EXHIBIT 2.1
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT is made as of June 20, 2003,
AMONG
ACETEX CORPORATION, a body corporate existing under the laws
of Alberta with its head office in the City of Vancouver, in
the Province of British Columbia (hereinafter called "ACETEX")
AND
2028569 ONTARIO LIMITED, a body corporate existing under the
laws of Ontario with its registered office in the City of
Toronto, in the Province of Ontario (hereinafter called
"ACETEX SUB")
AND
AT PLASTICS INC., a body corporate existing under the laws of
the Province of Ontario with its head office in the City of
Brampton, in the Province of Ontario (hereinafter called "AT
PLASTICS")
WHEREAS Acetex and AT Plastics wish to propose a combination of their
businesses;
AND WHEREAS the parties hereto intend to carry out the transactions
contemplated herein by way of an amalgamation of AT Plastics and Acetex Sub
pursuant to which the shareholders of AT Plastics will dispose of their shares
and receive shares of Acetex;
AND WHEREAS the parties hereto have entered into this Agreement to
provide for the matters referred to in the foregoing recitals and for other
matters relating to such amalgamation;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto do hereby covenant and agree as follows.
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"ACETEX OPTION PLAN" means the Acetex Employee Stock Option Plan, as amended and
restated effective August 17, 2000;
"ACETEX SHARES" means common shares in the capital of Acetex;
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"ACETEX SHAREHOLDERS" means the holders of Acetex Shares;
"ACETEX SUB" means 2028569 Ontario Limited;
"ACETEX SUBSTITUTE WARRANTS #1" and "ACETEX SUBSTITUTE WARRANTS #2" means those
warrants to acquire Acetex Shares as set out in Schedule E hereto;
"ACQUISITION PROPOSAL" means any merger, amalgamation, consolidation,
arrangement, business combination, recapitalization, take-over bid, sale of
material assets, material sale of treasury shares or rights or interests therein
or thereto (other than a public offering of treasury shares) or similar
transactions involving Acetex or AT Plastics or any Material Subsidiary of
Acetex or AT Plastics, or a proposal to do so, excluding the Amalgamation;
"AMALGAMATION" means the amalgamation involving AT Plastics and Acetex Sub
pursuant to the provisions of Section 175 of the OBCA, on the terms and
conditions set forth in herein;
"AMALGAMATED CORPORATION" means the corporation continuing on the amalgamation
of Acetex Sub and AT Plastics;
"ARTICLES OF AMALGAMATION" means the articles of amalgamation in form attached
as Schedule A hereto;
"AT PLASTICS AMALGAMATION RESOLUTION" means the special resolution of AT
Plastics Shareholders approving the Amalgamation;
"AT PLASTICS CIRCULAR" means the management information circular to be prepared
and sent to the AT Plastics Shareholders in connection with the AT Plastics
Meeting;
"AT PLASTICS MEETING" means the special meeting of AT Plastics Shareholders to
approve the Amalgamation;
"AT PLASTICS OPTION PLAN" means the AT Plastics Employee Stock Option Plan, as
amended and restated May 1, 2002;
"AT PLASTICS OPTIONHOLDERS" means the holders of AT Plastics Options;
"AT PLASTICS OPTIONS" means AT Plastics Employee Stock Options;
"AT PLASTICS SHAREHOLDERS" means the holders of AT Plastics Shares;
"AT PLASTICS SHARES" means the common shares in the capital of AT Plastics;
"AT PLASTICS SUPPORT OBLIGATIONS" means those obligations described in Schedule
F hereto;
"AT PLASTICS WARRANTS" means warrants outstanding pursuant to Warrant
Certificates dated June 2, 2003 entitling Peninsula Funds III, L.P to acquire
4,240,568 AT Plastics Shares at a price of $1.57 per share and Connecticut
General Life Insurance Company; to acquire 843,113 AT Plastics Shares at a price
of $.72 per share;
"AT PLASTICS WARRANTHOLDERS" means Peninsula Fund III, L.P. and Connecticut
General Life Insurance Company;
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"BUSINESS DAY" means any day, other than Saturday, Sunday and a statutory
holiday in the Province of Ontario;
"COMPETITION ACT" means the Competition Act, R.S.C. 1985, c. C-34, as amended;
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated April 5,
2003 between Acetex and AT Plastics;
"DEPOSITORY" means Computershare Trust Company, or any successor thereto;
"DIRECTOR" means the Director of Corporations appointed pursuant to Section 278
of the OBCA;
"EFFECTIVE DATE" means the date upon which the Amalgamation becomes effective
under the OBCA;
"ENCUMBRANCE" includes, without limitation, any mortgage, pledge, assignment,
charge, lien, security interest, adverse interest in property, other third party
interest or encumbrance of any kind, whether contingent or absolute, and any
agreement, option, right or privilege (whether by law, contract or otherwise)
capable of becoming any of the foregoing;
"ENVIRONMENTAL APPROVALS" means all permits, certificates, licenses,
authorizations, consents, instructions, registrations, directions or approvals
issued or required by Governmental Entities pursuant to Environmental Laws;
"ENVIRONMENTAL LAWS" means all applicable Laws, including applicable common
laws, relating to the protection of the environment and employee and public
health and safety;
"GOVERNANCE ARRANGEMENTS" means the arrangements set forth in Schedule D hereto;
"GOVERNMENTAL ENTITY" means any (a) multi-national, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign, (b) subdivision, agent, commission, board
or authority of any of the foregoing or (c) quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for the
account of any of the foregoing;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any nature,
hazardous substance, hazardous material, toxic substance, dangerous substance or
dangerous good as defined, judicially interpreted or identified in any
applicable Environmental Law;
"LAWS" means all laws, by-laws, rules, regulations, orders, ordinances,
protocols, codes, guidelines, policies, notices, directions and judgments or
other requirements of any Governmental Entity;
"LENDER CONSENTS" means the consents of the lenders to AT Plastics to the
Amalgamation;
"LETTER OF TRANSMITTAL" means the letter of transmittal sent by AT Plastics to
the AT Plastics Shareholders concurrently with the sending of the AT Plastics
Circular for the AT Plastics Meeting;
"MATERIAL ADVERSE CHANGE" or "material adverse effect" means, when used in
connection with Acetex or AT Plastics, any change, effect, event, occurrence or
change in a state of facts that is, or would reasonably be expected to be,
material and adverse to the business, operations or financial condition of such
Party and its Subsidiaries, taken as a whole, other than any change, effect,
event, occurrence or change in a state of facts principally caused by a change,
effect, event, occurrence or change in a state of facts in (i) the
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Canadian or United States economies or financial, currency exchange, securities
or commodities markets in general, (ii) the trading price of the Acetex Shares
or AT Plastics Shares, respectively, or other securities of Acetex or AT
Plastics immediately following and reasonably attributable to the announcement
of this Agreement and the transactions contemplated hereby, (iii) the chemical
manufacturing industry in general, and (iv) specific matters disclosed in the
disclosure memoranda delivered pursuant to Section 1.10;
"MATERIAL SUBSIDIARY" in respect of a Party means a Subsidiary of that Party the
total assets of which constitute more than 10% of the consolidated assets of the
Party or the total revenues of which constitute more than 10% of the
consolidated revenues of that Party, in each case based on the unaudited interim
financial statements for the three months ended March 31, 2003;
"MEETING DATE" means August 1, 2003 or such other date as the parties may agree
upon;
"OBCA" means the Business Corporations Act, R.S.O. 1990, c. B-16, as may be
amended;
"PARTIES" means Acetex, Acetex Sub and AT Plastics and "Party" means any one of
them;
"RETURNS" means all material reports, information statements and returns
relating to or as required to be filed in connection with any Taxes;
"SUBSIDIARY" means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily entitled
to elect a majority of the board of directors thereof (whether or not shares of
any other class or classes shall or might be entitled to vote upon the happening
of any event or contingency) are at the time owned directly or indirectly by
such specified body corporate and shall include any body corporate, partnership,
joint venture or other entity over which it exercises direction or control or
which is in a like relation to a Subsidiary;
"SUPERIOR PROPOSAL" shall have the meaning as set forth in Section 5.5(a);
"TAX ACT" means the Income Tax Act, R.S.C. 1985, c. 1 (5th supp.), as amended;
and
"TAXES" means all taxes, however denominated, including any interest, penalties
or other additions that may become payable in respect thereof, imposed by any
Governmental Entity; which taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes (including, but not limited to,
federal, state and provincial income taxes), capital taxes, payroll and employee
withholding taxes, unemployment insurance, social insurance taxes (including
Canada Pension Plan payments), sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, gross receipts taxes, business license taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes,
transfer taxes, workers' compensation, pension assessment and other governmental
charges, and other obligations of the same or of a similar nature to any of the
foregoing, which one of the Parties or any of its Subsidiaries is required to
pay, withhold or collect.
1.2 INTERPRETATION
The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this Agreement.
The Parties hereto acknowledge that their respective legal counsel have reviewed
and participated in settling the terms of this Agreement, and the Parties hereby
agree that any rule of construction to the effect that any ambiguity is to be
resolved against the drafting Party will not be applicable in the interpretation
of this Agreement.
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1.3 ARTICLE REFERENCES
Unless the contrary intention appears, references in this Agreement to
an Article, Section, subsection, paragraph or Schedule by number or letter or
both refer to the Article, Section, subsection, paragraph or Schedule,
respectively, bearing that designation in this Agreement.
1.4 NUMBER AND GENDER
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa; words importing gender
shall include all genders; and words importing persons shall include a natural
person, firm, trust, partnership, association, corporation, joint venture or
government (including any Governmental Entity).
1.5 DATE FOR ANY ACTION
If the date on which any action is required to be taken hereunder by
any of the Parties is not a day of business in the place where the action is
required to be taken, such action shall be required to be taken on the next
succeeding day which is a day of business in such place.
1.6 CURRENCY
Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
1.7 SCHEDULES
Schedules A, B, C, D, E and F annexed to this Agreement; being the
Articles of Amalgamation, the representations and warranties of Acetex and AT
Plastics, Governance Arrangements, Acetex Substitute Warrants #1 and #2 and AT
Plastics Support Obligations respectively, are incorporated by reference into
this Agreement and form a part hereof.
1.8 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this Agreement
shall have the meanings attributable thereto under Canadian generally accepted
accounting principles and all determinations of an accounting nature required to
be made shall be made in a manner consistent with, Canadian generally accepted
accounting principles.
1.9 MATERIAL
The terms "material" and "materially" shall, when used in this
Agreement, be construed, measured or assessed on the basis of whether the matter
would materially affect a Party and its Subsidiaries, taken as a whole, or would
significantly impede the ability to complete the Amalgamation in accordance with
this Agreement.
1.10 DISCLOSURE
Where in this Agreement reference is made to disclosure in writing, or
disclosed in writing on or prior to the date hereof, such disclosure shall be
made in writing in separate memorandum, dated the date hereof and signed by an
officer of each of Acetex or AT Plastics, as the case may be, and delivered to
the other immediately prior to the execution of this Agreement. Such disclosure
memoranda
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shall make specific reference to the applicable Sections and paragraphs of this
Agreement in respect of which such disclosure is made.
ARTICLE 2
THE COMBINATION
2.1 AMALGAMATION
(a) Subject to the terms and conditions hereof:
(i) AT Plastics and Acetex Sub shall amalgamate pursuant to the
provisions of section 175 of the OBCA and the Articles of
Amalgamation shall be filed;
(ii) Shareholders of AT Plastics shall receive 1/6 of an Acetex Share
for each AT Plastics Share held;
(iii) Acetex shall receive one share of the Amalgamated Corporation
for each share of Acetex Sub held.
(b) On the Effective Date each AT Plastics Option will, without any further
action on the part of any AT Plastics Optionholder, become an option
(remaining under the AT Plastics Option Plan) to purchase the number
of Acetex Shares determined by dividing the number of AT Plastics
Shares subject to the particular AT Plastics Option at the Effective
Date by 6, at an exercise price per Acetex Shares equal to the
exercise price per share in the particular AT Plastics Option at the
Effective Time multiplied by 6. If the foregoing calculation results
in an option being exercisable for a fraction of an Acetex Share then
the number of Acetex Shares subject to such option will be rounded
down to the nearest whole number of shares, and the exercise price per
whole Acetex Share will be as determined above. The obligations of AT
Plastics under the AT Plastics Options so converted shall be assumed
by Acetex and Acetex shall be substituted for AT Plastics under the AT
Plastics Option Plan, the address for exercise of such converted
options shall be the registered office of Acetex in Calgary, Alberta,
Attention: Corporate Secretary, and the AT Plastics Options will be
further modified as necessary to effect such conversion. Except as
provided in this subsection, the term, exerciseability and all other
terms and conditions of the AT Plastics Options in effect at the
Effective Date shall govern the AT Plastics Options as so converted.
(c) On the Effective Date the AT Plastics Warrants shall be cancelled and
extinguished and in consideration therefore Peninsula Fund III, L.P.
shall be entitled to receive Acetex Substitute Warrant #1 entitling it
to acquire 706,760 Acetex Shares at an exercise price equal to the
closing price of the Acetex Shares on the Toronto Stock Exchange on the
Effective Date or if there is no closing price on the Effective Date
the next day on which there is a trade on the Toronto Stock Exchange
and Connecticut General Life Insurance shall be entitled to receive
Acetex Substitute Warrant #2 entitling it to acquire 141,352 Acetex
Shares at an exercise price of $4.32.
(d) As of the Effective Date:
(i) An AT Plastics Shareholder who is entitled to dissent with
respect to the Amalgamation in accordance with the OBCA and who
duly exercises such right; and
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(A) is ultimately entitled to be paid fair value for such
shareholder's AT Plastics Shares shall be deemed to have
transferred such shares to the Amalgamated Corporation for
cancellation on the Effective Date; or
(B) is ultimately not entitled to be paid fair value for such
shareholder's AT Plastics Shares, for any reason, shall be
deemed to have participated in the Amalgamation on the same
basis as at and from the Effective Date as any other
non-dissenting AT Plastics Shareholder;
(ii) Acetex shall not be required to recognize AT Plastics
Shareholders described in paragraph 2.1(c)(i)(A) above as holding
AT Plastics Shares on or after the Effective Date and the names
of such holders shall be deleted from the registers of AT
Plastics;
(iii) The Amalgamated Corporation will possess all of the property,
rights and assets of each of Acetex Sub and AT Plastics and will
assume all of their respective obligations;
(iv) The first director of the Amalgamated Corporation shall be Xxxxxx
X. Xxxx Vancouver, British Columbia;
(v) The by-laws of the Amalgamated Corporation shall be the by-laws
of Acetex Sub;
(vi) The registered office of the Amalgamated Corporation shall be
Suite 1800 BCE Place, 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx X0X 0X0.
2.2 ISSUANCE OF CERTIFICATES REPRESENTING ACETEX SHARES
At or promptly after the Effective Date, Acetex shall deposit with the
Depository, for the benefit of the former AT Plastics Shareholders who exchanged
AT Plastics Shares pursuant to the Amalgamation, certificates representing the
Acetex Shares issued pursuant to the Amalgamation. Upon surrender to the
Depository, at any of its offices specified in the Letter of Transmittal, of a
certificate which prior to the Effective Date represented outstanding AT
Plastics Shares, and such additional documents and instruments as the Depository
may reasonably require, the holder of such surrendered certificate shall be
entitled to receive in exchange therefor, and the Depository shall forthwith
deliver to such holder, a certificate representing that number (rounded down to
the nearest whole number) of Acetex Shares which such holder received pursuant
to the Amalgamation (together with any dividends or distributions with respect
thereto pursuant to Section 2.3 and any cash in lieu of fractional Acetex Shares
pursuant to Section 2.4), and any certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of AT Plastics Shares which
is not registered in the transfer records of AT Plastics, a certificate
representing the proper number of Acetex Shares (together with any dividends or
distributions with respect thereto pursuant to Section 2.3 and any cash in lieu
of fractional Acetex Shares pursuant to Section 2.4) shall be delivered to a
transferee if the certificate formerly representing such AT Plastics Shares is
presented to the Depository at its offices as aforesaid, accompanied by the
foregoing documents together with all other documents required to evidence and
effect such transfer. Until surrendered as contemplated by this Section 2.2,
each certificate which prior to the Effective Date represented outstanding AT
Plastics Shares shall be deemed at any time after the Effective Date, to
represent only the right to receive upon such surrender (a) the certificate
representing Acetex Shares as contemplated by this Section 2.2, (b) a cash
payment in lieu of any fractional Acetex Shares as contemplated by Section 2.4,
and (c) any dividends or distributions with a record date on or after the
Effective Date theretofore paid or payable with respect to Acetex Shares as
contemplated by Section 2.3.
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2.3 DIVIDENDS AND OTHER DISTRIBUTIONS
No dividends or other distributions declared or made on or after the
Effective Date with respect to the Acetex Shares with a record date on or after
the Effective Date shall be paid to the holder of any certificates formerly
representing outstanding AT Plastics Shares which are not surrendered pursuant
to Section 2.2 and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 2.4 (and no interest will be earned and
payable thereon), unless and until the certificate representing such AT Plastics
Shares shall be surrendered in accordance with Section 2.2. Subject to
applicable law, at the time of such surrender of any such certificate (or, in
the case of clause (c) below, at the appropriate payment date), there shall be
paid to the holder of the Acetex Shares issued pursuant to the Amalgamation, in
all cases without interest, (a) the amount of any cash payable in lieu of a
fractional Acetex Shares to which such holder is entitled pursuant to Section
2.4, (b) the amount of dividends or other distributions with a record date on or
after the Effective Date theretofore paid with respect to such Acetex Shares,
and (c) the amount of dividends or other distributions with a record date on or
after the Effective Date but prior to surrender and a payment date subsequent to
surrender payable with respect to such Acetex Shares.
2.4 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Acetex Shares shall be
issued upon the surrender for exchange of certificates pursuant to Section 2.2,
and such fractional interests shall not entitle the owner thereof to vote or to
possess or exercise any rights as a security holder of Acetex. In lieu of any
such fractional interests, each person entitled thereto, will receive an amount
of cash (rounded to the nearest whole cent), without interest, equal to the
product of (a) such fractional interest, multiplied by (b) the average of the
closing trading price for Acetex Shares on the Toronto Stock Exchange for the
first three trading days on which Acetex Shares are traded following the
Effective Date, such amount to be provided to the Depository by Acetex upon
request.
2.5 LOST CERTIFICATES
If any certificate which prior to the Effective Date represented
outstanding AT Plastics Shares has been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, the Depository will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Acetex Shares
(together with any dividends or distributions with respect thereto pursuant to
Section 2.3 and any cash in lieu of fractional Acetex Shares pursuant to Section
2.4) deliverable in respect thereof as determined in accordance with Section
2.2. When seeking such certificate and payment in exchange for any lost, stolen
or destroyed certificate, the person to whom certificates representing Acetex
Shares are to be issued shall, as a condition precedent to the issuance thereof,
give a bond satisfactory to Acetex and its transfer agent, in such sum as Acetex
may direct or otherwise indemnify Acetex and its transfer agent in a manner
satisfactory to Acetex and its transfer agent against any claim that may be made
against Acetex or its transfer agent with respect to the certificate alleged to
have been lost, stolen or destroyed.
2.6 EXTINGUISHMENT OF RIGHTS
Any certificate which prior to the Effective Date represented
outstanding AT Plastics Shares and has not been deposited on or prior to the
tenth anniversary of the Effective Date shall cease to represent a claim or
interest of any kind or nature as a shareholder or a holder of Acetex Shares or
AT Plastics Shares. On such date, the Acetex Shares (and any dividends or
distributions with respect thereto pursuant to Section 2.3 and any cash in lieu
of fractional Acetex Shares pursuant to Section 2.4) to which the former holder
of the certificate referred to in the preceding sentence was ultimately entitled
shall be
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deemed to have been surrendered to Acetex, together with all entitlements to
dividends, distributions, cash and interest thereon held for such former holder,
for no consideration, and such shares and rights shall thereupon be cancelled
and the name of the former registered holder shall be removed from the register
of holders of such shares.
2.7 CONVERTED AT PLASTICS OPTION
As soon as practical after the Effective Date, Acetex shall confirm in
writing to each of the former holders of AT Plastics Options the terms of their
options for Acetex Shares into which their AT Plastics Options have been
converted pursuant to subsection 2.1(b).
2.8 AT PLASTICS MEETING
Subject to compliance with the terms and conditions contained herein,
AT Plastics shall call the AT Plastics Meeting on August 1, 2003, or such other
date as the Parties may agree to for the purpose of considering and, if deemed
advisable:
(a) approving by a special resolution at the AT Plastics Meeting the AT
Plastics Amalgamation Resolution in accordance with the terms and
conditions hereof; and
(b) passing such other resolutions as Acetex and AT Plastics may agree are
necessary or desirable for the purposes hereof.
2.9 AT PLASTICS DIRECTORS' APPROVAL
(a) AT Plastics represents as of the date hereof that its Board of
Directors, after considering the Amalgamation, has determined
unanimously that:
(i) the Amalgamation is fair to AT Plastics Shareholders and AT
Plastics Optionholders and is in the best interests of AT
Plastics; and
(ii) it will recommend in the AT Plastics Circular that AT Plastics
Shareholders vote in favour of the AT Plastics Amalgamation
Resolution;
(b) AT Plastics represents as of the date hereof that its Board of
Directors has received an opinion from W. Y. Xxxxxxxx & Company,
financial advisors to AT Plastics, to the effect that the consideration
to be received by the AT Plastics Shareholders and AT Plastics
Optionholders under the Amalgamation is fair to AT Plastics
Shareholders and AT Plastics Optionholders from a financial point of
view, subject, in each case, to the assumptions and limitations
described in such opinion; and
(c) AT Plastics represents as of the date hereof that its directors, Chief
Executive Officer and Chief Financial Officer have advised it that they
intend to vote all AT Plastics Shares held by them in favour of the AT
Plastics Amalgamation Resolution and will, accordingly, so represent in
the AT Plastics Circular.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACETEX
3.1 REPRESENTATIONS AND WARRANTIES
Acetex hereby makes to AT Plastics the representations and warranties
as set forth in Schedule B to this Agreement and acknowledges that AT Plastics
is relying upon those representations and warranties in connection with entering
into this Agreement.
3.2 INVESTIGATION
Any investigation by AT Plastics and its advisors shall not mitigate,
diminish or affect the representations and warranties of Acetex pursuant to this
Agreement.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Acetex contained in this
Agreement shall not survive the completion of the Amalgamation and shall expire
and be terminated and extinguished upon the Amalgamation becoming effective.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AT PLASTICS
4.1 REPRESENTATIONS AND WARRANTIES
AT Plastics hereby makes to Acetex the representations and warranties
as set forth in Schedule C to this Agreement and acknowledges that Acetex is
relying upon those representations and warranties in connection with entering
into this Agreement.
4.2 INVESTIGATION
Any investigation by Acetex and its advisors shall not mitigate,
diminish or affect the representations and warranties of AT Plastics pursuant to
this Agreement.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of AT Plastics contained in this
Agreement shall not survive the completion of the Amalgamation and shall expire
and be terminated and extinguished upon the Amalgamation becoming effective.
