EXHIBIT 2.2
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE ONTARIO BUSINESS CORPORATIONS ACT
OF
SONIC ENVIRONMENTAL SYSTEMS, INC.,
SONIC CANADA, INC.
AND
TURBOTAK TECHNOLOGIES, INC.
CONTENTS
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ARTICLE I - INTERPRETATION............................................ 1
1.1 Definitions............................................ 1
1.2 Sections and Headings.................................. 7
1.3 Number, Gender and Persons............................. 8
1.4 Withholding Tax........................................ 8
ARTICLE II - ARRANGEMENT................................................ 8
2.1 Arrangement............................................ 8
ARTICLE III - RIGHTS OF DISSENT......................................... 10
3.1 Rights of Dissent...................................... 10
ARTICLE IV - CERTIFICATES AND FRACTIONAL SHARES......................... 10
4.1 Issuance of Certificates Representing
Exchangeable Shares.................................... 10
4.2 Distributions with Respect to Unsurrendered
Certificates........................................... 11
4.3 No Fractional Shares................................... 11
4.4 Lost Certificates...................................... 12
4.5 Extinguishment of Rights............................... 12
ARTICLE V - CERTAIN RIGHTS OF SONIC TO ACQUIRE
EXCHANGEABLE SHARES................................. 13
5.1 Sonic Retraction Call Right............................ 13
5.2 Sonic Liquidation Call Right........................... 14
5.3 Sonic Redemption Call Right............................ 16
5.4 Consideration for Call Rights of Sonic................. 17
5.5 Fractional Sonic Common Shares......................... 18
5.6 Economic Equivalence................................... 18
5.7 Capital Reorganization of Sonic........................ 18
5.8 Other Change in Sonic Common Shares.................... 19
ARTICLE VI - AMENDMENT 19
6.1 Plan of Arrangement Amendment.......................... 19
APPENDIX A TO PLAN OF ARRANGEMENT
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES......................... 1
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE ONTARIO BUSINESS CORPORATIONS ACT
ARTICLE I
INTERPRETATION
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1.1 DEFINITIONS
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In this Plan of Arrangement unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have the corresponding meanings.
"AFFILIATE" of any person means any other person directly or indirectly
controlling, controlled by, or under common control with, that person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any person, means the possession by another person, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that first mentioned person whether through the ownership of voting
securities, by contract or otherwise;
"ARRANGEMENT" means the arrangement under Section 182 of the OBCA on the
terms and subject to the conditions set out in this Plan of Arrangement, subject
to any amendments thereto made in accordance with section 6.1 or made at the
direction of the Court in the Final Order;
"AUTOMATIC REDEMPTION DATE" means the date for the automatic redemption by
the Corporation of Exchangeable Shares pursuant to Article 6 of the Exchangeable
Share Provisions, which date shall be June 30, 2002.
"BOARD OF DIRECTORS" means the board of directors of the Corporation;
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of the State of New Jersey and
Waterloo, Ontario;
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot
exchange rate on such date for such foreign currency expressed in Canadian
dollars as reported by the Bank of Canada or, in the event such spot exchange
rate is not available, such exchange rate on such date for such foreign currency
expressed in Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose;
"CAPITAL REORGANIZATION" has the meaning ascribed thereto in section 5.7;
"COMBINATION AGREEMENT" means the agreement by and among Sonic, the
Corporation and Turbotak, dated as of July 1, 1997, as the same may be amended
and restated, providing for, among other things, the Arrangement;
"CORPORATION" means Sonic Canada Inc., a corporation existing under the
OBCA;
"COURT" means the Ontario Court General Division;
"CURRENT MARKET PRICE" means, in respect of a Sonic Common Share on any
date, the Canadian Dollar Equivalent of the closing sales price of Sonic Common
Shares on each day (or, if no trades of Sonic Common Shares occurred on such
day, on the last trading day prior thereto on which such trades occurred)
reported on NASDAQ, or, if the Sonic Common Shares are not then quoted on
NASDAQ, on such other stock exchange or automated quotation system on which the
Sonic Common Shares are listed or quoted, as the case may be, as may be selected
by the Board of Directors for such purpose; provided, however, that if in the
opinion of the Board of Directors the public distribution or trading activity of
Sonic Common Shares during such time period does not create a market that
reflects the fair market value of a Sonic Common Share, then the Current Market
Price of a Sonic Common Share shall be determined by the Board of Directors
based upon the advice of such qualified independent financial advisors as the
Board of Directors may deem to be appro priate, and provided further that any
such selection, opinion or determination by the Board of directors shall be
conclusive and binding;
"CURRENT SONIC COMMON SHARE EQUIVALENT" means, on any date, the equivalent
as at such date of one Sonic Common Share as at the Effective Date, expressed to
four decimal places, determined by applying on a cumulative basis the following
adjustments, to the extent applicable by reason of any transactions occurring in
respect of Sonic Common Shares between the Effective Date and such date, the
Current Sonic Common Share Equivalent as at the Effective Date being 1.0000;
(i) if Sonic shall (A) subdivide, redivide or change its then
outstanding Sonic Common Shares into a greater number of Sonic
Common Shares, unless the Corporation is permitted under applicable
law without a vote of its shareholders to make, and shall
simultaneously make, the same or an economically equivalent change
to the rights of the holders of Exchangeable Shares, (B) reduce,
combine, consolidate or change its then outstanding Sonic Common
Shares into a lesser number of Sonic Common Shares, unless the
Corporation is permitted under applicable law without a vote of its
shareholders to make, and shall simultane ously make, the same or
an economically equivalent change to the rights of the holders of
Exchangeable Shares, or (C) issue Sonic Common Shares (or
securities exchangeable or convertible into Sonic Common Shares) to
the holders of all or substantially all of its then outstanding
Sonic
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Common Shares by way of stock dividend or other distribu tion
(other than to holders of Sonic Common Shares who exercise an
option to receive stock dividends in lieu of receiving cash
dividends), unless the Corporation is permitted under applicable
law without a vote of its shareholders to issue or distribute, and
shall simultane ously issue and distribute, equivalent numbers of
Sonic Common Shares or other securities (adjusted if necessary in
accordance with the Current Sonic Common Share Equivalent), or the
common equivalent on a per share basis, to the holders of the
Exchangeable Shares (any of such events being herein called a
"Sonic Common Share Reorganization"), the Current Sonic Common
Share Equivalent shall be adjusted effective immediately after the
record date at which the holders of Sonic Common Shares are
determined for the purpose of the Sonic Common Share Reorganization
by multiplying the Current Sonic Common Share Equivalent in effect
at such record date by the quotient obtained when:
(A) the number of Sonic Common Shares outstanding after the
completion of such Sonic Common Share Reorganization (but
before giving effect to the issue of any Sonic Common Shares
issued after such record date otherwise than as part of such
Sonic Common Share Reorganization) including, in the case
where securities exchangeable or convertible into Sonic Common
Shares are distributed, the number of Sonic Common Shares that
would have been outstanding had such securities been exchanged
for or converted into Sonic Common Shares on such record date,
(B) the number of Sonic Common Shares outstanding on such record
date before giving effect to the Sonic Common Share
Reorganization.
(ii) if at any time Sonic shall fix a record date for the issuance of
rights, options or warrants to the holders of all or substantially
all of the Sonic Common Shares entitling them to subscribe for or
to purchase Sonic Common Shares (or securities of Sonic convertible
into Sonic Common Shares) at a price per Sonic Common Share (or
having a conversion price per Sonic Common Share) of less than the
Current Market Price on such record date, unless the Corporation is
permitted under applicable law without a vote of its shareholders
to issue, and shall simultane ously issue, equivalent numbers of
such rights, options or warrants, adjusted if necessary in
accordance with the Current Sonic Common Share Equivalent at such
record date, or the economic equivalent thereof on a per share
basis, to the holders of Exchangeable Shares (any such event being
herein referred to as a "Rights Offering"), then the Current Sonic
Common Share Equivalent then in effect
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shall be adjusted immediately after such record date by multiplying
the Current Sonic Common Share Equivalent then in effect on such
record date by the quotient obtained when:
(A) the sum of the number of Sonic Common Shares outstanding on
such date and the number of additional Sonic Common Shares
offered for subscription or purchase under the Rights Offering
(or the number of Sonic Common Shares into which the
securities so offered are convertible)
is divided by
(B) the sum of the number of Sonic Common Shares outstanding on
such record date and the number determined by dividing the
aggregate price of the total number of additional Sonic Common
Shares offered for subscription or purchase under the Rights
Offering (or the aggregate conversion price of the convertible
securities so offered) by the Current Market Price on such
record date.
