<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SPARKLING SPRING WATER GROUP LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
NOVA SCOTIA, CANADA 5149
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
FOR INFORMATION REGARDING ADDITIONAL REGISTRANTS, SEE "TABLE OF ADDITIONAL
REGISTRANTS."
------------------------
<TABLE>
<S> <C>
ONE LANDMARK SQUARE STEPHEN L. LARSON
STAMFORD, CT 06901 VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
(203) 325-0077 SPARKLING SPRING WATER GROUP LIMITED
(ADDRESS, INCLUDING ZIP CODE, TELEPHONE ONE LANDMARK SQUARE
NUMBER, INCLUDING AREA CODE, OR REGISTRANT'S STAMFORD, CT 06901
PRINCIPAL EXECUTIVE OFFICES) (203) 325-0077
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPIES OF COMMUNICATIONS TO:
RICHARD A. KRANTZ, ESQ.
ROBINSON & COLE LLP
FINANCIAL CENTRE
P.O. BOX 10305
STAMFORD, CT 06904-2305
(203) 462-7500
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SECURITY OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 1/2% Senior Subordinated Notes
due 2007........................ $100,000,000 100% $100,000,000 $29,500
- ----------------------------------------------------------------------------------------------------------
Guarantees of 11 1/2% Senior
Subordinated Notes due 2007..... -- -- -- (2)
==========================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee.
(2) Pursuant to Rule 457(n), no additional registration fee is payable with
respect to the Guarantees of the Additional Registrants.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
================================================================================
<TABLE>
<S> <C> <C>
STATE OR OTHER PRIMARY STANDARD
JURISDICTION OF INDUSTRIAL
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS INCORPORATION OF CLASSIFICATION
CHARTER ORGANIZATION CODE NUMBER
- ----------------------------------------------------------------------------------------------
Sparkling Spring Water Limited.................... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
Spring Water, Inc................................. Delaware 5149
- ----------------------------------------------------------------------------------------------
Cullyspring Water Co., Inc. ...................... Washington 5149
- ----------------------------------------------------------------------------------------------
Crystal Spring Acquisition, Inc. ................. Delaware 5149
- ----------------------------------------------------------------------------------------------
Mountain Fresh Acquisition Corp. ................. Delaware 5149
- ----------------------------------------------------------------------------------------------
Water Jug Enterprises Limited..................... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
Withey's Water Softening & Purification Ltd. ..... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
Aqua Care Water Softening & Purification Inc. .... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
High Valley Water Limited......................... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
3003969 Nova Scotia Limited....................... Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
Canadian Springs Water Company Limited............ Nova Scotia 5149
- ----------------------------------------------------------------------------------------------
Sparkling Spring Water (UK) Limited............... UK 5149
- ----------------------------------------------------------------------------------------------
Aquaporte (UK) Limited............................ UK 5149
- ----------------------------------------------------------------------------------------------
Marlborough Employment Limited.................... Scotland 5149
- ----------------------------------------------------------------------------------------------
Water at Work Limited............................. Scotland 5149
- ----------------------------------------------------------------------------------------------
Natural Water Limited............................. Scotland 5149
==============================================================================================
</TABLE>
The address, including zip code, and telephone number, including area code,
of the principal executive offices of, the name, address, including zip code,
and telephone number, including area code, of agent for service for, each of
Additional Registrants is the same as for Sparkling Spring Water Group Limited,
as set forth on the facing page of Registration Statement. Copies of
communications to any Additional Registrant should be sent to Richard A. Krantz,
Esq., Robinson & Cole LLP, Financial Center, P.O. Box 10305, 695 East Main
Street, Stamford, CT 06904-2305 (telephone number (203)462-7505).
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1997
PRELIMINARY PROSPECTUS
SPARKLING SPRING WATER GROUP LIMITED
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT FOR EACH $1,000 IN PRINCIPAL AMOUNT OF ITS
OUTSTANDING 11 1/2% SENIOR SUBORDINATED NOTES
DUE 2007, OF WHICH $100,000,000 PRINCIPAL
AMOUNT IS OUTSTANDING
[SPARKLING SPRINGS LOGO] ------------------------
Sparkling Spring Water Group Limited, a corporation organized under the laws
of the Province of Nova Scotia, Canada ("Sparkling Spring" and, together with
its subsidiaries, the "Company") is hereby offering (the "Exchange Offer"), upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$1,000 principal amount of its registered 11 1/2% Senior Subordinated Notes due
2007 (the "Exchange Notes"), for each $1,000 principal amount of its outstanding
unregistered 11 1/2% Senior Subordinated Notes due 2007 (the "Private Notes"),
of which $100,000,000 in aggregate principal amount was issued on November 19,
1997 and is outstanding as of the date hereof. The form and the terms of the
Exchange Notes are identical in all material respects to those of the Private
Notes, except for certain transfer restrictions and registration rights relating
to the Private Notes and except for certain interest provisions relating to such
registration rights. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace) and will be issued pursuant to, and
entitled to the benefits of, an Indenture, dated as of November 19, 1997
governing the Private Notes and the Exchange Notes (the "Indenture"). The
Private Notes and the Exchange Notes are sometimes referred to herein,
collectively, as the "Notes". See "The Exchange Offer" and "Description of
Notes".
Interest on the Notes will be payable semi-annually on May 15 and November
15 of each year, commencing May 15, 1998, at the rate of 11 1/2% per annum. The
Notes will be redeemable, in whole or in part, at the option of Sparkling Spring
on or after November 15, 2002 at the redemption prices set forth herein plus
accrued and unpaid interest, if any, to the date of redemption. In addition, at
any time on or prior to November 15, 2000, Sparkling Spring, at its option, may
redeem up to $30.0 million aggregate principal amount of the Notes originally
issued with the net cash proceeds of one or more Public Equity Offerings (as
defined) at a redemption price equal to 111.50% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of redemption, provided
that at least $70.0 million in aggregate principal amount of the Notes
originally issued remains outstanding immediately following such redemption.
Upon a Change of Control (as defined), each holder of the Notes will have the
right to require Sparkling Spring to repurchase such holder's Notes at a price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest
to the date of repurchase. In addition, Sparkling Spring will be obligated to
offer to repurchase Notes at 100% of the principal amount thereof plus accrued
and unpaid interest to the date of repurchase in the event of certain Asset
Sales (as defined). See "Description of the Notes."
The Notes are general unsecured obligations of Sparkling Spring and are
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined). The Notes will rank pari passu in right of payment with any future
senior subordinated indebtedness of Sparkling Spring and will rank senior in
right of payment to all other subordinated obligations of Sparkling Spring. The
Notes are unconditionally guaranteed (the "Guarantees") on a senior subordinated
basis by Sparkling Spring's existing subsidiaries and will be so guaranteed by
those formed or acquired in the future (the "Subsidiary Guarantors"). The
Guarantees are general unsecured obligations of the Subsidiary Guarantors and
are subordinated in right of payment to all existing and future Guarantor Senior
Indebtedness (as defined). The Guarantees will rank pari passu with any future
senior subordinated indebtedness of the Subsidiary Guarantors and will rank
senior in right of payment to all other subordinated obligations of the
Subsidiary Guarantors. As of September 30, 1997, on a pro forma basis after
giving effect to the Offering and the application of the net proceeds therefrom
as described herein, Sparkling Spring would have had no Senior Indebtedness
outstanding and the Subsidiary Guarantors would have had approximately $1.5
million of Guarantor Senior Indebtedness outstanding. See "Use of Proceeds,"
"Unaudited Pro Forma Consolidated Financial Data" and "Description of the Credit
Agreement."