ARTICLE 5
COVENANTS
5.1 CORPORATE GOVERNANCE
The Parties agree to use their best efforts to cause the Governance
Arrangements set out in Schedule D, including without limitation, the matters
contained in Section 1 of Schedule D, to become effective upon the Amalgamation
becoming effective or immediately thereafter.
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5.2 CONSULTATION
Acetex and AT Plastics agree to consult with each other in issuing any
press releases or otherwise making public statements with respect to this
Agreement or the Amalgamation and in making any filing with any Governmental
Entity or with any stock exchange with respect thereto. Each Party shall use all
reasonable commercial efforts to enable the other Party to review and comment on
all such press releases prior to the release thereof and to enable the other
Party to review and comment on such filings prior to the filing thereof. The
Parties agree to issue jointly a press release with respect to this Agreement as
soon as practicable, in a form acceptable to both Parties.
5.3 MUTUAL COVENANTS
Each of the Parties covenants and agrees that, except as contemplated
in this Agreement or the Amalgamation, until the Effective Date or the day upon
which this Agreement is terminated, whichever is earlier:
(a) except as previously disclosed in writing to, or with the prior written
consent of, the other Party hereto, it shall, and shall cause each of
its Subsidiaries to, conduct its and their respective businesses only
in, and not take any action except in, the usual, ordinary and regular
course of business and consistent with past practices;
(b) except as previously disclosed in writing to the other Party, including
in paragraph 2 of Schedule C hereto or except in respect of internal
transactions involving a Party and its wholly-owned Subsidiaries or
among such Subsidiaries, it shall not, without the prior written
consent of the other Party hereto, which shall not be unreasonably
withheld or delayed, directly or indirectly, including through a
Subsidiary, do or permit to occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or agree to
issue, sell, pledge, lease, dispose of or encumber (or permit any
of its Subsidiaries to issue, sell, pledge, lease, dispose of,
encumber or agree to issue, sell, pledge, lease, dispose of or
encumber):
(A) any shares of, or any options, warrants, calls, conversion
privileges or rights of any kind to acquire any shares of it
or any of its Subsidiaries, except pursuant to the exercise
of stock options currently outstanding or under existing
share issuance plans which have been disclosed to the other
Party to this Agreement and except for stock options issued
to new hires in accordance with past practices and shares
issued in respect thereof; and as Acetex may deem
appropriate or necessary for purposes of refinancing the
debt of the Amalgamated Corporation; or
(B) except in the usual, ordinary and regular course of business
and consistent with past practice, any material assets of it
or any of its Material Subsidiaries;
(ii) amend or propose to amend its articles or by-laws or those of any
of its Material Subsidiaries;
(iii) split, combine or reclassify any of its outstanding shares, or
declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to its
shares;
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(iv) redeem, purchase or offer to purchase (or permit any of its
Material Subsidiaries to redeem, purchase or offer to purchase)
any shares or other securities of it or any of its Material
Subsidiaries, unless otherwise required by the terms of such
securities;
(v) reorganize, amalgamate or merge it or any of its Material
Subsidiaries with any other person, corporation, partnership or
other business organization whatsoever;
(vi) except in the usual, ordinary and regular course of business and
consistent with past practice, acquire, agree to acquire, dispose
of or agree to dispose of any person, corporation, partnership,
joint venture or other business organization or division or
acquire, agree to acquire, dispose of or agree to dispose of any
assets, which, in each case, are individually or in the aggregate
material;
(vii) except in the usual, ordinary and regular course of business and
consistent with past practice: (A) satisfy or settle any claims
or liabilities which are individually or in the aggregate
material; (B) relinquish any contractual rights which are
individually or in the aggregate material; or (C) enter into any
interest rate, currency or commodity swaps, xxxxxx or other
similar financial instruments; or
(viii) except in the usual, ordinary and regular course of business
and consistent with past practice, and except for the purpose of
the renewal of or the replacement of existing credit facilities
where such renewal or replacement facilities are for a principal
amount approximately the same as or less than the principal
amount of the facilities renewed or replaced, incur or commit to
provide guarantees, incur any indebtedness for borrowed money or
issue any amount of debt securities which are individually or in
the aggregate material;
(c) except as may be required under the Lender Consents, without the prior
written consent of the other Party hereto, which shall not be
unreasonably withheld or delayed, it shall not, and shall cause each of
its Subsidiaries not to:
(i) other than as previously disclosed in writing to the other Party
hereto or in the usual, ordinary and regular course of business
and consistent with past practice or pursuant to existing
employment, pension, supplemental pension, termination,
compensation arrangements or policies, enter into or modify any
employment, severance, collective bargaining or similar
agreements, policies or arrangements with, or grant any bonuses,
salary increases, stock options, pension or supplemental pension
benefits, profit sharing, retirement allowances, deferred
compensation, incentive compensation, severance or termination
pay to, or make any loan to, any officers or directors of it or
any Subsidiary;
(ii) other than as previously disclosed in writing to the other Party
hereto or in the usual, ordinary and regular course of business
and consistent with past practice or pursuant to existing
employment, pension, supplemental pension, termination,
compensation arrangements or policies, in the case of employees
of it or any of its Subsidiaries who are not officers or
directors, take any action with respect to the entering into or
modifying of any employment, severance, collective bargaining or
similar agreements, policies or arrangements or with respect to
the grant of any bonuses, salary increases, stock options,
pension or supplemental pension benefits, profit sharing,
retirement allowances, deferred compensation, incentive
compensation, severance or termination pay or any other form of
compensation or profit sharing or with respect to any increase of
benefits payable
12
(provided that Acetex consents to the acceleration of vesting of
all options under the AT Plastics Option Plan upon the
Amalgamation becoming effective); or
(iii) except as set forth in the Parties' previously approved
respective capital budgets (copies of which have been previously
provided to the other Party), incur or commit to capital
expenditures prior to the Effective Date individually or in the
aggregate exceeding $250,000;
(d) it shall use its reasonable commercial efforts (taking into account
insurance market conditions and offerings and industry practices) to
cause its current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to lapse,
except where such cancellation, termination or lapse would not
individually or in the aggregate have a material adverse effect, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance
companies of nationally recognized standing providing coverage equal to
or greater than the coverage under the cancelled, terminated or lapsed
policies for substantially similar premiums are in full force and
effect;
(e) it shall:
(i) use its reasonable commercial efforts, and cause each of its
Subsidiaries to use its reasonable commercial efforts, to
preserve intact their respective business organizations and
goodwill, to keep available the services of its officers and
employees as a group and to maintain satisfactory relationships
with suppliers, agents, distributors, customers and others having
business relationships with it or its Subsidiaries;
(ii) not take any action, or permit any of its Subsidiaries to take
any action that would interfere with or be inconsistent with the
completion of the transactions contemplated hereunder or would
render, or that reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in
any material respect at any time prior to the Effective Date if
then made (other than a change of recommendation in accordance
with Section 5.4 and the communication of such change); and
(iii) promptly notify the other Party to this Agreement of any
material adverse change, or any change which could reasonably be
expected to become a material adverse change, in respect of its
or any of its Subsidiaries' businesses or in the operation of its
or any of its Subsidiaries' businesses or in the operation of its
or any of its Subsidiaries' properties, and of any material
Governmental Entity or third party complaints, investigations or
hearings (or communications indicating that the same may be
contemplated);
(f) except in connection with the Lender Consents, it shall not settle or
compromise any claim brought by any present, former or purported holder
of any of its securities in connection with the transactions
contemplated by this Agreement or the Amalgamation prior to the
Effective Date without the prior written consent, not to be
unreasonably withheld or delayed, of the other Party to this Agreement;
(g) except in the usual, ordinary and regular course of business and
consistent with past practice, or except as previously disclosed in
writing to the other Party hereto or as required by applicable Laws, it
and its Subsidiaries shall not enter into or modify in any material
respect any contract, agreement, commitment or arrangement which new
contract or series of related new contracts or modification to an
existing contract or series of related existing contracts would be
material to a Party hereto or which would have a material adverse
effect on a Party hereto;
13
(h) it shall use all reasonable commercial efforts to satisfy (or cause the
satisfaction of) the conditions precedent to its obligations hereunder
set forth in Article 6 to the extent the same is within its control and
take, or cause to be taken, all other action and to do, or cause to be
done, all other things necessary, proper or advisable under all
applicable Laws to complete the Amalgamation, including using its
reasonable commercial efforts to:
(i) obtain all necessary waivers, consents and approvals required to
be obtained by it from other parties to loan agreements, leases
and other contracts;
(ii) obtain all necessary consents, approvals and authorizations as
are required to be obtained by it under any applicable Laws;
(iii) effect all necessary registrations and filings and submissions
of information requested by Governmental Entities required to be
effected by it in connection with the Amalgamation and
participate and appear in any proceedings of either Party before
Governmental Entities in connection with the Amalgamation;
(iv) oppose, lift or rescind any injunction or restraining order or
other order or action seeking to stop, or otherwise adversely
affecting the ability of the Parties to consummate, the
transactions contemplated hereby or by the Amalgamation;
(v) fulfill all conditions and satisfy all provisions of this
Agreement and the Amalgamation, including delivery of the
certificates of their respective officers contemplated by Section
6.2 and Section 6.3; and
(vi) cooperate with the other Party to this Agreement in connection
with the performance by it of its obligations hereunder;
(vii) it shall not take any action, refrain from taking any action, or
permit any action to be taken or not taken, inconsistent with
this Agreement or which would reasonably be expected to
significantly impede the consummation of the Amalgamation (other
than a change of recommendation in accordance with Section 5.4
and the communication of such change);
(i) subject to the Confidentiality Agreement and Section 5.7, it will, in
all material respects, conduct itself so as to keep the other Parties
to this Agreement fully informed as to the material decisions required
to be made or actions required to be taken with respect to the
operation of its business, provided that such disclosure is not
otherwise prohibited by reason of a confidentiality obligation owed to
a third party for which a waiver could not be obtained or is with
respect to customer specific or competitively sensitive information
relating to areas or projects where Acetex and AT Plastics are
competitors;
(j) it shall discuss and consider such Pre-Amalgamation Steps as may be
proposed by the other Party hereto and implement such Pre-Amalgamation
Steps that it considers to be in the best interests of its
shareholders, provided such steps are agreed to in writing by the other
Party hereto;
(k) it shall make or cooperate as necessary in the making of all necessary
filings and applications under all applicable Laws required in
connection with the transactions contemplated herein and take all
reasonable action necessary to be in compliance with such Laws; and
14
(l) it shall use its reasonable commercial efforts to conduct its affairs
so that all of its representations and warranties contained herein
shall be true and correct in all material respects on and as of the
Effective Date as if made thereon.
5.4 RECOMMENDATION OF BOARDS OF DIRECTORS
The AT Plastics Circular shall include the recommendation and
representation of the AT Plastics Board of Directors to its security holders in
respect of the Amalgamation as set out in Section 2.9. Notwithstanding any other
provision of this Agreement, the Board of Directors of AT Plastics may change
its recommendation to its securityholders in respect of the Amalgamation from
that set forth in Sections 2.9, if such Board concludes, in good faith, after
receiving the advice of outside counsel and financial advisors that is reflected
in the minutes of a meeting of the Board, that such action is necessary for such
Board to act in a manner consistent with its fiduciary duty or applicable Laws
and, in the event that Sections 5.5, 5.6 or 8.2 are applicable, if such Party
and its Board are in compliance with those sections and such Party has paid any
fee applicable under Article 8. The foregoing shall not relieve the Board of
Directors of AT Plastics from its obligation to proceed to call and hold the AT
Plastics Meeting, solicit proxies for such meeting and to hold the vote of AT
Plastics Shareholders.
5.5 MUTUAL COVENANT REGARDING NON-SOLICITATION
(a) Neither Acetex nor AT Plastics, nor their respective Subsidiaries
shall, directly or indirectly, through any officer, director, employee,
representative or agent of Acetex or AT Plastics, as the case may be,
solicit, initiate, invite or knowingly encourage (including by way of
furnishing confidential information or entering into any form of
agreement, arrangement or understanding) the initiation of or
participate in, any inquiries or proposals regarding an Acquisition
Proposal, provided that nothing contained in this Section 5.5 or other
provisions of this Agreement shall prevent the Board of Directors of
Acetex or AT Plastics from considering, negotiating, approving or
recommending to its shareholders an agreement in respect of an
unsolicited bona fide written Acquisition Proposal (i) in respect of
which any required financing has been demonstrated to the satisfaction
of the Board of Directors of the Party subject to the Acquisition
Proposal, acting in good faith, to be reasonably likely to be obtained,
(ii) which is not subject to a due diligence access condition which
allows access to the books, records and personnel of a Party hereto or
any of its Subsidiaries or their representatives beyond 5:00 p.m.
(Eastern Daylight Time) on the third business day after which access is
afforded to the person making the Acquisition Proposal (provided,
however, the foregoing shall not restrict the ability of such person to
continue to review the information provided); (iii) in respect of which
the Board of Directors of the Party subject to the Acquisition Proposal
determines (having consulted outside counsel) that in the exercise of
its fiduciary duty it would be necessary for such Board of Directors to
take such action in order to avoid breaching its fiduciary duties; and
(iv) in respect of which the Board of Directors of the Party subject to
the Acquisition Proposal determines in good faith, after consultation
with financial advisors, if consummated in accordance with its terms,
would result in a transaction more favourable to its shareholders than
the Amalgamation (any such Acquisition Proposal that satisfies clauses
(i) through (iv) above being referred to herein as a "Superior
Proposal").
(b) Subject to the ability of the Parties to carry on business in
accordance with Section 5.3, Acetex and AT Plastics shall continue to
refrain from participating in any discussions or negotiations with any
parties (other than the other Party hereto) with respect to any
potential Acquisition Proposal. Acetex and AT Plastics agree not to
release any third party from any confidentiality agreement in respect
of an Acquisition Proposal to which such third party is a party. Acetex
and AT Plastics further agree not to release any third party from any
standstill agreement to which
15
such third party is a party, unless such third party has made a
Superior Proposal. Acetex and AT Plastics shall immediately request the
return or destruction of all confidential information provided to any
third parties who have previously entered into a confidentiality
agreement in respect of an Acquisition Proposal with Acetex or AT
Plastics, as the case may be, and shall use all reasonable efforts to
ensure that such requests are honoured.
(c) Each of Acetex and AT Plastics shall immediately notify the other
Party (orally and in writing) of any future Acquisition Proposal of
which such Party's directors or senior officers become aware, or any
amendments to the foregoing, or any request for non-public information
relating to Acetex or AT Plastics, as the case may be, or any of such
Party's Material Subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records or for a
list of the shareholders of such Party or any Material Subsidiary by
any person or entity that informs such Party or such Material
Subsidiary that it is considering making an Acquisition Proposal. Such
notice shall include a copy, of all written communications and a
description of the material terms and conditions of any proposal and
provide such details of the proposal, inquiry or contact as the other
Party hereto may reasonably request, including without limitation the
identity of the person and controlling person, if any, making such
proposal, inquiry or contact.
(d) If Acetex or AT Plastics receives a request for material non-public
information from a person who proposes a bona fide Acquisition Proposal
in respect of Acetex or AT Plastics, and the Board of Directors of such
Party determines that such proposal would be a Superior Proposal
pursuant to Section 5.5(a), assuming the satisfactory outcome of a due
diligence condition which conforms to Section 5.5(a), then, and only in
such case, the Board of Directors may, subject to the execution of a
confidentiality agreement containing a standstill provision
substantially similar to that contained in Article 7 of the
Confidentiality Agreement (provided, however, the person making the
Acquisition Proposal shall not be precluded thereunder from making the
Acquisition Proposal as proposed) and provided such Party sends a copy
of any such confidentiality agreement to the other Party immediately
upon its execution, only provide such person with access, in accordance
with Section 5.5(a) to the same information previously provided to the
other Party. The Party providing access shall provide the other Party
with a list of the information provided to the person making the
Superior Proposal.
(e) Each Party hereto shall ensure that its directors and officers and its
Subsidiaries and any financial advisors or other advisors or
representatives retained by it are aware of the provisions of this
Section, and it shall be responsible for any breach of this Section 5.5
by its financial advisors or other advisors or representatives.
5.6 NOTICE OF SUPERIOR PROPOSAL DETERMINATION
Neither Acetex nor AT Plastics shall accept, approve or recommend or
enter into any agreement (except for a confidentiality agreement pursuant to
Section 5.5(d)) in respect of an Acquisition Proposal on the basis that it
constitutes a Superior Proposal unless (i) it has provided the other Party
hereto with a copy of the Acquisition Proposal document which has been
determined to be a Superior Proposal, with such deletions as are necessary to
protect confidential portions of such Acquisition Proposal document, provided
that the material terms, conditions and the identity of the person, and
controlling person, if any, making the Acquisition Proposal may not be deleted;
(ii) five (5) business days (the "Notice Period") shall have elapsed from the
later of the date the other Party received notice of the determination to
accept, approve or recommend an agreement in respect of such Acquisition
Proposal, and the date such Party received a copy of the Acquisition Proposal
document; (iii) it has paid to the other Party the fee payable under Sections
8.1 or 8.2, as the case may be; and (iv) it concurrently terminates this
Agreement pursuant to Sections 9.1(e) or (f), as the case may be. During the
Notice Period, the Party
16
receiving or subject to the Superior Proposal shall provide a reasonable
opportunity to the other Party to consider, discuss and offer such adjustments
in the terms and conditions of this Agreement as would enable the Party
receiving the Superior Proposal to proceed with its recommendation to
securityholders with respect to the Amalgamation; provided however that any such
adjustment shall be at the discretion of the Parties at the time. The Board of
Directors of the Party receiving or subject to the Superior Proposal will review
in good faith any offer made by the other Party to amend the terms of this
Agreement in order to determine, in its discretion, as part of its exercising
its fiduciary duties, whether the proposed amendments would, upon acceptance,
result in such Superior Proposal ceasing to be a Superior Proposal. If the Board
of Directors of the Party determines that the Superior Proposal would cease to
be a Superior Proposal, it will so advise the other Party and will accept the
offer by the other Party to amend the terms of this Agreement and the Parties
agree to take such actions and execute such documents as are necessary to give
effect to the foregoing. If the Board of Directors of the Party subject to or
receiving the Superior Proposal continues to believe, in good faith and after
consultation with financial advisors and outside counsel, that such Superior
Proposal remains a Superior Proposal and therefore rejects the amendments
offered by the other Party hereto, that Party may, subject to the terms of this
Agreement including the payment of applicable fees under Article 8, accept,
approve, recommend or enter into an agreement, understanding or arrangement in
respect of such Superior Proposal. Each successive material modification of any
Acquisition Proposal or a Superior Proposal shall constitute a new Acquisition
Proposal for the purposes of this Section 5.6 and shall require a five (5)
business day Notice Period from the date such amendment is communicated to the
other Party hereto (other than an amendment to improve upon a Superior Proposal
in respect of which the other Party has been provided with an opportunity to
amend the terms of this Agreement and such Superior Proposal has not ceased to
be a Superior Proposal prior to the proposed amendment). Information provided
hereunder shall constitute confidential information under the Confidentiality
Agreement.
5.7 ACCESS TO INFORMATION
Subject to the Confidentiality Agreement and applicable Laws, upon
reasonable notice, AT Plastics shall (and shall cause each of its Subsidiaries
to) afford the officers, employees, counsel, accountants and other authorized
representatives and advisors ("Representatives") of Acetex access, during normal
business hours from the date hereof and until the earlier of the Effective Date
or the termination of this Agreement, to its properties, books, contracts and
records as well as to its management personnel, and, during such period, AT
Plastics shall (and shall cause each of its Subsidiaries to) furnish promptly to
Acetex all information concerning its business, properties and personnel as
Acetex may reasonably request. Subject to the Confidentiality Agreement and
applicable Laws, upon reasonable notice, Acetex shall (and shall cause each of
its Subsidiaries to) provide the same access to AT Plastics and its
Representatives on the same terms and conditions. Nothing in the foregoing shall
require Acetex or AT Plastics to disclose information subject to a written
confidentiality agreement with third parties or competitively sensitive
information relating to areas or projects where Acetex and AT Plastics are
competitors. For greater certainty, until the earlier of the Effective Date and
the termination of this Agreement, access to and exchange of competitively
sensitive confidential information ("Confidential Data") as between the Parties
shall be limited to that which is reasonably necessary for the purposes of
securing all necessary regulatory approvals, the preparation and settlement of
definitive documents and the advancement of the Amalgamation as contemplated
herein and shall be further limited such that the dissemination of such
Confidential Data shall be confined to those representatives of the Parties and
their advisors who have a need to know such information for these purposes and
who agree to respect such confidentiality in their dealings with such
Confidential Data. In particular, with reference to access to and the sharing of
Confidential Data of one Party with representatives of the other Party for the
purposes of preparing any filings or submissions under the Competition Act in
respect of the Amalgamation, the general principle which shall be applied is
that such information shall be made available to, exchanged or shared with
counsel to the Parties rather than the Parties or their representatives.
17
5.8 COVENANTS OF AT PLASTICS
AT Plastics covenants and agrees that, except as contemplated in this
Agreement or pursuant to the Amalgamation, until the Effective Date or the day
upon which this Agreement is terminated, whichever is earlier, it will:
(a) in a timely and expeditious manner:
(i) prepare, in consultation with Acetex, and file the AT Plastics
Circular in all jurisdictions where the same is required to be
filed and mail the same in accordance with all applicable Laws,
in all jurisdictions where the same is required, complying in all
material respects with all applicable Laws on the date of mailing
thereof and containing full, true and plain disclosure of all
material facts relating to the Amalgamation and AT Plastics and
not containing any misrepresentation, as defined under such
applicable Laws, with respect thereto;
(ii) solicit proxies for the approval of the AT Plastics Amalgamation
Resolution in accordance with the AT Plastics Circular;
(iii) convene the AT Plastics Meeting and distribute copies of this
Agreement (or a written summary thereof prepared by AT Plastics
in form and substance satisfactory to Acetex acting reasonably);
and
(iv) provide notice to Acetex of the AT Plastics Meeting and allow
Acetex's representatives to attend the AT Plastics Meeting; and
(v) conduct the AT Plastics Meeting in accordance with the by-laws of
AT Plastics and any instrument governing such meeting, as
applicable, and as otherwise required by applicable Laws;
(b) in a timely and expeditious manner, prepare (in consultation with
Acetex) and file any mutually agreed (or otherwise required by
applicable Laws) amendments or supplements to the AT Plastics Circular
with respect to the AT Plastics Meeting and mail the same in accordance
with all applicable Laws, in all jurisdictions where the same is
required, complying in all material respects with all applicable legal
requirements on the date of mailing thereof;
(c) subject to the satisfaction of the conditions precedent in favour of AT
Plastics and the receipt of the written confirmation of Acetex that the
conditions precedent in favour of Acetex have been satisfied, file the
Articles of Amalgamation with the Director in order for the
Amalgamation to become effective;
(d) except for individual proxies and other non-substantive communications,
furnish promptly to Acetex a copy of each notice, report, report of
proxies submitted, schedule or other document or communication
delivered, filed or received by AT Plastics in connection with the
Amalgamation the AT Plastics Meeting or any other meeting of AT
Plastics security holders or class of security holders which all such
holders, as the case may be, are entitled to attend, any filings under
applicable Laws and any dealings with regulatory agencies in connection
with, or in any way affecting, the transactions contemplated herein;
18
(e) subject to Section 5.7, in a timely and expeditious manner, provide to
Acetex all information as may be reasonably requested by Acetex with
respect to AT Plastics and its Subsidiaries and their respective
businesses and properties; and
(f) assist and cooperate in the preparation and filing with all applicable
securities commissions or similar securities regulatory authorities of
Canada of all necessary applications to seek exemptions, if required,
from the prospectus, registration and other requirements of the
applicable securities laws of Canada for the issue by Acetex of Acetex
Shares pursuant to the terms of the Amalgamation and the resale of such
Acetex Shares.
