EXHIBIT 4.1
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms will have the
respective meanings set out below and grammatical variations of such terms will
have corresponding meanings:
"Acquisition Agreement" means the acquisition agreement made as of the
19/th/ day of June, 2001 by and among Parent, Niwot Acquisition Corp.,
CallCo, ExchangeCo, the Company, Element K, the Principal Shareholders and
Element K LLC, in its own capacity and, acting through its authorized
representative Xxxxx Xxxxxx, in its capacity as Shareholder Representative,
as amended, supplemented and/or restated in accordance therewith prior to
the Effective Date, providing for, among other things, the Arrangement.
"Aggregate Amount" means US$94,000,000 minus (i) the Balance Sheet
Adjustment Amount, and (ii) all Debentureholder Cash Payments.
"Arrangement" means an 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 or variations thereto made in accordance with
Section 8.3 or Section 8.4 of the Acquisition Agreement or Article 5 hereof
or made at the direction of the Court, and pursuant to which the Company
will become an indirect wholly-owned subsidiary of Parent.
"Arrangement Resolution" means the special resolution to be passed by the
Securityholders, to be substantially in the form and content of Exhibit J
annexed to the Acquisition Agreement.
"Articles of Arrangement" means the articles of arrangement of the Company
in respect of the Arrangement that are required by the OBCA to be sent to
the Director after the Final Order is made.
"Balance Sheet Adjustment Amount" means the amount, if any, by which the
Companys total liabilities exceed an amount equal to the Companys total
current assets as reflected on the Closing Date Balance Sheet plus
US$1,000,000; provided, however, that (i) the principal amount of the
Company Convertible Debenture, (ii) up to US$300,000 in reasonable and
documented Estimated Third Party Expenses, and (iii) the principal amount
of the Shareholder Convertible Debentures plus any accrued and unpaid
interest thereon and any premium with respect thereto will not be
considered liabilities
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for purposes of calculating the Balance Sheet Adjustment Amount, if any;
and provided, further, that if (x) the Closing shall not have occurred on
or prior to July 25, 2001, and (y) as of July 25, 2001, the Specified
Conditions (as defined in the Acquisition Agreement) shall have been
satisfied as if the Closing had occurred as of such date, the Balance Sheet
Adjustment Amount shall mean (A) if the Post-Interim Balance Sheet
Adjustment Amount is greater than the Interim Balance Sheet Adjustment
Amount, the sum of (i) the Interim Balance Sheet Adjustment Amount plus
(ii) twenty percent (20%) of the amount by which the Post-Interim Balance
Sheet Adjustment Amount exceeds the Interim Balance Sheet Adjustment Amount
and (B) if the Post-Interim Balance Sheet Adjustment Amount is less than
the Interim Balance Sheet Adjustment Amount, the Post-Interim Balance Sheet
Adjustment Amount.
"Business Day" means any day on which commercial banks are generally open
for business in San Francisco, California and Toronto, Ontario, other than
a Saturday, a Sunday or a day observed as a holiday in San Francisco,
California or in Toronto, Ontario.
"CallCo" means 3055855 Nova Scotia Company, a Nova Scotia unlimited
liability company.
"Cash Exchange Ratio" means an amount of cash equal to the quotient
obtained by dividing (i) the Aggregate Amount by (ii) the Total Company
Shares.
"Certificate" means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to subsection 183(2) of the OBCA after the
Articles of Arrangement have been filed.
"Closing" means the closing of the Arrangement.
"Closing Date" means the date upon which the Closing actually occurs.
"Closing Date Balance Sheet" means the estimated balance sheet of the
Company, which shall include all Estimated Third Party Expenses as
liabilities of the Company, delivered to Parent at least three (3) Business
Days prior to the Closing Date, which balance sheet has been prepared in
accordance with GAAP (except that the Closing Date Balance Sheet may
exclude footnotes and other presentation items that may be required by
GAAP) applied on a basis consistent with the most recent balance sheet
included in the Financials (as defined in the Acquisition Agreement) that
fairly presents an estimate by the Company in good faith based on
reasonable assumptions of the balance sheet of the Company as of the
Closing Date. The Closing Date Balance Sheet shall include as a current
asset an accrual for unbilled revenues due to Element K or its Affiliates
as determined in accordance with GAAP applied on a basis consistent with
the most recent balance sheet included in the Financials in an amount not
to exceed US$1,000,000.
"Company" means Isopia Inc., a corporation incorporated under the laws of
Ontario.
"Company Convertible Debenture" means those certain convertible debentures
issued pursuant to the Debenture Purchase Agreement dated as of May 5, 2000
between the
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Company and Element K Holdings, LLC in the aggregate principal amount of
US$9,000,000, as of the date hereof (whose rights, or the rights of one of
its affiliates in respect of (i) US$7,500,000 aggregate principal amount
thereunder were assigned to Element K (Nova Scotia) Company on June 14,
2001, and (ii) US$1,500,000 aggregate principal amount thereunder were
assigned to Element K Newco (Nova Scotia) Company on June 14, 2001) and in
an aggregate principal amount not to exceed US$10,000,000 at any time,
including all property or rights issued by the Company with respect to such
Company Convertible Debenture.
"Company Options" means all issued and outstanding options to purchase or
otherwise acquire Company Shares (whether or not vested) held by any person
under the Companys Stock Option Plan dated January 1, 2000 and the
agreements relating thereto, and any other employee stock option plan or
arrangement.
"Company Securities" means, collectively, the Company Shares, the Company
Convertible Debenture and the Shareholder Convertible Debentures, and does
not include the Company Options.
"Company Securityholders Meeting" means the special meeting of the
Securityholders, including any adjournment thereof, to be called and held
in accordance with the Interim Order to consider, and if deemed appropriate
to approve, the Arrangement.
"Company Shares" means all of the issued and outstanding common shares of
the Company beneficially owned or held of record and to be beneficially
owned or held of record by the Shareholders as at the Effective Date,
including all property or rights issued by the Company with respect to such
shares, and, in the event the Company Reorganization is implemented
"Company Shares" shall include the Preferred Shares and the New Common
Shares.
"Court" means the Ontario Superior Court of Justice.
"Debentureholder Cash Payment" means, for each Debentureholder, the amount
such Debentureholder is due under such Debentureholders Shareholder
Convertible Debenture, including any accrued interest thereon and any
premium payable with respect thereto.
"Debentureholders" means holders of the Shareholder Convertible Debentures
as set forth on Section 2.2(a) of the Disclosure Schedule to the
Acquisition Agreement.
"Director" means the Director appointed pursuant to section 278 of the
OBCA.
"Dissent Rights" has the meaning ascribed thereto in Section 3.1 hereof.
"Dissenting Shareholder" means a holder of Company Shares who dissents in
respect of the Arrangement in strict compliance with the Dissent Rights.
"Effective Date" means the date shown on the Certificate.
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"Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date.
"EK Interest Amount" means the amount of interest payable to Element K at
Closing in accordance with the terms of the Company Convertible Debenture.