The Notes are eligible for trading in the Private Offering, Resales and
Trading through Automated Linkages ("PORTAL") Market of the National Association
of Securities Dealers, Inc.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
The Private Notes were sold in an aggregate principal amount of $100.0
million by Sparking Spring on November 19, 1997 to BT Alex. Brown Incorporated
and Natwest Capital Markets Limited (the "Initial Purchasers") in a transaction
not registered under the Securities Act in reliance upon the private offering
exemption under Section 4(2) of the Securities Act. The Initial Purchasers
subsequently placed the Private Notes with qualified institutional buyers
("QIBS") in reliance upon Rule 144A under the Securities Act and with a limited
number of accredited investors (as defined in Rule 501 (A)(1), (2), (3) or (7)
under the Securities Act). Accordingly, the Private Notes may not be reoffered,
resold or otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available.
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of Sparkling Spring and the Subsidiary Guarantors contained in the
Registration Rights Agreement, dated as of November 19, 1997 (the "Registration
Rights Agreement"), among Sparkling Spring, the Subsidiary Guarantors, and the
Initial Purchasers.
Based upon interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties unrelated to Sparkling Spring, Sparkling Spring believes that the
Exchange Notes issued pursuant to the Exchange Offer in exchange for Private
Notes may be offered for sale, sold and otherwise transferred by a holder
thereof (other than (i) any person who is an "affiliate" of Sparkling Spring
within the meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) a broker-dealer who purchases Notes from Sparkling
Spring to resell pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act; provided
that such holder is acquiring the Exchange Notes in the ordinary course of its
business and such holder is not engaging, and has no intention to engage, and
has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes. Holders of Private Notes wishing to accept
the Exchange Offer must represent to Sparkling Spring that such conditions have
been met. Each broker-dealer that will receive Exchange Notes for its own
account in exchange for Private Notes must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by such a broker-dealer in
connection with resales of Exchange Notes received in exchange for Private
Notes, where such Private Notes were acquired by such broker-dealer as a result
of market-making or other trading activities. Sparkling Spring has agreed to
make this Prospectus, as it may be amended or supplemented from time to time,
available to any such broker-dealer that requests copies of such Prospectus in
the Letter of Transmittal for use in connection with any such resale for a
period of up to 90 days after the Expiration Date (as defined herein). See "The
Exchange Offer" and "Plan of Distribution."
Sparkling Spring will not receive any proceeds from, and has agreed to bear
the expenses of, the Exchange Offer. No underwriter is being used in connection
with the Exchange Offer.
The Exchange Offer will expire at 5:00 p.m. New York City time, on
, 1997 unless the Exchange Offer is extended by Sparkling Spring
in its sole discretion. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Private Notes being tendered for exchange.
The National Association of Securities Dealers, Inc. ("NASD") has
designated the Private Notes as securities eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market of
the NASD, and Sparkling Spring has been advised that the Initial Purchasers or
their affiliates have heretofore acted as market makers for the Private Notes.
Holders of the Private Notes whose Private Notes were not tendered and accepted
in the Exchange Offer will continue to hold such Private Notes and will be
entitled to all the rights and preferences and will be
i
<PAGE> 5
subject to the limitations applicable thereto under the Indenture. Following
consummation of the Exchange Offer, the holders of Private Notes will continue
to be subject to the existing restrictions upon transfer thereof and Sparkling
Spring, subject to limited exceptions, will have no further obligation to such
holders to provide for the registration under the Securities Act of the Private
Notes held by them. To the extent that any Private Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Private
Notes could be adversely affected. No assurances can be given as to the
liquidity of the trading market for the Private Notes. See "Risk Factors --
Consequences of Failure to Exchange Private Notes."
Prior to the Exchange Offer, there has been no public market for the
Exchange Notes. There can be no assurance as to the liquidity of any market that
may develop for the Exchange Notes, the ability of holders to sell the Exchange
Notes, or the price at which holders would be able to sell the Exchange Notes.
The Initial Purchasers have advised Sparkling Spring that they or their
affiliates currently intend to make a market in the Exchange Notes. The Initial
Purchasers are not obligated to do so, however, and any market-making activities
with respect to the Exchange Notes may be discontinued at any time without
notice. Future trading prices of the Exchange Notes will depend upon many
factors, including among other things, prevailing interest rates, Sparkling
Spring's and the Subsidiary Guarantors' operating results and the market for
similar securities. Historically, the market for securities similar to the
Exchange Notes, including non-investment grade debt, has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that any market for the Exchange Notes, if
such a market develops, will not be subject to similar disruptions. See "Risk
Factors -- Lack of Public Market for the Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL SPARKLING SPRING ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE LETTER OF
TRANSMITTAL IN CONNECTION WITH THE EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY SPARKLING SPRING OR ANY OF THE SUBSIDIARY GUARANTORS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR THE EXCHANGE PROPOSED TO BE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF SPARKLING SPRING OR ANY OF THE SUBSIDIARY GUARANTORS
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS OFFERING MEMORANDUM INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE UNITED
STATES SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS OFFERING
MEMORANDUM, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S
FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED COSTS AND PLANS
AND OBJECTIVE OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING
STATEMENTS. IN ADDITION, FORWARD-LOOKING STATEMENTS GENER-
ii
<PAGE> 6
ALLY CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY",
"WILL", "EXPECT", "INTEND", "ESTIMATE", "ANTICIPATE", "BELIEVE", OR "CONTINUE"
OR THE NEGATIVE THEREOF OR VARIATIONS THEREON OR SIMILAR TERMINOLOGY. ALTHOUGH
THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS OFFERING MEMORANDUM,
INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS OFFERING MEMORANDUM. ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY, OR PERSONS ACTING ON ITS
BEHALF, ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
Sparkling Spring is incorporated under the laws of the Province of Nova
Scotia, Canada. The majority of its directors and officers, and certain experts
named herein, are residents of Canada, and all or a portion of the assets of
such persons and of the Company are located outside of the United States. In
addition, certain of the Subsidiary Guarantors are incorporated in jurisdictions
outside the United States. Although each of Sparkling Spring and the Subsidiary
Guarantors has agreed, in accordance with the terms of the indenture pursuant to
which the Notes will be issued (the "Indenture"), to accept service in the
United States by its agent designated for such purpose, it may be difficult or
impossible for holders of the Notes to effect service upon certain of the
directors and officers of Sparkling Spring and the Subsidiary Guarantors and
certain experts named herein and to realize in the United States upon judgments
of courts of the United States predicated upon the civil liability of such
persons under the United States federal securities laws. There is doubt as to
the enforceability in Canada and in other foreign jurisdictions against any of
these persons, in original actions or in actions for enforcement of judgments of
United States courts, of liabilities predicated solely on the United States
federal securities laws.