Any Sonic Common Share owned by or held for the account of Sonic
shall be deemed not to be outstanding for the purpose of any such
computation. If such rights, options or warrants are not so issued
or if, at the date of expiry of the rights, options or warrants
have been exercised, then the Current Sonic Common Share Equivalent
shall be readjusted effective immediately after the date of expiry
to the Current Sonic Common Share Equivalent which would have been
in effect of such record date had not been fixed or to the current
Sonic Common Share Equivalent which would then be in effect on the
date of expiry of the only rights, options or warrants issued had
been those that were exercised, as the case may be;
(iii) If Sonic shall fix a record date for the making of a distribution
(including a distribution by way of stock dividend) to the holders
of all or substantially all its outstanding Sonic Common Shares of
(A) shares of Sonic of any class other than Sonic Common Shares
(or shares convertible into Sonic Common Shares referred to in
(i)(C) above),
(B) rights, options or warrants (excluding a Rights Offering),
(C) evidences of its indebtedness (excluding indeb tedness
convertible into Sonic Common Shares referred to in (i)(C)
above), or
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(D) any other assets (other than any of the distri butions
referred to in (A), (B) or (C), dividends paid in the ordinary
course or a Sonic Common Share Reorganization)
unless the Corporation is permitted under applicable law without a
vote of its shareholders to distribute, and shall simultaneously
distribute, the same number of shares, rights, options or warrants,
evidences of indeb tedness or other assets, as the case may be,
adjusted if necessary in accordance with the Current Sonic Common
Share Equivalent as at such record date, or the economic equivalent
thereof on a per share basis, to the holders of Exchangeable Shares
(any such event being herein referred to as a "Special
Distribution") then, in each such case, the Current Sonic Common
Share Equivalent shall be adjusted effective immediately after the
record date at which the holders of Sonic Common Shares are
determined for the purposes of the Special Distribution by multiply
ing the Current Sonic Common Share Equivalent in effect on such
record date by the quotient obtained when:
(I) the product obtained when the number of Sonic Common
Shares outstanding on the record date is multiplied by
the Current Market Price on such date,
(II) the difference obtained when the amount by which the
aggregate fair market value (as determined by the Board
of Directors, which determination shall be conclusive) of
the shares, rights, options, warrants, evidences of
indebtedness or assets, as the case may be, distributed
in the Special Distribution exceeds the fair market value
(as determined by the Board of Directors, which
determination shall be conclusive) of the consideration,
if any, received therefor by Sonic, is subtracted from
the product obtained when the number of Sonic Common
Shares outstanding on the record date is multiplied by
the Current Market Price on such date,
provided that no such adjustment shall be made if the result of
such adjustment would be to decrease the Current Sonic Common Share
Equivalent in effect immediately before such record date. Any
Sonic Common Share owned by or held for the account of Sonic shall
be deemed not to be out standing 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 distri bution
is not so made, the Current Sonic Common Share Equivalent shall be
readjusted effective immediately to
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the Current Sonic Common Share Equivalent which would then be in
effect based upon such shares or rights, options or warrants or
evidences of indebtedness or assets actually distributed;
"DEPOSITARY" means The Trust Company of Bank of Montreal at its principal
offices in Toronto, Ontario;
"EFFECTIVE DATE" means the date shown on the certificate of arrangement
issued by the Director under the OBCA giving effect to the arrangement;
"EFFECTIVE TIME" means 12:01 A.M. on the Effective Date;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which are set
forth in Appendix A hereto;
"EXCHANGEABLE SHARES" means the Exchangeable Non-Voting Shares of the
Corporation having the rights, privileges, restrictions and conditions set forth
in the Exchangeable Share Provisions;
"FINAL ORDER" means the final order of the Court approving the
Arrangement a such order may be amended by the Court at any time prior to the
Effective Time;
"LIEN" means any lien, pledge, adverse claim, security interest,
mortgage, claim, charge or encumbrance;
"LIQUIDATION CALL PURCHASE PRICE" has the meaning ascribed thereto in
subsection 5.2(a);
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in subsection
5.2(a);
"LIQUIDATION DATE" has the meaning ascribed thereto in Section 4.1 of the
Exchangeable Share Provisions;
"MEETING" means the Special Meeting of the Common and Class B
shareholders of Turbotak (voting separately as two classes) and the holder of
the CVF Option to be held to consider the Arrangement.
"NASDAQ" means the NASDAQ National Market System;
"OBCA" means the Ontario Business Corporation Act, as amended from time
to time;
"REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in
subsection 5.3(a);
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in subsection
5.3(a);
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"RETRACTED SHARES" has the meaning ascribed thereto in subsection 5.1(a)
of the Exchangeable Share Provisions;
"RETRACTION CALL PURCHASE PRICE" has the meaning ascribed thereto in
subsection 5.1(a);
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in subsection
5.1(a);
"RETRACTION DATE" has the meaning ascribed thereto in subsection 5.2 of
the Exchangeable Share Provisions;
"RETRACTION REQUEST" has the meaning ascribed thereto in Section 5.1 of
the Exchangeable Share Provisions;
"SONIC" means Sonic Environmental Systems, Inc., a corporation existing
under the laws of the State of Delaware;
"SONIC CALL NOTICE" has the meaning ascribed thereto in subsection
5.1(b);
"SONIC COMMON SHARE REORGANIZATION" has the meaning ascribed thereto in
subsection 1.1 definition of Current Sonic Common Share Equivalent;
"SONIC COMMON SHARES" means the common stock, par value $.10 per share,
of Sonic;
"TRANSFER AGENT" means The Trust Company of Bank of Montreal or such
other person as may from time to time be the Registrar and Transfer Agent for
the Exchangeable Shares;
"TURBOTAK" means Turbotak Technologies, Inc., a corporation existing
under the OBCA;
"TURBOTAK COMMON SHARES" means the common shares in the capital of
Turbotak, including all rights associated therewith;
"TURBOTAK CLASS B SHARES" means the Class B shares in the capital of
Turbotak, including all rights associated therewith;
"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange Trust
Agreement between the Corporation, Sonic and The Trust Company of Bank of
Montreal made as of ___________________, 1997.
Any capitalized terms that have not been otherwise defined above shall
have the meanings ascribed to them in the Combination Agreement.
1.2 SECTIONS AND HEADINGS
---------------------
The division of this Plan of Arrangement into sections and the insertion
of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless other-
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wise indicated,any reference in this Plan of Arrangement to a section or an
Appendix refers to the specified section of or Appendix to this Plan of
Arrangement.
1.3 NUMBER, GENDER AND PERSONS
--------------------------
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa, words importing
any gender include all genders and words importing persons include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind.
1.4 WITHHOLDING TAX
---------------
All amounts required to be paid, deposited or delivered under this Plan
of Arrangement shall be paid, deposited or delivered after deduction of any
amount required by applicable law to deducted or withheld on account of tax and
the deduction of such amounts and remittance to the applicable tax authorities
shall, to the extent thereof, satisfy such requirement to pay, deposit or
deliver hereunder.
ARTICLE II
ARRANGEMENT
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2.1 ARRANGEMENT
-----------
At the Effective Time, the following shall occur and shall be deemed to
occur in the following order without any further act or formality:
(a) The authorized share of capital of the Corporation shall be amended
to authorize an unlimited number of Exchangeable Shares; as a
result of such amendment the Corporation shall have two classes of
authorized share capital, namely, an unlimited number of Class A
Common Shares and an unlimited number of Exchangeable Shares, the
rights, privileges, restrictions and conditions attaching to each
of which classes shall be set out in Appendix A.
(b) All of the outstanding Turbotak Common Shares and Turbotak Class B
Shares, except Turbotak Common Shares or Turbotak Class B Shares
held by holders who have exercised their rights of dissent in
accordance with section 3.1 hereof and who are ultimately entitled
to be paid fair market value for such shares (hereinafter
"Dissenters"), shall be exchanged by the holders thereof for
Exchangeable Shares, the number of which shall be in the case of
each holder, equal to the product obtained by multiplying 8,200,000
by a fraction, the numerator of which is the number of Turbotak
Common Shares or Class B Shares owned by such
8
holder at Closing and the denominator of which is the total number
of outstanding Turbotak Common Shares and Class B Shares at Closing
(the "Total Turbotak Outstanding Shares").
(c) Upon the exchange referred to in subsection 2.1(b) above, each
holder of exchanged Turbotak Common Shares or Turbotak Class B
Shares shall cease to be such a holder, shall have his name removed
from the register of holders of Turbotak Common Shares and Class B
Shares and shall become a holder of the number of fully paid
Exchangeable Shares to which he is entitled as a result of such
exchange and such holder's name shall be added to the register of
holders of Exchangeable Shares accordingly.
(d) The Corporation shall add to its stated capital account in respect
of Exchangeable Shares issued pursuant to subsection 2.1(b) an
amount equal to the aggregate fair market value of the Turbotak
Common Shares and Turbotak Class B Shares exchanged pursuant to
subsection 2.1(b) and immediately thereafter such stated capital
shall be reduced to an amount equal to the aggregate of the paid-up
capital, for purposes of the Income Tax Act (Canada), of the
Turbotak Common Shares and Turbotak Class B Shares exchanged
pursuant to subsection 2.1(b), all as determined by the Board of
Directors of the Corporation.
(d) The name of the Corporation shall be changed to "TURBOSONIC CANADA,
INC."
ARTICLE III
RIGHTS OF DISSENT
-----------------
3.1 RIGHTS OF DISSENT
-----------------
Holders of Turbotak Common shares or Turbotak Class B Shares may exercise
rights of dissent with respect to such Turbotak Common shares or Turbotak Class
B Shares held, as the class may be ("Dissenters' Shares"). All such rights of
dissent shall be exercised pursuant to and in the manner set forth in section
185 of the OBCA and this section 3.1 (the "Dissent Procedures") in connection
with the Arrangement and holder who duly exercise such right of dissent and who:
(a) are ultimately entitled to be paid fair value for their Dissenters'
Shares shall be deemed to have transferred such Dissenters Shares
to Turbotak for cancellation on the Effective Date; or
(b) are ultimately not entitled, for any reason, to be paid fair value
for their Dissenters' Shares shall be deemed to have participated
in the Arrangement on the same basis as
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any non-dissenting holder of Turbotak Common Shares or Turbotak
Class B Shares, as the case may be, and shall receive Exchangeable
Shares on the basis determined in accordance with subsection
2.1(b).
In no case shall Turbotak be required to recognize such holders as holders of
Turbotak Common Shares or Turbotak Class B Shares, as the case may be, on and
after the Effective Date, and the names of such holders of Turbotak Common
Shares or Turbotak Class B Shares, as the case may be, shall be deleted from the
register of holders of Turbotak Common Shares and Turbotak Class B Shares on the
Effective Date.
ARTICLE IV
CERTIFICATES AND FRACTIONAL SHARES
----------------------------------
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
---------------------------------------------------------
At or promptly after the Effective Time, the Corporation shall deposit
with the Depositary, for the benefit of the holders of Turbotak and Turbotak
Class B Shares exchanged pursuant to subsection 2.1(b), certificates
representing the Exchangeable Shares issued pursuant to subsections 2.1(c).
Upon surrender to the Depositary for cancellation of a certificate which
immediately prior to the Effective Time representing outstanding Turbotak Common
Shares or Turbotak Class B Shares exchanged pursuant to subsection 2.1(b),
together with such other documents and instruments as would have been required
to effect the transfer of the shares formerly represented by such certificate
under the OBCA and the articles and by-laws of Turbotak, and such additional
documents and instruments as the Depositary may reasonably require, the holder
of such surrendered certificate shall be entitled to receive in exchange
therefor, and the Depositary shall deliver to such holder, a certificate
representing that number (rounded down to the nearest whole number) of
Exchangeable Shares with such holder has the right to receive (together with any
dividends or distributions with respect thereto pursuant to section 4.2) and the
certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Turbotak Common Shares or Turbotak Class B Shares which
is not registered in the transfer records of Turbotak, a certificate
representing the proper number of Exchangeable Shares may be issued to a
transferee if the certificate representing Turbotak Common Shares or Turbotak
Class B Shares is presented to the Depositary, accompanied by all documents
required to evidence and effect such transfer. Until surrendered as
contemplated by this section 4.1, each certificate which immediately prior to
the Effective Date represented outstanding Turbotak Common Shares or Turbotak
Class B Shares, that were purchased for consideration consisting of Exchangeable
Shares, shall be deemed at any time after the Effective Time to represent only
the right to receive upon surrender (i) the certificate representing
Exchangeable Shares as contemplated by this section 4.1, and (ii) and dividends
or distributions with a record date after the Effective Time theretofore
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paid or payable with respect to Exchangeable Shares as contemplated by section
4.2.