"Election Deadline" means 5:00 pm (Toronto time) on the date of the Company
Securityholders Meeting.
"Election Form" means the Election Form attached hereto as Exhibit C.
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"Element K" means, collectively, Element K (Nova Scotia) Company and
Element K Newco (Nova Scotia) Company, both Nova Scotia unlimited liability
companies.
"Escrow Agent" means U.S. Bank Trust, National Association, or another
financial institution chosen by Parent and reasonably acceptable to the
Shareholder Representative.
"Escrow Cash" means ten percent (10%) of the cash otherwise payable to
Element K and Xxxx Xxxxxxxx at the Closing (other than, in the case of
Element K, the EK Interest Amount), together with any additional cash
deposited with the Escrow Agent in respect thereof pursuant to the escrow
arrangements set out in the Acquisition Agreement.
"Escrow Shares" means a number of Exchangeable Shares equal to the quotient
obtained by dividing (i) US$9,500,000 minus the amount of Escrow Cash by
(ii) US$28.00, otherwise issuable to the Founders at the Closing together
with any additional securities deposited with the Escrow Agent in respect
thereof pursuant to the escrow arrangements set out in the Acquisition
Agreement.
"Estimated Third Party Expenses" means the amount of Third Party Expenses
(as defined in the Acquisition Agreement) estimated by the Company in good
faith and based on reasonable assumptions as of the Closing Date and, for
purposes of the Interim Balance Sheet, as of July 25, 2001.
"ExchangeCo" means 514713 N.B. Inc., a corporation incorporated under the
laws of New Brunswick.
"Final Order" means the final order of the Court approving the Arrangement
as such order may be amended by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or
denied, as affirmed or as amended on appeal.
"Founders" means Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxx and
Xxxx Xxxxx.
"Founder Pro Rata Portion" means, with respect to each Founder, an amount
equal to the quotient obtained by dividing (x) the number of Company Shares
owned by such Founder immediately prior to the Closing by (y) the aggregate
number of Company Shares owned by all Principal Shareholders immediately
prior to Closing.
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"Governmental Entity" means any (a) multinational, federal, provincial,
state, municipal, local or other governmental or public department, central
bank, court, tribunal, arbitral body, commission, board, bureau, agency or
instrumentality, domestic or foreign, (b) any subdivision or authority of
any of the foregoing, or (c) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or for
the account of any of the above.
"Indemnifying Securityholder" means the Principal Shareholders and Element
K.
"Interim Balance Sheet" means the estimated balance sheet of the Company,
which shall include all Estimated Third Party Expenses as liabilities,
delivered to Parent not later than July 23, 2001, which balance sheet has
been prepared in accordance with GAAP (except that the Interim Balance
Sheet may exclude footnotes and other presentation items that may be
required by GAAP) applied on a basis consistent with the most recent
balance sheet included in the Financials (as defined in the Acquisition
Agreement) that fairly presents an estimate by the Company in good faith
based on reasonable assumptions of the balance sheet of the Company as of
the July 25, 2001. The Interim Balance Sheet shall include as a current
asset an accrual for unbilled revenues due to Element K or its Affiliates
as determined in accordance with GAAP applied on a basis consistent with
the most recent balance sheet included in the Financials in an amount not
to exceed US$1,000,000.
"Interim Balance Sheet Adjustment Amount" means the amount, if any, by
which the Company's total liabilities exceed an amount equal to the
Company's total current assets as reflected on the Interim Balance Sheet
plus US$1,000,000; provided, however, that (i) the principal amount of the
Company Convertible Debenture, (ii) up to US$300,000 in reasonable and
documented Estimated Third Party Expenses (treating all Third Party
Expenses as if they were accrued as liabilities of the Company as of July
25, 2001), and (iii) the principal amount of the Shareholder Convertible
Debentures plus any accrued and unpaid interest thereon and any premium
with respect thereto will not be considered liabilities for purposes of
calculating the Interim Balance Sheet Adjustment Amount, if any.
"Interim Order" means the interim order of the Court providing advice and
directions to the Company with respect to the calling and holding of the
Company Shareholders Meeting, as the same may be amended, in respect of the
Arrangement, as contemplated by Section 1.4 of the Acquisition Agreement.
"ITA" means the Income Tax Act (Canada), as amended.
"OBCA" means the Business Corporations Act (Ontario), as amended.
"Option Exchange Ratio" means the sum obtained by adding (A) seventy-five
percent (75%) of the quotient obtained by dividing the Aggregate Amount by
the Total Company Shares and dividing such amount by US$28.00 plus (B)
twenty-five percent (25%) of the quotient obtained by dividing the
Aggregate Amount by the Total Company Shares and dividing such amount by
the Trading Price.
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"Parent" means Sun Microsystems, Inc., a Delaware corporation.
"Parent Common Stock" means shares of the common stock, par value
US$0.00067 per share, of Parent.
"Parent Option" means any option to purchase shares of Parent Common Stock
issued pursuant to the terms of the Acquisition Agreement in connection
with the assumption of a Company Option.
"Parent Parties" means Parent, Niwot Acquisition Corp., ExchangeCo and
CallCo.
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other
entity, whether or not having legal status.
"Plan" means the Companys Stock Option Plan dated January 1, 2000.
"Post-Interim Balance Sheet Adjustment Amount" means the amount, if any, by
which the Company's total liabilities exceed an amount equal to the
Company's total current assets as reflected on the Closing Date Balance
Sheet plus US$1,000,000; provided, however, that (i) the principal amount
of the Company Convertible Debenture, (ii) up to US$300,000 in reasonable
and documented Estimated Third Party Expenses (treating all Third Party
Expenses as if they were accrued as liabilities of the Company as of July
25, 2001), and (iii) the principal amount of the Shareholder Convertible
Debentures plus any accrued and unpaid interest thereon and any premium
with respect thereto will not be considered liabilities for purposes of
calculating the Post-Interim Balance Sheet Adjustment Amount, if any.
"Principal Shareholders" means the Founders and Xxxx Xxxxxxxx.
"Securityholder" means any holder of Company Securities or Company Options.
"Share Exchange Ratio" means the number of Exchangeable Shares equal to the
quotient obtained by dividing (i) the quotient obtained by dividing the
Aggregate Amount by U.S.$28.00 by (ii) the Total Company Shares.
"Shareholder Convertible Debentures" means the convertible debentures
issued to the Debentureholders, in the aggregate principal amounts listed
on Section 2.2(a) of the Disclosure Schedule to the Acquisition Agreement,
including all property or rights issued by the Company with respect to such
Shareholder Convertible Debentures.
"Total Company Shares" means the aggregate number of Company Shares,
including any Company Options (whether vested or unvested), the Company
Convertible Debenture and any other rights convertible into, or exercisable
or exchangeable for, Company Shares on an as-converted, exercised or
exchanged basis, plus the Equivalent Scheduled Option Shares (as defined in
the Acquisition Agreement) but excluding the
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Shareholder Convertible Debentures, issued and outstanding immediately
prior to the Closing.