------------------------
EXCHANGE RATE DATA
The Company publishes its consolidated financial statements in U.S.
dollars. All dollar amounts set forth in this Offering Memorandum are expressed
in U.S. dollars unless otherwise specifically indicated. The following table
sets forth for both Canadian dollars and British pounds sterling for the periods
indicated, the high and low exchange rates (i.e., the highest and lowest
exchange rate at which each currency was sold), the average exchange rate (i.e.,
the average of each exchange rate on the last business day of each month during
the applicable period) and the period end exchange rate of each currency in
exchange for the U.S. dollar, as calculated from the inverse of the exchange
rates reported by the Federal Reserve Bank of New York for cable transfers
payable in Canadian dollars and British pounds sterling for customs purposes.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ ----------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
CANADIAN DOLLAR
High for period.................... 0.877 0.807 0.764 0.753 0.753 0.740 0.748
Low for period..................... 0.773 0.742 0.710 0.710 0.721 0.721 0.715
End of period...................... 0.787 0.757 0.713 0.733 0.730 0.735 0.725
Average for period................. 0.828 0.775 0.732 0.728 0.733 0.735 0.726
BRITISH POUND STERLING
High for period.................... 2.004 1.593 1.643 1.641 1.711 1.567 1.711
Low for period..................... 1.502 1.418 1.460 1.527 1.497 1.407 1.578
End of period...................... 1.513 1.480 1.564 1.552 1.705 1.563 1.616
Average for period................. 1.755 1.501 1.531 1.578 1.560 1.537 1.650
</TABLE>
iii
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes thereto)
appearing elsewhere in this Prospectus. Unless the context otherwise requires,
the information contained in this Prospectus gives effect to the Reorganization
(as defined) and all references to the Company refer collectively to Sparkling
Spring Water Group Limited and its direct and indirect subsidiaries. All
references in this Offering Memorandum to "EBITDA" mean operating profit plus
depreciation and amortization. EBITDA is presented because it is a widely
accepted financial indicator of a company's ability to service and/or incur
indebtedness. However, EBITDA should not be considered as an alternative to net
income as a measure of operating results or to cash flow from operations as a
measure of liquidity in accordance with generally accepted accounting
principles. All references in this Prospectus to "CAGR" mean compound annual
growth rate. Unless otherwise indicated, all statistical data and information
contained in this Prospectus is as of September 30, 1997. Pro forma information
contained in this Offering Memorandum gives effect to the Pro Forma Transactions
(as defined).
THE COMPANY
The Company is one of the world's largest providers of bottled water
delivered directly to the residential and commercial markets. Presently, the
Company has the leading market share position in British Columbia and the
Maritime Provinces of Canada, England and Scotland in the United Kingdom, and
the State of Oregon in the United States. In addition, the Company has the
second largest market share in the State of Washington. The Company's strategy
has been to achieve strong market positions in a number of attractive markets
and thereby realize the operating leverage that can be obtained once a
distribution system is established. The Company's primary focus is on the
bottling and delivery of high quality drinking water in five-gallon and
six-gallon bottles to homes and offices, and the rental of water coolers.
The Company has grown through both strong internal growth and the execution
of a proven acquisition strategy. The Company's revenue and EBITDA have
increased from $3.8 million and $0.5 million, respectively, in 1992, to $27.3
million and $6.9 million, respectively, in 1996, representing a CAGR of 63.6%
and 88.6%, respectively. On a pro forma basis, revenue and EBITDA for the nine
months ended September 30, 1997 of $37.3 million and $11.0 million,
respectively, increased by 9.3% and 16.7% compared to the prior year period,
reflecting the significant internal growth of the Company's operations.
The Company has been a leader in the consolidation of the highly fragmented
bottled water industry by executing a disciplined acquisition strategy. In
addition, the Company has significantly improved the operations and
profitability of each company it has acquired. For the four acquired companies
for which the Company has comparable full-year pre-acquisition and
post-acquisition data, revenue and EBITDA increased, on average, by 18.5% and
64.0%, respectively, in the first year after the acquisition. Management
believes that it has realized similar improved performance in its other
acquisitions for which sufficient post-acquisition information is available.
Since January 1, 1997, the Company has completed seven acquisitions through
which it entered the attractive U.S. bottled water market and expanded its
leadership positions in Canada and the United Kingdom.
BUSINESS STRATEGY
Bottled water continues to be the fastest growing segment of the beverage
industry, growing at a CAGR of 10.5% since 1980 according to Beverage Marketing
Corporation. Management believes this growth stems primarily from two sources:
(i) consumer dissatisfaction with tap water and (ii) increased consumer health
consciousness resulting in the substitution of water for other less-healthy
beverages. The Company expects to benefit from the growing demand for quality
drinking
1
<PAGE> 8
water by increasing its installed base of water coolers, increasing the water
and related products offered through its established distribution system, and
continuing to be a leader in the consolidation of the highly fragmented bottled
water industry. In particular, the Company expects to continue to pursue the
following business strategies:
Focus on the Water Cooler Segment Within the Growing "Alternative to Tap
Water" Market. Management believes that the overall growth of the bottled water
industry and the relatively low level of water cooler penetration in Canada and
the U.K., in particular, provide the Company with significant growth
opportunities. The Company believes that health concerns and problems with the
taste and odor of tap water have generated consumer demand for an "alternative
to tap water," driving consumers to increasingly rely on bottled water and
filtration systems in order to satisfy their drinking water needs. The Company
intends to take advantage of this growth in demand by offering a premium product
through multiple channels (i.e., direct delivery, retail and filtration
systems), with a specific focus on the "direct delivery" water cooler segment.
The water cooler business enjoys higher margins, less competition and
greater operating leverage than either the retail bottled water or the water
filter businesses. Sales in this segment are generally less price sensitive than
retail sales of bottled water because the customer is generally more concerned
with service and convenience. In addition, there are incremental cost and
inconvenience factors associated with switching suppliers. Furthermore, water
cooler companies generally have lower advertising costs than companies pursuing
retail sales of bottled water because consumers generally do not select a water
cooler provider on the basis of brand name. The water cooler business is also
generally less competitive than other segments of the bottled water industry due
to the relative capital intensity of the operations. Finally, the significant
growth potential in the water cooler market and the low levels of water cooler
penetration allow industry participants to focus on attracting new customers
rather than on capturing market share from competitors.
Leverage Existing Infrastructure. Due to the significantly fixed
distribution system associated with the direct delivery of bottled water in a
geographic area, additional operating leverage can be achieved by increasing
route density through incremental market penetration. In addition to increasing
the overall customer base, the Company expects to continue to benefit as per
capita consumption continues to climb with each existing customer consuming more
water. Finally, the Company utilizes its route systems to offer products which
are complementary to bottled water, including cups, cooler sanitation services,
coffee and related products.
In addition to benefiting from internal growth in its markets, the Company
leverages its infrastructure with each acquisition in adjacent or overlapping
territories. Specific operating initiatives employed by the Company typically
include: (i) maximizing distribution route efficiencies, (ii) consolidating
bottling facilities, (iii) eliminating duplicative administrative costs and (iv)
utilizing favorable purchasing opportunities. The Company's existing
infrastructure and scale of operations provide an attractive opportunity to
continue to add incremental customers at a higher marginal profitability rate.