4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
--------------------------------------------------------
No dividends or other distributions declared or made after the Effective
Time with respect to Exchangeable Shares with a record date after the Effective
Time shall be paid to the holder of any unsur rendered certificate which,
immediately prior to the Effective Time, represented outstanding Turbotak Common
Shares or Turbotak Class B Shares that were exchanged pursuant to section 2.1,
unless and until such certificate shall be surrendered in accordance with 4.1.
Subject to applicable law and to section 4.5, at the time of such surrender of
any certificate (or, in the case of clause (iii) below, at the appro priate
payment date), there shall be paid to the record holder of the certificate
representing whole Exchangeable Shares into which the shares represented by the
surrendered certificate wer exchanged, without interest, (i) the amount of any
cash payable in lieu of a fractional Exchangeable Share to which such holder is
entitled pursuant to section 4.3, (ii) the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole Exchangeable Shares, and (iii) the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Exchangeable Shares.
4.3 NO FRACTIONAL SHARES
--------------------
No certificates or scrip representing fractional Exchangeable Shares
shall be issued upon the surrender for exchange of certificates pursuant to
section 4.1 and no dividend, stock split or other change in the capital
structure of the Corporation shall relate to any such fractional security and
such fractional interests shall not entitle the owner thereof to vote or to
exercise any rights as a security holder of the Corporation. In lieu of any
such fractional securities, each person entitled to a fractional interest in an
Exchangeable Share will receive an amount of cash (rounded to the nearest whole
cent), without interest, equal to the Canadian Dollar Equivalent as of the
Effective Date of the product of (i) such fraction multiplied by (ii) the
Current Market Price of Sonic Common Stock.
4.4 LOST CERTIFICATES
-----------------
If any certificate that immediately prior to the Effective Time
represented outstanding Turbotak Common Shares or Turbotak Class B Shares that
were exchanged pursuant to section 2.1 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 Depositary will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Exchangeable
Shares (and any dividends or distributions with respect thereto and any cash
pursuant to section 4.3) deliverable in respect thereof as determined in
accordance with section 2.1. When authorizing such payment in
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exchange for any lost, stolen or destroyed certificate, the person to whom
certificates representing Exchangeable Shares are to be issued, as a condition
precedent to the issuance thereof, give a bond satisfactory to Turbotak or the
Corporation, as the case may be, in such sum as Turbotak or the Corporation may
direct or otherwise indemnify Turbotak or the Corporation in a manner
satisfactory to the Corporation and Turbotak against any claim that may be made
against Turbotak or the Corporation with respect to the certificate alleged to
have been lost, stolen or destroyed.
4.5 EXTINGUISHMENT OF RIGHTS
------------------------
Any certificate that immediately prior to the Effective Time represented
outstanding Turbotak Common Shares or Turbotak Class B Shares that were
purchased pursuant to section 2.1 and not deposited, with all other documents
required by section 4.1, on or prior to the sixth anniversary of the Effective
Time, will cease to represent a claim or interest of any kind of nature as a
shareholder of Turbotak or the Corporation. On such date, the Turbotak Common
Shares or Turbotak Class B Shares to which the former registered holder of the
certificate referenced in the preceding sentence was ultimately entitled shall
be deemed to have been redeemed by the Corporation with all entitlement to
dividends or distributions thereon held for such former registered holder for no
consideration.
ARTICLE V
CERTAIN RIGHTS OF SONIC TO ACQUIRE EXCHANGEABLE SHARES
------------------------------------------------------
5.1 SONIC RETRACTION CALL RIGHT
---------------------------
(a) Sonic shall have the overriding right (the "Retraction Call Right")
notwithstanding the proposed redemption of Retracted Shares by the Corporation
on Retraction Date, to purchase from the holder of the Retracted Shares on the
Retraction Date the Retracted Shares upon payment by Xxxxx to the holder of an
Exchangeable Share an amount equal to (a) the Current Market Price multiplied by
the Current Sonic Common Share Equivalent, in each case determined on the
Retraction Date, which shall be satisfied in full in respect to the Retracted
Shares by causing to be delivered to the holder such whole number of Sonic
Common Shares as is equal to the amount obtained by multiplying the number of
Retracted Shares by the Current Sonic Common Share Equivalent (together with an
amount in lieu of any fractional Sonic Common Share resulting from such
calculation payable in accordance with section 5.5 and the aggregate of all
dividends declared and unpaid on such Retracted Shares (collectively, the
"Retraction Call Purchase Price"). In the event of the exercise of the
Retraction Call Right by Xxxxx, the holder of the Retracted Shares shall be
obligated to sell to Sonic, and Xxxxx shall be obligated to purchase, the
Retracted Shares on the Retraction Date upon payment by Xxxxx to such holder of
the Retraction Call Purchase Price for each Retracted Share.
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(b) In order to exercise the Retraction Call Right, Xxxxx shall advise
the Transfer Agent in writing of its determination to do so (the "Sonic Call
Notice") on or prior to the expiry of the third Business Day after the receipt
by the Transfer Agent of the Retraction Request. If Xxxxx does not so notify
the Transfer Agent, the Transfer Agent will notify the holder as soon as
possible thereafter that Xxxxx has waived the Retraction Call Right. If Xxxxx
delivers the Sonic Call Notice before the expiry of such three Business Day
period, the Retraction Request shall thereupon be deemed only to be an offer by
the holder to sell the Retracted Shares to Sonic. In such event, the
Corporation shall not redeem the Retracted Shares and Sonic shall purchase from
such holder and such holder shall sell to Sonic on the Retraction Date the
Retracted Shares for the Retraction Call Purchase Price for each Retracted
Share.
(c) For the purposes of completing a purchase of the Retracted Shares
pursuant to the Retraction Call Right, Sonic shall deposit with the Transfer
Agent, on or before the Retraction Date, certificates representing the Sonic
Common Shares to be delivered to the holder of the Retracted Shares in payment
of the total Retraction Call Purchase Price for the Retracted Shares (or the
portion thereof payable in Sonic Common Shares, as the case may be) and a cheque
in the amount of the remaining portion, if any, of the total Retraction Call
Purchase Price (or, if any portion of the Retraction Call Purchase Price
consists of dividends payable in property, such property or property that is the
same as or economically equivalent to such property). Provided that such total
Retraction Call Purchase Price has been so deposited with the Transfer Agent,
the closing of the purchase and sale of the Retracted Shares pursuant to the
Retraction Call Right shall be deemed to have occurred as of the close of
business on the Retraction Date and, for greater certainty, no redemption by the
Corporation of such Retracted Shares shall take place on the Retraction Date.
Sonic shall cause the Transfer Agent to deliver to the holder of the Retracted
Shares, at the address of such holder recorded in the securities register of the
Corporation for the Exchangeable Shares or at the address specified in the
holder's Retraction Request or by holding for pick-up by the holder at the
office of the Transfer Agent to which the Retraction Request was delivered, in
payment of such total Retraction Purchase Price, certificates representing the
Sonic Common Shares to be delivered in respect of such payment (which shares
shall be dully issued as fully paid and non-assessable and shall be free and
clear of any Liens) registered in the name of the holder or in such other name
as the holder may request in payment of such and, if applicable, a cheque of
Sonic payable at par and in Canadian dollars at any branch of the bankers of
Sonic or the Corporation in Canada (or, if any part of the Retraction Call
Purchase Price consists of dividends payable in property, such property or
property that is the same as or economically equivalent to such property), and
such delivery of such certificates and cheque (and property, if any) to the
holder on behalf of Sonic by the Transfer Agent shall be deemed to be payment of
and shall satisfy and discharge all liability for the total Retraction Call
Purchase Price to the extent that the same is represented by such share
certificates and cheque (and property, if any), unless such cheque is
13
not paid on due presentation. On and after the close of business on the
Retraction Date, the holder of the Retracted Shares shall cease to be a holder
of such Retracted Shares and shall not be entitled to exercise any of the rights
of a holder in respect thereof, other than the right to receive the Retraction
Call Purchase Price, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the total Retraction Call
Price shall not be made, in which case the rights of such holder shall remain
unaffected until the total Retraction Call Purchase Price has been paid in the
manner hereinbefore provided. On and after the close of busi ness on the
Retraction Date, provided that presentation and surrender of certificates and
payment of the total Retraction Call Purchase Price has been made in accordance
with the foregoing provisions, the holder of the Retracted Shares so purchased
by Xxxxx shall thereafter be considered and deemed for all purposes to be a
holder of the Sonic Common Shares delivered to such holder.
5.2 SONIC LIQUIDATION CALL RIGHT
----------------------------
(a) Sonic shall have the overriding right (the "Liquidation Call Right")
in the event of and notwithstanding the proposed liquida tion, dissolution or
winding-up of the Corporation, to purchase from all but not less than all of the
holders (other than Sonic) of Exchangeable Shares on the Liquidation Date all
but not less than all of the Exchangeable Shares held by each such holder on
payment by Sonic of an amount per share equal to (a) the Current Market Price
multiplied by the Current Sonic Common Share Equivalent, in each case determined
on the Liquidation Date, which shall be satisfied in full in respect of all of
the Exchangeable Shares held by such holder by Xxxxx causing to be delivered to
such holder such whole number of Sonic Common Shares as is equal to the product
obtained by multiplying the number of such Exchangeable Shares by the Current
Sonic Common Share Equivalent (together with an amount in lieu of any fractional
Sonic Common Share resulting from such calculation payable in accordance with
section 5.5), plus (b) the aggregate of all dividends declared and unpaid on
such Exchangeable Share up to the Liquidation Date (collectively the
"Liquidation Call Purchase Price"). In the event of the exercise of the
Liquidation Call Right by Xxxxx, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to Sonic on the Liquidation Date on
payment by Xxxxx to the holder of the Liquidation Call Purchase Price for each
such share.
