any holder of TMI Common
Stock.
"DISSENTING SHAREHOLDER" means a holder of Dissenting Shares.
"DISSENTING SHARES" means those shares of TMI Common Stock, if any, held by
Persons exercising dissenter's rights in accordance with the Washington Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EFFECTIVE TIME" means the time the Merger becomes effective as described
in Section 1.4(c).
"ENVIRONMENTAL LAWS" means any and all laws, statutes, ordinances,
judgments, injunctions, decrees, regulations, rules and orders of any
Governmental Authority relating to pollution or the protection of human health
or the environment or to emissions, discharges, releases or threatened releases
of any substance that is regulated by any Governmental Authority or that has
been designated by any Governmental Authority to be toxic, hazardous,
radioactive or otherwise a danger to health or the environment.
"ESCROW AGENT" means the Person designated as such pursuant to the terms of
the Escrow Agreement.
"ESCROW AGREEMENT" has the meaning set forth in Section 1.1(e).
29
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 5.1 (i).
"FINE GOLD COMMON STOCK" means the issued and outstanding common stock of
Fine Gold, $.01 par value, immediately preceding the Effective Time.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means any U.S., Canadian, state, provincial, local
or foreign court or governmental, administrative or regulatory authority or
agency.
"HAZARDOUS MATERIAL" means any substance that is regulated by any
Governmental Authority or that has been designated by any Governmental Authority
to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment.
"INDEBTEDNESS" of any Person means all obligations of such Person which in
accordance with GAAP should be classified upon a balance sheet of such Person as
Liabilities of such Person, and in any event, regardless of how classified in
accordance with GAAP, shall include (i) all obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any lien or other charge upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, and (iii) obligations
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person, notwithstanding the fact that
the rights and remedies of such seller, lender or lessor under such agreement in
the event of default are limited to repossession or sale of the property.
"INTELLECTUAL PROPERTY" means all patents, trademarks, service marks,
copyrights, computer software, data and documentation, trade secrets and
confidential business information, and copies and tangible embodiments thereof
in whatever form or medium.
"KNOWLEDGE" means knowledge that a reasonable person under similar
circumstances would have after reasonable investigation and inquiry (including
with legal counsel).
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MERGER" means the merger described in Article 1 of this Agreement.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of a
Person consistent with past custom and practice of that Person (including with
respect to quantity, value, amount and frequency).
"PERSON" means any natural person, corporation, limited liability company,
partnership, association, venture, trust, estate, company or any other natural
or juridical entity of any nature.
"PLAN OF MERGER" has the meaning set forth in Section 1.1.
"SEC" means the United States Securities and Exchange Commission.
30
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien.
"SHAREHOLDERS" means the individuals identified as such on the signature
pages hereof.
"SHARES" means the shares of Altair Common Stock being received by the
holders of Common Stock in exchange for TMI Common Stock pursuant to the Merger.
"SUBSIDIARY" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"TAX" or "TAXES" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax, levy, fee, impost, charge or duty of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TMI COMMON STOCK" means the issued and outstanding common stock of TMI,
$.005 par value, immediately preceding the Effective Time.
"TMI DISCLOSURE SCHEDULES" has the meaning set forth in Section 5.1.
"TMI OPTIONS" means the non-qualified options to acquire 1,671,251 shares
of TMI Common Stock described on SCHEDULE 5.1(b).
"WARRANT" has the meaning set forth in Section 1.1(h).
"WARRANT CERTIFICATE" has the meaning set forth in Section 1.1(h).
"WARRANT SHARES" has the meaning set forth in Section 1.1(h).
"WASHINGTON ACT" means the Washington Business Corporation Act.
31
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
Fine Gold Recovery Systems, Inc.,
a Nevada corporation
By:
-----------------------------------
Title:
--------------------------------
Altair International Gold Inc.,
an Ontario corporation
By:
-----------------------------------
Title:
--------------------------------
Trans Mar, Inc.,
a Washington corporation
By:
-----------------------------------
Title:
--------------------------------
The following holders of the TMI Common Stock, by their execution below,
approve the execution of this Agreement by TMI and agree to vote their shares
of TMI Common Stock for approval of the Merger and the Merger Agreement as
set forth herein:
-----------------------------------
Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Xx. Xxxx X. Xxxx
32
-----------------------------------
Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
-----------------------------------
Colina Negra, S.A.