"Trading Price" means the average closing sale price of one share of Parent
Common Stock as reported on The Nasdaq National Market for the ten (10)
consecutive trading days ending three (3) business days prior to the
Closing Date.
Section 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 otherwise indicated, any reference in this
Plan of Arrangement to a section or an exhibit refers to the specified section
of or exhibit to this Plan of Arrangement.
Section 1.3 Number and Gender
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa and words
importing any gender include all genders.
Section 1.4 Governing Law
This Plan of Arrangement will be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable therein, without regard to principles of conflicts of laws.
ARTICLE 2
ARRANGEMENT
Section 2.1 Binding Effect
This Plan of Arrangement will become effective at, and be binding at and
after, the Effective Time on (i) the Company, (ii) the Parent Parties, and (iii)
the Securityholders.
Section 2.2 Arrangement
Commencing at the Effective Time, the following will occur and will be
deemed to occur in the following order without any further act or formality:
(a) if required by the Parent Parties by written notice delivered to the
Company prior to the Effective Time, the following reorganization of
the authorized, issued and outstanding share capital of the Company
shall be implemented (the "Company Reorganization"):
(i) an unlimited number of fixed value preferred shares in the share
capital of the Company will be created ("Preferred Shares"),
having the rights, privileges and restrictions set out in
Schedule 1 hereto, each such Preferred Share having a redemption
value equal to the product of the Trading Price multiplied by the
Share Exchange Ratio;
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(ii) an unlimited number of a new class of common shares in the share
capital of the Company will be created ("New Common Shares"),
having the rights, privileges and restrictions set out in
Schedule 1 hereto;
(iii) each Company Share will be converted into the aggregate of (i)
three-quarters (3/4) of a Preferred Share and (ii) one-quarter
(1/4) of a New Common Share;
(iv) the Company Shares, as a class of shares in the share capital of
the Company and any Company Shares that were issued and
outstanding prior to the implementation of steps (ii) and (iii)
above will be eliminated and canceled; and
(v) the Company will amend and modify its securities register
accordingly to reflect the Company Reorganization;
(b) each Company Share in respect of which the consideration payable to
the holder thereof is in cash (in accordance with Section 2.3 below)
will be transferred by the holder thereof, without any further act or
formality on the part of such holder, to CallCo and the name of each
such holder will be removed from the Companys register of holders of
Company Shares and CallCo will be recorded as the holder of such
Company Shares so exchanged and will be deemed to be the legal and
beneficial holder thereof;
(c) each Company Share in respect of which the consideration payable to
the holder thereof is in Exchangeable Shares (in accordance with
Section 2.3 below) will be transferred by the holder thereof, without
any further act or formality on the part of such holder, to ExchangeCo
and the name of each such holder will be removed from the Companys
register of holders of Company Shares and added to the register of
holders of Exchangeable Shares, and ExchangeCo will be recorded as the
holder of such Company Shares so exchanged and will be deemed to be
the legal and beneficial holder thereof;
(d) the Company Convertible Debenture will be transferred by the holder
thereof to CallCo for the consideration set out in Section 2.4(1)
below, without any further act or formality on the part of such
holder, and the name of such holder will be removed from the Companys
register of holders of Company Convertible Debentures and CallCo will
be recorded as the holder of the Company Convertible Debenture and
will be deemed to be the legal and beneficial holder thereof;
(e) each Shareholder Convertible Debenture will be transferred by the
holder thereof to CallCo for the consideration set out in Section
2.4(2) below, without any further act or formality on the part of such
holder, and the name of each such holder will be removed from the
Companys register of holders of the Shareholder Convertible Debentures
and CallCo will be recorded as the holder of such Shareholder
Convertible Debentures and will be deemed to be the legal and
beneficial holder thereof;
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(f) subject to applicable securities laws and regulatory requirements,
each Company Option that is outstanding and unexercised at or
immediately prior to the Effective Time will be assumed by Parent in
accordance with Section 2.7 hereof;
(g) immediately after the transfer of the Company Convertible Debenture by
Element K to CallCo, without any further act or formality on the part
of CallCo, the Company Convertible Debenture will be converted into
7,394,574 Company Shares, or if the Company Reorganization is
implemented, 7,394,574 New Common Shares in the capital of the
Company; and
(h) coincident with the transactions set out above in this Section 2.2,
Parent, CallCo, ExchangeCo and the Shareholder Representative will
execute the Exchange and Support Agreement (the "Exchange and Support
Agreement") in substantially the form attached to the Acquisition
Agreement as Exhibit E, with such changes as the parties thereto may
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agree in writing.
Section 2.3 Consideration Payable to Shareholders
Subject to Section 2.5, Section 2.6, Section 4.2 and Section 4.4, each
holder of Company Shares shall have the right to elect one of the following
options:
(1) a holder of Company Shares may elect to:
(a) (i) exchange with CallCo twenty five percent (25%) of the Company
Shares held by such Shareholder at the Effective Time in consideration
for an amount of cash per Company Share so exchanged equal to the Cash
Exchange Ratio; and (ii) exchange with ExchangeCo the remaining
seventy-five percent (75%) of the Company Shares held by such
Shareholder at the Effective Time in consideration for a number of
Exchangeable Shares, in which case ExchangeCo will issue to such
Shareholder for each Company Share so exchanged a number of
Exchangeable Shares equal to the Share Exchange Ratio; or
(b) if the Company Reorganization is implemented, (i) exchange with CallCo
all of the New Common Shares held by such Shareholder at the Effective
Time in consideration for an amount of cash for each New Common Share
so exchanged equal to the Cash Exchange Ratio; and (ii) exchange with
ExchangeCo all of the Preferred Shares held by such Shareholder at the
Effective Time in consideration for a number of Exchangeable Shares,
in which case ExchangeCo will issue to such Shareholder for each
Preferred Share so exchanged a number of Exchangeable Shares equal to
Share Exchange Ratio (collectively, the "Share/Cash Election" and each
Shareholder making the Share/Cash Election being referred to as an
"Exchanging Shareholder"); or
(2) a holder of Company Shares may elect to:
(a) sell to CallCo all of the Company Shares held by such Shareholder at
the Effective Time in consideration for an amount of cash for each
Company Share so sold equal to the Cash Exchange Ratio; or
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(b) if the Company Reorganization is implemented, sell to CallCo all of
the Preferred Shares and New Common Shares held by such Shareholder at
the Effective Time in consideration for an aggregate amount of cash
equal to the number of Preferred Shares and New Common Shares so sold
multiplied by the Cash Exchange Ratio (collectively, the "Cash
Election" and each Shareholder making, or being deemed to have made,
the Cash Election being referred to as a "Tendering Shareholder").
Each Shareholder may exercise either the Cash Election or the Share/Cash
Election at any time following the date of the Acquisition Agreement until the
Election Deadline by executing and delivering to Parent an election in the form
set out in Exhibit C to the Acquisition Agreement. Any Shareholder who has not
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made such an election prior to the Election Deadline shall be deemed to have
exercised the Cash Election.