5.9 COVENANTS OF ACETEX
Acetex covenants and agrees that, except as contemplated in this
Agreement or pursuant to the Amalgamation, until the Effective Date or the day
upon which this Agreement is terminated, whichever is earlier, it will:
(a) in a timely and expeditious manner prepare, in consultation with AT
Plastics, the AT Plastics Circular in so far as information contained
therein relates to Acetex and provide to AT Plastics for inclusion in
the circular all such information and financial statements required
under applicable Laws which information shall constitute full, true and
plain disclosure of all material facts relating to the Amalgamation and
Acetex and shall not contain any misrepresentation, as defined under
such applicable Laws, with respect thereto and shall provide a
certificate to that effect in the Circular;
(b) in a timely and expeditious manner, prepare (in consultation with AT
Plastics) and file any mutually agreed (or otherwise required by
applicable Laws) amendments or supplements to the AT Plastics Circular
with respect to the Acetex Meeting and mail the same in accordance with
all applicable Laws, in all jurisdictions where the same is required,
complying in all material respects with all applicable legal
requirements on the date of mailing thereof;
(c) except for non-substantive communications, furnish promptly to AT
Plastics a copy of each notice, report, schedule or other document or
communication delivered, filed or received by Acetex in connection with
the Amalgamation, any meeting of Acetex Security holders or class of
security holders which all such holders, as the case may be, are
entitled to attend, any filings under applicable Laws and any dealings
with regulatory agencies in connection with, or in any way affecting,
the transactions contemplated herein;
(d) subject to Section 5.7, in a timely and expeditious manner, provide to
AT Plastics all information as may be reasonably requested by AT
Plastics with respect to Acetex and its Subsidiaries and their
respective businesses and properties;
(e) prepare and file with all applicable securities commissions or similar
securities regulatory authorities of Canada all necessary applications
to seek exemptions if required by applicable securities Laws or this
Agreement, from the prospectus, registration and other requirements of
the applicable securities Laws of Canada for the issue by Acetex of
Acetex Shares pursuant to the terms of the Amalgamation and the resale
of such Acetex Shares;
(f) apply for and use all reasonable efforts to obtain the listing on The
Toronto Stock Exchange, as of the Effective Date, of the Acetex Shares
which are to be issued pursuant to the Amalgamation and issuable upon
the exercise of the AT Plastics Options;
19
(g) subject to the satisfaction of the conditions precedent in favour of
Acetex and the receipt of the written confirmation of AT Plastics that
the conditions precedent in favour of AT Plastics have been satisfied,
cause Acetex Sub to file the Articles of Amalgamation with the Director
in order for the Amalgamation to become effective;
(h) issue the Acetex Shares, in accordance with the terms of the terms
hereof to those AT Plastics Shareholders who are entitled to receive
Acetex Shares pursuant to the Amalgamation, which Acetex Shares shall
be validly issued as fully paid and non-assessable shares;
(i) assume, in accordance with the terms hereof, the obligations of AT
Plastics under the AT Plastics Options in accordance with the terms
hereof; and
(j) issue the Acetex Substitute Warrants #1 and Acetex Substitute
Warrants #2 in accordance with the terms hereof.
5.10 INDEMNIFICATION OF DIRECTORS AND OFFICERS, CORPORATE INDEMNITIES AND
INSURANCE
(a) For a period of six years after the Effective Date, AT Plastics
shall and Acetex shall cause AT Plastics to (i) maintain in effect the
current or substantially similar (subject to any changes required by
applicable Laws in the jurisdiction in which AT Plastics may exist from
time to time) provisions regarding indemnification of officers and
directors contained in the constating documents of AT Plastics and its
Subsidiaries and any directors', officers' or employees'
indemnification agreements of AT Plastics and its Subsidiaries; (ii)
maintain in effect the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by AT
Plastics and its Subsidiaries (provided that Acetex may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are, in the aggregate, not materially less
advantageous to the insured) with respect to claims arising from facts
or events which occurred on or before the Effective Date; and (iii)
indemnify the directors and officers of AT Plastics and its
Subsidiaries to the fullest extent to which AT Plastics and its
Subsidiaries are permitted to indemnify such officers and directors
under its articles and bylaws and applicable Laws in the jurisdiction
in which AT Plastics may continue to exist from time to time. Acetex
shall unconditionally and irrevocably guarantee for the benefit of such
directors, officers and employees, the obligations of AT Plastics and
its Subsidiaries under the foregoing indemnification arrangements.
(b) The provisions of this Section 5.10 are (i) for the benefit of, and
shall be enforceable by, each indemnified party, his or her heirs,
executors, administrators and other legal representatives; and (ii) are
in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by
contract or otherwise, and such rights shall be held by AT Plastics or
Acetex, as the case may be, in trust for such person provided however
that no approval of any beneficiary of such trust shall be required in
connection with an amendment or variation of this Section 5.10 prior to
the Effective Date.
(c) Notwithstanding the foregoing, this Section 5.10 shall not restrict or
prohibit Acetex or AT Plastics from entering into any transaction
subsequent to the Effective Date, including a merger, amalgamation,
arrangement, dissolution, liquidation, reorganization of capital or
sale of all or substantially all of the assets of Acetex or AT Plastics
or a Subsidiary of either of them to another entity, causing Acetex, AT
Plastics or a Subsidiary of either of them to assume the liabilities of
another entity or otherwise reorganizing or restructuring Acetex, AT
Plastics or a Subsidiary of either of them or their respective
businesses.
20
5.11 MERGER OF COVENANTS
The covenants set out in this Agreement, except for Section
5.10 and Article 10 (other than Section 10.5), shall not survive the completion
of the Amalgamation, and shall expire and be terminated without recourse between
the Parties upon such completion.
ARTICLE 6
CONDITIONS
6.1 MUTUAL CONDITIONS
The obligations of AT Plastics and Acetex to complete the transactions
contemplated hereby are subject to fulfillment of the following conditions on or
before the Effective Date or such other time as is specified below:
(a) the AT Plastics Amalgamation Resolutions set forth in the AT Plastics
Circular shall have been passed at the AT Plastics Meeting, in
accordance with the by-laws of AT Plastics;
(b) the Effective Date shall be on or before September 30, 2003, subject to
any extension of up to thirty (30) days from September 30, 2003,
available to a Party pursuant to Section 6.4;
(c) there shall be no action taken under any Laws or by any Governmental
Entity, that:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Amalgamation or any other transactions
or agreements contemplated herein; or
(ii) results in a judgment or assessment of damages, directly or
indirectly, which is materially adverse to the transactions or
agreements contemplated herein;
(d) if applicable, the relevant waiting period in section 123 of the
Competition Act shall have expired and (i) an advance ruling
certificate ("ARC") pursuant to section 102 of the Competition Act
shall have been issued by the Commissioner of the Competition Bureau
("Commissioner") appointed under the Competition Act; or (ii) a "no
action letter" satisfactory to Acetex and AT Plastics, acting
reasonably, indicating that the Commissioner has determined not to make
an application for an order under section 92 of the Competition Act
shall have been received from the Commissioner, and any terms and
conditions attached to any such letter shall be acceptable to Acetex
and AT Plastics, acting reasonably; and, in addition, in the event that
the ARC or "no action" letter described in (i) or (ii) in the foregoing
is issued, there shall be no threatened or actual application by the
Commissioner for an order under section 92 or 100 of the Competition
Act;
(e) all other consents, waivers, permits, orders and approvals of any
Governmental Entity (other than as contemplated in Sections 6.1(g) or
6.1(i)) or other person, and the expiry or termination of any waiting
periods, in connection with, or required to permit, the consummation of
the Amalgamation, the failure of which to obtain or the non-expiry of
which would be materially adverse to Acetex or AT Plastics, as the case
may be, or materially impede the completion of the Amalgamation, shall
have been obtained, received or occurred on terms that will not have a
material adverse effect on either Acetex or AT Plastics and reasonably
satisfactory evidence thereof shall have been delivered to each Party;
21
(f) The Toronto Stock Exchange shall have conditionally approved for
listing, subject to compliance with the usual requirements of such
exchanges, the Acetex Shares issuable pursuant to the terms of the
Amalgamation and issuable upon the exercise of the AT Plastics Options;
(g) Acetex and AT Plastics shall have each received a legal opinion from
United States counsel to Acetex and United States counsel to AT
Plastics in connection with the Amalgamation, each in form and
substance satisfactory to Acetex and to AT Plastics, acting reasonably,
to the effect that, assuming compliance with the procedures specified
in such legal opinions, the issuance of Acetex Shares pursuant to the
terms of the Amalgamation are exempt from the registration requirements
of the United States Securities Act of 1933, as amended;
(h) any required prospectus exemptions under Canadian federal, provincial
or territorial securities Laws and any required registration exemptions
under state securities Laws shall have been obtained or perfected or be
otherwise available so that the Acetex Shares issuable pursuant to the
terms of the Amalgamation shall not be subject to any prospectus or
registration requirements or resale restrictions under any of such
securities Laws, other than such requirements or restrictions in
respect of control persons or affiliates and subject to requirements of
general application; and
(i) rights of dissent shall not have been exercised, nor shall proceedings
have been initiated to exercise such rights by AT Plastics Shareholders
which exceed 10% of the AT Plastics Shares issued and outstanding or
such other amount which in the opinion of the board of directors of
Acetex and AT Plastics, acting reasonably, may have a material adverse
effect upon the business, property or financial condition of Acetex or
AT Plastics.
The foregoing conditions are for the mutual benefit of AT Plastics and Acetex
and may be waived, in whole or in part, in writing by both AT Plastics and
Acetex at any time. If any of the said conditions precedent shall not be
complied with or waived in writing as aforesaid on or before the date required
for the performance thereof, either AT Plastics or Acetex may rescind and
terminate this Agreement by written notice to the other Party (provided such
non-compliance did not arise from the acts or omissions of the Party purporting
to rescind and terminate this Agreement) and shall have no other right or
remedy, except as set forth in Article 8 or 9.
6.2 AT PLASTICS CONDITIONS
The obligation of AT Plastics to complete the transactions contemplated
herein is subject to the fulfillment of the following conditions on or before
the Effective Date or such other time as specified below:
(a) the representations and warranties made by Acetex in this Agreement
shall, in the reasonable judgment of AT Plastics, be true and correct
as of the Effective Date as if made on and as of such date (except to
the extent such representations and warranties speak as of an earlier
date or except as affected by transactions contemplated or permitted by
this Agreement or except for any failures or breaches of
representations and warranties which individually or in the aggregate
would not have, or would not reasonably be expected to have, a material
adverse effect on Acetex or materially impede the completion of the
Amalgamation or the transactions contemplated by this Agreement), and
Acetex shall have provided to AT Plastics the certificate of a senior
officer of Acetex certifying such accuracy on the Effective Date;
(b) Acetex shall have complied with its covenants herein, except to the
extent the failure, in the reasonable judgment of AT Plastics, to
comply with such covenants has not had, or would not reasonably be
expected to have, individually or in the aggregate a material adverse
effect on
22
Acetex or materially impede the completion of the Amalgamation or the
transactions contemplated by this Agreement, and Acetex shall have
provided to AT Plastics the certificate of a senior officer of Acetex
certifying that Acetex has so complied with its covenants herein; and
(c) from the date hereof and up to and including the Effective Date, there
shall have been no change, effect, event, occurrence or change in state
of facts which has had or, in the reasonable judgment of AT Plastics
has or would reasonably be expected to have, a material adverse effect
on Acetex.
The foregoing conditions precedent are for the benefit of AT Plastics
and may be waived, in whole or in part, by AT Plastics in writing at any time.
If any of the said conditions shall not be complied, with or waived in writing
by AT Plastics on or before the date required for their performance and provided
such non-compliance did not arise from the acts or omissions of AT Plastics,
then AT Plastics may rescind and terminate this Agreement by written notice to
Acetex and shall have no other right or remedy against Acetex, except as set
forth in Article 8 or 9.
6.3 ACETEX CONDITIONS
The obligation of Acetex to complete the transactions contemplated
herein is subject to the fulfillment of the following conditions on or before
the Effective Date or such other time as specified below:
(a) the representations and warranties made by AT Plastics in this
Agreement shall be, in the reasonable judgment of Acetex, true and
correct as of the Effective Date as if made on and as of such date
(except to the extent such representations and warranties speak as of
an earlier date or except as affected by transactions contemplated or
permitted by this Agreement or except for any failures or breaches of
representations and warranties which individually or in the aggregate
would not have, or would not reasonably be expected to have, a material
adverse effect on AT Plastics or materially impede the completion of
the Amalgamation or the transactions contemplated by this Agreement),
and AT Plastics shall have provided to Acetex the certificate of a
senior officer of AT Plastics certifying such accuracy on the Effective
Date;
(b) AT Plastics shall have complied with its covenants herein, except to
the extent the failure, in the reasonable judgment of Acetex, to comply
with such covenants has not had, or would not reasonably be expected to
have, individually or in the aggregate a material adverse effect on AT
Plastics or materially impede the completion of the Amalgamation or the
transactions contemplated by this Agreement, and AT Plastics shall have
provided to Acetex the certificate of a senior officer of AT Plastics
certifying that AT Plastics has so complied with its covenants herein;
(c) from the date hereof and up to and including the Effective Date, there
shall have been no change, effect, event, occurrence or change in state
of facts which has had or in the reasonable judgment of Acetex has or
would reasonably be expected to have, a material adverse effect on AT
Plastics;
(d) Acetex, acting reasonably shall have determined that it is able to
arrange financing which in its opinion is adequate to refinance the
debt of the Amalgamated Corporation such that Acetex will be in
compliance with the terms and conditions of its 10 7/8% Senior Notes
due 2009 on the Effective Date;
(e) AT Plastics has entered into agreements in form and substance
satisfactory to Acetex providing that after the Effective Date the
Amalgamated Corporation may refinance its debts owing to AT Plastics
Warrantholders for the principal amount thereof and an additional
amount not to exceed
23
US$850,000 and which provide for the cancellation and extinguishment
of the AT Plastics Warrants in consideration for the Acetex Substitute
Warrants #1 and Acetex Substitute Warrants #2; and
(f) Acetex is satisfied that AT Plastics has not issued any options or
issued warrants to acquire its stock save as disclosed in writing since
March 31, 2003.
The foregoing conditions precedent are for the benefit of Acetex and
may be waived, in whole or in part, by Acetex in writing at any time. If any of
the said conditions shall not be complied with or waived in writing by Acetex on
or before the date required for their performance and provided such
non-compliance did not arise from the acts or omissions of Acetex, then Acetex
may rescind and terminate this Agreement by written notice to AT Plastics and
shall have no other right or remedy against AT Plastics, except as set forth in
Article 8 or 9.
6.4 NOTICE AND CURE PROVISIONS
Each of AT Plastics and Acetex will give prompt notice to the other of
the occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence of failure
would, or would be likely to:
(a) cause any of the representations or warranties of any Party
contained herein to be untrue or inaccurate in any material respect on
the date hereof; or
(b) result in the failure to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by any Party hereunder.
No Party may elect not to complete the transactions contemplated hereby
pursuant to the non-fulfillment of the conditions precedent contained in
Sections 6.1, 6.2 and 6.3 or, any termination right arising therefrom and no
payments are payable pursuant to Sections 8.1 or 8.2 as a result of such
election unless forthwith and in any event prior to the filing of the Articles
of Amalgamation for acceptance by the Director, the Party intending to rely
thereon has delivered a written notice to the other Party specifying in
reasonable detail all breaches of covenants, representations and warranties or
other matters which the Party delivering such notice is asserting as the basis
for the non-fulfillment of the applicable condition precedent or termination
right, as the case may be. If any such notice is delivered, provided that a
Party is proceeding diligently to cure such matter and such matter is capable of
being cured (except matters arising out of the failure to make appropriate
disclosure in the disclosure memoranda delivered on the date of execution of
this Agreement pursuant to Section 1.10 hereof) no Party may terminate this
Agreement until the later of September 30, 2003 and (except with respect to the
condition set out in 6.3(d)) the expiration of a period of thirty (30) days from
such notice and then only if such matter is not cured in all material respects.
If such notice has been delivered prior to the date of the AT Plastics Meeting,
such meeting shall be postponed until the expiry of such period. If such notice
has been delivered prior to the filing of the Articles of Amalgamation with the
Director, such application and such filing shall be postponed until the expiry
of such period.
6.5 MERGER OF CONDITIONS
The conditions set out in Sections 6.1, 6.2 and 6.3 shall be
conclusively deemed to have been satisfied, waived or released upon the filing
of Articles of Amalgamation as contemplated by this Agreement. Notwithstanding
the foregoing, the covenants set forth in Section 5.10 and Article 10 (other
than Section 10.5) shall survive the filing of Articles of Amalgamation, as
contemplated by this Agreement.
24
ARTICLE 7
AMENDMENT
7.1 AMENDMENT
This Agreement may, at any time and from time to time before or after
the holding of the AT Plastics Meeting, be amended by mutual written agreement
of the Parties hereto without further notice to or authorization on the part of
their respective shareholders, and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of
the Parties;
(b) waive any inaccuracies or modify any representation contained herein or
in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify, performance of any of the obligations of the
Parties; and
(d) waive compliance with or modify any conditions precedent herein
contained;
provided that: (i) notwithstanding the foregoing, following the approval of the
AT Plastics Amalgamation Resolution, the number of Acetex Shares which the AT
Plastics Shareholders shall have the right to receive in the Amalgamation may
not be decreased without the further approval of the AT Plastics Shareholders
given in the same manner as required for the approval of the Amalgamation; and
(ii) any such change, waiver or modification does not invalidate any required
securityholder approval of the Amalgamation.
ARTICLE 8
AGREEMENT AS TO COMPENSATION AND OTHER ARRANGEMENTS
8.1 ACETEX COMPENSATION
(a) If at any time after the execution of this Agreement:
(i) the Board of Directors of AT Plastics has withdrawn, qualified or
changed any of its recommendations or determinations referred to
in Section 2.9(a) in a manner adverse to Acetex or shall have
resolved to do so prior to the Effective Date;
(ii) a bona fide Acquisition Proposal is publicly announced, proposed,
offered or made to the AT Plastics Shareholders or to AT
Plastics, and (A) such Acquisition Proposal has not expired or
been withdrawn at the time of the AT Plastics Meeting, (B) the AT
Plastics Shareholders do not approve the Amalgamation and (C)
such Acquisition Proposal, an amended version thereof, a
competing Acquisition Proposal or an Acquisition Proposal
solicited in response to the foregoing, is consummated within 12
months of the termination of this Agreement; or
(each of the above being an "Acetex Payment Event"), then AT Plastics
shall pay to Acetex in immediately available funds the amount of
US$5,000,000 to an account designated by Acetex , within three business
days after any one of Sections 8.1(a)(i) or (ii) being satisfied or if
requested by Acetex issue and deliver to Acetex (subject to all
necessary regulatory approvals including the approval of the Toronto
Stock Exchange) that number of AT Plastics Shares of its capital, as
fully
25
paid and non-assessable as is equal to US$5,000,000 divided by
the closing price of the AT Plastics Shares on the business day
immediately preceding the date of the Acetex Payment Event, within
three business days thereof.
(b) If this Agreement is terminated by Acetex in accordance with Section
9.1(b) in reliance on the condition contained in Section 6.3(a), then
AT Plastics shall pay to Acetex in immediately available funds the
amount of US$1,000,000 to an account designated by Acetex , within
three business days or if requested by Acetex issue and deliver to
Acetex (subject to all necessary regulatory approvals including the
approval of the Toronto Stock Exchange) that number of AT Plastics
Shares of its capital, as fully paid and non-assessable as is equal to
US$1,000,000 divided by the closing price of the AT Plastics Shares on
the business day immediately preceding the date of such termination,
within three business days thereof.
(c) Notwithstanding anything to the contrary contained herein, if a payment
has been made under any of Sections 8.1(a)(i) or (ii) or 8.1(b) above,
no further payment shall be required under Sections 8.1 (a)(i) or (ii)
or 8.1(b).
8.2 AT PLASTICS COMPENSATION
(a) If at any time after the execution of this Agreement: Acetex does
not waive the condition set out in Section 6.3(d) by September 30, 2003
and its failure to do so is not principally attributable to the failure
of AT Plastics to co-operate and assist Acetex with respect to the
matters provided therein and/or the failure of AT Plastics to perform
the AT Plastics Support Obligations (an "AT Plastics Payment Event"),
then Acetex shall pay to AT Plastics US$5,000,000 as liquidated damages
in immediately available funds to an account designated by AT Plastics
within three business days thereof or if requested by AT Plastics issue
and deliver to AT Plastics (subject to all necessary regulatory
approvals including the approval of the Toronto Stock Exchange) that
number of Acetex Shares, as fully paid and non-assessable as is equal
to US$5,000,000 divided by the closing price of the Acetex Shares on
the business day immediately preceding the Acetex Payment Event, within
three business days thereof.
(b) If this Agreement is terminated by AT Plastics in accordance with
Section 9.1(b) in reliance on the condition contained in Section
6.2(a), then Acetex shall pay to AT Plastics in immediately available
funds the amount of US$1,000,000 to an account designated by AT
Plastics, within three business days thereof issue or if requested by
AT Plastics issue and deliver to AT Plastics (subject to all necessary
regulatory approvals including the approval of the Toronto Stock
Exchange) that number of Acetex Common Shares of its capital, as fully
paid and non-assessable as is equal to US$1,000,000 divided by the
closing price of the Acetex Shares on the business day immediately
preceding the date of such termination, within three business days
thereof.
(c) Notwithstanding anything to the contrary contained herein, if a payment
has been made under any of Sections 8.2(a)or 8.2(b) above, no further
payment shall be required under Sections 8.2(a) or 8.2(b).
8.3 LIQUIDATED DAMAGES
Each Party acknowledges that the amounts set out in this Article 8
represent liquidated damages which are a genuine pre-estimate of the damages,
including opportunity costs, which the Party entitled to such damages will
suffer or incur as a result of the event (subject to Section 6.4) giving rise to
such damages and resultant termination of this Agreement, and are not penalties.
Each Party irrevocably
26
waives any right it may have to raise as a defence that any such liquidated
damages are excessive or punitive.
8.4 LIMITED REMEDY
For greater certainty, the Parties agree that the compensation or
damages to be received pursuant to this Article 8 is the sole remedy in
compensation or damages of the party receiving such payment; provided however
that nothing contained in this Article 8 or Section 9.1, including the payment
of an amount under this Article 8 shall relieve or have the effect of relieving
any Party in any way from liability for damages incurred or suffered by a Party
as a result of a breach of this Agreement by a Party acting in bad faith with a
clear intent and design to prevent the conditions precedent to this Agreement's
completion from being satisfied. Nothing herein shall preclude a Party from
seeking injunctive relief to restrain any breach or threatened breach of the
covenants or agreements set forth in this Agreement or the Confidentiality
Agreement or otherwise to obtain specific performance of any of such act,
covenants or agreements, without the necessity of posting bond or security in
connection therewith.