The Company has achieved significant cost savings in its existing operations as
reflected in the increase in its EBITDA margin from 14.3% in 1992 to 25.2% in
1996 and 28.7% in the nine months ended September 30, 1997.
Pursue Strategic Acquisitions. The Company has successfully pursued a
disciplined acquisition strategy to create value by taking advantage of the
consolidation of the highly fragmented bottled water industry. The Company has
developed and successfully implemented a "hub and spoke" approach to acquiring
companies in new markets by identifying one of the largest bottled water
companies as a platform acquisition, and complementing it with smaller fill-in
acquisitions in neighboring or overlapping geographic territories. The Company
is generally unwilling to enter a market through an acquisition unless the
company being acquired is both one of the market share leaders and provides the
critical mass and local management talent necessary to act as a platform in that
market. While the purchase price paid for a platform company is typically higher
than that for a fill-in acquisition, the Company is able to reduce its average
acquisition multiple by opportunisti-
2
<PAGE> 9
cally acquiring "spoke" distribution routes at more attractive prices due to the
limited strategic options available to these smaller operators. In addition to
buying companies at relatively low multiples of EBITDA, management has been able
to create value by improving the operations of acquired entities and by
realizing operating synergies. The Company's recent acquisition of Cullyspring
Water Co., Inc. ("Cullyspring") demonstrates its plan to continue to expand in
the U.S. Cullyspring is the second largest water cooler provider in Washington,
and management believes it has the opportunity to enhance its market position
through fill-in acquisitions.
Provide Outstanding Customer Service. The Company believes quality of
service and reliability of delivery are the primary competitive factors in the
water cooler business. The quality of service is measured by the Company's
ability to: (i) reliably deliver bottled water on schedule, (ii) meet customer
shortages with the quick delivery of refills, (iii) provide regular maintenance
and sanitation of water coolers and (iv) effectively address any other needs of
a customer. Management monitors on a monthly basis the Company's customer
"churn" rate (its non-renewal rate with respect to its water cooler rental
agreements) in an effort to continually enhance customer service. The Company's
churn rate was approximately 2.0% per month in 1996 and 1.6% per month for the
nine months ended September 30, 1997, which management believes is significantly
lower than the industry average churn rate.
INVESTMENT HIGHLIGHTS
Attractive Industry Fundamentals. The Company believes that the
"alternative to tap water" market represents an attractive industry opportunity
due to the strong growth in demand for bottled water in the Company's primary
markets and the ability to enhance profit margins as revenue grows. In the U.S.,
bottled water continues to be the fastest growing segment of the beverage
industry, according to a study prepared by Beverage Marketing Corporation. Total
bottled water consumption in the U.S. increased from 2.8 gallons per capita in
1980 to 11.7 gallons per capita in 1996. According to Zenith International Ltd.,
in the U. K., total bottled water consumption increased at a CAGR of 11.2% from
1990 to 1996, with annual consumption increasing from 1.9 gallons per capita in
1990 to 3.6 gallons per capita in 1996.
Management believes the strong industry growth will continue to be driven
by: (i) concerns related to the quality of tap water, (ii) trends in consumer
selection of healthy products, (iii) taste preferences over tap water and other
refreshment beverages and (iv) favorable demographics.
Leading Market Share. The Company holds leading market share positions in
the water cooler markets which it serves. Based upon its own internal estimates,
the Company believes it has approximately 45% market share in British Columbia,
70% in the Maritime Provinces, 22% in the United Kingdom, 40% in Oregon and 20%
in Washington. The Company believes it is the market share leader in each of
these markets, except in Washington where it believes it is the second largest
provider. By virtue of its leadership position in its markets, the Company
benefits from several competitive advantages over smaller operators, including
more efficient distribution operations, purchasing synergies, superior customer
service and well-established infrastructure. Management believes the Company's
leadership in each of its served markets creates a significant barrier to entry
for prospective competitors.
Significant Installed Cooler Base. The Company delivers bottled water to a
significant installed base of approximately 115,000 water coolers in its served
markets. Customers typically sign a one-year contract, providing the Company
with a dual stream of relatively stable and recurring revenue from both a
monthly cooler rental charge and the sale of bottled water. The Company believes
that direct delivery water cooler companies enjoy several advantages over
retailers of bottled water. Customers suffer both incremental cost and
inconvenience if they choose to switch from one water cooler company to another.
In addition, direct delivery water cooler operators such as the Company have
made significant capital investments in inventories of water coolers and
bottles, a truck fleet
3
<PAGE> 10
and bottling facilities. Management believes the capital intensity of the water
cooler business provides a second significant barrier to entry.
Proven Beverage Industry Consolidation Track Record. The Company has a
successful record of completing and integrating acquisitions, having made 12
acquisitions since 1993. These acquisitions have enabled the Company to rapidly
expand into attractive markets and increase production capacity. In addition to
completing the acquisitions of fast-growing bottled water companies at
attractive purchase price multiples, management has dramatically improved the
operations and profitability of each acquired company. For the four acquired
companies for which the Company has comparable full-year pre-acquisition and
post-acquisition data, revenue and EBITDA increased, on average, by 18.5% and
64.0%, respectively, in the first year after the acquisition. Management
believes its reputation as a proven and well-capitalized industry consolidator
facilitates its access to additional acquisition candidates and generates
unsolicited offers from prospective sellers.
Experienced Management Team with Significant Equity Ownership. The Company
is led by an experienced senior management team whose members average more than
13 years in the beverage industry. A trust for the benefit of G. John Krediet,
the Chairman of Sparkling Spring, and his children owns 50.9% of the common
stock ("Common Stock") of Sparkling Spring (after giving effect to the
Reorganization). Mr. Krediet successfully executed a consolidation of Canadian
Pepsi-Cola bottlers and, together with Stephen L. Larson, identified the bottled
water consolidation opportunity. Stephen L. Larson, Vice Chairman of Sparkling
Spring, has led the Company's successful acquisition strategy. In addition to
identifying new acquisition targets, Mr. Larson has been responsible for the
negotiation, financing, consummation and integration of each of the Company's
acquisitions. Stewart E. Allen, President of Sparkling Spring, has managed the
operations of the business focusing on profitably increasing the penetration
levels in each of its markets. The senior management team is strongly motivated
through its equity ownership of 63.9% of the Common Stock of Sparkling Spring
(including shares beneficially owned by a trust for the benefit of the family of
one senior manager), after giving effect to the Reorganization. Management has
successfully consolidated both water cooler companies and Pepsi-Cola bottlers,
and has consistently demonstrated an ability to achieve strong internal growth
and to identify, acquire, integrate and improve the performance of acquired
companies.