Section 2.4 Consideration Payable to Element K and the Debentureholders
(1) Subject to Section 2.5 and Section 4.4, as consideration for the Company
Convertible Debenture transferred to CallCo pursuant to the Arrangement,
Element K will receive (i) an amount of cash equal to the EK Interest
Amount plus (ii) an amount of cash equal to the Cash Exchange Ratio
multiplied by the total number of Company Shares issuable upon conversion
of the Company Convertible Debenture immediately prior to the Closing.
(2) Subject to Section 2.5, Section 2.6 and Section 4.4, as consideration for
the Shareholder Convertible Debentures transferred to CallCo pursuant to
the Arrangement, each Debentureholder will be paid such Debentureholders
Debentureholder Cash Payment.
Section 2.5 Contribution to Escrow
Parent shall cause to be distributed to the Escrow Agent an amount of cash
representing the Escrow Cash and a certificate or certificates representing the
Escrow Shares which shall be registered in the name of the Escrow Agent as
nominee for each Indemnifying Securityholder. The Escrow Shares and Escrow Cash
shall be held in escrow and shall be available to compensate Parent for certain
damages as provided in Article VII of the Acquisition Agreement. The Escrow
Shares shall be withheld from the Exchangeable Shares otherwise issuable to each
Founder pursuant to Section 2.3(1) hereof in an amount equal to each such
Founder's Founder Pro Rata Portion of the Escrow Shares. The Escrow Shares so
withheld from the Exchangeable Shares otherwise payable to each Founder shall be
comprised solely of "Vested Shares" (as defined in the repurchase agreement
entered into by each such Founder pursuant to the terms of the Acquisition
Agreement). The Escrow Cash shall be withheld from the cash otherwise payable
to Element K pursuant to Section 2.4 hereof in an amount equal to ten percent
(10%) of the cash otherwise payable to Element K at the Closing (other than the
EK Interest Amount), and from the cash otherwise payable to Xxxx Xxxxxxxx
pursuant to Section 2.3(2) hereof in an amount equal to ten percent (10%) of the
cash otherwise payable to Xxxx Xxxxxxxx at the Closing. To the extent not used
for such purposes, such Escrow Shares and Escrow Cash shall be released as
provided in Article VII of the Acquisition Agreement.
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Section 2.6 Shareholder Loans
In the event that any Shareholder has outstanding loans from the Company as
of the Closing,
(a) the number of Exchangeable Shares payable to an Exchanging Shareholder
will be reduced by such number of Exchangeable Shares equal to the
outstanding principal plus accrued interest of such Shareholders loans
as of the Closing Date divided by the Trading Price, and if required,
by an amount of cash payable to such Exchanging Shareholder equal to
the remaining outstanding principal plus accrued interest of such
Exchanging Shareholders loans as of the Closing Date; and
(b) the amount of cash payable to a Tendering Shareholder will be reduced
by an amount equal to the outstanding principal plus accrued interest
of such Tendering Shareholders loans as of the Closing Date.
Section 2.7 Assumption of Company Options
Effective upon Closing, each Company Option will be exchanged and converted
by Parent into a Parent Option. Each Company Option so exchanged and converted
by Parent pursuant to this Section 2.7 will continue to have, and be subject to,
the same terms and conditions (subject to any waivers of acceleration of
vesting, including vesting terms) set forth in the Plan, and the option
agreements relating thereto, as in effect immediately prior to the Closing,
except that (i) such assumed Company Option will be exercisable for that number
of whole shares of Parent Common Stock equal to the product of the number of
Company Shares that were issuable upon exercise of such Company Option
immediately prior to the Closing multiplied by the Option Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock, and
(ii) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Option will be equal to the quotient
obtained by dividing the exercise price per share of Company Shares at which
such assumed Company Option was exercisable immediately prior to the Closing
Date by the Option Exchange Ratio, rounded up to the nearest whole cent. No
Company Option will be exercisable until the registration statement on Form S-8
described in the Acquisition Agreement is effective.
ARTICLE 3
RIGHTS OF DISSENT
Section 3.1 Rights of Dissent
Holders of Company Shares may exercise rights of dissent with respect to
such shares pursuant to and in the manner set forth in section 185 of the OBCA
and this Section 3.1 (the "Dissent Rights") in connection with the Arrangement;
provided that, notwithstanding subsection 185(6) of the OBCA, the written
objection to the Arrangement Resolution referred to in subsection 185(6) of the
OBCA must be received by the Company not later than 5:00 p.m. (Toronto time) on
the Business Day preceding the Company Shareholders Meeting. Holders of Company
Xxxxxx who duly exercise such rights of dissent and who:
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(a) are ultimately determined to be entitled to be paid fair value for
their Company Shares will be deemed to have transferred such Company
Shares to the Company immediately prior to the Effective Time and such
Company Shares will be cancelled as of the Effective Time; or
(b) are ultimately determined not to be entitled, for any reason, to be
paid fair value for their Company Shares shall be deemed to have
exercised the Cash Election and shall receive the cash consideration
provided for in Section 2.3(2);
but in no case shall the Parent Parties, the Company or any other Person be
required to recognize Dissenting Shareholders as holders of Company Shares after
the Effective Time, and the names of such Dissenting Shareholders shall be
deleted from the registers of holders of Company Shares at the Effective Time.
ARTICLE 4
CERTIFICATES, CHEQUES AND FRACTIONAL SHARES
Section 4.1 Rights to payment and share certificates
Subject to Section 2.5 , Section 2.6 and Section 4.4, on the Effective
Date:
(a) if a Securityholder has delivered to the Company a duly completed
Election Form, and has delivered for transfer at Closing, as
applicable, the certificates representing the Company Shares, the
Company Convertible Debenture or the Shareholder Convertible Debenture
held by such Securityholder, together with all other documents and
instruments required pursuant to the terms of the Acquisition
Agreement and the Arrangement, the Parent Parties will deliver to such
Securityholder at Closing, as applicable, either:
(i) a certificate representing the number of Exchangeable Shares
required to be delivered to such Securityholder pursuant to the
provisions hereof, and a cheque representing the cash
consideration payable to such Securityholder pursuant to the
provisions hereof (in the case of the Principal Shareholders,
less the Escrowed Shares required to be escrowed by such
Principal Shareholder); or
(ii) a cheque representing the cash consideration payable to such
Securityholder pursuant to the provisions hereof (in the case of
the holders of the Company Convertible Debenture, less the
Escrowed Cash required to be escrowed by such Securityholder);
and the certificates representing the Company Shares so surrendered shall
be cancelled; and
(b) if a Securityholder has not delivered a duly completed Election Form
and has not delivered for transfer at Closing, as applicable, the
certificates representing the Company Shares, the Company Convertible
Debenture or the Shareholder Convertible Debenture held by such
Securityholder, and has not exercised his or
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her Dissent Rights in accordance with Article 3 hereof, XxxxXx will
hold, at the principal office of the Company in Toronto, Ontario, a
cheque representing the cash consideration payable to such
Securityholder pursuant to the provisions hereof, and the Company
Shares of such Securityholder shall nonetheless be cancelled.