ARTICLE 9
TERMINATION
9.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective
Date:
(a) by mutual written consent of Acetex and AT Plastics;
(b) as provided in Sections 6.1, 6.2 and 6.3, subject to the right to cure
pursuant to Section 6.4;
(c) by Acetex upon the occurrence of an Acetex Payment Event as
provided in Section 8.1;
(d) by AT Plastics upon the occurrence of an AT Plastics Payment Event
as provided in Section 8.2;
(e) by Acetex upon the acceptance of an Acquisition Proposal pursuant to,
and in accordance with, Sections 5.5 and 5.6 (and provided payment of
the applicable amounts under Section 8.2(a) to, AT Plastics have been
made);
(f) by AT Plastics upon the acceptance of an Acquisition Proposal pursuant
to, and in accordance with, Sections 5.5 and 5.6 (and provided payment
of the applicable amounts under Section 8.1(a) to Acetex have been
made); and
(g) by either Acetex or AT Plastics if: at the AT Plastics Meeting the
requisite vote of AT Plastics Shareholders is not obtained;
(h) In the event of the termination of this Agreement in the circumstances
set out in any of paragraphs (a) through (g) of this Section 9.1, this
Agreement shall forthwith be terminated and neither Party shall have
any liability or further obligation to the other Party hereunder,
except with respect to the obligations set forth in Article 8 and
Article 10 (other than Section 10.5) which shall survive such
termination.
27
ARTICLE 10
GENERAL
10.1 EXPENSES
(a) The Parties agree that, except in the event of the termination of this
Agreement, all out-of-pocket third party transaction expenses of the
Amalgamation, including legal fees, regulatory filing fees, all
disbursements by advisors and printing and mailing costs, shall be paid
by the Party incurring such expenses. If this Agreement is terminated,
Acetex and AT Plastics agree to share equally the fees and filing fees
in respect of the Competition Act.
(b) Acetex and AT Plastics represent and warrant to each other that,
except for Xxxxxxxxx XxXxxxxx Partners and UBS Securities, LLC in the
case of Acetex, and W.Y. Xxxxxxxx & Company in the case of AT Plastics,
no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission, or to the reimbursement of any of
its expenses, in connection with the Amalgamation. Each Party to this
Agreement has provided to the other Party a correct and complete copy
of all agreements relating to the arrangement between it and its
financial advisors as are in existence at the date hereof and agrees
not to amend the terms of any such agreements relating to the payment
of fees and expenses or enter into an engagement letter with any
strategic advisor without the prior written approval of the other Party
of the fees and expenses to be incurred.
10.2 NOTICES
Any notice, consent, waiver, direction or other communication required
or permitted to be given under this Agreement by a Party to any other Party
shall be in writing and may be given by delivering same or sending same by
facsimile transmission or by delivery addressed to the Party to which the notice
is to be given at its address for service herein. Any notice, consent, waiver,
direction or other communication aforesaid shall, if delivered, be deemed to
have been given and received on the date on which it was delivered to the
address provided herein (if a business day, if not, the next succeeding business
day) and if sent by facsimile transmission be deemed to have been given and
received at the time of receipt unless actually received after 4:00 p.m. at the
point of delivery in which case it shall be deemed to have been given and
received on the next business day.
The address for service of each of the parties hereto shall be as follows:
(a) if to Acetex or 2028569 Ontario Limited:
Acetex Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxx
Fax: (000) 000-0000
28
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx LLP
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxx
Fax: (000) 000-0000
(b) if to AT Plastics:
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxxxx
with a copy to:
Xxxx & Berlis LLP
#1800, 000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxxx Xxxxxxxx
10.3 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
10.4 ENTIRE AGREEMENT
This Agreement and the Confidentiality Agreement constitute the entire
agreement between the Parties and cancel and supersede all prior agreements and
understandings between the Parties with respect to the subject matter hereof. To
the extent that provisions of the Confidentiality Agreement conflict with
provisions of this Agreement, the provisions of this Agreement shall govern. The
Board of Directors of each of the Parties hereby consents under Section 11.1 of
the Confidentiality Agreement (for so long as this Agreement remains in effect
and has not been terminated) to the actions of the other taken to consummate the
Amalgamation and the transactions contemplated thereby or action taken to
propose amendments thereto under Section 5.6 of this Agreement. The Parties
hereby amend the Confidentiality Agreement such that the Confidentiality
Agreement shall terminate upon the Amalgamation becoming effective or at the end
of the 12th calendar month following the termination of this Agreement,
whichever is first to occur and the exclusivity provisions of the
Confidentiality Agreement contained in Article 3 thereof are hereby terminated.
10.5 FURTHER ASSURANCES
Each Party hereto shall, from time to time, and at all times hereafter,
at the request of the other Party hereto, but without further consideration, do
all such further acts and execute and deliver all such further documents and
instruments as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof.
29
10.6 GOVERNING LAW
This Agreement shall be governed by, and be construed in accordance
with, the laws of the Province of Ontario and the laws of Canada applicable
therein. Each Party hereto hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of Ontario in respect of all matters
arising under or in relation to this Agreement.
10.7 EXECUTION IN COUNTERPARTS
This Agreement may be executed in identical counterparts, each of which
is and is hereby conclusively deemed to be an original and the counterparts
collectively are to be conclusively deemed to be one instrument.
10.8 WAIVER
No waiver by any Party hereto shall be effective unless in writing and
any waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or occurrence.
10.9 ENUREMENT AND ASSIGNMENT
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by any Party hereto without the prior written
consent of the other Party hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
ACETEX CORPORATION AT PLASTICS INC.
Per: (signed) "XXXXXX X. XXXX" Per: (signed) "XXXX XXXXXXXXXX"
---------------------------- ----------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxx Xxxxxxxxxx
Title: Chairman & Chief Title: President & Chief Executive
Executive Officer Officer
Per: (signed) "XXX X. XXXXXXX"
----------------------------
Name: Xxx X. Xxxxxxx
Title: President & Chief
Operating Officer
2028569 ONTARIO LIMITED
Per: (signed) "XXXXXX X. XXXX"
----------------------------
Name: Xxxxxx X. Xxxx
Title: Chairman & Chief
Executive Officer
Per: (signed) "XXX X. XXXXXXX"
----------------------------
Name: Xxx X. Xxxxxxx
Title: President & Chief
Operating Officer
30
SCHEDULE "A"
ARTICLES OF AMALGAMATION
[OBCA FORM]
1. NAME OF CORPORATION.
Acetex (Ontario) Inc.
2. CORPORATE ACCESS NO.
3.
4. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE.
An unlimited number of common shares
5. RESTRICTIONS IF ANY ON SHARE TRANSFERS.
No restrictions.
6. NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS.
Minimum of three (3), maximum of twelve (12).
7. RESTRICTIONS IF ANY ON BUSINESS THE CORPORATION MAY CARRY ON.
No restrictions.
8. OTHER RULES OR PROVISIONS IF ANY.
The directors of the Corporation are authorized to appoint
from time to time between annual meetings one or more additional directors of
the Corporation to serve until the next annual general meeting, but the number
of additional directors shall not at any time exceed one-third of the number of
directors who held office at the end of the most recently completed annual
general meeting of the Corporation.
9. NAME OF AMALGAMATING CORPORATIONS.
AT Plastics Inc
Acetex (Ontario) Inc.
10. CORPORATE ACCESS NO.
DATE SIGNATURE TITLE
31
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF ACETEX
1. ORGANIZATION.
Each of Acetex and its Material Subsidiaries has been duly incorporated
or formed under the Laws of its jurisdiction of incorporation or other
organization, is validly subsisting and has full corporate or legal power and
authority to own its properties and conduct its businesses as presently owned
and conducted. All of the outstanding shares in the capital of and other
ownership interests of its Subsidiaries are validly issued, fully paid and
non-assessable and all such shares and other ownership interests owned directly
or indirectly by Acetex are (except as disclosed in writing to AT Plastics or
pursuant to restrictions on transfer contained in constating documents, rights
of first refusal and similar rights restricting transfer contained in
shareholder, partnership or joint venture agreements for or pursuant to existing
financing arrangements involving Subsidiaries which are not wholly owned): (i)
owned free and clear of all material liens, claims or encumbrances and (ii)
there are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire any such
shares of capital stock or other ownership interests in any of its Subsidiaries.
2. CAPITALIZATION.
The authorized capital of Acetex consists of an unlimited number of
Acetex Shares. As of the date hereof there are 25,491,864 Acetex Shares
outstanding and 2,869,188 Acetex Shares issuable under the Acetex Option Plan.
Except as described in the immediately preceding sentence or otherwise disclosed
in writing, there are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating Acetex or any
Subsidiary to issue or sell (other than to a wholly-owned Subsidiary of Acetex
or any of its Subsidiaries) any shares of Acetex or any of its Subsidiaries or
securities or obligations of any kind convertible into or exchangeable for any
shares of Acetex, any Subsidiary or any other person, nor (except for rights
under the Acetex Option Plans), is there outstanding any stock appreciation
rights, phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other attribute of Acetex
or any Subsidiary. There have been no Acetex Shares issued since 2000, other
than pursuant to the exercise of stock option entitlements. Since 2000, Acetex
has granted Acetex Options only in the ordinary course of business.
3. AUTHORITY.
Acetex has the requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by Acetex and the consummation by Acetex of the
transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of Acetex and, subject to approval by the Acetex
Shareholders, no other corporate proceedings on the part of Acetex are necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Acetex and constitutes a valid
and binding obligation of Acetex, enforceable against Acetex in accordance with
its terms subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other applicable Laws relating to or affecting
creditors' rights generally, to general principles of equity and public policy.
Except as disclosed in writing to AT Plastics on or prior to the date hereof and
subject to obtaining all consents and approvals contemplated by this Agreement,
the execution and delivery by Acetex of this Agreement and performance by it of
its obligations hereunder and the completion of the Amalgamation and the
transactions contemplated thereby, will not:
32
(a) result in a violation or breach of, require any consent to be obtained
under or give rise to any termination rights under any provision of:
(i) its or any Material Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents, including any
unanimous shareholder agreement or any other agreement or
understanding with any person holding an ownership interest in
any Material Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any contract, agreement, license, franchise or permit to which
Acetex or any Material Subsidiary is bound or is subject or is
the beneficiary;
(b) give rise to any right of termination or acceleration of indebtedness,
or cause any third party indebtedness to come due before its stated
maturity or cause any available credit to cease to be available; or
(c) result in the imposition of any Encumbrance, charge or lien upon any of
its assets or the assets of any Material Subsidiary, or restrict,
hinder, impair or limit the ability of Acetex or any Material
Subsidiary to carry on the business of Acetex or any Material
Subsidiary as and where it is now being carried on or as and where it
may be carried on in the future;
which would individually or in the aggregate have a material adverse effect on
Acetex or materially impair the ability of Acetex to perform its obligations
hereunder or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
4. ABSENCE OF CHANGES.
Since December 31, 2002, and except as has been previously disclosed in
writing to AT Plastics or has been publicly disclosed prior to the date hereof
in any document filed with the Alberta Securities Commission (the "Securities
Authorities") (i) Acetex has conducted its business only in the ordinary and
regular course of business consistent with past practice, (ii) other than in the
ordinary and regular course of business consistent with past practice, no
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise) which would individually or in the aggregate be material to Acetex
or which materially and adversely affects the ability of Acetex to consummate
the transactions contemplated hereby have been incurred, (iii) there has not
been any material change, as defined under the Securities Act (Alberta), in the
affairs of Acetex or in the financial condition, results of operations or
business of Acetex and (iv) as of the execution hereof, there are no material
change reports filed with the Securities Authorities which remain confidential.
5. EMPLOYMENT AGREEMENTS.
(a) Other than as disclosed in writing to AT Plastics on or prior to the
date hereof, or except as set forth in the proxy circular prepared in
connection with the Annual General Meeting of Acetex held on May 24,
2003, neither Acetex nor any Material Subsidiary is a party to any
written or oral policy, agreement, obligation or understanding
providing for severance or termination payments to, or any employment
agreement with, any senior executive.
(b) Other than as disclosed in writing to AT Plastics on or prior to the
date hereof, neither Acetex nor any Material Subsidiary is a party to
any collective bargaining agreement nor subject to any application for
certification or threatened or apparent union-organizing campaigns for
employees
33
not covered under a collective bargaining agreement nor are there any
current, pending or threatened strikes or lockouts at either Acetex or
any Material Subsidiary that would individually or in the aggregate
have a material adverse effect on Acetex.
(c) Other than as disclosed in writing to AT Plastics on or prior to the
date hereof, neither Acetex nor any Material Subsidiary is subject to
any claim for wrongful dismissal, constructive dismissal or any other
tort claim, actual or threatened, or any litigation, actual or
threatened, relating to its employees or independent contractors
(including any termination of such persons) other than those claims or
such litigation as would individually or in the aggregate not have a
material adverse effect on Acetex.
(d) Other than as disclosed in writing to AT Plastics on or prior to the
date hereof or as are not material, Acetex and all Material
Subsidiaries have operated in accordance with all applicable Laws with
respect to employment and labour, including, but not limited to,
employment and labour standards, occupational health and safety,
employment equity, pay equity, workers' compensation, human rights and
labour relations and there are no current, pending or threatened
proceedings before any board or tribunal with respect to any of the
areas listed herein other than where the failure to so operate or such
proceedings which, individually or in the aggregate would not have a
material adverse effect on Acetex.
6. DISCLOSURE.
Acetex has publicly disclosed in documents filed with the Securities
Authorities or disclosed to AT Plastics in writing, on or prior to the date
hereof, any information regarding any event, circumstance or action taken or
failed to be taken which could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Acetex or materially and adversely
affects the ability of Acetex to consummate the transactions contemplated
hereby.
7. FINANCIAL STATEMENTS.
Except as disclosed in writing to AT Plastics on or prior to the date
hereto, the audited consolidated balance sheet and related consolidated
statements of income, retained income and cash flows of Acetex, for the fiscal
years ended December 31, 2002 and 2001 and the unaudited interim consolidated
financial statements of Acetex for the periods ended March 31, 2003, were
prepared in accordance with generally accepted accounting principles in Canada
consistently applied (except (i) as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited statements, in the
related report of Acetex's independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present the
consolidated financial condition of Acetex at the respective dates indicated and
the results of operations of Acetex (on a consolidated basis) for the periods
indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments).
8. BOOKS AND RECORDS.
The corporate records and minute books of Acetex and the Material
Subsidiaries have been maintained substantially in accordance with all
applicable Laws and are complete and accurate in all material respects.
34
9. LITIGATION, ETC.
Except as set forth or specifically reflected in any document filed
with the Securities Authorities, or as disclosed in writing to AT Plastics on or
prior to the date hereof, there is no claim, action, proceeding or investigation
pending or, to the knowledge of Acetex, threatened against or relating to Acetex
or any Material Subsidiary or affecting any of their properties or assets before
any court or governmental or regulatory authority or body that, if adversely
determined, is likely to have a material adverse effect on Acetex or prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Amalgamation, nor is Acetex aware of any basis for any such claim,
action, proceeding or investigation. Neither Acetex nor any Material Subsidiary
is subject to any outstanding order, writ, injunction or decree that has had or
is reasonably likely to have a material adverse effect on Acetex or prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Amalgamation.
10. ENVIRONMENTAL.
All operations of Acetex and its Material Subsidiaries, have been and
are now, in compliance with all Environmental Laws, except where the failure to
be in compliance would not, individually or in the aggregate, have a material
adverse effect on Acetex. Except as has been disclosed in writing to AT Plastics
on or prior to the date hereof, neither Acetex nor any Material Subsidiary is
aware of, or is subject to:
(a) any proceeding, application, order or directive which relates to
environmental health or safety matters, and which may require any
material work, repairs, construction, or expenditures; or
(b) any demand or notice with respect to the breach of any Environmental
Laws applicable to Acetex or any Subsidiary, including, without
limitation, any regulations respecting the use, storage, treatment,
transportation, or disposition of Hazardous Substances;
which individually or in the aggregate would have a material adverse effect on
Acetex.
11. INSURANCE.
Policies of insurance in force as of the date hereof naming Acetex as
an insured adequately cover all risks reasonably and prudently foreseeable in
the operation and conduct of the business of Acetex and the Material
Subsidiaries for which, having regard to the nature of such risk and the
relative cost of obtaining insurance, it is in the opinion of Acetex reasonable
to seek such insurance rather than provide for self insurance. All such policies
of insurance shall remain in force and effect (subject to taking into account
insurance market conditions and offerings and industry practices) and shall not
be cancelled or otherwise terminated as a result of the transactions
contemplated hereby or by the Amalgamation other than such cancellations as
would not individually or in the aggregate have a material adverse effect on
Acetex.
12. TAX MATTERS.
(a) RETURNS FILED AND TAXES PAID. All Returns required to be filed by or on
behalf of Acetex or any Material Subsidiaries have been duly filed on a
timely basis and such Returns are true, complete and correct in all
material respects. Except as disclosed in writing by Acetex to AT
Plastics on or prior to the date hereof, all Taxes shown to be payable
on the Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other material
35
amount of Taxes are payable by Acetex or any Material Subsidiaries
with respect to items or periods covered by such Returns.
(b) TAX RESERVES. Acetex has paid or provided adequate accruals in its
consolidated financial statements for the year ended December 31, 2002
for Taxes assessed, including income taxes and related deferred taxes,
in conformity with generally accepted accounting principles applicable
in Canada.
(c) TAX DEFICIENCIES; AUDITS. Except as has been disclosed in writing to AT
Plastics, no deficiencies exist or have been asserted with respect to
Taxes of Acetex or any Material Subsidiary, neither Acetex nor any
Material Subsidiary is a Party to any action or proceeding for
assessment or collection of Taxes, nor has such event been asserted or
threatened against Acetex or any Material Subsidiary or any of their
respective assets, except where such deficiencies, actions or
proceedings are not material to Acetex or the Amalgamation.
13. PENSION AND EMPLOYEE BENEFITS.
(a) Other than as disclosed in writing to AT Plastics on or prior to
the date hereof, Acetex has complied, in all material respects, with
all the terms of and all applicable Laws in respect of the pension and
other employee compensation and benefit obligations of Acetex and its
Material Subsidiaries, including the terms of any collective
agreements, funding and investment contracts or obligations applicable
thereto, arising under or relating to each of the pension or retirement
income plans or other employee compensation or benefit plans,
agreements, policies, programs, arrangements or practices, whether
written or oral, which are maintained by or binding upon Acetex or any
of its Material Subsidiaries (collectively referred to as the "Acetex
Plans") and all Acetex Plans are fully funded and in good standing with
such regulatory authorities as may be applicable.
(b) No step has been taken, no event has occurred and no condition or
circumstance exists that has resulted in or could reasonably be
expected to result in any Acetex Plan being ordered or required to be
terminated or wound up in whole or in part or having its registration
under applicable legislation refused or revoked, or being placed under
the administration of any trustee or receiver or regulatory authority
or being required to pay any material taxes, fees, penalties or levies
under applicable Laws. There are no actions, suits, claims (other than
routine claims for payment of benefits in the ordinary course), trials,
demands, investigations, arbitrations or other proceedings which are
pending or threatened in respect of any of the Acetex Plans or their
assets which individually or in the aggregate would have a material
adverse effect on Acetex.
(c) Other than as disclosed in writing to AT Plastics on or prior to the
date hereof, no event has occurred or condition exists with respect to
any of the Acetex Plans or relating to any employee of Acetex or a
Material Subsidiary which, individually or in the aggregate, is
reasonably likely to result in a material liability to Acetex.
14. PROPERTY.
Acetex and its Material Subsidiaries have good and sufficient title to
the real property interests including, without limitation, fee simple estate of
and in real property, leases, easements, rights of way, permits or licences from
landowners or authorities permitting the use of land by Acetex and its Material
Subsidiaries, necessary to permit the operation of its businesses as presently
owned and conducted except as disclosed in writing to the other Party hereto on
or prior to the date hereof and except for such failures of title that would,
individually or in the aggregate, not have a material adverse effect on
36
Acetex. All trade marks, trade names, patents and copyrights, both domestic and
foreign, used in or required for the proper carrying on of the business of
Acetex and its Material Subsidiaries are validly and beneficially owned by
Acetex or the relevant Material Subsidiary with the sole and exclusive right to
use the same and are in good standing and duly registered in all appropriate
offices to preserve the right thereof and thereto and the conduct of the Acetex
and its Material Subsidiaries does not infringe upon the trade marks, trade
names, patents or copyrights, domestic or foreign, of any other person.
15. REPORTS.
Acetex has filed with the Securities Authorities, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1997 except for such forms, reports,
schedules, statements or other documents which were not material (such forms,
reports, schedules, statements and other documents, including any financial
statements or other documents, including any financial statements or schedules
included therein, are referred to as the "Acetex Documents"). The Acetex
Documents, at the time filed, (a) did not contain any misrepresentation and (b)
complied in all material respects with the requirements of applicable securities
legislation.
16. COMPLIANCE WITH LAWS.
Since December 31, 2002, and except as has been publicly disclosed
prior to the date hereof in any document filed with the Securities Authorities,
Acetex and its Material Subsidiaries and its Material Subsidiaries have complied
with and are not in violation of any applicable Laws other than non-compliance
or violations which would not, individually or in the aggregate, have a material
adverse effect on Acetex or which would not materially impair the ability of
Acetex to perform its obligations hereunder or prevent or materially delay the
consummation of any of the transactions contemplated hereby.
17. LICENSES, ETC.
Except as disclosed in writing to AT Plastics on or prior to the date
hereof, Acetex and each of its Material Subsidiaries owns, possesses, or has
obtained and is in compliance with, all licenses, permits (including permits
required under Environmental Laws), certificates, orders, grants and other
authorizations of or from any Governmental Entity necessary to conduct its
businesses as now conducted or as proposed to be conducted, the failure to own,
possess, obtain or be in compliance with which would not, individually or in the
aggregate, have a material adverse effect on Acetex or would not materially
impair the ability of Acetex to perform its obligations hereunder or prevent or
materially delay the consummation of any of the transactions contemplated
hereby.
18. CERTAIN CONTRACTS.
Except as disclosed in writing to AT Plastics on or prior to the date
hereof, neither Acetex nor any of its Material Subsidiaries is a party to or
bound by any non-competition agreement or any other agreement or obligation
which purports to limit the manner or the localities in which all or any
material portion of the business of Acetex or its Material Subsidiaries is or
would be conducted other than such contracts which individually or in the
aggregate would not have material portion of the business of Acetex or its
Material Subsidiaries is or would be conducted other than such contracts which
individually or in the aggregate would not have a material adverse effect, on
Acetex or would not materially impair the ability of Acetex to perform its
obligations hereunder or prevent or materially delay the consummation of any of
the transactions contemplated hereby.