Strong Financial Performance. The success of the Company's operating
strategy is evidenced by its growth in revenue and EBITDA over the past five
years. Revenue increased at a CAGR of 63.6% from $3.8 million in 1992 to $27.3
million in 1996. Over the same period, EBITDA increased at a CAGR of 88.6% from
$0.5 million to $6.9 million, with EBITDA margins increasing from 14.3% to
25.2%. In addition to expansion through acquisitions, the Company's operations
exhibit significant internal growth. On a pro forma basis, revenue and EBITDA of
$37.3 million and $11.0 million, respectively, increased 9.3% and 16.7%,
respectively, in the nine months ended September 30, 1997 over the comparable
period in the prior year.
The principal executive offices of Sparkling Spring are located at 19
Fielding Avenue, Dartmouth, Nova Scotia, Canada B3B-1C9, and its telephone
number at that address is (902) 468-8430. The Company also maintains executive
offices in the U.S. at One Landmark Square, Stamford, CT 06901, and its
telephone number at that address is (203) 325-0077.
HISTORY
Sparkling Spring Water Limited ("SSWL"), a wholly-owned subsidiary of
Sparkling Spring, was founded in 1971 in Halifax, Nova Scotia to operate in the
bottled water industry. In 1988, a controlling interest in the Company was
acquired by Maritime Beverages Limited ("MBL"), a Pepsi-Cola bottler, which was
managed by G. John Krediet and Stephen L. Larson, principals of C.F. Capital
Corporation, an investment and management company ("CFCC"). When MBL sold its
soft drink bottling holdings to Pepsi-Cola Canada Limited in 1992, Messrs.
Krediet and Larson retained their ownership of SSWL. Recognizing the growth
opportunities in the bottled water industry,
4
<PAGE> 11
Messrs. Krediet and Larson identified SSWL as their platform for consolidation
and recruited Stewart E. Allen from the MBL operation. Messrs. Krediet, Larson
and Allen have managed the Company since late 1992, when they began to grow the
water cooler business in Nova Scotia and New Brunswick. Since 1993, the Company
has successfully completed 12 acquisitions. These acquisitions have enabled the
Company to rapidly expand into attractive markets and increase production
capacity. Additionally, the management team has been responsible for introducing
new investors to the Company, including Clairvest Group Inc. ("Clairvest"), a
merchant bank listed on the Toronto Stock Exchange, and certain members of the
MacMillan family.
RECENT DEVELOPMENTS
On October 23, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Cullyspring for approximately $7.6 million, including
transaction costs. Cullyspring is a Seattle-based bottled water company focusing
on the direct delivery of five-gallon containers to homes and offices and the
rental of water coolers. The acquisition represents a continuation of the
Company's consolidation activities in the Pacific Northwest market. In this
market, the Company now services territories from Eugene, Oregon through British
Columbia, with primary markets in Portland, Oregon; Seattle, Washington; and
Vancouver, British Columbia.
THE OFFERING
Pursuant to a Purchase Agreement dated as of November 14 1997 (the
"Purchase Agreement"), Sparkling Spring sold Private Notes in an aggregate
principal amount of $100.0 million to the Initial Purchasers on November 19,
1997. The Initial Purchasers subsequently resold the Private Notes purchased
from Sparkling Spring to QIBs pursuant to Rule 144A under the Securities Act and
to certain accredited investors (as defined in Rule 501(A)(1) (2) or (4) under
the Securities Act). The net proceeds to Sparkling Spring from the Offering,
after deduction of discounts and offering expenses, was approximately $96.5
million. Sparkling Spring used $56.5 million of the net proceeds to repay the
entire principal amount and accrued interest owing under the Existing Credit
Facility, approximately $13.9 million was used in connection with the
Reorganization and, approximately $3.6 million will be used to repay amounts
outstanding under certain capitalized leases. The remaining proceeds of the
Offering, approximately $22.5 million, will be used for general corporate
purposes, including potential acquisitions.
THE EXCHANGE OFFER
The Exchange Offer......... Sparkling Spring is hereby offering to exchange
$1,000 principal amount of Exchange Notes for each
$1,000 principal amount of Private Notes that are
properly tendered and accepted. Sparkling Spring
will issue Exchange Notes on or as promptly as
practicable after the Expiration Date. As of the
date hereof, there is $100,000,000 aggregate
principal amount of Private Notes outstanding. See
"The Exchange Offer." The Exchange Offer is not
conditioned upon any minimum aggregate principal
amount of Private Notes being tendered for
exchange. Based upon interpretations of the staff
of the Commission set forth in no-action letters
issued to third parties unrelated to Sparkling
Spring, Sparkling Spring believes that the Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be offered for
resale, resold and otherwise transferred by a
holder thereof (other than (i) any person who is an
"affiliate" of Sparkling Spring within the meaning
of Rule 405 under the Securities Act or (ii) a
broker-dealer who purchases Notes from Sparkling
Spring to resell
5
<PAGE> 12
pursuant to Rule 144A under the Securities Act or
any other available exemption under the Securities
Act) without compliance with the registration and
prospectus delivery provisions of the Securities
Act; provided that such holder is acquiring the
Exchange Notes in the ordinary course of its
business and such holder is not engaging and has no
intention to engage, and has no arrangement or
understanding with any person to participate, in
the distribution of the Exchange Notes. Holders of
Private Notes wishing to accept the Exchange Offer
must represent to Sparkling Spring that such
conditions have been met. Each broker-dealer that
will receive Exchange Notes for its own account in
exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of
market-making or other trading activities, must
acknowledge in the Letter of Transmittal that it
will deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by such a broker-dealer in connection with
resales of Exchange Notes received in exchange for
Private Notes acquired by such broker-dealer as a
result of market-making or other trading
activities. See "The Exchange Offer -- Resale of
the Exchange Notes" and "Plan of Distribution". In
addition, to comply with the securities laws in
certain jurisdictions, if applicable, the Exchange
Notes may not be offered or sold unless they have
been registered or qualified for sale in such
jurisdictions or an exemption from registration or
qualification is available and complied with.
Sparkling Spring and the Subsidiary Guarantors have
agreed, pursuant to the Registration Rights
Agreement (subject to certain specified limitations
set forth therein), to use their reasonable best
efforts to register or qualify the Exchange Notes
for offer or sale under the Securities or Blue Sky
laws of such jurisdictions as any holder to the
Notes reasonably requests in writing.
Registration Rights
Agreement................ The Private Notes and the related Guarantees were
sold by Sparkling Spring and the Subsidiary
Guarantors to the Initial Purchasers in a
transaction exempt from the registration
requirements of the Securities Act on November 19,
1997 pursuant to a Purchase Agreement, dated
November 14, 1997, by and among Sparkling Spring,
the Guarantors and the Initial Purchasers. Pursuant
to the Purchase Agreement, Sparkling Spring, the
Subsidiary Guarantors and the Initial Purchasers
entered into a Registration Rights Agreement, dated
November 19, 1997, which grants the holders of the
Private Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy
such rights, which terminate upon consummation of
the Exchange Offer. The holders of Exchange Notes
will not be entitled to any exchange or
registration rights with respect to the Exchange
Notes. See "The Exchange Offer -- Termination of
Certain Rights."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City Time, on , 1997, unless
the Exchange Offer is extended by Sparkling Spring
in its sole discretion, in which case the term
6
<PAGE> 13
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended. See
"The Exchange Offer -- Expiration Date; Extensions;
Termination."