(b) To exercise the Liquidation Call Right, Xxxxx must notify the
Transfer Agent and the Corporation of Xxxxx's intention to exercise such right
at least 30 days before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding up of the Corporation and at least five
Business Days before the Liquidation Date in the case of an involuntary
liquidation, dissolution or winding up of the Corporation. The Transfer Agent
will notify the holders of Exchangeable Shares as to whether or not Xxxxx has
exercised the Liquidation Call Right forthwith after the expiry of the date by
which the same may be exercised by Xxxxx. If Sonic exercises the Liquidation
Call Right, on the Liquidation Date Sonic will purchase and the holders
14
shall sell all of the Exchangeable Shares then outstanding for a price per share
equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Sonic shall deposit with the
Transfer Agent, on or before the Liquidation Date, certificates representing the
aggregate number of Sonic Common Shares deliverable by Sonic (which shares shall
be duly issued as fully paid and non-assessable and shall be free and clear of
any Liens) in payment of the total Liquidation Call Purchase Price (or the
portion thereof payable in Sonic Common Shares, as the case may be) and a cheque
or cheques in the amount of the remaining portion, if any, of the total
Liquidation Call Purchase Price (or, if any part of the Liquidation Call
Purchase Price consists of dividends payable in property, such property or
property that is the same as or economically equivalent to such property).
Provided that such total Liquidation Call Purchase Price has been so deposited
with the Transfer Agent, on and after the Liquidation Date the rights of each
holder of Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Liquidation Call Purchase Price payable by Sonic
upon presentation and surrender of certificates representing the Exchangeable
Shares held by such holder and the holder shall on and after the Liquidation
Date be considered and deemed for all purposes to be the holder of the Sonic
Common Shares delivered to it. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the articles and by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Sonic shall deliver to such holder, certificates representing
the Sonic Common Shares to which the holder is entitled and a cheque and or
cheques of Sonic payable at par and in and in Canadian dollars at any branch of
the bankers of Sonic or of the Corporation in Canada in payment of the remaining
portion, if any, of the total Liquidation Call Purchase Price (or, part of the
Liquidation Call Purchase Price consists of dividends payable in property, such
property or property that is the same as or economically equivalent to such
property). If Xxxxx does not exercise the Liquidation Call Right in the manner
described above, on the Liquidation Date the holders of the Exchangeable Shares
will be entitled to receive in exchange therefor the Liquidation Amount
otherwise payable by the Corporation in connection with the liquidation,
dissolution or winding-up of the Corporation pursuant to sections 4.1 to 4.3 of
the Exchangeable Share Provisions.
5.3 SONIC REDEMPTION CALL RIGHT
---------------------------
(a) Sonic shall have the overriding right (the "Redemption Call Right")
notwithstanding the proposed redemption of the Exchangeable Shares by the
Corporation on the Automatic Redemption Date, to purchase from all but not less
than all of the holders (other
15
than Sonic) of the Exchangeable Shares on the Automatic Redemption Date all but
not less than all of the Exchangeable Shares held by each such holder on payment
by Xxxxx to the holder of an amount per share equal to (a) the Current Market
Price multiplied by the Current Sonic Common Share Equivalent, in each case
determined on the Automatic Redemption Date, which shall be satisfied in full in
respect of all of the Exchangeable Shares held by such holder by causing to be
delivered to such holder such whole number of such Sonic Common Shares as is
equal to the product obtained by multiplying the number of Exchangeable Shares
by the Current Sonic Common Share Equivalent (together with an amount in lieu of
any fractional Sonic Common Share resulting from such calculation payable in
accordance with section 5.5) plus (b) the aggregate of all dividends declared
and unpaid on such Exchangeable Share (collectively, the "Redemption Call
Purchase Price"). In the event of the exercise of the Redemption Call Right by
Sonic, each holder shall be obligated to sell to Sonic, and Sonic shall be
obligated to purchase, all the Exchangeable Shares held by the holder on the
Automatic Redemption Date on payment by Xxxxx to the holder of the Redemption
Call Purchase Price for each such share.
(b) To exercise the Redemption Call Right, Xxxxx must notify the Transfer
Agent, as agent for the holders of the Exchangeable Shares, and the Corporation
of Sonic's intention to exercise such right at least 75 days before the
Automatic Redemption Date. The Transfer Agent will notify the holders of the
Exchangeable Shares as to whether or not Xxxxx has exercised the Redemption Call
Right forthwith after the date by which the same may be exercised by Xxxxx. If
Sonic exercises the Redemption Call Right, on the Automatic Redemption Date
Sonic will purchase and the holders will sell all of the Exchangeable Shares
then outstanding for a price per share equal to the Redemption Call Purchase
Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Sonic shall deposit with the
Transfer Agent, on or before the Automatic Redemption Date certificates
representing the aggregate number of Sonic Common Shares deliverable by Sonic
(which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any Liens) in payment of the total Redemption Call Purchase
Price (or the portion thereof payable in Sonic Common Shares, as the case may
be) and a cheque or cheques in the amount of the remaining portion, if any, of
the total Redemption Call Purchase Price (or, if part of the Redemption Call
Purchase Price consists of dividends payable in property, such property or
property the same as or economically equivalent to such property). Provided that
such total Redemption Call Purchase Price has been so deposited with the
Transfer Agent, on and after the Automatic Redemption Date the rights of each
holder of Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price payable by Sonic
upon presentation and surrender by the holder of certificates representing
Exchangeable Shares held by such holder and the holder shall on and after the
Automatic Redemption Date be considered and deemed for all purposes to be the
holder of the Sonic Common Shares delivered to such holder. Upon
16
surrender to the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the OBCA and the
articles and by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of Sonic shall deliver to such
holder, certificates representing the Sonic Common Shares to which the holder is
entitled and a cheque or cheques of Sonic payable at par and in Canadian dollars
at any branch of the bankers of Sonic or of the Corporation in Canada in payment
of the remaining portion, if any, of the total Redemption Call Purchase Price
(or, if part of the Redemption Call Purchase Price consists of dividends payable
in property, such property or property the same as or economically equivalent to
such property). If Xxxxx does not exercise the Redemption Call Right in the
manner described above, on the Automatic Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor the
redemption price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to sections 6.1 and 6.2 of the
Exchangeable Share Provisions.
5.4 CONSIDERATION FOR CALL RIGHTS OF SONIC
--------------------------------------
The Retraction Call Right, the Liquidation Call Right and the Redemption
Call Right are granted to Sonic by the holders of Exchangeable Shares in
consideration of the grant by Sonic of the Voting Rights, Automatic Exchange
Rights and Exchange Right (as such terms are respectively defined in the Voting
and Exchange Trust Agreement) to the Trustee (as defined in the Exchangeable
Share Provisions) for the benefit of the holders of Exchangeable Shares.
5.5 FRACTIONAL SONIC COMMON SHARES
------------------------------
No certificates or scrip representing fractional Sonic Common Shares
shall be delivered to holders of Exchangeable Shares pursuant to the provisions
hereof. In lieu of any such fractional security, each person entitled to a
fractional interest in an Sonic Common Share will receive an amount of cash
(rounded to the nearest whole cent), without interest, equal to the Canadian
Dollar Equivalent as of the fourth Business Day prior to the relevant date of
delivery of certificates representing Sonic Common Shares (the "Fractional Share
Calculation Date") of the product of (i) such fraction, multiplied by (u) the
closing sale price of Sonic Common Shares as reported on NASDAQ on the
Fractional Share Calculation Date.
5.6 ECONOMIC EQUIVALENCE
--------------------
The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the Board of Directors may require)
economic equivalence for the purposes of any provision herein that requires such
a determination and each such
17
determination shall be conclusive and binding on Sonic and the holders of
Exchangeable Shares, where applicable.
5.7 CAPITAL REORGANIZATION OF SONIC
-------------------------------
If at any time there is a capital reorganization of Sonic that is not
provided for in the definition of Current Sonic Common Share Equivalent or a
consolidation, merger, arrangement or amalgamation (statutory or otherwise) of
Sonic with or into another entity (any such event being called a "Capital
Reorganization"), any holder of Exchangeable Shares whose Exchangeable Shares
have not been exchanged for Sonic Common Shares in accordance with the
provisions hereof prior to the record date for such Capital Reorganization shall
be entitled to receive and shall accept, upon any such exchange occurring
pursuant to the provisions hereof at any time after the record date for such
Capital Reorganization, in lieu of the Sonic Common Shares that he would
otherwise have been entitled to receive pursuant to the provisions hereof, the
number of shares or other securities of Sonic or of the body corporate
resulting, surviving or continuing from the Capital Reorganization, or other
property, that such holder would have been entitled to receive as a result of
such Capital Reorganization if, on the record date, he had been the registered
holder of the number of Sonic Common Shares to which he was then entitled upon
any exchange of his Exchangeable Shares into Sonic Common Shares in accordance
with the provisions hereof, subject to adjustment thereafter in the same manner,
as nearly as may be possible, as is provided for in the definition of Current
Sonic Common Share Equivalent provided that no such Capital Reorganization shall
be carried into effect unless all necessary steps shall have been taken so that
each holder of Exchangeable Shares shall thereafter be entitled to receive, upon
any exchange of his Exchangeable Shares pursuant to the provisions hereof, such
number of shares or other securities of Sonic or of the body corporate
resulting, surviving or continuing from the Capital Reorganization, or other
property.
5.8 OTHER CHANGE IN SONIC COMMON SHARES
-----------------------------------
In the case of any reclassification of, or other change in, the
outstanding Sonic Common Shares other than a Sonic Common Share Reorganization
or a Capital Reorganization, such changes shall be made in the rights attaching
to the Exchangeable Shares, without any action on the part of the Corporation or
the holders of the Exchangeable Shares to the extent permitted by applicable
law, effective immediately following the record date for such reclassification
or other change, to the extent necessary to ensure that holders of Exchangeable
Shares shall be entitled to receive, upon the occurrence at any time after such
record date of any event whereby they would receive Sonic Common Shares pursuant
to the provisions hereof, such shares, securities or rights as they would have
received if their Exchangeable Shares had been exchanged for Sonic Common Shares
pursuant to the provisions hereof immediately prior to such record date, subject
to adjustment thereafter in the same manner, as nearly as may be possible, as is
18
provided for in the definition of Current Sonic Common Share Equivalent.
ARTICLE VI
AMENDMENT
---------
6.1 PLAN OF ARRANGEMENT AMENDMENT
-----------------------------
(a) By instrument in writing the Corporation and Turbotak may amend,
modify and/or supplement this Plan of Arrangement at any time and from time to
time provided that any such amendment, modification, or supplement must be (if
agreed to by Xxxxx, (ii) filed with the Court and, if made following the
Meeting, approved by the Court and (iii) communicated to holders of Turbotak
Common Shares and Turbotak Class B Shares in the manner required by the Court
(if so required).