37
19. REGULATORY MATTERS
The aggregate value of the assets of Acetex and its Subsidiaries in
Canada does not exceed (Cdn.) $9 million in the aggregate, determined as of
December 31, 2002 and in such manner as is prescribed for purposes of the
COMPETITION ACT (Canada); and the gross revenues from sales in, from or into
Canada of Acetex and its Subsidiaries, determined for the year ended December
31, 2002 and in such manner as is prescribed for purposes of the Competition Act
(Canada), do not exceed (Cdn.) $150 million in the aggregate Acetex is a
"Canadian" as that term is defined pursuant to the provisions of the INVESTMENT
CANADA ACT.
20. ACETEX SUB
Acetex Sub has no liabilities or obligations other than those arising
pursuant to the Agreement and has no assets save for cash of $10.
38
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF AT PLASTICS
1. ORGANIZATION.
Each of AT Plastics and its Material Subsidiaries has been duly
incorporated or formed under the Laws of its jurisdiction of incorporation or
other organization, is validly subsisting and has full corporate or legal power
and authority to own its properties and conduct its businesses as presently
owned and conducted. All of the outstanding shares in the capital of and other
ownership interests of its Subsidiaries are validly issued, fully paid and
non-assessable and all such shares and other ownership interests owned directly
or indirectly by AT Plastics are (except as disclosed in writing to Acetex or
pursuant to restrictions on transfer contained in constating documents, rights
of first refusal and similar rights restricting transfer contained in
shareholder, partnership or joint venture agreements for or pursuant to existing
financing arrangements involving Subsidiaries which are not wholly owned): (i)
owned free and clear of all material liens, claims or encumbrances and (ii)
there are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to acquire any such
shares of capital stock or other ownership interests in any of its Subsidiaries.
2. CAPITALIZATION.
The authorized capital of AT Plastics consists of: (a) an unlimited
number of AT Plastics Shares and two classes of preferred shares. As of the date
hereof there are 49,935,934 AT Plastics Shares outstanding and no preferred
shares outstanding and 4,013,497 AT Plastics Shares were issuable pursuant to
outstanding AT Plastics Options. Except as described in the immediately
preceding sentence or as disclosed in writing to Acetex and except for: (a)the
AT Plastics Warrants; the compensation arrangement with Xxxxxx Xxxxx; and (c)
the compensation arrangement with certain directors of AT Plastics, there are no
options, warrants, conversion privileges or other rights; agreements,
arrangements or commitments obligating AT Plastics or any Subsidiary to issue or
sell (other than to a wholly-owned Subsidiary of AT Plastics or any of its
Subsidiaries) any shares of AT Plastics or any of its Subsidiaries or securities
or obligations of any kind convertible into or exchangeable for any shares of AT
Plastics, any Subsidiary or any other person, nor is there outstanding any stock
appreciation rights, phantom equity or similar rights, agreements, arrangements
or commitments based upon the book value, income or any other attribute of AT
Plastics or the Subsidiary. Except as disclosed in writing to Acetex, there have
been no AT Plastics Shares issued since December 31, 2002 other than pursuant to
the exercise of stock option entitlements.
3. AUTHORITY.
AT Plastics has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by AT Plastics and the consummation by AT Plastics of
the transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of AT Plastics and, subject to approval by the AT Plastics
Shareholders, no other corporate proceedings on the part of AT Plastics are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly executed and delivered by AT Plastics and
constitutes a valid and binding obligation of AT Plastics, enforceable against
AT Plastics in accordance with its terms subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other applicable Laws
relating to or affecting creditors' rights generally, to general principles of
equity and public policy. Except as disclosed in writing to Acetex on or prior
to the date hereof and subject to obtaining all consents and approvals
contemplated by this Agreement, the execution and delivery by AT Plastics of
this Agreement and performance by it of its obligations hereunder and the
completion of the Amalgamation and the transactions contemplated thereby, will
not:
39
(a) result in a violation or breach of, require any consent to be obtained
under or give rise to any termination rights under any provision of:
(i) its or any Material Subsidiary's certificate of incorporation,
articles, by-laws or other charter documents, including any
unanimous shareholder agreement or any other agreement or
understanding with any Person holding an ownership interest in
any Material Subsidiary;
(ii) any law, regulation, order, judgment or decree; or
(iii) any contract, agreement, license, franchise or permit to which
AT Plastics or any Material Subsidiary is bound or is subject or
is the beneficiary;
(b) give rise to any right of termination or acceleration of indebtedness,
or cause any third party indebtedness to come due before its stated
maturity or cause any available credit to cease to be available; or
(c) result in the imposition of any Encumbrance, charge or lien upon any of
its assets or the assets of any Material Subsidiary, or restrict,
hinder, impair or limit the ability of AT Plastics or any Material
Subsidiary to carry on the business of AT Plastics or any Material
Subsidiary as and where it is now being carried on or as and where it
may be carried on in the future;
which would individually or in the aggregate have a material adverse effect on
AT Plastics or materially impair the ability of AT Plastics to perform its
obligations hereunder or materially delay the consummation of the transactions
contemplated hereby.
4. ABSENCE OF CHANGES.
Since December 31, 2002, and except as has been previously disclosed in
writing to Acetex or has been publicly disclosed prior to the date hereof in any
document filed with the Alberta Securities Commission (the "Securities
Authorities") (i) AT Plastics has conducted its business only in the ordinary
and regular course of business consistent with past practice, (ii) other than in
the ordinary and regular course of business consistent with past practice, no
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise) which would individually or in the aggregate be material to AT
Plastics or which materially and adversely affects the ability of AT Plastics to
consummate the transactions contemplated hereby have been incurred, (iii) there
has not been any material change, as defined under the Securities Act (Alberta),
in the affairs of AT Plastics or in the financial condition, results of
operations or business of AT Plastics and (iv) as of the execution hereof, there
are no material change reports filed with the Securities Authorities which
remain confidential.
5. EMPLOYMENT AGREEMENTS.
(a) Except as disclosed in writing to Acetex on or prior to the date
hereof, or except as set forth in the proxy circular prepared in
connection with the Annual General Meeting of AT Plastics held on May
22, 2003o , neither AT Plastics nor any Material Subsidiary is a party
to any written or oral policy, agreement, obligation or understanding
providing for severance or termination payments to, or any employment
agreement with, any senior executive.
(b) Other than as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any Material Subsidiary is a party to
any collective bargaining agreement nor subject to any application for
certification or threatened or apparent union-organizing campaigns for
employees
40
not covered under a collective bargaining agreement nor are there any
current, pending or threatened strikes or lockouts at either AT
Plastics or any Material Subsidiary that would individually or in the
aggregate have a material adverse effect on AT Plastics.
(c) Other than as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any Material Subsidiary is subject to
any claim for wrongful dismissal, constructive dismissal or any other
tort claim, actual or threatened, or any litigation, actual or
threatened, relating to its employees or independent contractors
(including any termination of such persons) other than those claims or
such litigation as would individually or in the aggregate not have a
material adverse effect on AT Plastics.
(d) Other than as disclosed in writing to Acetex on or prior to the date
hereof or as are not material, AT Plastics and all Material
Subsidiaries have operated in accordance with all applicable Laws with
respect to employment and labour, including, but not limited to,
employment and labour standards, occupational health and safety,
employment equity, pay equity, workers' compensation, human rights and
labour relations and there are no current, pending or threatened
proceedings before any board or tribunal with respect to any of the
areas listed herein other than where the failure to so operate or such
proceedings which, individually or in the aggregate would not have a
material adverse effect on AT Plastics.
6. DISCLOSURE.
AT Plastics has publicly disclosed in documents filed with the
Securities Authorities or disclosed to Acetex in writing, on or prior to the
date hereof, any information regarding any event, circumstance or action taken
or failed to be taken which could, individually or in the aggregate, reasonably
be expected to have a material adverse effect on AT Plastics or materially and
adversely affects the ability of AT Plastics to consummate the transactions
contemplated hereby.
7. FINANCIAL STATEMENTS.
The audited consolidated financial statements of AT Plastics for the
fiscal year ended December 31, 2002 and the unaudited interim consolidated
financial statements of AT Plastics for the period ended March 31, 2003 were
prepared in accordance with generally accepted accounting principles in Canada
consistently applied (except (i) as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited statements, in the
related report of AT Plastics's independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present the
consolidated financial condition of AT Plastics at the respective dates
indicated and the results of operations of AT Plastics (on a consolidated basis)
for the periods indicated therein (subject, in the case of any unaudited interim
financial statements, to normal year-end audit adjustments).
8. BOOKS AND RECORDS.
The corporate records and minute books of AT Plastics and the Material
Subsidiaries have been maintained substantially in accordance with all
applicable Laws and are complete and accurate in all material respects.
9. LITIGATION, ETC.
Except as set forth or specifically reflected in any document filed
with the Securities Authorities, or as disclosed in writing to Acetex on or
prior to the date hereof, there is no claim, action,
41
proceeding or investigation pending or, to the knowledge of AT Plastics,
threatened against or relating to AT Plastics or any Material Subsidiary or
affecting any of their properties or assets before any court or governmental or
regulatory authority or body that, if adversely determined, is likely to have a
material adverse effect on AT Plastics, or prevent or materially delay
consummation of the transactions contemplated by this Agreement or the
Amalgamation, nor is AT Plastics aware of any basis for any such claim, action,
proceeding or investigation. Neither AT Plastics nor any Material Subsidiary is
subject to any outstanding order, writ, injunction or decree that has had or is
reasonably likely to have a material adverse effect on AT Plastics or prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Amalgamation.
10. ENVIRONMENTAL.
All operations of AT Plastics and its Material Subsidiaries, have been
and are now, in compliance with all Environmental Laws, except where the failure
to be in compliance would, not, individually or in the aggregate, have a
material adverse effect on AT Plastics. Except as has been disclosed in, writing
to Acetex on or prior to the date hereof, neither AT Plastics nor any Material
Subsidiary is aware of, or is subject to:
(a) any proceeding, application, order or directive which relates to
environmental health or safety matters, and which may require any
material work, repairs, construction, or expenditures; or
(b) any demand or notice with respect to the breach of any Environmental
Laws applicable to AT Plastics or any Subsidiary, including, without
limitation, any regulations respecting the use, storage, treatment,
transportation, or disposition of Hazardous Substances;
which individually or in the aggregate would have a material adverse effect on
AT Plastics.
11. INSURANCE.
Policies of insurance in force as of the date hereof naming AT Plastics
as an insured adequately cover all risks reasonably and prudently foreseeable in
the operation and conduct of the business of AT Plastics and the Material
Subsidiaries for which, having regard to the nature of such risk and the
relative costs of obtaining insurance, it is in the opinion of AT Plastics
reasonable to seek such insurance rather than provide for self insurance. All
such policies of insurance shall remain in force and effect (subject to taking
into account insurance market conditions and offerings and industry practices)
and shall not be cancelled or otherwise terminated as a result of the
transactions contemplated hereby or by the Amalgamation other than such
cancellations as would not individually or in the aggregate have a material
adverse effect on AT Plastics.
12. TAX MATTERS.
(a) RETURNS FILED AND TAXES PAID. All Returns required to be filed by or on
behalf of AT Plastics or any Material Subsidiaries have been duly filed
on a timely basis and such Returns are true, complete and correct in
all material respects. Except as disclosed in writing by AT Plastics to
Acetex on or prior to the date hereof, all Taxes shown to be payable on
the Returns or on subsequent assessments with respect thereto have been
paid in full on a timely basis, and no other material amount of Taxes
are payable by AT Plastics or any Material Subsidiaries with respect to
items or periods covered by such Returns.
(b) TAX RESERVES. AT Plastics has paid or provided adequate accruals in its
consolidated financial statements for the year ended December 31, 2002
for Taxes assessed, including income taxes and
42
related deferred taxes, in conformity with generally accepted
accounting principles applicable in Canada.
(c) TAX DEFICIENCIES; AUDITS. Except as has been disclosed in writing to
Acetex, no deficiencies exist or have been asserted with respect to
Taxes of AT Plastics or any Material Subsidiary, neither AT Plastics
nor any Material Subsidiary is a Party to any action or proceeding for
assessment or collection of Taxes, nor has such event been asserted or
threatened against AT Plastics or any Material Subsidiary or any of
their respective assets, except where such deficiencies, actions or
proceedings are not material to AT Plastics or the Amalgamation.
13. PENSION AND EMPLOYEE BENEFITS.
(a) Other than as disclosed in writing to Acetex on or prior to the date
hereof, AT Plastics has complied, in all material respects, with all
the terms of and all applicable Laws in respect of the pension and
other employee compensation and benefit obligations of AT Plastics and
its Material Subsidiaries, including the terms of any collective
agreements, funding and investment contracts or obligations applicable
thereto, arising under or relating to each of the pension or retirement
income plans or other employee compensation or benefit plans,
agreements, policies, programs, arrangements or practices, whether
written or oral, which are maintained by or binding upon AT Plastics or
any of its Material Subsidiaries
(collectively referred to as the "AT Plastics Plans") and all AT
Plastics Plans are fully funded and in good standing with such
regulatory authorities as may be applicable.
(b) No step has been taken, no event has occurred and no condition or
circumstance exists that has resulted in or could reasonably be
expected to result in any AT Plastics Plan being ordered or required to
be terminated or wound up in whole or in part or having its
registration under applicable legislation refused or revoked, or being
placed under the administration of any trustee or receiver or
regulatory authority or being required to pay any material taxes, fees,
penalties or levies under applicable Laws. There are no actions, suits,
claims (other than routine claims for payment of benefits in the
ordinary course), trials, demands, investigations, arbitrations or
other proceedings which are pending or threatened in respect of any of
the AT Plastics Plans or their assets which individually or in the
aggregate would have a material adverse effect on AT Plastics.
(c) Other than as disclosed in writing to Acetex on or prior to the date
hereof, no event has occurred or condition exists with respect to the
AT Plastics Plans or relating to any employee of AT Plastics or a
Material Subsidiary which, individually or in the aggregate, is
reasonably likely to result in a material liability to AT Plastics.
14. PROPERTY.
AT Plastics and its Material Subsidiaries have good and sufficient
title to the real property interests including, without limitation, fee simple
estate of and in real property, leases, easements, rights of way, permits or
licences from landowners or authorities permitting the use of land by AT
Plastics and its Material Subsidiaries, necessary to permit the operation of its
businesses as presently owned and conducted except as disclosed in writing to
the other Party hereto on or prior to the date hereof and except for such
failures of title that would, individually or in the aggregate, not have a
material adverse effect on AT Plastics. All trade marks, trade names, patents
and copyrights, both domestic and foreign, used in or required for the proper
carrying on of the business of AT Plastics and its Material Subsidiaries are
validly and beneficially owned by AT Plastics or the relevant Material
Subsidiary with the sole and exclusive right to use the same and are in good
standing and duly registered in all appropriate
43
offices to preserve the right thereof and thereto and the conduct of the AT
Plastics and its Material Subsidiaries does not infringe upon the trade marks,
trade names, patents or copyrights, domestic or foreign, of any other person.
15. REPORTS.
AT Plastics has filed with the Securities Authorities, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1999 except for such forms, reports,
schedules, statements or other documents which were not material (such forms,
reports, schedules, statements and other documents, including any financial
statements or other documents, including any financial statements or schedules
included therein, are referred to as the "AT Plastics Documents"). The AT
Plastics Documents, at the time filed, (a) did not contain any misrepresentation
not subsequently corrected and (b) complied in all material respects with the
requirements of applicable securities legislation.
16. COMPLIANCE WITH LAWS.
Since December 31, 2002, and except as has been publicly disclosed
prior to the date hereof in any document filed with the Securities Authorities,
AT Plastics and its Material Subsidiaries have complied with and are not in
violation of any applicable Laws other than non-compliance or violations which
would not individually or in the aggregate have a material adverse effect on AT
Plastics or which would not materially impair the ability of AT Plastics to
perform its obligations hereunder or prevent or materially delay the
consummation of any of the transactions contemplated hereby.
17. LICENSES, ETC.
Except as disclosed in writing to Acetex on or prior to the date
hereof, AT Plastics and each of its Material Subsidiaries owns, possesses, or
has obtained and is in compliance with, all licenses, permits (including permits
required under Environmental Laws), certificates, orders, grants and other
authorizations of or from any Governmental Entity necessary to conduct its
businesses as now conducted or as proposed to be conducted, the failure to own,
possess, obtain or be in compliance with which would not individually or in the
aggregate have a material adverse effect on AT Plastics or would not materially
impair the ability of AT Plastics to perform its obligations hereunder or
prevent or materially delay the consummation of any of the transactions
contemplated hereby.
18. CERTAIN CONTRACTS.
Except as disclosed in writing to Acetex on or prior to the date
hereof, neither AT Plastics nor any of its Material Subsidiaries is a party to
or bound by any non-competition agreement or any other agreement or obligation
which purports to limit the manner or the localities in which all or any
material portion of the business of AT Plastics or its Material Subsidiaries is
or would be conducted other than such contracts which individually or in the
aggregate would not have a material adverse effect on AT Plastics or would not
materially impair the ability of AT Plastics to perform its obligations
hereunder or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
44
SCHEDULE D
GOVERNANCE ARRANGEMENTS
1. TRANSITIONAL
Between the date hereof and the Effective Date, the Chief Executive
Officers of each of Acetex and AT Plastics shall agree on an organizational
structure to be implemented as soon as practicable after the Effective Date and
shall agree on the placement of individuals in respect of significant management
positions.
It is the intention of Acetex and AT Plastics that there be a
reasonable sharing of employment positions for the combined business operations
after the Effective Date; it being understood that determinations in respect of
such positions shall be made in a manner consistent with the efficient operation
of the combined business operations.
2. OPTIONS
AT Plastics and Acetex anticipate that, following the completion of the
Amalgamation; the Board of Directors of Acetex will conduct an assessment of
Acetex's outstanding options. This may result in additional options being
granted or in the surrender of options in conjunction with the grant of new
options, all in accordance with the terms of the Acetex Option Plan and subject
to any required stock exchange and shareholder approvals. All determinations
with respect of the foregoing matters described in this paragraph shall be at
the discretion of the Board of Directors of Acetex.
SCHEDULE E
ACETEX SUBSTITUTE WARRANTS
Warrant Certificate No. 1
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BY 4:30 P.M. (CALGARY TIME), ON JUNE 2, 2008.
NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE ISSUER HEREOF, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE
WITH ANY APPLICABLE U.S. STATE SECURITIES LAWS, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AS AMENDED, OR THE RULES AND
REGULATIONS PROMULGATED THEREUNDER, AS AMENDED, AND IN COMPLIANCE WITH ANY
APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF
THE ISSUER HEREOF, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S.
SECURITIES LAWS.
45
WARRANT CERTIFICATE
ACETEX CORPORATION
(Incorporated under the laws of Alberta)
WARRANT CERTIFICATE 706,760 WARRANTS entitling the holder to acquire
NO. 1 706,760 Common Shares in the capital of Acetex
Corporation at a price per Common Share as determined
herein (subject to adjustment).
THIS IS TO CERTIFY THAT The Peninsula Fund III, L.P., The Xxxx Building, 000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx XX 00000 (hereinafter referred to as the
"HOLDER" or "WARRANTHOLDER") is the holder of the number of warrants
("Warrants") of Acetex Corporation (the "CORPORATION") specified above, each
Warrant entitling the holder to acquire from the Corporation, at the Exercise
Price (as defined herein) per common share, in the manner and subject to the
restrictions and adjustments set forth herein, at any time from the date hereof,
and from time to time thereafter, as to all or any part of the Warrants
represented hereby until 4:30 p.m. (Calgary time) (the "TIME OF EXPIRY") on June
2, 2008 (the "EXPIRY DATE") one (1) common share without nominal or par value of
the Corporation, as such shares were constituted on the date of this Warrant
Certificate (the "COMMON SHARES").
MECHANICS OF EXERCISE
THE RIGHT TO ACQUIRE COMMON SHARES MAY ONLY BE EXERCISED BY THE HOLDER WITHIN
THE TIME SET FORTH ABOVE BY:
(b) duly completing and executing the Exercise Form forming
Schedule B to this Warrant Certificate;
(c) surrendering this Warrant Certificate to the Corporation at the
executive office of the Corporation together with the duly
completed Exercise Form; and
(d) remitting a certified cheque, bank draft or money order in lawful
money of Canada, payable to or to the order of the Corporation at
par where this Warrant Certificate is so surrendered, for the
aggregate purchase price of the Common Shares so subscribed for.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE WILL BE DEEMED TO BE
SURRENDERED ONLY UPON PERSONAL DELIVERY HEREOF OR, IF SENT BY MAIL OR OTHER
MEANS OF TRANSMISSION, UPON ACTUAL PERSONAL DELIVERY HEREOF.
HOLDER OF RECORD AND DELIVERY OF SHARE CERTIFICATES
UPON EXERCISE OF THE WARRANTS AND SURRENDER OF THIS WARRANT CERTIFICATE, AND
PAYMENT OF THE EXERCISE PRICE (AS DEFINED IN 0) TO THE CORPORATION, THE PERSON
OR PERSONS IN WHOSE NAME OR NAMES THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THE WARRANTS ARE TO BE ISSUED SHALL BE DEEMED FOR ALL PURPOSES (EXCEPT AS
PROVIDED IN THIS WARRANT CERTIFICATE) TO BE THE HOLDER OR HOLDERS OF RECORD OF
SUCH COMMON SHARES AND THE CORPORATION COVENANTS THAT IT WILL (SUBJECT TO THE
PROVISIONS OF THIS WARRANT CERTIFICATE) CAUSE A CERTIFICATE OR CERTIFICATES
REPRESENTING SUCH COMMON SHARES TO BE DELIVERED OR MAILED TO THE PERSON OR
PERSONS AT THE ADDRESS OR ADDRESSES SPECIFIED IN THE EXERCISE FORM.
CERTIFICATES FOR THE COMMON SHARES SUBSCRIBED FOR WILL BE MAILED TO THE PERSONS
SPECIFIED IN THE EXERCISE FORM AT THEIR RESPECTIVE ADDRESSES SPECIFIED THEREIN,
FIVE BUSINESS DAYS AFTER THE SURRENDER OF THIS WARRANT CERTIFICATE AND PAYMENT
OF THE EXERCISE PRICE. IN THE EVENT OF
46
A PURCHASE OF A NUMBER OF COMMON SHARES FEWER THAN THE NUMBER WHICH CAN BE
PURCHASED UPON EXERCISE OF THE WARRANTS REPRESENTED HEREBY, THE WARRANTHOLDER
SHALL BE ENTITLED TO RECEIVE, WITHOUT CHARGE, A NEW WARRANT CERTIFICATE IN
RESPECT OF THE BALANCE OF THE COMMON SHARES NOT THEN PURCHASED. UNDER NO
CIRCUMSTANCES WILL THE CORPORATION BE OBLIGED TO ISSUE FRACTIONAL COMMON SHARES.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Corporation represents and warrants to, and covenants and agrees with,
the Warrantholder as follows:
(e) TO ISSUE WARRANTS AND RESERVE COMMON SHARES: That it is duly
authorized to create and issue the Warrants and that the
Warrants, when issued and signed, will be valid and enforceable
against the Corporation and that the Corporation will cause the
Common Shares acquired pursuant to the Warrants under this
Warrant Certificate and the certificates representing such Common
Shares to be duly issued and delivered. At all times prior to and
including the Time of Expiry, while any of the Warrants are
outstanding, the Corporation shall reserve and allot out of its
authorized capital a number of Common Shares as is sufficient to
enable the Corporation to meet its obligation to issue Common
Shares in respect of the exercise of all Warrants outstanding
hereunder from time to time. All Common Shares acquired pursuant
to the Warrants shall be fully paid and non-assessable.