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by
Sparkling Spring. See "The Exchange
Offer -- Expiration Date; Extensions; Termination."
Sparkling Spring reserves the right to terminate or
amend the Exchange Offer at any time prior to the
Expiration date upon the occurrence of any such
conditions.
Procedures for Tendering
Private Notes............ Each holder of Private Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with the Private Notes and any other required
documentation to Bankers Trust Company, as exchange
agent (the "Exchange Agent"), at the address set
forth herein. Private Notes may be physically
delivered, but physical delivery is not required if
a confirmation of a book-entry transfer of such
Private Notes to the Exchange Agent's account at
The Depository Trust Company ("DTC" or the
"Depository") is delivered in a timely fashion. By
executing the Letter of Transmittal, each holder of
Private Notes will represent to and agree with
Sparkling Spring that, among other things, (i) the
Exchange Notes to be acquire pursuant to the
Exchange Offer are being acquired in the ordinary
course of business of the person receiving such
Exchange Notes, whether or not such person is the
holder, (ii) that neither the holder nor any such
other person is engaged in, or intends to engage
in, or has any arrangement or understanding with
any person to participate in, the distribution of
the Exchange Notes, and (iii) that neither the
holder nor any such other person is an "affiliate"
of Sparkling Spring within the meaning of Rule 405
under the Securities Act (or, if such holder or
other person is an affiliate, that it will comply
with the registration and prospectus delivery
requirements of the Securities Act to the extent
applicable). Each broker-dealer that will receive
Exchange Notes for its own account in exchange for
Private Notes, where such Private Notes were
acquired by such broker-dealer as a result of
market-making or other trading activities, must
acknowledge in the Letter of Transmittal that it
will deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. See "The Exchange
Offer -- Procedures for Tendering" and "Plan of
Distribution."
Untendered Private Notes... Following the consummation of the Exchange Offer,
holders of Private Notes eligible to participate
but who do not tender their Private Notes will not
have any further exchange rights and such Private
Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Private Notes
could be adversely affected.
7
<PAGE> 14
Consequences of Failure
to Exchange.............. The Private Notes that are not exchanged pursuant
to the Exchange Offer will remain restricted
securities. Accordingly such Private Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a non-U.S. person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange
Offer-Consequences of Failure to Exchange."
Special Procedures for
Beneficial Owner......... Any beneficial owner whose Private Notes are held
through a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender
such Private Notes in the Exchange Offer should
contact such intermediary promptly and instruct
such
intermediary to tender on such beneficial owner's
behalf. See "The Exchange Offer -- Procedures for
Tendering.
Guaranteed Delivery
Procedures............... Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any
other documentation required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date, must tender their Private Notes
according to the guaranteed delivery procedures set
forth under "The Exchange Offer -- Guaranteed
Delivery Procedures."
Acceptance of the Private
Notes and Delivery of the
Exchange Notes........... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, Sparkling Spring
will accept for exchange any and all Private Notes
that are properly tendered in the Exchange Offer
prior to the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Withdrawal Rights.......... Tenders of Private Notes may be withdrawn at any
time prior to the Expiration Date. See "The
Exchange Offer -- Withdrawal of Tenders."
Certain Federal Income Tax
Considerations........... For a discussion of certain federal income tax
considerations relating to the exchange of the
Private Notes for the Exchange Notes, see "Certain
Federal Income Tax considerations -- Tax
Consequences of the Exchange Offer."
Exchange Agent............. Bankers Trust Company is serving as the Exchange
Agent in connection with the Exchange Offer. See
"The Exchange Offer -- Exchange Agent."
8
<PAGE> 15
THE NOTES
The Exchange Offer applies to $100,000,000 aggregate principal amount of
the Private Notes. The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Private Notes except that the
Exchange Notes will have been registered under the Securities Act and,
therefore, the Exchange Notes will not bear legends restricting the transfer
thereof and holders of the Exchange Notes will not be entitled to any of the
registration rights of holders of the Private Notes under the Registration
Rights Agreement (or related rights to certain interest payments upon the
failure of Sparkling Spring to fulfill certain conditions set forth in the
Registration Rights Agreement), which rights will terminate upon consummation of
the Exchange Offer. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace), and will be issued under, and be
entitled to the benefits of, the Indenture. The Private Notes and the Exchange
Notes will be considered collectively to be a single class for all purposes
under the Indenture. See "Description of Notes."
Notes Offered.............. $100,000,000 aggregate principal amount of 11 1/2%
Senior Subordinated Notes due 2007.
Maturity Date.............. November 15, 2007.
Interest Payment Dates..... Interest on the Notes will accrue from the date of
original issuance (the "Issue Date") and will be
payable semi-annually on each May 15 and November
15, commencing on May 15, 1998.
Optional Redemption........ The Notes will be redeemable at Sparkling Spring's
option, in whole or in part, on and after November
15, 2002 at the redemption prices set forth herein,
plus accrued and unpaid interest to the date of
redemption. In addition, at any time on or prior to
November 15, 2000, Sparkling Spring, at its option,
may redeem up to $30.0 million of the aggregate
principal amount of the Notes originally issued
with the net cash proceeds of one or more Public
Equity Offerings, at a redemption price equal to
111.50% of the principal amount thereof, plus
accrued and unpaid interest to the date of
redemption, provided that at least $70.0 million of
the aggregate principal amount of the Notes
originally issued remains outstanding immediately
following any such redemption. See "Description of
the Notes -- Redemption."
Change of Control.......... Upon a Change of Control, each holder of the Notes
will have the right to require Sparkling Spring to
repurchase such holder's Notes at a price equal to
101% of the principal amount thereof plus accrued
and unpaid interest to the date of repurchase.
Redemption for Tax
Reasons.................... In the event the Company is obligated to pay
Additional Amounts (as defined) in respect of the
Notes and otherwise satisfies certain conditions,
the Company may redeem the Notes, in whole but not
in part, upon giving not less than 30 or more than
60 days notice, at 100% of the principal amount
thereof plus accrued and unpaid interest, if any,
to the date of redemption. See "Description of the
Notes -- Redemption -- Optional Redemption upon the
Occurrence of Certain Tax Events" and "-- Taxation;
Redemption for Taxation Reasons."
Ranking.................... The Notes are general unsecured obligations of
Sparkling Spring and are subordinated in right of
payment to all existing and future Senior
Indebtedness. The Notes will rank pari passu in
right of payment with any future senior
subordinated indebtedness of
9
<PAGE> 16
Sparkling Spring and will rank senior in right of
payment to all other subordinated obligations of
Sparkling Spring. As of September 30, 1997, on a
pro forma basis after giving effect to the Offering
and the application of the net proceeds therefrom
as described herein, Sparkling Spring would have
had no Senior Indebtedness outstanding. However,
under the Indenture,
Sparkling Spring will have the ability to incur
Indebtedness in the future, including Indebtedness
under the Credit Agreement, which constitutes
Senior Indebtedness. See "Use of Proceeds,"
"Unaudited Pro Forma Consolidated Financial Data"
and "Description of the Credit Agreement."