(b) Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Meeting shall be effective only if
(i) it is consented to by each of the Corporation, Turbotak and Sonic and (ii)
it is consented to by the holders of the Turbotak Common Shares and the holders
of the Turbotak Class B Shares, in each case to the extent so required by the
Court.
19
APPENDIX A TO PLAN OF ARRANGEMENT
---------------------------------
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have the
following rights, privileges, restrictions and conditions.
ARTICLE 1
INTERPRETATION
--------------
1.1 For the purposes of these share provisions:
(a) "AFFILIATE" of any person means any other person directly or
indirectly controlling, controlled by, or under common control with, that
person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling" "controlled by" and "under common
control with"), as applied to any person, means the possession by another
person, directly or indirectly, of the power to direct or cause the direction of
the management and policies of that first mentioned person, whether through the
ownership of voting securities, by contract or otherwise.
(b) "AUTOMATIC REDEMPTION DATE" means the date for the automatic
redemption by the Corporation of Exchangeable Shares pursuant to Article 6 of
these share provisions, which date shall be June 30, 2002.
(c) "BOARD OF DIRECTORS" means the board of directors of the Corporation.
(d) "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in one or both of the State of New Jersey
and Waterloo, Ontario.
(e) "CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed
in a foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot
exchange rate on such date for such foreign currency expressed in Canadian
dollars as reported by the Bank of Canada or, in the event such spot exchange
rate is not available, such exchange rate on such date for such foreign currency
expressed in Canadian dollars as may be deemed by the Board of Director; to be
appropriate for such purpose.
(f) "CAPITAL REORGANIZATION" has he meaning ascribed thereto in section
9.2 of these share provisions.
(g) "CORPORATION" means Sonic Canada, Inc., a corporation incorporated
under the OBCA.
(h) "CURRENT MARKET PRICE" means, in respect of an Sonic Common Share on
any date, the Canadian Dollar Equivalent of the closing
1
sale price of Sonic Common Shares on such day (or, if no trades of Sonic Common
Shares occurred on such day, on the last trading day prior thereto on which such
trades occurred) reported on NASDAQ, or, if the Sonic Common Shares are not then
quoted on NASDAQ, on such other stock exchange or automated quotation system on
which the Sonic Common Shares are listed or quoted, as the case may be, as may
be selected by the Board of Directors for such purpose; provided, however, that
if in the opinion of the Board of Directors the public distribution or trading
activity of Sonic Common Shares during such period does not create a market that
reflects the fair market value of a Sonic Common Share, then the Current Market
Price of a Sonic Common Share shall be determined by the Board of Directors
based upon he advice of such qualified independent financial advisors as the
Board of Directors may deem to be appropriate, and provided further that any
such selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
(i) "CURRENT SONIC COMMON SHARE EQUIVALENT" means, on any date, the
equivalent as at such date of one Sonic Common Share as at the Effective Date,
expressed to four decimal places, determined by applying on a cumulative basis
the following adjustments, to the extent applicable by reason of any
transactions occurring in respect of Sonic Common Shares between the Effective
Date and such date, the Current Sonic Common Share Equivalent as at the
Effective Date being 1.0000:
(i) if Sonic shall (A) subdivide, redivide or change its then
outstanding Sonic Common Shares into a greater number of Sonic
Common Shares, unless the Corporation is permitted under
applicable law without a vote of its shareholders to make, and
shall simultaneously make, the same or an economically
equivalent change to the rights of the holders of Exchangeable
Shares, (B) reduce, combine, consolidate or change its then
outstanding Sonic Common Shares into a lesser number of Sonic
Common Shares, unless the Corporation is permitted under
applicable law without a vote of its shareholders to make, and
shall simultaneously make, the same or an economically
equivalent change to the rights of the holders of Exchangeable
Shares, or (C) issue Sonic Common Shares (or securities
exchangeable or convertible into Sonic Common Shares) to the
holders of all or substantially all of its then outstanding
Sonic Common Shares by way of stock dividend or other
distribution (other than to holders of Sonic Common Shares who
exercise an option to receive stock dividends in lieu of
receiving cash dividends), unless the Corporation is permitted
under applicable law without a vote of its shareholders to
issue or distribute, and shall simultaneously issue and
distribute, equivalent numbers of Sonic Common Shares or other
securities (adjusted if necessary in accordance with the
2
Current Sonic Common Share Equivalent), or the economic
equivalent on a per share basis, to the holders of the
Exchangeable Shares (any of such events being herein called an
"Sonic Common Share Reorganization"), the Current Sonic Common
Share Equivalent shall be adjusted effective immediately after
the record date at which the holders of Sonic Common Shares
are determined for the purpose of the Sonic Common Share
Reorganization by multiplying the Current Sonic Common Share
Equivalent in effect on such record date by the quotient
obtained when:
(A) the number of Sonic Common Shares outstanding after the
completion of such Sonic Common Share Reorganization (but
before giving effect to the issue of any Sonic Common
Shares issued after such record date otherwise than as
part of such Sonic Common Share Reorganization)
including, in the case where securities exchangeable or
convertible into Sonic Common Shares are distributed, the
number of Sonic Common Shares that would have been
outstanding had such securities been exchanged for or
converted into Sonic Common Shares on such record date,
is divided by
(B) the number of Sonic Common Shares outstanding on such
record date before giving effect to the Sonic Common
Share Reorganization;
(ii) if at any time Sonic shall fix a record date for the issuance
of rights, options or warrants to the holders of all or
substantially all of the Sonic Common Shares entitling them to
subscribe for or to purchase Sonic Common Shares (or
securities of Sonic convertible into Sonic Common Shares) at a
price per Sonic Common Share (or having a conversion price per
Sonic Common Share) of less than the Current Market Price on
such record date, unless the Corporation is permitted under
applicable law without a vote of its shareholders to issue,
and shall simultaneously issue, equivalent numbers of such
rights, options or warrants, adjusted if necessary in
accordance with the Current Sonic Common Share Equivalent at
such record date, or the economic equivalent thereof on a per
share basis, to the holders of Exchangeable Shares (any such
event being herein referred to as a"Rights Offering"), then
the Current Sonic Common Share Equivalent then in effect shall
be adjusted immediately after such record date by multiplying
the Current Sonic Common Share Equivalent in effect on such
record date by the quotient obtained when:
3
(A) the sum of the number of Sonic Common Shares outstanding
on such record date and the number of additional Sonic
Common Shares offered for subscription or purchase under
the Rights Offering (or the number of Sonic Common Shares
into which the securities so offered are convertible)
is divided by
(B) the sum of the number of Sonic Common Shares outstanding
on such record date and the number determined by dividing
the aggregate price of the total number of additional
Sonic Common Shares offered for subscription or purchase
under the Rights Offering (or the aggregate conversion
price of the convertible securities so offered) by the
Current Market Price on such record date.
Any Sonic Common Share owned by or held for the account of Sonic
shall be deemed not to be outstanding for the purpose of any such
computation. If such rights, options or warrants are not so issued
or if, at the date of expiry of the rights, options or warrants
subject to the Rights Offering, less than all the rights, options
or warrants have been exercised, then the Current Sonic Common
Share Equivalent shall be readjusted effective immediately after
the date of expiry to the Current Sonic Common Share Equivalent
which would have been in effect if such record date had not been
fixed or to the Current Sonic Common Share Equivalent which would
then be in effect on the date of expiry if the only rights, options
or warrants issued had been those that were exercised, as the case
may be;
(iii) if Xxxxx shall fix a record date for the making of a
distribution (including a distribution by way of stock
dividend) to the holders of all or substantially all its
outstanding Sonic Common Shares of
(A) shares of Sonic of any class other than Sonic Common Shares
(or shares convertible into Sonic Common Shares referred to
(i)(C) above),
(B) rights, option or warrants (excluding a Rights Offering),
(C) evidence of its indebtedness (excluding indebtedness
convertible into Sonic Common Shares referred to in (i) (C)
above) or
4
(D) any other assets (other than any of the distributions
referred to in (A), (B) or (C), dividends paid in the
ordinary course or an Sonic Common Share Reorganization)
unless the Corporation is permitted under applicable law without
a vote of its shareholders to distribute, and shall
simultaneously distribute, the same number of shares, rights,
options or warrants, evidences of indebtedness or other assets,
as the case may be, adjusted if necessary in accordance with the
Current Sonic Common Share Equivalent, as at such record date,
or the economic equivalent thereof on a per share basis, to the
holders of Exchangeable Shares (any such event being herein
referred to as a "Special Distribution") then, in each such
case, the Current Sonic Common Share Equivalent shall be
adjusted effective immediately after the record date at which
the holders of Sonic Common Shares are determined for the
purposes of the Special Distribution by multiplying the Current
Sonic Common Share Equivalent in effect on such record date by
the quotient obtained when:
(I) the product obtained when the number of Sonic Common
Shares outstanding on the record date is multiplied by
the Current Market Price on such date,
is divided by
(II) the difference obtained when the amount by which the
aggregate fair market value (as determined by the
Board of Directors, which determination shall be
conclusive) of the shares, rights, options, warrants,
evidences of indebtedness or assets, as the case may
be, distributed in the Special Distribution exceeds
the fair market value (as determined by the Board of
Directors, which determination shall be conclusive) of
the consideration, if any, received therefor by Sonic,
is subtracted from the product obtained when the
number of Sonic Common Shares outstanding on the
record date is multiplied by the Current Market Price
on such date,
provided that no such adjustment shall be made if the result of such
adjustment would be to decrease the Current Sonic Common Share
Equivalent in effect immediately before such record date. Any Sonic
Common Share owned by or held for the account of Sonic shall be deemed
not to be outstanding for the purpose of any such computation. Such
adjustment shall be
5
made successively whenever such a record date is fixed. To the extent
that such distribution is not so made, the Current Sonic Common Share
Equivalent shall be readjusted effective immediately to the Current
Sonic Common Share Equivalent which would then be in effect based upon
such shares or rights, options or warrants or evidences of
indebtedness or assets actually distributed.
(j) "EFFECTIVE DATE" has the meaning ascribed thereto in the Plan of
Arrangement.
(k) "EXCHANGEABLE SHARES" mean the Exchangeable Non-Voting Shares of the
Corporation having the rights, privileges, restrictions and conditions set forth
herein.
(l) "LIEN" has the meaning ascribed thereto in the Plan of Arrangement.