Section 4.2 No Fractional Shares
No fraction of an Exchangeable Share will be issued, but in lieu thereof,
any fractional share (after aggregating all fractional Exchangeable Shares to be
received by each Shareholder) will be rounded to the nearest whole Exchangeable
Share (with 0.5 being rounded up); provided, however, that this Section 4.2
shall not apply to any Parent Option granted pursuant to the terms of this
Agreement.
Section 4.3 Lost, Stolen or Destroyed Certificates
In the event any certificates evidencing any of the Company Shares shall
have been lost, stolen or destroyed, ExchangeCo or CallCo, as the case may be,
will pay in exchange for such lost, stolen or destroyed certificates, upon the
making of an affidavit of that fact by the holder thereof, such consideration,
if any, as may be required pursuant to Section 2.3 hereof; provided, however,
that ExchangeCo or CallCo, as the case may be, may, in its discretion and as a
condition precedent to the payment of the said consideration, require the owner
of such lost, stolen or destroyed certificates to deliver a bond in such sum as
it may direct against any claim that may be made against ExchangeCo or CallCo,
as the case may be, with respect to the certificates alleged to have been lost,
stolen or destroyed.
Section 4.4 Withholding Rights
Any amounts payable to any Securityholder pursuant to Article 2 hereof will
be subject to, and reduced by, all amounts required to be withheld under any
applicable state, provincial, federal and foreign taxation laws in connection
with the acquisition of Company Securities and the exchange of Company Options
upon the exercise of Company Options or upon payment of a bonus in the form of
Company Shares, if any, to such Securityholder will be subject to, and reduced
by, all such amounts required to be withheld in connection with such payment.
Without limiting the generality of the foregoing, the following withholding
obligations will apply:
(a)
(i) each Debentureholder that is not a resident of Canada for
purposes of the ITA (a "Non-Resident Debentureholder") will
provide to CallCo either a certificate issued pursuant to Section
116 of the ITA in connection with the transfer by the Non-
Resident Debentureholder of the Shareholder Convertible Debenture
pursuant to Section 2.2(e) hereof or written confirmation from
the CCRA that no such certificate is required at law in
connection with the acquisition by CallCo of the Shareholder
Convertible Debentures pursuant to this Agreement:
(ii) if such a certificate issued by the Minister of National Revenue
pursuant to Section 116(2) of the ITA is delivered by the Non-
Resident
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Debentureholder to CallCo at or prior to Closing and such
certificate fixes a certificate limit (as defined in Section
116(2) of the ITA) that is not less than the amount of the
Debentureholder Cash Payment, the whole in form and substance
satisfactory to CallCo, CallCo will remit forthwith to the Non-
Resident Debentureholder the Debentureholder Cash Payment;
(iii) if such a certificate issued by the Minister of National
Revenue pursuant to Section 116(2) of the ITA is delivered by
the Non-Resident Debentureholder to CallCo at or prior to
Closing and such certificate fixes a certificate limit that is
less than the amount of the Debentureholder Cash Payment,
CallCo shall be entitled to withhold twenty-five percent (25%)
of the amount, if any, by which such Debentureholder Cash
Payment exceeds the certificate limit;
(iv) if a certificate is not so delivered at or prior to Closing,
CallCo shall be entitled to withhold twenty-five percent (25%)
of the Debentureholder Cash Payment;
(v) where CallCo has withheld any amount pursuant to Section
4.4(a)(iii) or Section 4.4(a)(iv) hereinabove and the Non-
Resident Debentureholder has not complied with the conditions
of Section 4.4(a)(vii) below by the Business Day which is the
day before the date on which CallCo is required to remit the
amount withheld hereunder to the Receiver General of Canada (in
this Section, referred to as the "Remittance Date"), subject to
Section 4.4(a)(vi), the amount withheld will be paid by CallCo
on the Remittance Date to the Receiver General of Canada on
account of the Non-Resident Debentureholders liability for tax
pursuant to Section 116 of the ITA and shall also be credited
to CallCo as a payment to the Debentureholder on account of the
Debentureholder Cash Payment attributable to such Non-Resident
Debentureholder for the purchase of the Shareholder Convertible
Debenture. Interest, if any, earned on such amount withheld, as
well as the balance of any amount withheld which is not
required to be remitted to the Receiver General of Canada,
shall be paid forthwith to the Non-Resident Debentureholder;
(vi) where CallCo has withheld an amount pursuant to Section
4.4(a)(iii) or Section 4.4(a)(iv) and if the Non-Resident
Debentureholder delivers to CallCo after the Closing, but prior
to the Remittance Date, a certificate issued by the Minister of
National Revenue under Section 116(2) of the ITA and such
certificate fixes a certificate limit which is less than the
amount of the Debentureholder Cash Payment, CallCo shall pay
forthwith to the Non-Resident Debentureholder upon delivery to
CallCo of such certificate such portion of the amount withheld
hereunder equal to the amount of the excess, if any, of:
(A) the amount of the Debentureholder Cash Payment that CallCo
has withheld pursuant to Section 4.4(a)(iii) or Section
4.4(a)(iv)
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hereinabove, together with interest, if any, that may have
been earned on such amounts withheld, over
(B) the amount equal to twenty-five percent (25%) of (A-B),
where A is the amount of the Debentureholder Cash Payment
and B is the amount of such certificate limit;
(vii) If the Non-Resident Debentureholder delivers to CallCo after
the Closing, but prior to the Remittance Date, either a
certificate issued by the Minister of National Revenue under
Section 116(2) of the ITA with a certificate limit which is no
less than the amount of the Debentureholder Cash Payment or a
certificate issued by the Minister of National Revenue under
Section 116(4) of the ITA, CallCo shall pay forthwith to the
Non-Resident Debentureholder upon delivery to CallCo of such
certificate any amount that CallCo has withheld pursuant to
Section 4.4(a)(iii) or Section 4.4(a)(iv) hereinabove, as well
as interest, if any, earned on such amounts withheld;
(b)
(i) Each Shareholder that is not a resident of Canada for purposes
of the ITA (a "Non-Resident Vendor") will provide to CallCo a
certificate issued pursuant to Section 116 of the ITA in
connection with the transfer by such Non-Resident Vendor of
Company Shares to CallCo pursuant to Section 2.2(b) hereof:
(ii) if such a certificate issued by the Minister of National
Revenue pursuant to Section 116(2) of the ITA is delivered by
the Non-Resident Vendor to CallCo at or prior to Closing and
such certificate fixes a certificate limit that is not less
than the aggregate amount of the cash consideration payable by
CallCo to the Non-Resident Vendor pursuant to Section 2.3
hereof (such amount is referred to herein as the "CallCo
Proceeds"), the whole in form and substance satisfactory to
CallCo, CallCo will remit the CallCo Proceeds forthwith to the
Non-Resident Vendor;
(iii) If such certificate issued by the Minister of National Revenue
pursuant to Section 116(2) of the ITA is delivered by the Non-
Resident Vendor to CallCo at or prior to Closing and such
certificate fixes a certificate limit that is less than the
amount of the CallCo Proceeds, CallCo will be entitled to
withhold twenty-five percent (25%) of the amount, if any, by
which the CallCo Proceeds exceed the certificate limit;
(iv) if a certificate is not so delivered at or prior to Closing,
CallCo will be entitled to withhold twenty-five percent (25%)
of the CallCo Proceeds;
(v) where CallCo has withheld any amount pursuant to Section
4.4(b)(iii) or Section 4.4(b)(iv) hereinabove and the Non-
Resident has not complied with the conditions of Section
4.4(b)(vii) below by the Business Day