(f) TO MAINTAIN STOCK EXCHANGE LISTING: That it will use its best
efforts to ensure that its Common Shares remain listed on the
facilities of The Toronto Stock Exchange Inc. (the "TSE") or
another recognized stock exchange in Canada until the first
anniversary of the Expiry Date, and the Corporation will make
application to the TSE to list such additional number of Common
Shares as may be issued as a result of the exercise of the
Warrants.
(g) TO EXECUTE FURTHER ASSURANCES: That it will do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, all other acts, deeds and assurances
in law as the Warrantholder may reasonably require for effecting
the provisions of this Warrant Certificate.
(h) TO CARRY ON BUSINESS: It will at all times do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, carry on and conduct, and will
cause to be carried on and conducted, its business in the same
manner as heretofore carried on and conducted, provided, however,
that the Corporation may cease to operate or may dispose of any
business, premises, property or operation if in the opinion of
the directors or officers of the Corporation or any subsidiary of
the Corporation, as the case may be, it would be advisable and in
the best interests of the Corporation to do so.
47
(i) REPORTING ISSUER AND RESTRICTIONS ON TRANSFER OF COMMON SHARES:
That the Corporation is presently a reporting issuer (or the
equivalent) in British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, Quebec, New Brunswick, Xxxxxx Xxxxxx Island, Nova Scotia
and Newfoundland (the "REPORTING JURISDICTIONS") and will use its
best efforts to ensure that it remains a reporting issuer (or the
equivalent) in good standing under the securities legislation of
the Reporting Jurisdictions until the first anniversary of the
Expiry Date.
(j) PROVISION OF FINANCIAL INFORMATION: That if it ceases to be a
reporting issuer in at least one Reporting Jurisdiction, it will
provide to the Warrantholder such interim and annual financial
information as it would be required to file in the Reporting
Jurisdictions if it were a reporting issuer at the earliest times
that it would have been required to file such financial
information in the Reporting Jurisdictions.
SECURITIES LAW REQUIREMENTS
IF, IN THE OPINION OF COUNSEL TO THE CORPORATION, ANY INSTRUMENT IS REQUIRED TO
BE FILED WITH OR ANY PERMISSION, ORDER OR RULING IS REQUIRED TO BE OBTAINED FROM
ANY SECURITIES REGULATORY AUTHORITY OR ANY OTHER STEP IS REQUIRED UNDER ANY
FEDERAL, STATE OR PROVINCIAL LAW OF THE REPORTING JURISDICTIONS OR OF THE UNITED
STATES BEFORE ANY SECURITIES OR PROPERTY WHICH THE WARRANTHOLDER IS ENTITLED TO
RECEIVE PURSUANT TO THE EXERCISE OF THE WARRANTS MAY PROPERLY AND LEGALLY BE
DELIVERED UPON THE DUE EXERCISE OF THE WARRANTS AND SOLD WITHOUT RESTRICTION
(OTHER THAN STANDARD RESALE RESTRICTIONS APPLICABLE TO A PRIVATE PLACEMENT OF
SECURITIES), THE CORPORATION COVENANTS THAT IT WILL USE ITS BEST EFFORTS TO FILE
SUCH INSTRUMENT, OBTAIN SUCH PERMISSION, ORDER OR RULING OR TAKE ALL SUCH OTHER
ACTIONS, AT ITS EXPENSE, AS IS REQUIRED OR APPROPRIATE IN THE CIRCUMSTANCES;
PROVIDED, HOWEVER, THAT THE CORPORATION IS IN NO WAY OBLIGATED TO FILE ANY
PROSPECTUS OR REGISTRATION STATEMENT WITH ANY SECURITIES REGULATORY AUTHORITY OR
SIMILAR AUTHORITY IN CANADA OR THE UNITED STATES TO QUALIFY THE DISTRIBUTION OF
THE SECURITIES OR PROPERTY ISSUABLE ON THE EXERCISE OF THE WARRANTS.
THE CORPORATION WILL GIVE ALL NOTICES AND MAKE ALL FILINGS UNDER APPLICABLE
CANADIAN AND UNITED STATES SECURITIES LAWS AND APPLICABLE STOCK EXCHANGE RULES,
REGULATIONS AND POLICIES REQUIRED TO BE MADE BY THE CORPORATION IN CONNECTION
WITH THE EXERCISE OF THE WARRANTS AND THE ISSUANCE OF THE UNDERLYING COMMON
SHARES.
IF AT THE TIME OF EXERCISE OF THE WARRANTS THERE REMAIN TRADING RESTRICTIONS ON
THE COMMON SHARES ISSUABLE UPON SUCH EXERCISE PURSUANT TO APPLICABLE SECURITIES
LEGISLATION OF ANY OF THE PROVINCES OF CANADA, THE CORPORATION MAY, UPON THE
ADVICE OF ITS COUNSEL, ENDORSE ANY SUCH COMMON SHARE CERTIFICATE ISSUED BY THE
CORPORATION TO SUCH EFFECT BY PLACING THE FOLLOWING LEGEND ON SUCH CERTIFICATE
(OR SUCH OTHER OR ADDITIONAL LEGEND(S) AS MAY BE REQUIRED BY APPLICABLE
REGULATORY AUTHORITIES OR STOCK EXCHANGES), AS WELL AS ALL CERTIFICATES ISSUED
IN EXCHANGE THEREFOR OR IN SUBSTITUTION THEREFOR OR UPON A TRANSFER THEREOF:
STATUTORY RESALE RESTRICTIONS UNDER APPLICABLE SECURITIES LEGISLATION OF
THE PROVINCES OF CANADA MAY APPLY ON THE RESALE OF THESE SECURITIES.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA OR THE UNITED
STATES. A NEW CERTIFICATE NOT BEARING THIS LEGEND MAY BE OBTAINED FROM THE
CORPORATION UPON DELIVERY OF THIS CERTIFICATE AND AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE TO THE EFFECT THAT
SUCH RESALE IS NOT SUBJECT TO ANY SUCH APPLICABLE STATUTORY RESALE
RESTRICTIONS.
48
CERTIFICATES REPRESENTING COMMON SHARES ISSUED PURSUANT TO THE EXERCISE OF THE
WARRANTS IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON OR A PERSON IN THE UNITED STATES (AS DEFINED IN THE U.S. SECURITIES ACT),
AS WELL AS ALL CERTIFICATES ISSUED IN EXCHANGE THEREFOR OR IN SUBSTITUTION
THEREFOR OR UPON A TRANSFER THEREOF, WILL BEAR A LEGEND TO THE FOLLOWING EFFECT:
THE COMMON SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
SUCH COMMON SHARES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH
COMMON SHARES MAY BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES
IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE U.S. SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES
ACT, SUBJECT TO THE CORPORATION'S AND ANY TRANSFER AGENT'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO THIS CLAUSE (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION
SATISFACTORY TO EACH OF THEM. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, MAY BE
OBTAINED FROM THE TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND
A WRITTEN DECLARATION TO THE TRANSFER AGENT AND THE CORPORATION, TO THE
EFFECT THAT THE SALE OF THE COMMON SHARES REPRESENTED HEREBY IS BEING
MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT.
ADJUSTMENTS
FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS HAVE THE MEANINGS AS SET OUT
BELOW:
"CURRENT MARKET PRICE" means at any date the weighted average price at
which the Common Shares have been traded on the Corporation's Principal
Stock Exchange during the 30 consecutive Trading Days ending one
Trading Day before such date; and in the event the Common Shares are
not so traded on any stock exchange in Canada, the "CURRENT MARKET
PRICE" thereof shall be determined by the board of directors of the
Corporation who shall rely upon the advice of independent financial
agents with respect thereto.
"EFFECTIVE DATE" has the meaning ascribed thereto in the Combination
Agreement entered into among Acetex Corporation, AT Plastics Inc. and
Acetex (Ontario) Inc. as of even date herewith.
"EXERCISE PRICE" with respect to the exercise of the Warrants means the
closing price of a Common Share on the Toronto Stock Exchange on the
Effective Date (in Canadian dollars) provided that if there is no trade
of a
49
Common Share on the Toronto Stock Exchange on such date then it shall
mean the closing price on the first day following the Effective Date on
which a trade occurs on the Toronto Stock Exchange, unless such price
has been adjusted in accordance with the provisions hereunder, in which
case it shall mean the adjusted price in effect at such time.
"PRINCIPAL STOCK EXCHANGE" means the TSE; and in the event the Common
Shares are not listed on the TSE, but are listed on another stock
exchange or stock exchanges in Canada, the foregoing references to the
TSE shall be deemed to be references to such other stock exchange or,
if more than one, to such one as shall be designated by the board of
directors of the Corporation.
"TRADING DAY" means, with respect to a stock exchange, a day on which
such exchange is open for the transaction of business and with respect
to the over-the-counter market means a day on which the Corporation's
Principal Stock Exchange is open for the transaction of business.
THE ACQUISITION RIGHTS AS THEY RELATE TO COMMON SHARES, IN EFFECT AT ANY DATE,
ATTACHING TO THE WARRANTS, AND THE EXERCISE PRICE IN RESPECT THEREOF, SHALL BE
SUBJECT TO ADJUSTMENT FROM TIME TO TIME AS FOLLOWS:
(k) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall:
(i) subdivide or redivide the outstanding Common Shares into a
greater number of shares;
(ii) reduce, combine or consolidate the outstanding Common Shares
into a smaller number of shares; or
(iii) issue Common Shares (or securities convertible into Common
Shares) to the holders of all or substantially all of the
outstanding Common Shares by way of a stock dividend or other
distribution of Common Shares or securities convertible into
Common Shares;
the Exercise Price in effect on the effective date of such subdivision,
redivision, reduction, combination or consolidation or on the record
date for such issue of Common Shares by way of a stock dividend, as the
case may be, shall be adjusted to equal the price determined by
multiplying the Exercise Price in effect immediately prior to such
effective date or record date by a fraction of which the numerator
shall be the total number of Common Shares outstanding immediately
prior to such date and the denominator shall be the total number of
Common Shares immediately after such date. Such adjustment shall be
made successively whenever any event referred to in this 1(a)(x) shall
occur; any such issue of Common Shares by way of a stock dividend shall
be deemed to have been made on the record date for the stock dividend
for the purpose of calculating the number of outstanding Common Shares
under 1(a)(x) and 1(a)(xii). Upon any adjustment of the Exercise Price
pursuant to 1(a)(x), the number of Common Shares obtainable under each
Warrant shall be adjusted immediately after the effective date of such
subdivision, redivision, change,
50
reduction, combination or consolidation, by multiplying the number of
Common Shares which were theretofore obtainable on the exercise thereof
by a fraction of which the numerator shall be the total number of
Common Shares outstanding immediately after such date and the
denominator shall be the total number of Common Shares outstanding
immediately prior to such date. Such adjustment shall be made
successively whenever any event referred to in this 1(a)(x) shall
occur;
(l) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall fix a record date for
the distribution to all or substantially all of the holders of
Common Shares of rights, options or warrants (other than
Warrants) entitling them, for a period expiring not more than 45
days after such record date, to subscribe for or purchase Common
Shares (or securities convertible or exchangeable into Common
Shares) at a price per share (or having a conversion or exchange
price per share) less than 95% of the Current Market Price on
such record date, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Exercise Price in effect on
such record date by a fraction, of which the numerator shall be
the total number of Common Shares outstanding on such record date
plus a number of Common Shares equal to the number arrived at by
dividing the aggregate price of the total number of additional
Common Shares offered for subscription or purchase (or the
aggregate conversion or exchange price of the convertible or
exchangeable securities so offered) by such Current Market Price,
and of which the denominator shall be the total number of Common
Shares outstanding on such record date plus the total number of
additional Common Shares offered for subscription or purchase (or
into which the convertible or exchangeable securities so offered
are convertible or exchangeable); any Common Shares owned by or
held for the account of the Corporation or any subsidiary shall
be deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent that any such rights,
options or warrants are not issued or any such rights, options or
warrants are not exercised prior to the expiration thereof, the
Exercise Price shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed or
to the Exercise Price which would then be in effect based upon
the number of Common Shares (or securities convertible or
exchangeable into Common Shares) actually issued upon the
exercise of such rights, options or warrants, as the case may be;
(m) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall fix a record date for
the making of a distribution to all or substantially all the
holders of its outstanding Common Shares of:
51
(i) shares of any class other than Common Shares, whether of the
Corporation or any other corporation;
(ii) rights, options or warrants to subscribe for or purchase
Common Shares (excluding those referred to in 001(a)(xi);
(iii) evidences of its indebtedness;
(iv) assets; or
(v) cash dividends paid;
then, in each such case, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the price
determined by multiplying the Exercise Price in effect on such record
date by a fraction, of which the numerator shall be the total number of
Common Shares outstanding on such record date multiplied by the Current
Market Price on such record date, less the aggregate fair market value
(as determined by the directors, which determination shall be
conclusive) of such shares, rights, options, warrants, evidences of
indebtedness, assets or dividends so distributed, and of which the
denominator shall be the total number of Common Shares outstanding on
such record date multiplied by such Current Market Price; any Common
Shares owned by or held for the account of the Corporation or
Subsidiary shall be deemed not to be outstanding for the purpose of any
such computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent that such distribution is
not so made, the Exercise Price shall be readjusted to the Exercise
Price which would then be in effect if such record date had not been
fixed or to the Exercise Price which would then be in effect based upon
such shares or rights, options or warrants or evidences of indebtedness
or assets actually distributed, as the case may be;
(n) notwithstanding any provision of this Warrant Certificate, if and
whenever at any time from the date hereof and prior to the Time
of Expiry, in the event of the occurrence of any change, either
(a) through the issue, transfer, acquisition, conversion,
exchange of securities or otherwise, or (b) through amalgamation,
arrangement, merger or otherwise as a result of which a person or
company or group of persons or companies acting jointly or in
concert, who, acting at arm's length to the Corporation, either
alone or together with its or their associates and affiliates,
beneficially own greater than fifty percent (50%) of the
outstanding Common Shares (a "CHANGE OF CONTROL"), all Warrants
that have not been exercised prior to the record date or
effective date of such Change in Control transaction, shall
thereafter be exercisable for and the holder shall be entitled to
receive and shall accept in lieu of the number of Common Shares
then subscribed for but for the same aggregate consideration
payable therefore, the number of other securities or property
(including cash) of the entity resulting from such
reorganization, consolidation, amalgamation, merger or sale, as
the case may be, that the holder would have been entitled to
receive on such Change in Control if, on the record date or the
52
effective date thereof, the holder had been the registered holder
of the number of Common Shares so subscribed for;
(o) if and whenever at any time from the date hereof and prior to the
Time of Expiry, there is a reclassification of the Common Shares
or a capital reorganization of the Corporation or a
consolidation, amalgamation, arrangement or merger of the
Corporation with or into any other body corporate, trust,
partnership or other entity, or a sale or conveyance of the
property and assets of the Corporation as an entirety or
substantially as an entirety to any other body corporate, trust,
partnership or other entity, any Warrantholder who has not
exercised its right of acquisition under the Warrants prior to
the effective date of such reclassification, reorganization,
consolidation, amalgamation, arrangement, merger, sale or
conveyance, upon the exercise of such right thereafter, shall be
entitled to receive and shall accept, in lieu of the number of
Common Shares then sought to be acquired by it, the number of
shares or other securities or property of the Corporation or of
the body corporate, trust, partnership or other entity resulting
from such merger, amalgamation, arrangement or consolidation, or
to which such sale or conveyance may be made, as the case may be,
that such Warrantholder would have been entitled to receive on
such reclassification, reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance, if, on the
record date or the effective date thereof, as the case may be,
the Warrantholder had been the registered holder of the number of
Common Shares sought to be acquired by it. If determined
appropriate by the Warrantholder to give effect to or to evidence
the provisions of this 1(a)(xiv), the Corporation, its successor,
or such purchasing body corporate, partnership, trust or other
entity, as the case may be, shall, prior to or contemporaneously
with any such reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, sale or
conveyance, issue to the Warrantholder a warrant certificate
which shall provide, to the extent possible, for the application
of the provisions set forth in this Warrant Certificate with
respect to the rights and interests thereafter of the
Warrantholder to the end that the provisions set forth in this
Warrant Certificate shall thereafter correspondingly be made
applicable, as nearly as may reasonably be possible, to any
shares, other securities or property to which a Warrantholder is
entitled on the exercise of its acquisition rights thereafter.
Any warrant certificate issued by the Corporation, any successor
to the Corporation or such purchasing body corporate,
partnership, trust or other entity shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided in this 0 and which shall apply to
successive reclassification, capital reorganizations,
amalgamations, arrangements, consolidations, mergers, sales or
conveyances;
53
(p) all adjustments to the Exercise Price provided for in this 0
shall be made subject to the rules and regulations of the
Principal Stock Exchange (if any), and in particular, the maximum
discount to market price allowable in connection with private
placements of securities;
(q) in any case in which this 0 shall require that an adjustment
shall become effective immediately after a record date for an
event referred to herein, the Corporation may defer, until the
occurrence of such event, issuing to the holder of any Warrant
exercised after such record date and before the occurrence of
such event the additional Common Shares issuable upon such
exercise by reason of the adjustment required by such event;
provided, however, that the Corporation shall deliver to such
holder an appropriate instrument evidencing such holder's right
to receive such additional Common Shares upon the occurrence of
the event requiring such adjustment and the right to receive any
distributions made on such additional Common Shares declared in
favour of holders of record of Common Shares on and after the
relevant date of exercise or such later date as such holder
would, but for the provisions of this 1(a)(xvi), have become the
holder of record of such additional Common Shares pursuant to
001(a)(xiii) or 1(a)(xiv);
(r) the adjustments provided for in this 0 are cumulative, and shall,
in the case of adjustments to the Exercise Price be computed to
the nearest whole cent and shall apply to successive
subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting
in any adjustment under the provisions of this 0, provided that,
notwithstanding any other provision of this 0, no adjustment of
the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise
Price then in effect; provided, however, that any adjustments
which by reason of this 1(a)(xvii) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment;
(s) after any adjustment pursuant to this 0, the term "COMMON SHARES"
where used in this Warrant Certificate shall be interpreted to
mean securities of any class or classes which, as a result of
such adjustment and all prior adjustments pursuant to this 0, the
Warrantholder is entitled to receive upon the exercise of his
Warrant, and the number of Common Shares indicated by any
exercise made pursuant to a Warrant shall be interpreted to mean
the number of Common Shares or other property or securities a
Warrantholder is entitled to receive, as a result of such
adjustment and all prior adjustments pursuant to this 0, upon the
full exercise of a Warrant;
(t) in determining at any time and from time to time the number of
Common Shares outstanding at that time for purposes of this 0,
there
54
shall be included that number of Common Shares which would be
outstanding upon conversion of all convertible securities then
outstanding and upon exercise of all rights, options or warrants
then outstanding to purchase Common Shares, and there shall be
excluded any Common Shares (and Common Shares which would be
outstanding upon conversion of convertible securities) held by or
for the account of the Corporation;
(u) upon the expiry of the period for conversion of convertible
securities and the exercise period for rights, options, warrants
to purchase Common Shares or convertible securities, the Exercise
Price shall be adjusted to what it would have been if such
unconverted securities and unexercised rights, options or
warrants had not been issued; and
(v) whenever Common Shares shall have been issued for non-cash
consideration in whole or in part, the issue price for such
Common Shares shall be determined by the directors.
ENTITLEMENT TO SHARES ON EXERCISE OF WARRANT
All shares of any class or other securities which a Warrantholder is at the time
in question entitled to receive on the exercise of its Warrants, whether or not
as a result of adjustments made pursuant hereto, shall, for the purposes of the
interpretation of this Warrant Certificate, be deemed to be shares which such
Warrantholder is entitled to acquire pursuant to such Warrant.
DETERMINATION BY CORPORATION'S AUDITORS
In the event of any dispute arising with respect to the adjustments provided for
hereunder such question shall be conclusively determined by the Corporation's
auditors who shall have access to all necessary records of the Corporation, and
such determination shall be binding upon the Corporation, the Warrantholder and
all other persons interested therein. The party that does not receive the
favourable determination of the dispute shall be solely responsible to pay all
fees and expenses of the Corporation's auditors arising in connection with the
dispute.
PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT
As a condition precedent to the taking of any action which would require an
adjustment in any of the acquisition rights pursuant to any of the Warrants,
including the number of Common Shares which are to be received upon the exercise
thereof, the Corporation shall take any corporate action which may, in the
opinion of counsel to the Corporation, be necessary in order that the
Corporation has unissued and reserved in its authorized capital and may validly
and legally issue as fully paid and non-assessable all the shares which the
holder is entitled to receive on the full exercise thereof in accordance with
the provisions of this Warrant Certificate.
CERTIFICATE OF ADJUSTMENT
The Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in hereunder,
deliver a certificate of the Corporation to the Warrantholder specifying the
nature of the event requiring the same and the amount of the adjustment
necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate and the calculation of the adjustment shall be supported by a
certificate of the Corporation's auditors verifying such calculation. When so
verified, the Corporation shall forthwith give notice to the Warrantholder
specifying the event requiring such adjustment or readjustment and the results
thereof including the resulting Exercise Price; provided
55
that, if the Corporation has given notice under 0 covering all the relevant
facts in respect of such event, no such notice need be given under this 0.
NOTICE OF SPECIAL MATTERS
The Corporation covenants that, so long as any Warrant remains outstanding, it
will give notice to the Warrantholder of its intention to fix the record date
for any event referred to in 1(a)(x), 1(a)(xii), 1(a)(xiii) or 1(a)(xiv) (other
than the subdivision, redivision, reduction, combination or consolidation of its
Common Shares) which may give rise to an adjustment of the Exercise Price. Such
notice shall specify the particulars of such event and the record date for such
event, provided that the Corporation shall only be required to specify in the
notice such particulars of the event as shall have been fixed and determined on
the date on which the notice is given. The notice shall be given in each case
not less than twenty-one calendar days prior to such applicable record date.
NO ACTION AFTER NOTICE
The Corporation covenants that it will not close its transfer books or take any
other corporate action which might deprive the holder of the opportunity to
exercise its right of acquisition pursuant thereto during the period of
twenty-one calendar days after the giving of the certificate or notices set
forth in 0 and 0.
OTHER ADJUSTMENTS
In case the Corporation after the date hereof shall take any action affecting
the Common Shares, other than an action described in 0, which in the opinion of
the directors would have a material adverse effect on the rights of the
Warrantholder, the Exercise Price and/or the number and/or kind of Common Shares
purchasable upon exercise, there shall be an adjustment in such manner, if any,
and at such time, as the directors in their discretion may reasonably determine
to be equitable to the Warrantholder in such circumstances. Failure by the
directors to take any such action so as to provide for an adjustment prior to
the effective date of any action by the Corporation affecting the Common Shares
shall be conclusive evidence that the directors have determined that it is
equitable to make no adjustment in the circumstances.
PARTICIPATION BY WARRANTHOLDER
No adjustments shall be made pursuant to 0 if the Warrantholder is entitled to
participate in the event described in 0 for which an adjustment would be made on
the same terms, MUTATIS MUTANDIS, as if the Warrantholder had exercised its
Warrants prior to, or on the effective date or record date of, such event.