(m) "LIQUIDATION AMOUNT" has the meaning ascribed thereto in section 4.1 of
these share provisions.
(n) "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in section
5.2 of the Plan of Arrangement.
(o) "NASDAQ" means the NASDAQ National Market System;
(p) "LIQUIDATION DATE" has the meaning ascribed thereto in section 4.1 of
these share provisions.
(q) "OBCA" means the Ontario Business Corporations Act, as amended from
time to time.
(r) "PLAN OF ARRANGEMENT" means the plan of arrangement relating to the
arrangement of the Corporation under section 182 of the OBCA, to which plan
these share provisions are attached.
(s) "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in section 5.3
of the Plan of Arrangement
(t) "REDEMPTION PRICE" has the meaning ascribed thereto in section 6.1 of
these share provisions.
(u) "RETRACTED SHARES" has the meaning ascribed thereto in section 5.1 of
these share provisions.
(v) "RETRACTION CALL RIGHT" has the meaning ascribed thereto in section 5.1
of the Plan of Arrangement.
(w) "RETRACTION DATE" has the meaning ascribed thereto in section 5.2 of
these share provisions.
(x) "RETRACTION PERIOD" means, subject to the power of Sonic to postpone
any such period as provided in section 5.1, any one of the
6
following periods (and including the beginning and ending dates of each): from
the Effective Date until the date which is June 30, 2002.
(y) "RETRACTION PRICE" has the meaning ascribed thereto in section 5.1 of
these share provisions.
(z) "RETRACTION REQUEst" has the meaning ascribed thereto in section 5.1 of
these share provisions.
(aa) "RIGHTS OFFERING" has the meaning ascribed thereto in subsection these
share provisions.
(ab) "SONIC" means Sonic Environmental Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, and any
successor corporation.
(ac) "SONIC CALL NOTICE" has the meaning ascribed thereto in subsection
5.1(b) of the Plan of Arrangement.
(ad) "SONIC COMMON SHARE REORGANIZATION" has the meaning ascribed thereto
in subsection 1.1(i) of these share provisions.
(ae) "SONIC COMMON SHARES" mean the shares of common stock of Sonic, with a
par value of U.S.$.10 per share and having one vote per share, and any other
securities into which such shares may be changed.
(af) "SONIC DIVIDEND DECLARATION DATE" means the date on which the Board of
Directors of Sonic declares any dividend on the Sonic Common Shares.
(ag) "SONIC SPECIAL SHARE" means the one share of Special Voting Preferred
Stock of Sonic with a par value of U.S.$.01 and having voting rights at meetings
of holders of Sonic Common Shares equal to the number of Exchangeable Shares
outstanding from time to time (other than Exchangeable Shares held by Xxxxx) to
be issued to, and voted by, the Trustee pursuant to the Voting Trust Agreement.
(ah) "SPECIAL DISTRIBUTION has the meaning ascribed thereto in subsection
1.1(i) of these share provisions.
(ai) "SUPPORT AGREEMENT" means the Support Agreement between Sonic and the
Corporation, made as of ___________, 1997.
(aj) "TRANSFER AGENT" means The Trust Company of Bank of Montreal or such
other person as may from time to time be the registrar and transfer agent for
the Exchangeable Shares.
(ak) "TRUSTEE" means The Trust Company of Bank of Montreal, a trust company
existing under the laws of Canada, and any successor trustee appointed under the
Voting and Exchange Trust Agreement.
7
(al) "VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange
Trust Agreement between the Corporation, Sonic and the Trustee, made as of
_____________, 1997.
1.2 All amounts required to be paid, deposited or delivered hereunder shall be
paid, deposited or delivered after deduction of any amount required by
applicable law to be deducted or withheld on account of tax and the deduction of
such amounts and remittance to the applicable tax authorities shall, to the
extent thereof, satisfy such requirement to pay, deposit or deliver hereunder.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
------------------------------
2.1 The Exchangeable Shares shall rank senior to the Common Shares and any
other shares ranking junior to the Exchangeable Shares, with respect to the
payment of dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding up its affairs.
ARTICLE 3
DIVIDENDS
---------
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, declare a dividend on each
Exchangeable Share (a) in the case of a cash dividend declared on the Sonic
Common Shares, in an amount in cash for each Exchangeable Share equal to the
Canadian Dollar Equivalent on the Sonic Dividend Declaration Date of the cash
dividend declared on such number of Sonic Common Shares as is equal to the
Current Sonic Common Share Equivalent on the Sonic Dividend Declaration Date or
(b) in the case of a stock dividend declared on the Sonic Common Shares to be
paid in Sonic Common Shares, in such whole number of Exchangeable Shares for the
Exchangeable Shares held by each holder as is equal to the number of Sonic
Common Shares to be paid as a dividend on an equivalent number of Sonic Common
Shares divided by the Current Sonic Common Share Equivalent on the Sonic
Dividend Declaration Date (if such calculation results in a fraction of an
Exchangeable Share, the holder shall receive in lieu of such fraction an amount
in cash equal to the product obtained by dividing the amount that would be
payable in respect of an equal fraction of an Sonic Common Share as at the Sonic
Dividend Declaration Date, calculated in accordance with section 9.4, by the
Current Sonic Common Share Equivalent as at such date) or (c) in the case of a
dividend declared on the Sonic Common Shares to be paid in property other than
cash or Sonic Common Shares (including without limitation other securities of
Sonic), in such type and amount of property for each Exchangeable Share as is
the same as or economically
8
equivalent (as determined by the Board of Directors in accordance with section
9.1) to the type and amount of property, to be paid as a dividend on such number
of Sonic Common Shares as is equal to the Current Sonic Common Share Equivalent
on the Sonic Dividend Declaration Date. Such dividends shall be paid out of
money, assets or property of the Corporation properly applicable to the payment
of dividends, or out of authorized but unissued Exchangeable Shares.
3.2 Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends contemplated by
subsection 3.1(a) hereof or in respect of any cash amount payable in lieu of a
fractional Exchangeable Share in connection with any stock dividends
contemplated by subsection 3.1(b) hereof and the sending of such a cheque to
each holder of an Exchangeable Share shall satisfy the cash dividend represented
thereby unless the cheque is not paid on presentation. Certificates registered
in the name of the registered holder of Exchangeable Shares shall be issued or
transferred in respect of any stock dividends contemplated by subsection 3.1(b)
hereof and the sending of such a certificate to each holder of an Exchangeable
Share shall satisfy the stock dividend represented thereby. Such other type and
amount of property in respect of any dividends contemplated by subsection 3.1(c)
hereof shall be issued, distributed or transferred by the Corporation in such
manner as it shall determine and the issuance, distribution or transfer thereof
by the Corporation to each holder of an Exchangeable Share shall satisfy the
dividend represented thereby. No holder of an Exchangeable Share shall be
entitled to recover by action or other legal process against the Corporation any
dividend that is represented by a cheque that has not been duly presented to the
Corporation's bankers for payment or that otherwise remains unclaimed for a
period of six years from the date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under section 3.1 hereof shall be the same dates as
the record date and payment date, respectively, for the corresponding dividend
declared on the Sonic Common Shares.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Corporation shall have sufficient moneys, assets or property
properly applicable to the payment of such dividends.
3.5 So long as any of the Exchangeable Shares are outstanding, the Corporation
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in section 8.2 of these
share provisions:
9
(a) pay any dividends on the Common Shares, or any other shares ranking
junior to the Exchangeable Shares, other than stock dividends payable
in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Exchangeable
Shares;
(c) redeem or purchase any other shares of the Corporation ranking equally
with the Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution;
(d) issue any Exchangeable Shares other than (i) by way of stock dividends
to the holders of such Exchangeable Shares, (ii) otherwise pro rata to
holders of Exchangeable Shares, (iii) as contemplated by the Support
Agreement or (iv) pursuant to any agreements or rights in existence at
the Effective Date; or
(e) issue any other shares of the Corporation ranking equally with or
senior to the Exchangeable Shares;
provided that the restrictions in subsections 3.5(a), 3.5(b) and 3.5(c) shall
not apply if all dividends on the outstanding Exchangeable Shares corresponding
to dividends declared to date on the Sonic Common Shares shall have been
declared on the Exchangeable Shares and paid in full.
ARTICLE 4
DISTRIBUTION ON LIQUIDATION
---------------------------
4.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date (the "Liquidation Date") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share equal to (a) the Current Market Price
multiplied by the Current Sonic Common Share Equivalent, in each case determined
on the Liquidation Date, which shall be satisfied in full in respect of all of
the Exchangeable Shares held by such holder by the Corporation causing to be
delivered to such holder such whole number of Sonic Common Shares as is equal to
the product obtained by multiplying the number of such Exchangeable Shales by
the Current Sonic Common Share Equivalent (together with an amount in lieu of
any fractional Sonic Common Share resulting from such calculation payable in
accordance with section 9.4), plus (b) the
10
aggregate of all declared and unpaid dividends on each such Exchangeable Share
up to the Liquidation Date (collectively the "Liquidation Amount").
4.2 On or promptly after the Liquidation Date, and subject to the exercise by
Sonic of the Liquidation Call Right, the Corporation shall cause to be delivered
to the holders of the Exchangeable Shares the Liquidation Amount for each such
Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of the Exchangeable
Shares. Payment of the total liquidation Amount for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation or the Exchangeable Shares or by
holding for pick-up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation by
notice to the holders of Exchangeable Shares, on behalf of the Corporation of
certificates representing the Sonic Common Shares to be delivered in payment
thereof (which shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any Liens) and a cheque of the Corporation payable at
par at any branch of the bankers of the Corporation in respect of any fractional
Sonic Common Share and all declared and unpaid dividends comprising part of the
total Liquidation Amount (or, if any of such dividends were payable in property,
such property or property that is the same as or economically equivalent to such
property). On and after the Liquidation Date, the holders of the Exchangeable
Shares shall cease to be holders of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of holders in respect thereof, other than
the right to receive the total Liquidation Amount in respect of their
Exchangeable Shares, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time on or after the Liquidation Date to deposit or cause to be
deposited the total Liquidation Amount in respect of the Exchangeable Shares
represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account with any chartered
bank or trust company in Canada. Upon such deposit being made, the rights of the
holders of Exchangeable Shares after such deposit shall be limited to receiving
the total Liquidation Amount (without interest) for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Liquidation Amount, the holders of the
Exchangeable Shares shall
11
thereafter be considered and deemed for all purposes to be the holders of the
Sonic Common Shares delivered to them.