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which is the Remittance Date, subject to Section 4.4(b)(vi)
such portion of the amount withheld equal to the equivalent, in
Canadian dollars (as computed on the Closing Date), of twenty-
five percent (25%) of the CallCo Proceeds where such amounts
were withheld hereunder pursuant to Section 4.4(b)(iv)or
twenty-five percent (25%) of the difference between the cost to
CallCo of those Company Shares and the certificate limit where
such amounts were withheld hereunder pursuant to Section
4.4(b)(iii) hereof, will be remitted by CallCo on the
Remittance Date to the Receiver General of Canada on account of
the Non-Resident Vendors liability for tax pursuant to Section
116 of the ITA and shall also be credited to CallCo as a
payment to the Vendor on account of the CallCo Proceeds payable
to such Non-Resident Vendor pursuant to Section 2.3 hereof for
the purchase of the Company Shares. Interest, if any, earned on
such amount withheld, as well as the balance of any amount
withheld which is not required to be remitted to the Receiver
General of Canada, shall be paid forthwith to the Non-Resident
Vendor;
(vi) if the Non-Resident Vendor delivers to CallCo after the
Closing, but prior to the Remittance Date, a certificate issued
by the Minister of National Revenue under Section 116(2) of the
ITA and such certificate fixes a certificate limit which is
less than the amount of the CallCo Proceeds, CallCo shall pay
forthwith to the Non-Resident Vendor upon delivery to CallCo of
such certificate such portion of the CallCo Proceeds withheld
hereunder equal to the amount of the excess , if any, of:
(A) the amount of the CallCo Proceeds that CallCo has withheld
pursuant to Section 4.4(b)(iii) or Section 4.4(b)(iv)
hereinabove, together with interest, if any, that may have
been earned on such amounts withheld, over
(B) the amount equal to twenty-five percent (25%) of (A-B),
where A is the amount of the CallCo Proceeds and B is the
amount of such certificate limit;
(vii) where an amount has been withheld by CallCo pursuant to Section
4.4(b)(iii) or Section 4.4(b)(iv) and the Non-Resident Vendor
delivers to CallCo after the Closing, but prior to the
Remittance Date, either a certificate issued by the Minister of
National Revenue under Section 116(2) of the ITA with a
certificate limit which is not less than the amount of the
CallCo Proceeds or a certificate issued by the Minister of
National Revenue under Section 116(4) of the ITA, CallCo shall
pay forthwith to the Non-Resident Vendor upon delivery to
CallCo of such certificate any amount that CallCo has withheld
pursuant to Section 4.4(b)(iii) or Section 4.4(b)(iv) or
Section 4.4(b)(vi) hereinabove, as well as interest, if any,
earned on such amounts withheld.
(c)
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(i) each Non-Resident Vendor who has elected for the Share/Cash
Election will provide to ExchangeCo on or before Closing a
certificate issued pursuant to Section 116 of the ITA in
connection with the transfer by the Non-Resident Vendor of
Company Shares to ExchangeCo pursuant to Section 2.2(c) hereof:
(ii) if such certificate issued by the Minister of National Revenue
pursuant to Section 116(2) of the ITA is delivered by the Non-
Resident Vendor to ExchangeCo at or prior to Closing and such
certificate fixes a certificate limit that is not less than the
amount determined by multiplying the number of Exchangeable
Shares receivable by the Non-Resident Vendor from ExchangeCo
pursuant to Section 2.3 hereof by the greater of (A) US$28.00
and (B) the price at which the Parent Common Stock last traded
on the Business Day immediately before Closing (the "ExchangeCo
Proceeds"), the whole in form and substance satisfactory to
ExchangeCo, ExchangeCo will issue forthwith to the Non-Resident
Vendor the Exchangeable Shares to which such Non-Resident
Vendor is entitled to pursuant to Section 2.3 hereof;
(iii) if such a certificate issued by the Minister of National
Revenue pursuant to Section 116(2) of the ITA is delivered by
the Non-Resident Vendor to ExchangeCo at or prior to Closing
and such certificate fixes a certificate limit that is less
than the amount of the ExchangeCo Proceeds, ExchangeCo will be
entitled to withhold from the consideration payable such number
of Exchangeable Shares, the aggregate fair market value of
which is equal to thirty (30%) of the amount, if any, by which
the ExchangeCo Proceeds exceed the certificate limit;
(iv) if a certificate is not so delivered at or prior to Closing,
ExchangeCo will be entitled to withhold from the consideration
payable such number of Exchangeable Shares, the aggregate fair
market value of which is equal to thirty percent (30%) of the
ExchangeCo Proceeds;
(v) where ExchangeCo has withheld any amount pursuant to Section
4.4(c)(iii) or Section 4.4(c)(iv) hereinabove and the Non-
Resident has not complied with the conditions of Section
4.4(c)(viii) below by the Business Day which is the Remittance
Date, which ExchangeCo is required to remit an amount withheld
hereunder to the Receiver General, subject to Section
4.4(c)(vi), such portion of the amount withheld equal to the
equivalent, in Canadian dollars (as computed on the Closing
Date), of twenty-five percent (25%) of the ExchangeCo Proceeds
where amounts were withheld hereunder pursuant to Section
4.4(c)(iv) or twenty-five percent (25%) of the difference
between the cost to ExchangeCo Proceeds and the certificate
limit where such amounts were withheld hereunder pursuant to
Section 4.4(c)(iii), will be remitted by ExchangeCo on the
Remittance Date to the Receiver General of Canada on account of
the Non-Resident Vendors liability for tax pursuant to Section
116 of the ITA
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and shall also be credited to ExchangeCo as a payment to the
Non-Resident Vendor on account of the ExchangeCo Proceeds
payable to such Non-Resident Vendor pursuant to Section 2.3
hereof for the purchase of the Company Shares. Interest, if
any, earned on such amount withheld, as well as the balance of
any amount withheld which is not required to be remitted to the
Receiver General of Canada, shall be paid forthwith to the Non-
Resident Vendor;
(vi) if the Non-Resident Vendor delivers to ExchangeCo after the
Closing, but prior to the Remittance Date, a certificate issued
by the Minister of National Revenue under Section 116(2) of the
ITA and such certificate fixes a certificate limit which is
less than the amount of the ExchangeCo Proceeds, ExchangeCo
shall pay forthwith to the Non-Resident Vendor upon delivery to
ExchangeCo of such certificate such portion of the ExchangeCo
Proceeds withheld hereunder equal to the amount of the excess ,
if any, of:
(A) the value of the ExchangeCo Proceeds that ExchangeCo has
withheld pursuant to Section 4.4(c)(iii) or Section
4.4(c)(iv) hereinabove, over
(B) the amount equal to thirty percent (30%) of (A-B), where A
is the amount of the ExchangeCo Proceeds and B is the
amount of such certificate limit;
(vii) if the Non-Resident Vendor delivers to ExchangeCo after the
Closing, but prior to the Remittance Date, either a certificate
issued by the Minister of National Revenue under Section 116(2)
of the ITA with a certificate limit which is not less than the
amount of the ExchangeCo Proceeds or a certificate issued by
the Minister of National Revenue under Section 116(4) of the
ITA, ExchangeCo shall pay forthwith to the Non-Resident Vendor
upon delivery to ExchangeCo of such certificate any amount that
ExchangeCo has withheld pursuant to Section 4.4(c)(iii) or
Section 4.4(c)(iv) or Section 4.4(c)(vi) hereinabove, as well
as interest, if any, earned on such amounts withheld;
(viii) ExchangeCo will be entitled to use any such portion of the
ExchangeCo Proceeds withheld hereunder as is necessary in order
for ExchangeCo to generate sufficient funds to fulfill its
remittance obligations towards the Receiver General of Canada
and any amounts so remitted by ExchangeCo to the Receiver
General of Canada will be paid on account of the Non-Resident
Vendors liability for tax pursuant to Section 116 of the ITA.