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Xxxxxx Family Revocable Living Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Xx. Xxxx X. Xxxx Defined Benefit Plan
a ______________________
By:
-----------------------------------
Title:
--------------------------------
D.M.P. Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
Xxxxxx Family Trust
a ______________________
By:
-----------------------------------
Title:
--------------------------------
33
AMENDMENT TO MERGER AGREEMENT
THIS AMENDMENT TO MERGER AGREEMENT (the "AMENDMENT") is entered into this
22nd day of February, 1996, by and among ALTAIR INTERNATIONAL GOLD INC., an
Ontario corporation ("ALTAIR"), FINE GOLD RECOVERY SYSTEMS INC., a Nevada
corporation which is a wholly-owned subsidiary of Altair ("FINE GOLD"), TRANS
MAR, INC., a Washington corporation ("TMI"), and the individual shareholders of
TMI identified on the signature page hereto (collectively, the "PERFORMANCE
SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, as of February 8, 1996, Altair, Fine Gold and TMI entered into a
Merger Agreement (the "AGREEMENT") pursuant to which TMI proposed to merge with
and into Fine Gold and Altair proposed to issue to the shareholders of TMI
voting common shares of the capital stock of Altair (the "ALTAIR COMMON STOCK")
in exchange for all of the outstanding shares of the capital stock of TMI (the
"MERGER"); and
WHEREAS, the Agreement provides that the issuance of the shares of Altair
Common Stock to the shareholders of TMI is conditioned upon Altair's receipt of
all necessary approvals of the Alberta Stock Exchange (the "ASE"); and
WHEREAS, as a condition to its approval of the Merger, the ASE has required
that the terms of the Merger be modified to provide that certain shares of
Altair Common Stock to be issued to existing shareholders of TMI be held in
escrow until released on terms acceptable to the ASE; and
WHEREAS, upon the terms and subject to the conditions set forth in this
Amendment, Altair, Fine Gold, TMI and the Performance Shareholders desire to
amend the terms of the Merger Agreement and modify the terms of the Merger as
required by the ASE.
NOW, THEREFORE, in consideration of the premises and covenants and
agreements set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. Except as expressly set forth in this Amendment,
capitalized terms not defined in this Amendment shall have the meanings set
forth in the Agreement.
2. MODIFICATION OF TERMS. Subject to the terms and conditions set forth
in this Amendment, Altair, Fine Gold, TMI and the Performance Shareholders
hereby agree to modify the terms and conditions of the Agreement as follows:
2.1 Upon the execution of this Amendment, Section 1.1(e) of the Agreement
shall be deleted and shall be replaced with a new Section 1.1(e) which shall
read in its entirety as follows:
(e) ESCROW OF SHARES.
(i) Pursuant to the terms of Escrow Agreements
substantially in the form of EXHIBITS 1.1(e)(1) AND (2) attached to
this Agreement (the "ESCROW AGREEMENTS") to
be executed by and between Altair and the Escrow Agent prior to the
Closing, and subject to the approval of the ASE, including, without
limitation, the restrictions set forth in Sections 1.1(e)(ii) and
(iii) below, Altair shall, consistent with the provisions of Section 1.2,
transfer and deliver to the Escrow Agent for the benefit of the holders
of the TMI Common Stock all of the Shares. The Shares shall be held by the
Escrow Agent for distribution to the holders of the TMI Common Stock
at the times and in the manner set forth in the Escrow Agreements.
During the period that the Escrow Agent shall hold the Shares, all
cash dividends received by the Escrow Agent shall be paid to the
holders of the Shares entitled thereto. Any shares of Altair Common
Stock received by the Escrow Agent in respect of the Shares shall be
held in escrow pending distribution of the Shares pursuant to the
terms of the Escrow Agreements and this Agreement. During such
period, the Escrow Agent shall take such other actions as are
necessary or appropriate in order to achieve the purposes contemplated
under this Agreement.
(ii) The Escrow Agreement attached hereto as EXHIBIT
1.1(e)(1) (the "PRINCIPAL ESCROW AGREEMENT") shall provide that Seven
Hundred Fifty Thousand (750,000) Shares will be placed in escrow and
released, in the amounts and at the times set forth on SCHEDULE
1.1(e)(ii) attached to this Agreement (a copy of such schedule is also
attached to an Amendment to Merger Agreement dated February 22, 1996),
over a period of five calendar quarters.