4.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to section 4.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Corporation.
ARTICLE 5
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
-------------------------------------------
5.1 A holder of Exchangeable Shares shall be entitled during any Retraction
Period, subject to the exercise by Sonic of the Retraction Call Right and
otherwise upon compliance with the provisions of this Article 5, to require the
Corporation to redeem any or all of the Exchangeable Shares registered in the
name of such holder (the "Retracted Shares") for an amount for each Retracted
Share equal to (a) the Current Market Price multiplied by the Current Sonic
Common Share Equivalent, in each case determined on the Retraction Date, which
shall be satisfied in full in respect of the Retracted Shares by the Corporation
causing to be delivered to such holder such whole number of Sonic Common Shares
as is equal to the product obtained by multiplying the number of Retracted
Shares by the Current Sonic Common Share Equivalent (together with an amount in
lieu of any fractional Sonic Common Share resulting from such calculation
payable in accordance with section 9.4), plus (b) the aggregate of all dividends
declared and unpaid on each Retracted Share up to the Retraction Date
(collectively the "Retraction Price", provided that if the record date for any
such declared and unpaid dividend occurs on or after the Retraction Date the
Retraction Price shall not include such declared and unpaid dividends). To
effect such redemption, the holder shall present and surrender at any office of
the Transfer Agent listed on Schedule A hereto the certificate or certificates
representing the Exchangeable Shares which the holder desires to have the
Corporation redeem, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the OBCA and the by-
laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, and together with a duly-executed
statement (the "Retraction Request) in the form of Schedule A hereto or in such
other form as may be acceptable to the Transfer Agent:
(a) specifying that the holder desires to have the Retracted Shares
represented by such certificate or certificates redeemed by the
Corporation; and
(b) acknowledging the Retraction Call Right of Sonic to purchase all but
not less than all the Retracted Shares directly from the holder and
that the Retraction Request shall be deemed to
12
be an irrevocable offer by the holder to sell the Retracted Shares to
Sonic in accordance with the Retraction Call Right.
If any Retraction Request is received on a date that is not within a Retraction
Period, such Retraction Request shall be of no force or effect and the
Corporation, the Transfer Agent and Sonic shall have no obligations as a result
of the delivery of such Retraction Request, unless and until the holder
delivering such Retraction Request shall reconfirm at a subsequent time, in such
manner as may be required by the Transfer Agent, that such holder desires the
Retracted Shares to be redeemed by the Corporation in accordance with such
Retraction Request on a Retraction Date in a subsequent Retraction Period. If
such holder does not provide such reconfirmation, the Corporation shall cause
the Transfer Agent to return to such holder the certificate or certificates
representing Exchangeable Shares delivered to such holder to the Transfer Agent
with the Retraction Request.
5.2 Subject to the exercise by Sonic of the Retraction Call Right, upon receipt
by the Transfer Agent in the manner specified in section 5.1 hereof of a
certificate or certificates representing the number of Exchangeable Shares which
the holder desires to have the Corporation redeem, together with such other
documents and instruments as may be required pursuant to section 5.1 and a
Retraction Request, the Corporation shall redeem the Retracted Shares effective
at the close of business on the sixth Business Day after the Retraction Request
is received (the "Retraction Date") and shall cause to be delivered to such
holder the total Retraction Price with respect to such shares. If only a part of
the Exchangeable Shares represented by any certificate are redeemed (or
purchased by Sonic pursuant to the Retraction Call Right), a new certificate for
the balance of such Exchangeable Shares shall be issued to the holder at the
expense of the Corporation.
5.3 Upon receipt by the Transfer Agent of a Retraction Request, the Transfer
Agent shall forthwith notify Sonic thereof. In order to exercise the Retraction
Call Right, Xxxxx must deliver a Sonic Call Notice to the Transfer Agent prior
to the expiry of the third Business Day after the receipt by the Transfer Agent
of the Retraction Request. If Xxxxx does not so notify the Transfer Agent, the
Transfer Agent will notify the holder as soon as possible thereafter that Xxxxx
will not exercise the Retraction Call Right. If Xxxxx delivers the Sonic Call
Notice before the end of such three Business Day period, the Retraction Request
shall thereupon be considered only to be an offer by the holder to sell the
Retracted Shares to Sonic in accordance with the Retraction Call Right. In such
event, the Corporation shall not redeem the Retracted Shares and Sonic shall
purchase from such holder and such holder shall sell to Sonic on the Retraction
Date the Retracted Shares pursuant to the Retraction Call Right.
5.4 If a Retraction Request is received by the Transfer Agent pursuant to
section 5.1 and Xxxxx has not exercised the Retraction Call Right, the
Corporation shall cause the Transfer Agent to deliver to the holder of the
Retracted Shares, at the address of the holder recorded in the securities
register of the Corporation for the Exchangeable Shares or
13
at the address specified in the holder's Retraction Request or by holding for
pick-up by the holder at the office of the Transfer Agent to which the
Retraction Request was delivered, certificates representing the Sonic Common
Shares to be delivered to the holder in payment of the total Retraction Price
for the Retracted Shares (or the portion thereof payable in Sonic Common Shares,
as the case may be) (which shares shall be duly issued as fully paid and non
assessable and shall be free and clear of any Liens) registered in the name of
the holder or in such other name as the holder may request and a cheque of the
Corporation payable at par at any branch of the bankers of the Corporation in
payment of the remaining portion, if any, of the total Retraction Price (or, if
any part of the Retraction Price consists of dividends payable in property, such
property or property that is the same as or economically equivalent to such
property), and such delivery of such certificates and cheque (and property, if
any) on behalf of the Corporation by the Transfer Agent shall be deemed to be
payment of and shall satisfy and discharge all liability for the total
Retraction Price, to the extent that the same is represented by such share
certificates and cheque (and property, if any), unless such cheque is not paid
on due presentation.
5.5 On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive his proportionate part of the total
Retraction Price, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the total Retraction Price
shall not be made, in which case the rights of such holder shall remain
unaffected until the Total Retraction Price has been paid in the manner
hereinbefore provided. On and after the close of business on the Retraction
Date, provided that presentation and surrender of certificates and payment of
the total Retraction Price has been made in accordance with the foregoing
provisions, the holder of the Retracted Shares so redeemed by the Corporation
shall thereafter be considered and deemed for all purposes to be a holder of the
Sonic Common Shares delivered to it.
5.6 Notwithstanding any other provision of this Article 5, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to solvency requirements or other provisions of applicable law. If
the Corporation believes that on any Retraction Date it would not be permitted
by any of such provisions to redeem the Retracted Shares tendered for redemption
on such date, and provided that Sonic shall not have exercised the Retraction
Call Right with respect to the Retracted Shares, the Corporation shall be
obligated to redeem Retracted Shares specified by a holder in a Retraction
Request only to the extent of the maximum number that may be so redeemed
(rounded down to a whole number of shares) as would not be contrary to such
provisions on a pro rata basis and shall notify the holder at least two Business
Days prior to the Retraction Date as to the number of Retracted Shares which
will not be redeemed by the
14
Corporation and the Corporation shall issue to each holder of Retracted Shares a
new certificate, at the expense of the Corporation, representing the Retracted
Shares not redeemed by the Corporation pursuant to section 5.2 hereof. The
holder of any such Retracted Shares not redeemed by the Corporation pursuant to
section 5.2 of these share provisions as a result of solvency requirements of
applicable law shall be deemed by giving the Retraction Request to require Sonic
to purchase such Retracted Shares from such holder pursuant to the Exchange
Right (as defined in the Voting and Exchange Trust Agreement).
ARTICLE 6
REDEMPTION OF EXCHANGEABLE SHARES
---------------------------------
6.1 Subject to applicable law and if Sonic does not exercise the Redemption
Call Right, the Corporation shall on the Automatic Redemption Date redeem the
whole of the then outstanding Exchangeable Shares for an amount per share equal
to (a) the Current Market Price multiplied by the Current Sonic Common Share
Equivalent, in each case determined on the Automatic Redemption Date, which
shall be satisfied in full in respect of all of the Exchangeable Shares held by
each holder of Exchangeable Shares by the Corporation causing to be delivered to
such holder such whole number of Sonic Common Shares as is equal to the product
obtained by multiplying the number of such Exchangeable Shares by the Current
Sonic Common Share Equivalent (together with an amount in lieu of any fractional
Sonic Common Share resulting from such calculation payable in accordance with
section 9.4), plus (b) the aggregate of all declared and unpaid dividends
thereon up to the Automatic Redemption Date (collectively the "Redemption
Price").
6.2 On or after the Automatic Redemption Date and subject to the exercise by
Sonic of the Redemption Call Right, the Corporation shall cause to be delivered
to the holders of the Exchangeable Shares the Redemption Price for each such
Exchangeable Share upon presentation and surrender at any office of the Transfer
Agent of the certificates representing such Exchangeable Shares, together with
such other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require. Payment of the total Redemption Price for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation or by holding for pick up by the
holder at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice, on behalf
of the Corporation of certificates representing the Sonic Common Shares to be
delivered to the holder in payment of the Redemption Price (or the portion
thereof payable in Sonic Common Shares, as the case may be) (which shares shall
be duly issued as fully paid and non-assessable and shall be free and clear of
any Liens) and a cheque of the Corporation payable at par at any branch of the
bankers of the Corporation in
15
respect of any fractional Sonic Common Share and all declared and unpaid
dividends comprising part of the total Redemption Price (or, if any of such
dividends are payable in property, such property). On and after the Automatic
Redemption Date, the holders of the Exchangeable Shares called for redemption
shall cease to be holders of such Exchangeable Shares and shall not be entitled
to exercise any of the rights of holders in respect thereof, other than the
right to receive the total Redemption Price for their Exchangeable Shares,
unless payment of the total Redemption Price for such Exchangeable Shares shall
not be made upon presentation and surrender of certificates in accordance with
the foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Redemption Price has been paid in the manner
hereinafter provided. The Corporation shall have the right at any time to
deposit or cause to be deposited the total Redemption Price of the Exchangeable
Shares so called for redemption, or of such of the said Exchangeable Shares
represented by certificates that have not at the date of such deposit been
surrendered by the holders thereof in connection with such redemption, in a
custodial account with any chartered bank or trust company in Canada named in
such notice. Upon the later of such deposit being made and the Automatic
Redemption Date, the Exchangeable Shares in respect whereof such deposit shall
have been made shall be redeemed and the rights of the holders thereof after
such deposit or Automatic Redemption Date, as the case may be, shall be limited
to receiving the total Redemption Price for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of the total Redemption Price, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be holders of the Sonic Common Shares delivered to them.