Any amounts to be paid to the Receiver General of Canada
pursuant to Section 4.4(c) hereof will be satisfied by cash and
ExchangeCo may (except to the extent that the Non-Resident
otherwise funds the amounts required to be paid by ExchangeCo
to the Receiver General of Canada in a manner that is
satisfactory to ExchangeCo acting reasonably) generate the
required
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amount of cash by exchanging such number of Exchangeable Shares
withheld pursuant to Section 4.4(c) hereof into Parent Common
Stock and then selling such Parent Common Stock on behalf of
the Non-Resident Vendor, as will generate net proceeds in an
amount sufficient to satisfy the full amount to be paid to the
Receiver General of Canada.
ARTICLE 5
AMENDMENTS
Section 5.1 Amendments to Plan of Arrangement
(1) The Company reserves the right to amend, modify and/or supplement this Plan
of Arrangement at any time and from time to time prior to the Effective
Date, provided that each such amendment, modification and/or supplement
must be (i) set out in writing, (ii) approved by Parent, (iii) filed with
the Court and, if made following the Company Shareholders Meeting, approved
by the Court and (iv) communicated to the Securityholders, if and as
required by the Court.
(2) Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by the Company at any time prior to the Company Shareholders
Meeting (provided that Parent shall have consented thereto in writing) with
or without any other prior notice or communication, and, if so proposed and
accepted by the Persons voting at the Company Shareholders Meeting (other
than as may be required under the Interim Order), shall become part of this
Plan of Arrangement for all purposes.
(3) Any amendment, modification or supplement to this Plan of Arrangement that
is approved by the Court following the Company Shareholders Meeting shall
be effective only if (i) it is consented to in writing by each of the
Company and Parent, and (ii) if required by the Court, it is consented to
by the Securityholders voting in the manner directed by the Court.
(4) Any amendment, modification or supplement to this Plan of Arrangement may
be made following the Effective Date unilaterally by Parent, provided that
it concerns a matter which, in the reasonable opinion of Parent, is of an
administrative nature required to better give effect to the implementation
of this Plan of Arrangement and is not adverse to the interests of any
former Securityholder.
ARTICLE 6
FURTHER ASSURANCES
Section 6.1 Further Assurances
Notwithstanding that the transactions and events set out herein shall occur
and be deemed to occur in the order set out in this Plan of Arrangement without
any further act or formality, each of the parties to the Acquisition Agreement
shall make, do and execute, or cause to be made, done and executed, all such
further acts, deeds, agreements, transfers, assurances,
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instruments or documents as may reasonably be required by any of them in order
to further document or evidence any of the transactions or events set out
herein.
Schedule 1
Share Conditions -- Company Reorganization
I. The New Common Shares shall have attached thereto the following rights,
privileges, restrictions and conditions:
(a) Each New Common Share shall entitle the holder thereof to ten (10)
votes at all meetings of the shareholders of the Corporation, except
at a meeting of holders of a particular class of shares other than the
New Common Shares who are entitled to vote separately as a class at
such meeting.
(b) The holders of the New Common Shares shall be entitled to receive
during each year, as and when declared by the board of directors,
dividends payable in money, property or by the issue of fully paid
shares of the capital of the Corporation, subject to the
rights,privileges, restrictions and conditions attaching to any other
class of shares of the Corporation ranking in priority to or rateably
with the New Common Shares.
(c) In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or other distribution
of assets of the Corporation among shareholders for the purpose of
winding-up its affairs, the holders of the New Common Shares shall be
entitled to receive the remaining property of the Corporation, subject
to the rights of the holders of any other class of shares of the
Corporation entitled to receive the property or assets of the
Corporation upon such a liquidation, dissolution, winding-up or other
distribution in priority to or rateably with holders of the New Common
Shares.
II. The Preferred Shares shall have attached thereto the following rights,
privileges, restrictions and conditions:
(a) Subject to the provisions of the Business Corporations Act (Ontario)
or as otherwise expressly provided herein, the holders of the
Preferred Shares shall not be entitled to receive notice of, nor to
attend or vote at meetings of the shareholders of the Corporation.
(b) The holders of the Preferred Shares shall be entitled to receive, as
and when declared by the board of directors in their absolute
discretion, but always in preference and priority to any payment of
dividends on the New Common Shares or any other shares ranking junior
to the Preferred Shares, non-cumulative [monthly] dividends at a fixed
rate of five percent (5%) per annum calculated on the Preferred
Redemption Price (as hereinafter defined in paragraph II. (h)) of each
such share payable in money, property or by the issue of fully paid
shares of any class of the Corporation. The holders of the Preferred
Shares shall not be entitled to any dividend in excess of the dividend
hereinabove provided for.
(c) In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or other distribution
of assets of the
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Corporation among its shareholders for the purpose of winding-up its
affairs, the holders of the Preferred Shares shall be entitled to
receive for each Preferred Share, in preference and priority to any
distribution of the property or assets of the Corporation to the
holders of the New Common Shares and/or any other shares ranking
junior to the Preferred Shares as to such entitlement, an amount equal
to the Preferred Redemption Price plus all declared and unpaid
dividends thereon, if any, but shall not be entitled to share any
further in the distribution of the property or assets of the
Corporation.
(d) The Corporation may, in the manner hereinafter provided, redeem at any
time all, or from time to time any part, of the outstanding Preferred
Shares on payment of the Preferred Redemption Price for each Preferred
Share to be redeemed, plus all declared and unpaid dividends thereon,
if any (for purposes of paragraphs II. (e), (f) and (g), the
"Redemption Price").