(iii) The remaining One Million One Hundred Seventy
Thousand (1,170,000) Shares (the "PERFORMANCE SHARES") will be placed
in escrow subject to the requirements of the Escrow Agreement attached
hereto as EXHIBIT 1.1(e)(2) (the "PERFORMANCE ESCROW AGREEMENT"),
including, without limitation, the following requirements:
(A) One Performance Share shall be released from
escrow for each One and 80/100 Canadian Dollars (Cdn$1.80)
recognized by Altair as cash flow from, or associated with,
the operation, sale, license or lease of the CCJ by Altair
or Fine Gold after the Closing;
(B) The Performance Shares which are released
from escrow pursuant to subparagraph (A) above will be
released as soon as practicable following Altair's receipt
of approval of each such release from the ASE subsequent to
the respective anniversaries of the date of the Closing;
PROVIDED, HOWEVER, that not more than Three Hundred Ninety
Thousand (390,000) Performance Shares shall be released from
escrow during any twelve-month period commencing on any of
the first three anniversaries of the date of the Closing;
(C) Subject to the restrictions set forth in this
Section 1.1(e)(iii), Performance Shares which are released
from escrow shall be released to the following Shareholders
in the amounts and at the times set forth on SCHEDULE
1.1(e)(iii) attached to this Agreement (a copy of such
schedule is also attached to an Amendment to Merger
Agreement dated February 22, 1996) on a pro rata basis,
based upon the percentages set forth below, and shall be
subject to the restrictions on transfer set forth in Section
1.2(d) of this Agreement: Xxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxx (24.74 percent), Colina Negra, S.A. (47.31 percent),
Xxxxxxx X.
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Xxxxxxxxx (14.28 percent), the D.M.P. Trust (8.47 percent) and
the Xxxxxx Family Trust (5.20 percent);
(D) Except as otherwise permitted by the ASE, any
Performance Shares which are not released from escrow prior
to the fifth anniversary of the date of the Closing will be
cancelled and the Performance Shareholders will have no
claim against Altair, Fine Gold, the ASE or any Shareholder
therefor; and
(E) No Performance Shares shall be released from
escrow except as permitted by the Performance Escrow
Agreement and the ASE.
(iii) The Escrow Agent shall have the exclusive authority
to act on behalf of the holders of the Shares for all purposes under
the terms of this Agreement including, without limitation, providing
such consents, waivers, amendments and modifications as the Escrow
Agent may consider appropriate.
2.2 Except as expressly set forth in this Section 2, all references in the
Agreement to the "Escrow Agreement" shall be revised to refer to the "Escrow
Agreements."
3. EXECUTION OF ESCROW AGREEMENT. By their execution of this Amendment,
the Performance Shareholders acknowledge and agree that they have read and
understand the escrow restrictions set forth in Section 2 above. Each of the
Performance Shareholders further authorizes Xxxxxx X. Xxxxx to execute the
Escrow Agreements on behalf of the Performance Shareholder on substantially the
terms set forth above and agrees to be bound by the terms thereof as if the
Escrow Agreements were executed by the Performance Shareholder.
4. INTEGRATED AGREEMENT AND AMENDMENT. The Agreement, as amended by this
Amendment, and the other agreements, documents, obligations and transactions
contemplated thereby, constitute the entire agreement between Altair, Fine Gold,
TMI and the Performance Shareholders regarding the subject matter hereof.
5. RATIFICATION. In all respects, other than as specifically set forth
in this Amendment, the Agreement shall remain unaffected by this Amendment, and
the Agreement shall continue in full force and effect, subject to the terms and
conditions thereof.
6. FURTHER ASSURANCES. Each of Altair, Fine Gold and TMI and each of the
Performance Shareholders shall execute any and all further documents, agreements
and instruments, and take all further actions which may be required or desirable
under applicable law, or which Altair or Fine Gold may, in their reasonable
discretion, require in order to effectuate the transactions contemplated by the
Agreement.
7. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
"ALTAIR"
ALTAIR INTERNATIONAL GOLD INC.,
an Ontario corporation
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx
Its: Chief Executive Officer
----------------------------------
"FINE GOLD"
FINE GOLD RECOVERY SYSTEMS INC.,
a Nevada corporation
By: /s/ C. Xxxxxxx Xxxxxx
----------------------------------
C. Xxxxxxx Xxxxxx
Its: President
----------------------------------
"TMI"
TRANS MAR, INC.,
a Washington corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
Its: President
----------------------------------
"PERFORMANCE SHAREHOLDERS"
XXXXXX X. XXXXX, an individual
Xxxxxx X. Xxxxx
--------------------------------------
XXXXXXX X. XXXXX, an individual
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXXXXXX, an individual
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------
COLINA NEGRA, S.A.
a Costa Rican Corporation
By: /s/ Xxxxxx Xxxxxxx Xxxxxxx
------------------------------------
Its: President
------------------------------------
D.M.P. TRUST,
a
--------------------
By: [ILLEGIBLE]
-----------------------------------
Its: Trustees
-----------------------------------
XXXXXX FAMILY TRUST,
a
----------------
By: Xxxxx X. Xxxxxx
-----------------------------------
By: Xxxxxx X. Xxxxxx
-----------------------------------
Its: Trustees
-----------------------------------
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