ARTICLE 7
VOTING RIGHTS
-------------
7.1 Except as required by applicable law and the provisions of sections 3.5,
8.1 and 10.2, the holders of the Exchangeable Shares shall not be entitled as
such to receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting.
ARTICLE 8
AMENDMENT AND APPROVAL
----------------------
8.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
16
8.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 50% of the outstanding Exchangeable Shares at that time are present or
represented by proxy. If at any such meeting the holders of at least 50% of the
outstanding Exchangeable Shares at that time are not present or represented by
proxy within one-half hour after the time appointed for such meeting then the
meeting shall be adjourned to such date not less than 10 days thereafter and to
such time and place as may be designated by the Chairman of such meeting. At
such adjourned meeting the holders of Exchangeable Shares present or represented
by proxy thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not less than
two thirds of the votes cast on such resolution at such meeting shall constitute
the approval or consent of the holders of the Exchangeable Shares.
ARTICLE 9
ECONOMIC EQUIVALENCE; CHANGES RELATING TO SONIC
-----------------------------------------------
9.1 The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the Board of Directors may require)
economic equivalence for the purposes of any provision herein that requires such
a determination and each such determination shall be conclusive and binding on
Sonic, where applicable.
9.2 If at any time there is a capital reorganization of Sonic that is not
provided for in subsection 1.1(i) or a consolidation, merger arrangement or
amalgamation (statutory or otherwise) of Sonic with or into another entity (any
such event being called a "Capital Reorganization"), any holder of Exchangeable
Shares whose Exchangeable Shares have not been exchanged for Sonic Common Shares
in accordance with the provisions hereof prior to the record date for such
Capital Reorganization shall be entitled to receive and shall accept, upon any
such exchange occurring pursuant to the provisions hereof at any time after the
record date for such Capital Reorganization in lieu of the Sonic Common Shares
that he would otherwise have been entitled to receive pursuant to the provisions
hereof, the number of shares or other securities of Sonic or of the body
corporate resulting, surviving or continuing from the Capital Reorganization, or
other property, that such holder would have been entitled to receive as a result
of such Capital Reorganization if, on the record date, he had been the
registered holder of the number of Sonic Common Shares to which he was
17
then entitled upon any exchange of his Exchangeable Shares into Sonic Common
Shares in accordance with the provisions hereof, subject to adjustment
thereafter in the same manner, as nearly as may be possible, as is provided for
in subsection 1.1(i); provided that no such Capital Reorganization shall be
carried into effect unless all necessary steps shall have been taken so that
each holder of Exchangeable Shares shall thereafter be entitled to receive, upon
any exchange of his Exchangeable Shares pursuant to the provisions hereof, such
number of shares or other securities of Sonic or of the body corporate
resulting, surviving or continuing from the Capital Reorganization, or other
property.
9.3 In the case of any reclassification of, or other change in, the outstanding
Sonic Common Shares other than a Common Share Reorganization or a Capital
Reorganization, such changes shall be made in the rights attaching to the
Exchangeable Shares, without any action on the part of the Corporation or the
holders of the Exchangeable Shares to the extent permitted by applicable law,
effective immediately following the record date for such reclassification or
other change, to the extent necessary to ensure that holders of Exchangeable
Shares shall be entitled to receive, upon the occurrence at any time after such
record date of any event whereby they would receive Sonic Common Shares pursuant
to the provisions hereof, such shares, securities or rights as they would have
received if their Exchangeable Shares had been exchanged for Sonic Common Shares
pursuant to the provisions hereof immediately prior to such record date, subject
to adjustment thereafter in the same mariner, as nearly as may be possible, as
is provided for in subsection 1.1(i).
9.4 No certificates or scrip representing fractional Sonic Common Shares shall
be delivered to holders of Exchangeable Shares pursuant to the provisions
hereof. In lieu of any such fractional security, each person entitled to a
fractional interest in an Sonic Common Share will receive an amount of cash
(rounded to the nearest whole cent), without interest, equal to the Canadian
Dollar Equivalent as of the fourth Business Day prior to the relevant date of
delivery of certificates representing Sonic Common Shares (the "Fractional Share
Calculation Date") of the product of (i) such fraction, multiplied by (ii) the
closing sale price of Sonic Common Shares as reported on NASDAQ on the
Fractional Share Calculation Date.
ARTICLE 10
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
--------------------------------------------------
10.1 The Corporation will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by Sonic with all provisions of the Support Agreement and the
Voting and Exchange Trust Agreement applicable to the Corporation and Sonic,
respectively, in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall be
necessary or advisable to
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enforce to the fullest extent possible for the direct benefit of the Corporation
and the holders of Exchangeable Shares all rights and benefits in favour of the
Corporation under or pursuant to such agreement.
10.2 The Corporation shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement and the Voting and Exchange Trust Agreement without the
approval of the holders of the Exchangeable Shares given in accordance with
section 8.2 of these share provisions other than such amendments, waivers and/or
forgiveness as may be necessary or advisable for the purposes of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Corporation or the holders of
Exchangeable Shares; or
(b) making such provisions or modifications not inconsistent with such
agreements as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the opinion of the Board of
Directors, it may be expedient to make, provided that the Board of
Directors shall be of the opinion, after consultation with counsel,
that such provisions and modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreements which, on the
advice of counsel to the Corporation, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the opinion, after
consultation with counsel, that such changes or corrections will not
be prejudicial to the interests of the holders of the Exchangeable
Shares.
ARTICLE 11
LEGEND
------
11.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Retraction Call Right, the Liquidation Call Right
and the Redemption Call Right, and the Voting and Exchange Trust Agreement
(including the provisions with respect to the voting rights, exchange right and
automatic exchange thereunder).
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ARTICLE 12
NOTICES
-------
12.1 Any notice, request or other communication to be given to the Corporation
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to the attention of the
President. Any such notice, request or other communication, if given by mail,
telecopy or delivery, shall only be deemed to have been given and received upon
actual receipt thereof by the Corporation.
12.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be made
by registered mail (postage prepaid) or by delivery to the registered office of
the Corporation or to such office of the Transfer Agent as may be specified by
the Corporation, in each case addressed to the attention of the President of the
Corporation. Any such presentation and surrender of certificates shall only be
deemed to have been made and to be effective upon actual receipt thereof by the
Corporation or the Transfer Agent, as the case may be. Any such presentation and
surrender of certificates made by registered mail shall be at the sole risk of
the holder mailing the same.
12.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the fifth Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.
PROVISIONS ATTACHING TO THE COMMON SHARES OF THE CORPORATION
The common shares in the capital of the Corporation shall have attached
thereto the following rights, privileges, restrictions and conditions:
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DIVIDENDS
---------
Subject to the prior rights of the holders of the Exchangeable Shares, and
any other shares ranking senior to the common shares with respect to priority in
the payment of dividends, the holders of common shares shall be entitled to
receive dividends and the Corporation shall pay dividends thereon, as and when
declared by the Board of Directors out of moneys properly applicable to the
payment of dividends, in such amount and in such form as the Board of Directors
may from time to time determine and all dividends which the Board of Directors
may declare on the common shares shall be declared and paid in equal amounts per
share on all common shares at the time outstanding.
DISSOLUTION
-----------
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of the Exchangeable
Shares and any other shares ranking senior to the common shares with respect to
priority in the distribu tion of assets upon dissolution, liquidation or
winding-up, the holders of the common shares shall be entitled to receive the
remaining property and assets of the Corporation.
VOTING RIGHTS
-------------
The holders of the common shares shall be entitled to receive notice of and
to attend all meetings of the shareholders of the Corporation and shall have one
vote for each common share held at all meetings of the shareholders of the
Corporation, except for meetings at which only holders of another specified
class or series of shares of the Corporation are entitled to vote separately as
a class or series.
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SCHEDULE A
NOTICE OF RETRACTION
--------------------
To Sonic Canada, Inc. (the "Corporation") and TurboSonic Technologies, Inc.
("Sonic")
This notice is given pursuant to Article 5 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice that are defined in the
Share Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 5 of the Share Provisions:
[ ] all share(s) represented by this certificate; or
[ ] ____________________ share(s) only.
The undersigned acknowledges the Retraction Call Right of Sonic to purchase
all but not less than all the Retracted Shares from the undersigned and that
this notice shall be deemed to be an irrevocable offer (subject as hereinafter
provided) by the undersigned to sell the Retracted Shares to Sonic in accordance
with the Retraction Call Right on the Retraction Date for the Retraction Call
Purchase Price and on the other terms and conditions set out in section 5.1 of
the Plan of Arrangement. If Xxxxx determines not to exercise the Retraction Call
Right, the Corporation will notify the undersigned of such fact as soon as
possible. If this notice is not effective pursuant to section 5.1 of the Share
Provisions, whether as a result of the postponement of a Retraction Period or
otherwise, the offer contained in this notice may be revoked by the undersigned
by a further notice in writing addressed to the Corporation and Sonic and
delivered to the Transfer Agent.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law or otherwise, the Corporation fails to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Right (as
defined in the Voting and Exchange Trust Agreement) so as to require Sonic to
purchase the unredeemed Retracted Shares.
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The undersigned hereby represents and warrants to the Corporation and Sonic
that the undersigned has good title to, and owns, the share(s) represented by
this certificate to be acquired by the Corporation or Sonic, as the case may be,
free and clear of all Liens.
------------- ------------------------------- ---------------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
[ ] Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up
by the shareholder at the principal transfer office of
_____________________________ (the "Transfer Agent") in __________, failing
which the securities and any cheque(s) will be mailed to the last address
of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be
deposited with the Transfer Agent at its principal transfer office in
Toronto. The securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares will be issued and
registered in, and made payable to, respectively, the name of the
shareholder as it appears on the register of the Corporation and the
securities and cheque(s) resulting from such retraction or purchase
will be delivered to such shareholder as indicated above, unless the
form appearing immediately below is duly completed.
------------------------------------- ---------------------------------------
Name of Person in Whose Name Date
Securities or Cheque(s) Are To Be
Registered, Issued or Delivered
(please print)
------------------------------------- ---------------------------------------
Street Address or P.O. Box Signature of Shareholder
------------------------------------- ---------------------------------------
City-Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the
remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation, unless the Share Transfer Power on the share certificate
is duly completed in respect of such shares.
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