EXCHANGE OF WARRANT CERTIFICATE
The Warrantholder may, at any time prior to the Expiry Date, upon surrender of
this Warrant Certificate to the Corporation at the office referred to above,
exchange this Warrant Certificate for other Warrant Certificates entitling the
holder to acquire, in the aggregate, the same number of Common Shares as may be
acquired under this Warrant Certificate.
SHAREHOLDER STATUS
The holding of the Warrants evidenced by this Warrant Certificate shall not
constitute the holder hereof a shareholder of the Corporation or entitle the
holder to any right or interest in respect thereof except as expressly provided
in this Warrant Certificate.
TRANSFER OF WARRANTS
THE WARRANTS EVIDENCED BY THIS WARRANT CERTIFICATE MAY BE TRANSFERRED ON THE
REGISTER KEPT AT THE OFFICE OF THE CORPORATION BY THE REGISTERED HOLDER HEREOF
OR ITS LEGAL REPRESENTATIVES OR ITS ATTORNEY DULY APPOINTED BY COMPLETION OF THE
TRANSFER FORM ATTACHED AS SCHEDULE "A"
56
HERETO OR SUCH OTHER INSTRUMENT IN WRITING IN FORM AND EXECUTION SATISFACTORY TO
THE CORPORATION. IF THE WARRANTS ARE BEING SOLD OR TRANSFERRED OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE U.S. STATE SECURITIES LAWS,
THE LEGEND ON THIS WARRANT CERTIFICATE SHALL BE REMOVED BY PROVIDING A
DECLARATION TO THE CORPORATION TO THE FOLLOWING EFFECT (OR AS THE CORPORATION
MAY PRESCRIBE FROM TIME TO TIME):
The undersigned (a) acknowledges that the sale of the Warrants
to which this declaration relates is being made in reliance on
Rule 904 of Regulation S under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), and (b)
certifies that (1) it is not an affiliate (as that term is
defined in the U.S. Securities Act) of the issuer of the
securities, (2) the offer of such securities was not made to a
Person in the United States and, at the time the buy order was
originated, the buyer was outside the United States, or the
seller and any Person acting on its behalf reasonably believe
that the buyer was outside the United States, and (3) neither
the seller, nor any affiliate of the seller, nor any Person
acting on their behalf, has engaged or will engage in any
directed selling efforts in the United States in connection
with the offer and sale of such securities. Terms herein have
the meanings given to them by Regulation S under the U.S.
Securities Act.
If any such Warrants are being transferred other than in accordance
with Rule 904 of Regulation S under the U.S. Securities Act, and other
than to the Corporation, the legend shall be removed by delivery to the
Corporation of an opinion of counsel, of recognized standing reasonably
satisfactory to the Corporation, that such legend is no longer required
under applicable requirements of the U.S. Securities Act or U.S. state
securities laws.
THE WARRANTHOLDER MAY NOT TRANSFER THE WARRANTS REPRESENTED BY THIS WARRANT
CERTIFICATE TO MORE THAN FOUR PERSONS OR COMPANIES WITHOUT THE PRIOR CONSENT OF
THE CORPORATION.
INDEMNIFICATION
In addition to any other rights or remedies to which the Warrantholder may be
entitled, the Corporation agrees to and will indemnify and hold harmless the
Warrantholder and its affiliates and their respective successors, assigns,
officers, directors, employees, attorneys, and agents (individually and
collectively, an "INDEMNIFIED PARTY") from and against any and all losses,
claims, obligations, liabilities, deficiencies, diminutions in value, penalties,
causes of action, damages, costs, and expenses (including, without limitation,
costs of investigation and defense, reasonable attorneys' fees and expenses) and
that the Indemnified Party may suffer, incur, or be responsible for, arising or
resulting from any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or agreement on the part of the Corporation under this Warrant
Certificate or from any misrepresentation in or omission from any certificate or
other instrument furnished or to be furnished to the Warrantholder under this
Warrant Certificate. The foregoing indemnification includes any such claims,
actions, damages, costs and expenses incurred by reason of the sole, comparative
or contributory negligence of the person indemnified, but excludes any of the
same incurred by reason of such person's gross negligence or wilful misconduct
as determined by a final and non-appealable judgment of a court of competent
jurisdiction.
GOVERNING LAW
This Warrant Certificate and the Warrants represented hereunder will be governed
by the laws of the province of Alberta and the federal laws of Canada applicable
therein.
57
TIME OF THE ESSENCE
Time shall be of the essence hereof.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be
signed by its duly authorized officer on , 2003.
ACETEX CORPORATION
By:
--------------------------------------
Name:
Title:
58
SCHEDULE "A"
TRANSFER FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
__________ , _____ Warrants of Acetex Corporation registered in the name of the
undersigned on the records of Acetex Corporation represented by the attached
Warrant Certificate and irrevocably appoints __________ , the attorney of the
undersigned to transfer the said securities on the books of AT Plastics Inc. or
on the register of Warrant transfers, with full power of substitution.
DATED the __________ day of __________ 20 _____ .
_____________________________ _____________________________
Signature Guaranteed (Signature of Warrantholder)
1. Signature of the Warrantholder must be signature of the person
appearing on the face of this Warrant Certificate.
2. If this Transfer Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting in a fiduciary or representative capacity, the Warrant
Certificate must be accompanied by evidence of authority to sign
satisfactory to the Corporation.
3. The signature on this Transfer Form must be guaranteed by an authorized
officer of a chartered bank, trust company or an investment dealer who
is a member of a recognized stock exchange.
4. The Warrants shall only be transferable in accordance with applicable
laws.
5. THE TRANSFER OF WARRANTS MAY RESULT IN THE COMMON SHARES OBTAINED UPON
THE EXERCISE OF THE WARRANTS NOT BEING FREELY TRADEABLE IN THE
JURISDICTION OF THE PURCHASER'S RESIDENCE. IN SUCH A CASE, THE
CORPORATION MAY AFFIX SUCH LEGENDS AS IT MAY, UPON ADVICE OF COUNSEL,
DETERMINE APPROPRIATE.
59
SCHEDULE "B"
EXERCISE FORM
TO: AT PLASTICS INC.
The undersigned hereby irrevocably exercises the right to acquire, on the basis
of one Common Share for one Warrant represented by this Warrant Certificate,
_________ Common Shares of Acetex Corporation as constituted on _________ , 2003
(or such number of Common Shares or other securities or property to which such
Warrants entitle the undersigned pursuant to the provisions of the accompanying
Warrant Certificate) in accordance with and subject to the provision of this
Warrant Certificate and encloses herewith a certified cheque, bank draft or
money order, in lawful money of Canada payable to the order of Acetex
Corporation in the amount of $________ representing the aggregate exercise
price.
The Common Shares (or other securities or property) are to be issued as
follows:
Name: _________________________________________________________________
Address in full: ______________________________________________________
_______________________________________________________________________
Number of Common Shares: ______________________________________________
Note: If further nominees intended, please attach (and initial)
schedule giving these particulars.
DATED the _________ day of _________ , 200__.
_______________________________ ___________________________________
Signature Guaranteed (Signature of Warrantholder)
_______________________________ ___________________________________
Print full name
___________________________________
Print full address
___________________________________
60
INSTRUCTIONS:
6. The holder may exercise its right to receive Common Shares by
completing this Exercise Form and surrendering the Warrant Certificate
representing the Warrants being exercised, together with the aggregate
exercise price, to AT Plastics Inc. at its principal office x/x Xxxxxx,
Xxxxxxxxx & Xxxxxx XXX, 0000, 000 0xx Xxxxxx XX, Xxxxxxx, Xxxxxxx X0X
0X0. Certificates for Common Shares will be delivered or mailed within
five Business Days after exercise of the Warrants. THE RIGHTS OF THE
REGISTERED HOLDER HEREOF CEASE IF THE WARRANTS ARE NOT EXERCISED PRIOR
TO 4:30 P.M. (CALGARY TIME) ON OR BEFORE JUNE 2, 2008.
7. If the Exercise Form indicates that Common Shares are to be issued to a
person or persons other than the Warrantholder, the signature of the
Warrantholder on the Exercise Form MUST be guaranteed by an authorized
officer of a chartered bank, trust company or an investment dealer who
is a member of a recognized stock exchange.
8. If the Exercise Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting in a fiduciary or representative capacity, the Warrant
Certificate must be accompanied by evidence of authority to sign
satisfactory to the Corporation.
Warrant Certificate No. 2
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BY 4:30 P.M. (CALGARY TIME), ON JUNE 2, 2008.
NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE ISSUER HEREOF, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE
WITH ANY APPLICABLE U.S. STATE SECURITIES LAWS, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT, AS AMENDED, OR THE RULES AND
REGULATIONS PROMULGATED THEREUNDER, AS AMENDED, AND IN COMPLIANCE WITH ANY
APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF
THE ISSUER HEREOF, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S.
SECURITIES LAWS.
61
WARRANT CERTIFICATE
ACETEX CORPORATION
(Incorporated under the laws of Alberta)
WARRANT CERTIFICATE 141,352 WARRANTS entitling the holder to acquire,
NO. 2 at a price of Cdn. $4.32 per Common Share, 141,352
Common Shares in the capital of Acetex Corporation
(subject to adjustment).
THIS IS TO CERTIFY THAT Connecticut General Life Insurance Company, x/x Xxxxxxx
& Xxxxxxxxxxx Xxxxxxxxxxx (X00X), XXXXX Investments, Inc., 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 XXX (hereinafter referred to as the "HOLDER" or
"WARRANTHOLDER") is the holder of the number of warrants ("WARRANTS") of Acetex
Corporation (the "CORPORATION") specified above, each Warrant entitling the
holder to acquire from the Corporation, at a price of $4.32 per common share, in
the manner and subject to the restrictions and adjustments set forth herein, at
any time from the date hereof, and from time to time thereafter, as to all or
any part of the Warrants represented hereby until 4:30 p.m. (Calgary time) (the
"TIME OF EXPIRY") on June 2, 2008 (the "EXPIRY DATE") one (1) common share
without nominal or par value of the Corporation, as such shares were constituted
on the date of this Warrant Certificate (the "COMMON SHARES").
MECHANICS OF EXERCISE
THE RIGHT TO ACQUIRE COMMON SHARES MAY ONLY BE EXERCISED BY THE HOLDER WITHIN
THE TIME SET FORTH ABOVE BY:
(i) duly completing and executing the Exercise Form forming
Schedule B to this Warrant Certificate;
(ii) surrendering this Warrant Certificate to the Corporation at the
executive office of the Corporation together with the duly
completed Exercise Form; and
(iii) remitting a certified cheque, bank draft or money order in
lawful money of Canada, payable to or to the order of the
Corporation at par where this Warrant Certificate is so
surrendered, for the aggregate purchase price of the Common
Shares so subscribed for.
62
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE WILL BE DEEMED TO BE
SURRENDERED ONLY UPON PERSONAL DELIVERY HEREOF OR, IF SENT BY MAIL OR OTHER
MEANS OF TRANSMISSION, UPON ACTUAL PERSONAL DELIVERY HEREOF.
HOLDER OF RECORD AND DELIVERY OF SHARE CERTIFICATES
UPON EXERCISE OF THE WARRANTS AND SURRENDER OF THIS WARRANT CERTIFICATE, AND
PAYMENT OF THE EXERCISE PRICE (AS DEFINED IN 0) TO THE CORPORATION, THE PERSON
OR PERSONS IN WHOSE NAME OR NAMES THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THE WARRANTS ARE TO BE ISSUED SHALL BE DEEMED FOR ALL PURPOSES (EXCEPT AS
PROVIDED IN THIS WARRANT CERTIFICATE) TO BE THE HOLDER OR HOLDERS OF RECORD OF
SUCH COMMON SHARES AND THE CORPORATION COVENANTS THAT IT WILL (SUBJECT TO THE
PROVISIONS OF THIS WARRANT CERTIFICATE) CAUSE A CERTIFICATE OR CERTIFICATES
REPRESENTING SUCH COMMON SHARES TO BE DELIVERED OR MAILED TO THE PERSON OR
PERSONS AT THE ADDRESS OR ADDRESSES SPECIFIED IN THE EXERCISE FORM.
CERTIFICATES FOR THE COMMON SHARES SUBSCRIBED FOR WILL BE MAILED TO THE
PERSONS SPECIFIED IN THE EXERCISE FORM AT THEIR RESPECTIVE ADDRESSES
SPECIFIED THEREIN, FIVE BUSINESS DAYS AFTER THE SURRENDER OF THIS WARRANT
CERTIFICATE AND PAYMENT OF THE EXERCISE PRICE. IN THE EVENT OF A PURCHASE OF
A NUMBER OF COMMON SHARES FEWER THAN THE NUMBER WHICH CAN BE PURCHASED UPON
EXERCISE OF THE WARRANTS REPRESENTED HEREBY, THE WARRANTHOLDER SHALL BE
ENTITLED TO RECEIVE, WITHOUT CHARGE, A NEW WARRANT CERTIFICATE IN RESPECT OF
THE BALANCE OF THE COMMON SHARES NOT THEN PURCHASED. UNDER NO CIRCUMSTANCES
WILL THE CORPORATION BE OBLIGED TO ISSUE FRACTIONAL COMMON SHARES.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Corporation represents and warrants to, and covenants and agrees with, the
Warrantholder as follows:
(iv) TO ISSUE WARRANTS AND RESERVE COMMON SHARES: That it is duly
authorized to create and issue the Warrants and that the
Warrants, when issued and signed, will be valid and enforceable
against the Corporation and that the Corporation will cause the
Common Shares acquired pursuant to the Warrants under this
Warrant Certificate and the certificates representing such Common
Shares to be duly issued and delivered. At all times prior to and
including the Time of Expiry, while any of the Warrants are
outstanding, the Corporation shall reserve and allot out of its
authorized capital a number of Common Shares as is sufficient to
enable the Corporation to meet its obligation to issue Common
Shares in respect of the exercise of all Warrants outstanding
hereunder from time to time. All Common Shares acquired pursuant
to the Warrants shall be fully paid and non-assessable.
(v) TO MAINTAIN STOCK EXCHANGE LISTING: That it will use its best
efforts to ensure that its Common Shares remain listed on the
facilities of The Toronto Stock Exchange Inc. (the "TSE") or
another recognized stock exchange in Canada until the first
anniversary of the Expiry Date, and the Corporation will make
application to the TSE to list such additional number of Common
Shares as may be issued as a result of the exercise of the
Warrants.
(vi) TO EXECUTE FURTHER ASSURANCES: That it will do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged
63
and delivered, all other acts, deeds and assurances in law as the
Warrantholder may reasonably require for effecting the provisions
of this Warrant Certificate.
(vii) TO CARRY ON BUSINESS: It will at all times do or cause to be
done all things necessary to preserve and keep in full force and
effect its corporate existence, carry on and conduct, and will
cause to be carried on and conducted, its business in the same
manner as heretofore carried on and conducted, provided, however,
that the Corporation may cease to operate or may dispose of any
business, premises, property or operation if in the opinion of
the directors or officers of the Corporation or any subsidiary of
the Corporation, as the case may be, it would be advisable and in
the best interests of the Corporation to do so.
(viii) REPORTING ISSUER AND RESTRICTIONS ON TRANSFER OF COMMON SHARES:
That the Corporation is presently a reporting issuer (or the
equivalent) in British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, Quebec, New Brunswick, Xxxxxx Xxxxxx Island, Nova Scotia
and Newfoundland (the "REPORTING JURISDICTIONS") and will use its
best efforts to ensure that it remains a reporting issuer (or the
equivalent) in good standing under the securities legislation of
the Reporting Jurisdictions until the first anniversary of the
Expiry Date.
(ix) PROVISION OF FINANCIAL INFORMATION: That if it ceases to be a
reporting issuer in at least one Reporting Jurisdiction, it will
provide to the Warrantholder such interim and annual financial
information as it would be required to file in the Reporting
Jurisdictions if it were a reporting issuer at the earliest times
that it would have been required to file such financial
information in the Reporting Jurisdictions.
64
SECURITIES LAW REQUIREMENTS
IF, IN THE OPINION OF COUNSEL TO THE CORPORATION, ANY INSTRUMENT IS REQUIRED TO
BE FILED WITH OR ANY PERMISSION, ORDER OR RULING IS REQUIRED TO BE OBTAINED FROM
ANY SECURITIES REGULATORY AUTHORITY OR ANY OTHER STEP IS REQUIRED UNDER ANY
FEDERAL, STATE OR PROVINCIAL LAW OF THE REPORTING JURISDICTIONS OR OF THE UNITED
STATES BEFORE ANY SECURITIES OR PROPERTY WHICH THE WARRANTHOLDER IS ENTITLED TO
RECEIVE PURSUANT TO THE EXERCISE OF THE WARRANTS MAY PROPERLY AND LEGALLY BE
DELIVERED UPON THE DUE EXERCISE OF THE WARRANTS AND SOLD WITHOUT RESTRICTION
(OTHER THAN STANDARD RESALE RESTRICTIONS APPLICABLE TO A PRIVATE PLACEMENT OF
SECURITIES), THE CORPORATION COVENANTS THAT IT WILL USE ITS BEST EFFORTS TO FILE
SUCH INSTRUMENT, OBTAIN SUCH PERMISSION, ORDER OR RULING OR TAKE ALL SUCH OTHER
ACTIONS, AT ITS EXPENSE, AS IS REQUIRED OR APPROPRIATE IN THE CIRCUMSTANCES;
PROVIDED, HOWEVER, THAT THE CORPORATION IS IN NO WAY OBLIGATED TO FILE ANY
PROSPECTUS OR REGISTRATION STATEMENT WITH ANY SECURITIES REGULATORY AUTHORITY OR
SIMILAR AUTHORITY IN CANADA OR THE UNITED STATES TO QUALIFY THE DISTRIBUTION OF
THE SECURITIES OR PROPERTY ISSUABLE ON THE EXERCISE OF THE WARRANTS.
THE CORPORATION WILL GIVE ALL NOTICES AND MAKE ALL FILINGS UNDER APPLICABLE
CANADIAN AND UNITED STATES SECURITIES LAWS AND APPLICABLE STOCK EXCHANGE
RULES, REGULATIONS AND POLICIES REQUIRED TO BE MADE BY THE CORPORATION IN
CONNECTION WITH THE EXERCISE OF THE WARRANTS AND THE ISSUANCE OF THE
UNDERLYING COMMON SHARES.
IF AT THE TIME OF EXERCISE OF THE WARRANTS THERE REMAIN TRADING RESTRICTIONS
ON THE COMMON SHARES ISSUABLE UPON SUCH EXERCISE PURSUANT TO APPLICABLE
SECURITIES LEGISLATION OF ANY OF THE PROVINCES OF CANADA, THE CORPORATION
MAY, UPON THE ADVICE OF ITS COUNSEL, ENDORSE ANY SUCH COMMON SHARE
CERTIFICATE ISSUED BY THE CORPORATION TO SUCH EFFECT BY PLACING THE FOLLOWING
LEGEND ON SUCH CERTIFICATE (OR SUCH OTHER OR ADDITIONAL LEGEND(S) AS MAY BE
REQUIRED BY APPLICABLE REGULATORY AUTHORITIES OR STOCK EXCHANGES), AS WELL AS
ALL CERTIFICATES ISSUED IN EXCHANGE THEREFOR OR IN SUBSTITUTION THEREFOR OR
UPON A TRANSFER THEREOF:
STATUTORY RESALE RESTRICTIONS UNDER APPLICABLE SECURITIES LEGISLATION
OF THE PROVINCES OF CANADA MAY APPLY ON THE RESALE OF THESE SECURITIES.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA OR THE UNITED
STATES. A NEW CERTIFICATE NOT BEARING THIS LEGEND MAY BE OBTAINED FROM
THE CORPORATION UPON DELIVERY OF THIS CERTIFICATE AND AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE TO THE
EFFECT THAT SUCH RESALE IS NOT SUBJECT TO ANY SUCH APPLICABLE STATUTORY
RESALE RESTRICTIONS.
CERTIFICATES REPRESENTING COMMON SHARES ISSUED PURSUANT TO THE EXERCISE OF THE
WARRANTS IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON OR A PERSON IN THE UNITED STATES (AS DEFINED IN THE U.S. SECURITIES ACT),
AS WELL AS ALL CERTIFICATES ISSUED IN EXCHANGE THEREFOR OR IN SUBSTITUTION
THEREFOR OR UPON A TRANSFER THEREOF, WILL BEAR A LEGEND TO THE FOLLOWING EFFECT:
THE COMMON SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES
ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
SUCH COMMON SHARES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH
COMMON SHARES MAY BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES
IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE U.S. SECURITIES ACT, OR (D)
65
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE U.S. SECURITIES ACT, SUBJECT TO THE CORPORATION'S
AND ANY TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO THIS CLAUSE (D) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION CONFIRMING
THE AVAILABILITY OF SUCH EXEMPTION SATISFACTORY TO EACH OF THEM.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE, BEARING NO LEGEND, MAY BE OBTAINED FROM THE TRANSFER
AGENT UPON DELIVERY OF THIS CERTIFICATE AND A WRITTEN DECLARATION TO
THE TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT THE SALE OF
THE COMMON SHARES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH
RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.
ADJUSTMENTS
FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS HAVE THE MEANINGS AS SET OUT
BELOW:
"CURRENT MARKET PRICE" means at any date the weighted average price at
which the Common Shares have been traded on the Corporation's Principal
Stock Exchange during the 30 consecutive Trading Days ending one
Trading Day before such date; and in the event the Common Shares are
not so traded on any stock exchange in Canada, the "CURRENT MARKET
PRICE" thereof shall be determined by the board of directors of the
Corporation who shall rely upon the advice of independent financial
agents with respect thereto.
"EXERCISE PRICE" with respect to the exercise of the Warrants means
Cdn. $4.32 per Common Share, unless such price has been adjusted in
accordance with the provisions hereunder, in which case it shall mean
the adjusted price in effect at such time.
"PRINCIPAL STOCK EXCHANGE" means the TSE; and in the event the Common
Shares are not listed on the TSE, but are listed on another stock
exchange or stock exchanges in Canada, the foregoing references to the
TSE shall be deemed to be references to such other stock exchange or,
if more than one, to such one as shall be designated by the board of
directors of the Corporation.
"TRADING DAY" means, with respect to a stock exchange, a day on which
such exchange is open for the transaction of business and with respect
to the over-the-counter market means a day on which the Corporation's
Principal Stock Exchange is open for the transaction of business.