Guarantees................. The Notes are unconditionally guaranteed on a
senior subordinated basis by the Subsidiary
Guarantors. The Guarantees are general unsecured
obligations of the Subsidiary Guarantors and are
subordinated in right of payment to all existing
and future Guarantor Senior Indebtedness. The
Guarantees will rank pari passu with any future
senior subordinated indebtedness of the Subsidiary
Guarantors and will rank senior in right of payment
to any other subordinated obligations of the
Subsidiary Guarantors. As of September 30, 1997, on
a pro forma basis after giving effect to the
Offering and the application of the net proceeds
therefrom as described herein, the Subsidiary
Guarantors collectively would have had
approximately $1.5 million of Guarantor Senior
Indebtedness outstanding.
Certain Covenants.......... The Indenture contains certain covenants with
respect to Sparkling Spring and its subsidiaries
that restrict, among other things, (a) the
incurrence of additional indebtedness, (b) the
payment of dividends and other restricted payments,
(c) the creation of liens, (d) the sale or other
transfer of assets and subsidiary stock, (e) the
existence of limitations on distributions from
subsidiaries, (f) transactions with affiliates and
(g) the issuance of preferred stock by
subsidiaries. The Indenture also restricts the
ability of Sparkling Spring and the Subsidiary
Guarantors to consolidate or merge with or into, or
to transfer all or substantially all of its assets
to, another person. In addition, under certain
circumstances, Sparkling Spring will be required to
offer to purchase Notes, in whole or in part, at a
purchase price equal to 100% of the principal
amount thereof plus accrued interest to the date of
repurchase, with the proceeds of certain Asset
Sales. These restrictions and requirements are
subject to a number of important qualifications and
exceptions. See "Description of the
Notes -- Certain Covenants."
USE OF PROCEEDS
Sparkling Spring will not receive any proceeds from, and has agreed to bear
the expenses of, the Exchange Offer.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Notes.
10
<PAGE> 17
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL DATA
The following table sets forth certain summary historical and unaudited pro
forma consolidated financial data of the Company. The historical data as of
December 31, 1994, 1995 and 1996 has been derived from the consolidated
financial statements of the Company. The pro forma data has been derived from
the Unaudited Pro Forma Consolidated Financial Data of the Company included
elsewhere in this Prospectus. The Unaudited Pro Forma Consolidated Financial
Data does not purport to represent what the Company's results of operations
actually would have been if the transactions referred to therein had been
consummated on the date or for the periods indicated, or what such results will
be for any future date or for any future period. The information below should be
read in conjunction with the consolidated financial statements of the Company
and the other historical financial statements, including the notes thereto,
included elsewhere in the Prospectus and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------- PRO FORMA
(dollars in thousands) 1994 1995 1996 1996 1997
------- ------- ------- --------- ---------
PRO FORMA
1996
---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue............................ $8,725 $15,349 $27,326 $44,515 $34,098 $37,271
Cost of sales...................... 1,755 2,863 4,676 9,786 7,207 7,945
Operating expenses................. 5,356 9,041 15,756 22,311 17,493 18,356
Depreciation and amortization...... 1,095 1,465 3,842 5,869 4,245 4,305
Interest expense................... 625 1,294 2,481 11,850 8,888 8,888
Net income (loss) before
extraordinary items.............. (94) 411 166 (3,043) (2,109) (1,161)
Net (loss) income.................. (238) 19 (653) (3,858) (2,924) (1,161)
OTHER DATA:
EBITDA............................. $1,614 $3,445 $6,894 $12,418 $9,398 $10,970
EBITDA margin...................... 18.5% 22.4% 25.2% 27.9% 27.6 % 29.4 %
Net capital expenditures........... 1,257 2,287 6,736 7,427 5,993 5,918
Installed cooler base.............. 23,838 30,344 74,160 102,500 99,500 115,000
Ratio of EBITDA to net cash
interest expense................. 2.58x 2.66x 2.78x 1.20x 1.21 x 1.41 x
Net debt(1)........................ -- -- -- -- -- $77,224
Ratio of net debt to LTM
EBITDA(2)........................ -- -- -- -- -- 5.5 x
BALANCE SHEET DATA:
Cash and cash equivalents.......... $67 $860 $2,231 $-- $-- $23,427
Total assets....................... 13,835 18,521 44,409 -- -- 103,206
Long-term debt (3)................. 7,623 11,309 30,474 -- -- 101,500
Common shareholders' equity
(deficit)........................ 2,331 2,207 7,002 -- -- (6,533)
</TABLE>
- ---------------
(1) Net debt is defined as total debt less cash and cash equivalents.
(2) LTM EBITDA represents EBITDA calculated for the twelve months ended
September 30, 1997, which is $14.0 million.
(3) Includes amounts due under capital lease obligations, seller note and
current maturities.
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<PAGE> 18
RISK FACTORS
The risk factors set forth below, as well as the other information set
forth in this Prospectus should be carefully considered before deciding to
surrender the Private Notes in exchange for Exchange Notes pursuant to the
Exchange Offer.
SUBSTANTIAL LEVERAGE; DEBT SERVICE OBLIGATIONS
The Company is highly leveraged. At September 30, 1997, on a pro forma
basis after giving effect to the Offering and the application of the net
proceeds therefrom as contemplated in "Use of Proceeds," the Company would have
had an aggregate of approximately $101.5 million of outstanding indebtedness and
a shareholders' deficit of $6.5 million. In addition, the Indenture permits
Sparkling Spring and the Subsidiary Guarantors to incur substantial additional
indebtedness, including Senior Indebtedness and Guarantor Senior Indebtedness,
respectively, subject to certain limitations. See "Capitalization" and
"Description of the Notes -- Certain Covenants."
The Company's high degree of leverage could have important consequences to
the holders of the Notes, including the following: (i) the Company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired in
the future; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to service its indebtedness, thereby reducing the
funds available to the Company for other purposes; (iii) certain of the
Company's borrowings are expected to be at variable rates of interest (including
borrowings under the Credit Agreement), which will expose the Company to the
risk of increased interest rates; (iv) the Company is substantially more
leveraged than certain of its competitors, which may place the Company at a
competitive disadvantage; and (v) the Company's substantial degree of leverage
may limit its flexibility to adjust to changing market conditions, reduce its
ability to withstand competitive pressures and make it more vulnerable to a
downturn in general economic conditions or in its business. See "Description of
the Credit Agreement" and "Description of the Notes."
The Company's ability to make scheduled payments or to refinance its
obligations with respect to indebtedness (including the Notes) will depend on
its financial and operating performance, which, in turn, is subject to general
economic and market conditions and to financial, competitive, business and other
factors, including factors beyond the Company's control. If the Company's cash
flow and capital resources are insufficient to fund its debt service
obligations, the Company may be forced to reduce or delay planned expansion and
capital expenditures, sell assets, obtain additional equity capital or
restructure its debt. There can be no assurance that the Company's operating
results, cash flow and capital resources will be sufficient for payment of its
indebtedness in the future. In the absence of such operating results and
resources, the Company could face substantial liquidity problems and might be
required to dispose of material assets or operations to meet its debt service
and other obligations, and there can be no assurance as to the timing of such
sales or the proceeds that the Company could realize therefrom. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
HOLDING COMPANY STRUCTURE; DEPENDENCE ON SUBSIDIARY CASH FLOW
Sparkling Spring is a holding company with no independent operations.