(e) Before redeeming any Preferred Shares, the Corporation shall mail or
deliver to each person who, at the date of such mailing or delivery,
shall be a registered holder of Preferred Shares to be redeemed,
notice of the intention of the Corporation to redeem such shares held
by such registered holder. Such notice shall be delivered to, or
mailed by ordinary prepaid post addressed to, the last address of such
holder as it appears on the records of the Corporation, or in the
event of the address of any such holder not appearing on the records
of the Corporation, then to the last address of such holder known to
the Corporation, at least one (1) day before the date specified for
redemption. Such notice shall set out the Redemption Price, the date
on which the redemption is to take place and, if part only of the
Preferred Shares held by the person to whom it is addressed is to be
redeemed, the number thereof to be so redeemed. On or after the date
so specified for redemption, the Corporation shall pay or cause to be
paid the Redemption Price to the registered holders of the Preferred
Shares to be redeemed, the whole on presentation and surrender of the
certificates for the Preferred Shares so called for redemption at the
registered office of the Corporation or at such other place or places
as may be specified in such notice, and the certificates for such
Preferred Shares shall thereupon be cancelled, and the Preferred
Shares represented thereby shall thereupon be redeemed. From and
after the date specified for redemption in such notice, the holders of
the Preferred Shares called for redemption shall cease to be entitled
to dividends in respect of such shares and shall not be entitled to
exercise any of the rights of the holders thereof, except the right to
receive the Redemption Price, unless payment of the Redemption Price
shall not be made by the Corporation in accordance with the foregoing
provisions, in which case the rights of the holders of such shares
shall remain unaffected. On or before the date specified for
redemption, the Corporation shall have the right to deposit the
Redemption Price of the Preferred Shares called for redemption in a
special account with any chartered bank or trust company in Canada
named in the notice of redemption, to be remitted, without interest,
to or to the order of the respective holders of such Preferred Shares
called for redemption, the whole upon presentation and surrender of
the certificates representing the same and, upon such deposit being
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made or upon the date specified for redemption, whichever is later,
the Preferred Shares in respect whereof such deposit shall have been
made, shall be deemed to be redeemed and the rights of the respective
holders thereof, after such deposit or after such redemption date, as
the case may be, shall be limited to receiving, out of the moneys so
deposited, without interest, the Redemption Price applicable to their
respective Preferred Shares, the whole against presentation and
surrender of the certificates representing such Preferred Shares. If
less than all of the Preferred Shares are to be redeemed, the shares
to be redeemed shall be redeemed pro rata, disregarding fractions,
unless the holders of the Preferred Shares unanimously agree to the
adoption of another method of selection of the Preferred Shares to be
redeemed. If less than all of the Preferred Shares represented by any
certificate be redeemed, a new certificate for the balance shall be
issued.
(f) [At any time after ., 2006,] a holder of Preferred Shares shall be
entitled to require the Corporation to redeem at any time all, or from
time to time any part, of the Preferred Shares registered in the name
of such holder by tendering to the Corporation, at its registered
office, the share certificate(s) representing the Preferred Shares
which the registered holder desires to have the Corporation redeem,
which share certificate(s) shall be accompanied by a request in
writing specifying (i) the number of Preferred Shares which the
registered holder desires to have redeemed by the Corporation and (ii)
the business day (in this paragraph referred to as the "Redemption
Date") on which the holder desires to have the Corporation redeem such
Preferred Shares, which Redemption Date shall not be less than five
(5) days after the day on which the said request in writing is given
to the Corporation. Upon receipt of the share certificate(s)
representing the Preferred Shares which the registered holder desires
to have the Corporation redeem, together with the said written
request, the Corporation shall on, or at its option, before, the
Redemption Date redeem such Preferred Shares by paying to the
registered holder thereof, for each share to be redeemed, an amount
equal to the Redemption Price in respect thereof. Such payment shall
be made by cheque payable at par at any branch of the Corporation's
bankers for the time being in Canada. The said Preferred Shares shall
be deemed to be redeemed on the date of payment of the Redemption
Price and, from and after such date, such Preferred Shares shall cease
to be entitled to dividends and the holders thereof shall not be
entitled to exercise any of the rights of the holders of Preferred
Shares in respect thereof. Notwithstanding the foregoing, the
Corporation shall only be obliged to redeem Preferred Shares so
tendered for redemption to the extent that such redemption would not
be contrary to any applicable law, and if such redemption of any such
Preferred Shares would be contrary to any applicable law, the
Corporation shall only be obliged to redeem such Preferred Shares to
the extent that the moneys applied thereto shall be equal to such
amount (rounded to the next lower multiple of one hundred dollars
($100.00)) as would not be contrary to such law, in which case the
Corporation shall pay to each holder his pro rata share of the
purchase moneys so allocated. If less than all the Preferred Shares
represented by any certificate be redeemed, a new certificate for the
balance shall be issued.
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(g) The Corporation may purchase for cancellation or otherwise at any time
all, or from time to time any part, of the Preferred Shares
outstanding, by private contract at any price, with the unanimous
consent of the holders of the Preferred Shares then outstanding, or by
invitation for tenders addressed to all the holders of the Preferred
Shares at the lowest price at which, in the opinion of the directors,
each such share is obtainable but in no case shall the price for each
such preferred share exceed the Redemption Price thereof. If less than
all the Preferred Shares represented by any certificate are purchased
by the Corporation, a new certificate for the balance shall be issued.
(h) For the purposes of the foregoing paragraphs II. (b), (c) and (d), the
"Preferred Redemption Price" of each Preferred Share shall be an
amount equal to the product of the fair market value of one (1) share
of the common stock of Sun Microsystems, Inc. (a "Sun Share") at the
time such Preferred Share is issued multiplied by the Share Exchange
Ratio, as that term is defined in the acquisition agreement dated on
or about June 19, 2001 by and among, inter alia, the Corporation, Sun
Microsystems, Inc., 514713 N.B. Inc. and 3055855 Nova Scotia Company.
For purposes of this paragraph II. (h), the fair market value of a Sun
Share shall be the average closing sale price of one such Sun Share as
reported on the NASDAQ National Market for the ten (10) consecutive
days ending on the day that is immediately before the date on which
such Preferred Share is issued to the holder thereof.
(i) In the event that only part of the amount of the consideration
received by the Corporation for any Preferred Share issued by the
Corporation is added to the stated capital account of the Preferred
Shares, such Preferred Share shall be deemed to have been issued for
the full amount of the consideration received, for all purposes of
these articles (except only with respect to the stated capital of such
Preferred Shares), including, but without limiting the generality of
the foregoing, dividend rights, redemption rights and rights upon
liquidation and dissolution.
(j) No change to any of the provisions of paragraphs II. (a) to (i) or of
this paragraph (j) shall have any force or effect until it has been
approved by a majority of not less than two-thirds () of the votes
cast by the holders of the Preferred Shares, voting separately as a
class at a meeting of such holders specially called for that purpose,
or by a resolution in writing signed by all the holders of the
Preferred Shares, in addition to any other approval required by the
Business Corporations Act (Ontario).