66
THE ACQUISITION RIGHTS AS THEY RELATE TO COMMON SHARES, IN EFFECT AT ANY DATE,
ATTACHING TO THE WARRANTS, AND THE EXERCISE PRICE IN RESPECT THEREOF, SHALL BE
SUBJECT TO ADJUSTMENT FROM TIME TO TIME AS FOLLOWS:
(x) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall:
(1) subdivide or redivide the outstanding Common Shares into a
greater number of shares;
(2) reduce, combine or consolidate the outstanding Common Shares
into a smaller number of shares; or
(3) issue Common Shares (or securities convertible into Common
Shares) to the holders of all or substantially all of the
outstanding Common Shares by way of a stock dividend or other
distribution of Common Shares or securities convertible into
Common Shares;
the Exercise Price in effect on the effective date of such
subdivision, redivision, reduction, combination or consolidation or on
the record date for such issue of Common Shares by way of a stock
dividend, as the case may be, shall be adjusted to equal the price
determined by multiplying the Exercise Price in effect immediately
prior to such effective date or record date by a fraction of which the
numerator shall be the total number of Common Shares outstanding
immediately prior to such date and the denominator shall be the total
number of Common Shares immediately after such date. Such adjustment
shall be made successively whenever any event referred to in this
1(a)(x) shall occur; any such issue of Common Shares by way of a stock
dividend shall be deemed to have been made on the record date for the
stock dividend for the purpose of calculating the number of
outstanding Common Shares under 1(a)(x) and 1(a)(xii). Upon any
adjustment of the Exercise Price pursuant to 1(a)(x), the number of
Common Shares obtainable under each Warrant shall be adjusted
immediately after the effective date of such subdivision, redivision,
change, reduction, combination or consolidation, by multiplying the
number of Common Shares which were theretofore obtainable on the
exercise thereof by a fraction of which the numerator shall be the
total number of Common Shares outstanding immediately after such date
and the denominator shall be the total number of Common Shares
outstanding immediately prior to such date. Such adjustment shall be
made successively whenever any event referred to in this 1(a)(x) shall
occur;
(xi) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall fix a record date for
the distribution to all or substantially all of the holders of
Common Shares of rights, options or warrants (other than
Warrants) entitling them, for a period expiring not more than 45
days after such record date, to subscribe for or purchase Common
Shares (or securities convertible or exchangeable into Common
Shares) at a price per share (or having a conversion or exchange
price per share) less than 95% of the Current Market Price on
such record date, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the
price determined by multiplying the Exercise Price in effect on
such record
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date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date plus a
number of Common Shares equal to the number arrived at by
dividing the aggregate price of the total number of additional
Common Shares offered for subscription or purchase (or the
aggregate conversion or exchange price of the convertible or
exchangeable securities so offered) by such Current Market Price,
and of which the denominator shall be the total number of Common
Shares outstanding on such record date plus the total number of
additional Common Shares offered for subscription or purchase (or
into which the convertible or exchangeable securities so offered
are convertible or exchangeable); any Common Shares owned by or
held for the account of the Corporation or any subsidiary shall
be deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent that any such rights,
options or warrants are not issued or any such rights, options or
warrants are not exercised prior to the expiration thereof, the
Exercise Price shall be readjusted to the Exercise Price which
would then be in effect if such record date had not been fixed or
to the Exercise Price which would then be in effect based upon
the number of Common Shares (or securities convertible or
exchangeable into Common Shares) actually issued upon the
exercise of such rights, options or warrants, as the case may be;
(xii) if and whenever at any time after the date hereof and prior to
the Time of Expiry, the Corporation shall fix a record date for
the making of a distribution to all or substantially all the
holders of its outstanding Common Shares of:
(1) shares of any class other than Common Shares, whether of the
Corporation or any other corporation;
(2) rights, options or warrants to subscribe for or purchase
Common Shares (excluding those referred to in 00(xi);
(3) evidences of its indebtedness;
(4) assets; or
(5) cash dividends paid;
then, in each such case, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the price
determined by multiplying the Exercise Price in effect on such record
date by a fraction, of which the numerator shall be the total number
of Common Shares outstanding on such record date multiplied by the
Current Market Price on such record date, less the aggregate fair
market value (as determined by the directors, which determination
shall be conclusive) of such shares, rights, options, warrants,
evidences of indebtedness, assets or dividends so distributed, and of
which the denominator shall be the total number of Common
68
Shares outstanding on such record date multiplied by such Current
Market Price; any Common Shares owned by or held for the account of
the Corporation or Subsidiary shall be deemed not to be outstanding
for the purpose of any such computation; such adjustment shall be made
successively whenever such a record date is fixed; to the extent that
such distribution is not so made, the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect if such
record date had not been fixed or to the Exercise Price which would
then be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or assets actually distributed,
as the case may be;
(xiii) notwithstanding any provision of this Warrant Certificate, if
and whenever at any time from the date hereof and prior to the
Time of Expiry, in the event of the occurrence of any change,
either (a) through the issue, transfer, acquisition, conversion,
exchange of securities or otherwise, or (b) through amalgamation,
arrangement, merger or otherwise as a result of which a person or
company or group of persons or companies acting jointly or in
concert, who, acting at arm's length to the Corporation, either
alone or together with its or their associates and affiliates,
beneficially own greater than fifty percent (50%) of the
outstanding Common Shares (a "CHANGE OF CONTROL"), all Warrants
that have not been exercised prior to the record date or
effective date of such Change in Control transaction, shall
thereafter be exercisable for and the holder shall be entitled to
receive and shall accept in lieu of the number of Common Shares
then subscribed for but for the same aggregate consideration
payable therefore, the number of other securities or property
(including cash) of the entity resulting from such
reorganization, consolidation, amalgamation, merger or sale, as
the case may be, that the holder would have been entitled to
receive on such Change in Control if, on the record date or the
effective date thereof, the holder had been the registered holder
of the number of Common Shares so subscribed for;
(xiv) if and whenever at any time from the date hereof and prior to
the Time of Expiry, there is a reclassification of the Common
Shares or a capital reorganization of the Corporation or a
consolidation, amalgamation, arrangement or merger of the
Corporation with or into any other body corporate, trust,
partnership or other entity, or a sale or conveyance of the
property and assets of the Corporation as an entirety or
substantially as an entirety to any other body corporate, trust,
partnership or other entity, any Warrantholder who has not
exercised its right of acquisition under the Warrants prior to
the effective date of such reclassification, reorganization,
consolidation, amalgamation, arrangement, merger, sale or
conveyance, upon the exercise of such right thereafter, shall be
entitled to receive and shall accept, in lieu of the number of
Common Shares then sought to be acquired by it, the number of
shares or other securities or property of the Corporation or of
the body corporate, trust, partnership or other entity resulting
from
69
such merger, amalgamation, arrangement or consolidation, or to
which such sale or conveyance may be made, as the case may be,
that such Warrantholder would have been entitled to receive on
such reclassification, reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance, if, on the
record date or the effective date thereof, as the case may be,
the Warrantholder had been the registered holder of the number of
Common Shares sought to be acquired by it. If determined
appropriate by the Warrantholder to give effect to or to evidence
the provisions of this 1(a)(xiv), the Corporation, its successor,
or such purchasing body corporate, partnership, trust or other
entity, as the case may be, shall, prior to or contemporaneously
with any such reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, sale or
conveyance, issue to the Warrantholder a warrant certificate
which shall provide, to the extent possible, for the application
of the provisions set forth in this Warrant Certificate with
respect to the rights and interests thereafter of the
Warrantholder to the end that the provisions set forth in this
Warrant Certificate shall thereafter correspondingly be made
applicable, as nearly as may reasonably be possible, to any
shares, other securities or property to which a Warrantholder is
entitled on the exercise of its acquisition rights thereafter.
Any warrant certificate issued by the Corporation, any successor
to the Corporation or such purchasing body corporate,
partnership, trust or other entity shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided in this 0 and which shall apply to
successive reclassification, capital reorganizations,
amalgamations, arrangements, consolidations, mergers, sales or
conveyances;
(xv) all adjustments to the Exercise Price provided for in this 0
shall be made subject to the rules and regulations of the
Principal Stock Exchange (if any), and in particular, the maximum
discount to market price allowable in connection with private
placements of securities;
(xvi) in any case in which this 0 shall require that an adjustment
shall become effective immediately after a record date for an
event referred to herein, the Corporation may defer, until the
occurrence of such event, issuing to the holder of any Warrant
exercised after such record date and before the occurrence of
such event the additional Common Shares issuable upon such
exercise by reason of the adjustment required by such event;
provided, however, that the Corporation shall deliver to such
holder an appropriate instrument evidencing such holder's right
to receive such additional Common Shares upon the occurrence of
the event requiring such adjustment and the right to receive any
distributions made on such additional Common Shares declared in
favour of holders of record of Common Shares on and after the
relevant date of exercise or such later date as such holder
would,
70
but for the provisions of this 1(a)(xvi), have become the holder
of record of such additional Common Shares pursuant to 00(xiii)
or 1(a)(xiv);
(xvii) the adjustments provided for in this 0 are cumulative, and
shall, in the case of adjustments to the Exercise Price be
computed to the nearest whole cent and shall apply to successive
subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting
in any adjustment under the provisions of this 0, provided that,
notwithstanding any other provision of this 0, no adjustment of
the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise
Price then in effect; provided, however, that any adjustments
which by reason of this 1(a)(xvii) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment;
(xviii) after any adjustment pursuant to this 0, the term "COMMON
SHARES" where used in this Warrant Certificate shall be
interpreted to mean securities of any class or classes which, as
a result of such adjustment and all prior adjustments pursuant to
this 0, the Warrantholder is entitled to receive upon the
exercise of his Warrant, and the number of Common Shares
indicated by any exercise made pursuant to a Warrant shall be
interpreted to mean the number of Common Shares or other property
or securities a Warrantholder is entitled to receive, as a result
of such adjustment and all prior adjustments pursuant to this 0,
upon the full exercise of a Warrant;
(xix) in determining at any time and from time to time the number of
Common Shares outstanding at that time for purposes of this 0,
there shall be included that number of Common Shares which would
be outstanding upon conversion of all convertible securities then
outstanding and upon exercise of all rights, options or warrants
then outstanding to purchase Common Shares, and there shall be
excluded any Common Shares (and Common Shares which would be
outstanding upon conversion of convertible securities) held by or
for the account of the Corporation;
(xx) upon the expiry of the period for conversion of convertible
securities and the exercise period for rights, options, warrants
to purchase Common Shares or convertible securities, the Exercise
Price shall be adjusted to what it would have been if such
unconverted securities and unexercised rights, options or
warrants had not been issued; and
(xxi) whenever Common Shares shall have been issued for non-cash
consideration in whole or in part, the issue price for such
Common Shares shall be determined by the directors.
71
ENTITLEMENT TO SHARES ON EXERCISE OF WARRANT
All shares of any class or other securities which a Warrantholder is at the time
in question entitled to receive on the exercise of its Warrants, whether or not
as a result of adjustments made pursuant hereto, shall, for the purposes of the
interpretation of this Warrant Certificate, be deemed to be shares which such
Warrantholder is entitled to acquire pursuant to such Warrant.
DETERMINATION BY CORPORATION'S AUDITORS
In the event of any dispute arising with respect to the adjustments provided for
hereunder such question shall be conclusively determined by the Corporation's
auditors who shall have access to all necessary records of the Corporation, and
such determination shall be binding upon the Corporation, the Warrantholder and
all other persons interested therein. The party that does not receive the
favourable determination of the dispute shall be solely responsible to pay all
fees and expenses of the Corporation's auditors arising in connection with the
dispute.
PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT
As a condition precedent to the taking of any action which would require an
adjustment in any of the acquisition rights pursuant to any of the Warrants,
including the number of Common Shares which are to be received upon the exercise
thereof, the Corporation shall take any corporate action which may, in the
opinion of counsel to the Corporation, be necessary in order that the
Corporation has unissued and reserved in its authorized capital and may validly
and legally issue as fully paid and non-assessable all the shares which the
holder is entitled to receive on the full exercise thereof in accordance with
the provisions of this Warrant Certificate.
CERTIFICATE OF ADJUSTMENT
The Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in hereunder,
deliver a certificate of the Corporation to the Warrantholder specifying the
nature of the event requiring the same and the amount of the adjustment
necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate and the calculation of the adjustment shall be supported by a
certificate of the Corporation's auditors verifying such calculation. When so
verified, the Corporation shall forthwith give notice to the Warrantholder
specifying the event requiring such adjustment or readjustment and the results
thereof including the resulting Exercise Price; provided that, if the
Corporation has given notice under 0 covering all the relevant facts in respect
of such event, no such notice need be given under this 0.
NOTICE OF SPECIAL MATTERS
The Corporation covenants that, so long as any Warrant remains outstanding, it
will give notice to the Warrantholder of its intention to fix the record date
for any event referred to in 1(a)(x), 1(a)(xii), (xiii) or 1(a)(xiv) (other than
the subdivision, redivision, reduction, combination or consolidation of its
Common Shares) which may give rise to an adjustment of the Exercise Price. Such
notice shall specify the particulars of such event and the record date for such
event, provided that the Corporation shall only be required to specify in the
notice such particulars of the event as shall have been fixed and determined on
the date on which the notice is given. The notice shall be given in each case
not less than twenty-one calendar days prior to such applicable record date.
NO ACTION AFTER NOTICE
The Corporation covenants that it will not close its transfer books or take any
other corporate action which might deprive the holder of the opportunity to
exercise its right of acquisition pursuant thereto during the period of
twenty-one calendar days after the giving of the certificate or notices set
forth in 0 and 0.
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OTHER ADJUSTMENTS
In case the Corporation after the date hereof shall take any action affecting
the Common Shares, other than an action described in 0, which in the opinion of
the directors would have a material adverse effect on the rights of the
Warrantholder, the Exercise Price and/or the number and/or kind of Common Shares
purchasable upon exercise, there shall be an adjustment in such manner, if any,
and at such time, as the directors in their discretion may reasonably determine
to be equitable to the Warrantholder in such circumstances. Failure by the
directors to take any such action so as to provide for an adjustment prior to
the effective date of any action by the Corporation affecting the Common Shares
shall be conclusive evidence that the directors have determined that it is
equitable to make no adjustment in the circumstances.
PARTICIPATION BY WARRANTHOLDER
No adjustments shall be made pursuant to 0 if the Warrantholder is entitled to
participate in the event described in 0 for which an adjustment would be made on
the same terms, MUTATIS MUTANDIS, as if the Warrantholder had exercised its
Warrants prior to, or on the effective date or record date of, such event.
EXCHANGE OF WARRANT CERTIFICATE
The Warrantholder may, at any time prior to the Expiry Date, upon surrender of
this Warrant Certificate to the Corporation at the office referred to above,
exchange this Warrant Certificate for other Warrant Certificates entitling the
holder to acquire, in the aggregate, the same number of Common Shares as may be
acquired under this Warrant Certificate.
SHAREHOLDER STATUS
The holding of the Warrants evidenced by this Warrant Certificate shall not
constitute the holder hereof a shareholder of the Corporation or entitle the
holder to any right or interest in respect thereof except as expressly provided
in this Warrant Certificate.
TRANSFER OF WARRANTS
THE WARRANTS EVIDENCED BY THIS WARRANT CERTIFICATE MAY BE TRANSFERRED ON THE
REGISTER KEPT AT THE OFFICE OF THE CORPORATION BY THE REGISTERED HOLDER HEREOF
OR ITS LEGAL REPRESENTATIVES OR ITS ATTORNEY DULY APPOINTED BY COMPLETION OF THE
TRANSFER FORM ATTACHED AS SCHEDULE "A" HERETO OR SUCH OTHER INSTRUMENT IN
WRITING IN FORM AND EXECUTION SATISFACTORY TO THE CORPORATION. IF THE WARRANTS
ARE BEING SOLD OR TRANSFERRED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH ANY
APPLICABLE U.S. STATE SECURITIES LAWS, THE LEGEND ON THIS WARRANT CERTIFICATE
SHALL BE REMOVED BY PROVIDING A DECLARATION TO THE CORPORATION TO THE FOLLOWING
EFFECT (OR AS THE CORPORATION MAY PRESCRIBE FROM TIME TO TIME):
The undersigned (a) acknowledges that the sale of the Warrants to which
this declaration relates is being made in reliance on Rule 904 of
Regulation S under the United States Securities Act of 1933, as amended
(the "U.S. Securities Act"), and (b) certifies that (1) it is not an
affiliate (as that term is defined in the U.S. Securities Act) of the
issuer of the securities, (2) the offer of such securities was not made
to a Person in the United States and, at the time the buy order was
originated, the buyer was outside the United States, or the seller and
any Person acting on its behalf reasonably believe that the buyer was
outside the United States, and (3) neither the seller, nor any
affiliate of the seller, nor any Person acting on their behalf, has
engaged or will engage in any directed selling efforts in the United
States in connection with the offer and sale of such securities. Terms
herein have the meanings given to them by Regulation S under the U.S.
Securities Act.
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If any such Warrants are being transferred other than in accordance
with Rule 904 of Regulation S under the U.S. Securities Act, and other
than to the Corporation, the legend shall be removed by delivery to the
Corporation of an opinion of counsel, of recognized standing reasonably
satisfactory to the Corporation, that such legend is no longer required
under applicable requirements of the U.S. Securities Act or U.S. state
securities laws.
THE WARRANTHOLDER MAY NOT TRANSFER THE WARRANTS REPRESENTED BY THIS WARRANT
CERTIFICATE TO MORE THAN FOUR PERSONS OR COMPANIES WITHOUT THE PRIOR CONSENT OF
THE CORPORATION.
INDEMNIFICATION
In addition to any other rights or remedies to which the Warrantholder may be
entitled, the Corporation agrees to and will indemnify and hold harmless the
Warrantholder and its affiliates and their respective successors, assigns,
officers, directors, employees, attorneys, and agents (individually and
collectively, an "INDEMNIFIED PARTY") from and against any and all losses,
claims, obligations, liabilities, deficiencies, diminutions in value, penalties,
causes of action, damages, costs, and expenses (including, without limitation,
costs of investigation and defense, reasonable attorneys' fees and expenses) and
that the Indemnified Party may suffer, incur, or be responsible for, arising or
resulting from any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or agreement on the part of the Corporation under this Warrant
Certificate or from any misrepresentation in or omission from any certificate or
other instrument furnished or to be furnished to the Warrantholder under this
Warrant Certificate. The foregoing indemnification includes any such claims,
actions, damages, costs and expenses incurred by reason of the sole, comparative
or contributory negligence of the person indemnified, but excludes any of the
same incurred by reason of such person's gross negligence or wilful misconduct
as determined by a final and non-appealable judgment of a court of competent
jurisdiction.
GOVERNING LAW
This Warrant Certificate and the Warrants represented hereunder will be governed
by the laws of the province of Alberta and the federal laws of Canada applicable
therein.
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TIME OF THE ESSENCE
Time shall be of the essence hereof.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be
signed by its duly authorized officer on , 2003.
ACETEX CORPORATION
By: _____________________________________
Name:
Title:
75
SCHEDULE "A"
TRANSFER FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
__________ , Warrants of Acetex Corporation registered in the name of the
undersigned on the records of Acetex Corporation represented by the attached
Warrant Certificate and irrevocably appoints __________ , the attorney of the
undersigned to transfer the said securities on the books of AT Plastics Inc. or
on the register of Warrant transfers, with full power of substitution.
DATED the __________ day of __________ 200 _____ .
______________________________ ______________________________
Signature Guaranteed (Signature of Warrantholder)
9. Signature of the Warrantholder must be signature of the person
appearing on the face of this Warrant Certificate.
10. If this Transfer Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting in a fiduciary or representative capacity, the Warrant
Certificate must be accompanied by evidence of authority to sign
satisfactory to the Corporation.
11. The signature on this Transfer Form must be guaranteed by an authorized
officer of a chartered bank, trust company or an investment dealer who
is a member of a recognized stock exchange.
12. The Warrants shall only be transferable in accordance with applicable
laws.
13. THE TRANSFER OF WARRANTS MAY RESULT IN THE COMMON SHARES OBTAINED UPON
THE EXERCISE OF THE WARRANTS NOT BEING FREELY TRADEABLE IN THE
JURISDICTION OF THE PURCHASER'S RESIDENCE. IN SUCH A CASE, THE
CORPORATION MAY AFFIX SUCH LEGENDS AS IT MAY, UPON ADVICE OF COUNSEL,
DETERMINE APPROPRIATE.
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SCHEDULE "B"
EXERCISE FORM
TO: AT PLASTICS INC.
The undersigned hereby irrevocably exercises the right to acquire, on the basis
of one Common Share for one Warrant represented by this Warrant Certificate
____________________ , Common Shares of Acetex Corporation as constituted on
__________ , 2003 (or such number of Common Shares or other securities or
property to which such Warrants entitle the undersigned pursuant to the
provisions of the accompanying Warrant Certificate) in accordance with and
subject to the provision of this Warrant Certificate and encloses herewith a
certified cheque, bank draft or money order, in lawful money of Canada payable
to the order of AT Plastics Inc. in the amount of $________ representing the
aggregate exercise price.
The Common Shares (or other securities or property) are to be issued as
follows:
Name: _________________________________________________________________
Address in full: ______________________________________________________
_______________________________________________________________________
Number of Common Shares: ______________________________________________
Note: If further nominees intended, please attach (and initial)
schedule giving these particulars.
DATED the __________ day of __________ , 200__.
___________________________________ ___________________________________
Signature Guaranteed (Signature of Warrantholder)
___________________________________ ___________________________________
Print full name
___________________________________
Print full address
___________________________________
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INSTRUCTIONS:
14. The holder may exercise its right to receive Common Shares by
completing this Exercise Form and surrendering the Warrant Certificate
representing the Warrants being exercised, together with the aggregate
exercise price, to AT Plastics Inc. at its principal office x/x Xxxxxx,
Xxxxxxxxx & Xxxxxx XXX, 0000, 000 0xx Xxxxxx XX, Xxxxxxx, Xxxxxxx.
Certificates for Common Shares will be delivered or mailed within five
Business Days after exercise of the Warrants. THE RIGHTS OF THE
REGISTERED HOLDER HEREOF CEASE IF THE WARRANTS ARE NOT EXERCISED PRIOR
TO 4:30 P.M. (CALGARY TIME) ON OR BEFORE JUNE 2, 2008.
15. If the Exercise Form indicates that Common Shares are to be issued to a
person or persons other than the Warrantholder, the signature of the
Warrantholder on the Exercise Form MUST be guaranteed by an authorized
officer of a chartered bank, trust company or an investment dealer who
is a member of a recognized stock exchange.
16. If the Exercise Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person
acting in a fiduciary or representative capacity, the Warrant
Certificate must be accompanied by evidence of authority to sign
satisfactory to the Corporation.
SCHEDULE F
AT PLASTICS SUPPORT OBLIGATIONS
AT Plastics shall on or before July 10, 2003 prepare and deliver financial
statements in U.S. dollars (prepared as a translation of convenience):
(b) Audited consolidated balance sheets at December 31, 2001 and
December 31, 2002
(c) Audited consolidated statements of income, retained earnings and cash
flows for the twelve month periods ending December 31, 2000, December
31, 2001 and December 31, 2002,
(d) Unaudited consolidated balance sheets at June 30, 2003 subject to
auditors review sufficient for a comfort letter;
(e) Unaudited consolidated statements of income, retained earnings and cash
flows for the six month periods ending June 30, 2002 and June 30, 2003
subject to auditor's review sufficient for a comfort letter;
(f) All the above statements reconciled to U.S. generally accepted
accounting principles as required for Form 20F, item 17 status.
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(g) Actuarial reports with respect to AT Plastics pension plans for
funding purposes as at June 30, 2003.
AT Plastics shall provide access to its facilities, employees, executives and
consultants as may be reasonably requested by Acetex to allow Acetex to complete
its financing arrangements as contemplated by section 6.3(d).
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