Sparkling Spring relies entirely on its direct and indirect subsidiaries for
funds to meet its debt service obligations and for payments in respect of other
corporate expenses. Sparkling Spring's cash flow and, consequently, its ability
to service debt, including the Notes, is dependent upon the cash flow of its
subsidiaries and the payment of funds by those subsidiaries to Sparkling Spring
in the form of loans, dividends or otherwise. The Indenture limits the ability
of Sparkling Spring to create or permit restrictions on dividends and other
payments by its subsidiaries to Sparkling Spring or any other subsidiaries of
Sparkling Spring. However, there can be no assurance that Sparkling Spring's
subsidiaries will generate sufficient cash flow to loan, dividend or otherwise
advance funds to Sparkling Spring in an amount sufficient for Sparkling Spring
to make required payments of principal of and interest on the Notes. Should
Sparkling Spring fail to satisfy any payment obligation under the Notes, the
holders
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<PAGE> 19
thereof would have a direct claim therefor against the Subsidiary Guarantors
pursuant to the Guarantees. However, the Guarantees are subordinated in right of
payment to all Guarantor Senior Indebtedness and effectively subordinated to all
secured indebtedness of the Subsidiary Guarantors. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Description
of the Notes -- Certain Covenants -- Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries."
RANKING OF NOTES AND GUARANTEES; SUBORDINATION OF NOTES AND GUARANTEES
The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness of Sparkling Spring, including Indebtedness under the Credit
Agreement, and the Guarantees are subordinated to all existing and future
Guarantor Senior Indebtedness of the Subsidiary Guarantors. In addition, the
Notes and the Guarantees are effectively subordinated to all existing and future
secured indebtedness of Sparkling Spring and the Subsidiary Guarantors,
respectively. Under the terms of the Indenture, the Company and the Subsidiary
Guarantors are restricted, but not prohibited, from incurring additional
Indebtedness, including Senior Indebtedness, Guarantor Senior Indebtedness and
additional secured indebtedness. See "Description of the Credit Agreement," and
"Description of the Notes -- Subordination" and "-- Certain Covenants." As of
September 30, 1997, on a pro forma basis, after giving effect to the Offering
and the application of the net proceeds therefrom, Sparkling Spring would have
had no Senior Indebtedness outstanding and the Subsidiary Guarantors would have
had approximately $1.5 million of Guarantor Senior Indebtedness outstanding.
Management expects that, subject to the restrictions contained in the Company's
debt agreements, Sparkling Spring and the Subsidiary Guarantors will incur
additional Senior Indebtedness and Guarantor Senior Indebtedness, respectively,
including indebtedness under the Credit Agreement, in connection with the
implementation of the Company's business strategy.
By reason of the subordination described in the preceding paragraph, in the
event of the insolvency, liquidation, reorganization, dissolution or other
winding up of Sparkling Spring, creditors of Sparkling Spring who are not
holders of Senior Indebtedness, including holders of the Notes, may recover
less, ratably, than holders of Senior Indebtedness. Similarly, the creditors of
a Subsidiary Guarantor who are not holders of Guarantor Senior Indebtedness,
including holders of the Notes, may also recover less, ratably, than holders of
Guarantor Senior Indebtedness. In addition, the holders of any secured
indebtedness of the Company will be entitled to a claim on the assets securing
such indebtedness which is prior to any claim of the holders of the Notes or the
Guarantees, as the case may be. If Sparkling Spring or a Subsidiary Guarantor
incurs additional pari passu unsecured indebtedness, the holders of such debt
would be entitled to share ratably with the holders of the Notes in any proceeds
distributed in connection with any insolvency, liquidation, reorganization,
dissolution or other winding up of the Company. This may have the effect of
reducing the amount of proceeds paid to holders of the Notes. In addition, no
payments may be made with respect to the principal of or interest on the Notes
if a payment default exists with respect to Designated Senior Indebtedness (as
defined) and, under certain circumstances, no payments may be made with respect
to the principal of or interest on the Notes for certain periods of time if a
non-payment default exists with respect to Designated Senior Indebtedness. See
"Description of the Notes -- Subordination."
RESTRICTIONS IMPOSED BY DEBT AGREEMENTS
The Indenture restricts, among other things, the ability of Sparkling
Spring and its subsidiaries to: incur additional indebtedness; create liens; pay
dividends or make certain other restricted payments; sell or otherwise transfer
assets; create restrictions on distributions from subsidiaries; enter into
certain transactions with affiliates; incur indebtedness that is subordinate in
right of payment to any Senior Indebtedness or Guarantor Senior Indebtedness and
senior in right of payment to the Notes or the Guarantees, as the case may be;
or consolidate or merge with or into, or transfer all or substantially all of
its assets to, another person. The Indenture also prohibits subsidiaries of
Sparkling Spring from issuing preferred stock other than to Sparkling Spring or
its
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<PAGE> 20
wholly-owned subsidiaries. See "Description of the Notes -- Certain Covenants."
If the Company fails to comply with these covenants, it would be in default
under the Indenture and the principal and accrued interest on the Notes may
become due and payable. In addition, the Credit Agreement will contain
restrictive covenants and require the Company to maintain specified financial
ratios and satisfy certain financial tests. See "Description of the Credit
Agreement." The Company's ability to meet such financial ratios and tests may be
affected by events beyond its control, and there can be no assurance that the
Company will satisfy such tests. A breach of any of these covenants could result
in an event of default under the Credit Agreement. If an event of default under
the Credit Agreement were to occur, the lenders thereunder could elect to
declare all amounts borrowed, together with accrued interest, to be immediately
due and payable and the lenders under the Credit Agreement could terminate all
commitments thereunder. If any such indebtedness were to be accelerated, there
can be no assurance that the assets of the Company would be sufficient to repay
in full such indebtedness and the other indebtedness of the Company, including
the Notes. In addition, a default under the Credit Agreement or the instruments
governing the Company's other indebtedness could constitute a cross-default
under the Indenture and any instruments governing the Company's other
indebtedness, and a default under the Indenture could constitute a cross-default
under the Credit Agreement and instruments governing the Company's other
indebtedness. See "Description of the Notes -- Certain Covenants" and
"Description of the Credit Agreement."
FRAUDULENT CONVEYANCE RISKS
In the event of a bankruptcy proceeding or a lawsuit by or on behalf of
creditors of Sparkling Spring, the incurrence by Sparkling Spring of the
indebtedness evidenced by the Notes would be subject to review under relevant
United States federal and state fraudulent conveyance statutes and similar laws
of certain other jurisdictions ("Fraudulent Conveyance Statutes"). Generally,
under these statutes, if at the time the Notes were issued and the proceeds
applied, (i) Sparkling Spring issued the Notes and applied the proceeds with the
intent of hindering, delaying or defrauding creditors or (ii) Sparkling Spring
received less than a reasonably equivalent value or fair consideration for
issuing the Notes and, after so applying the proceeds, Sparkling Spring (a) was
insolvent or rendered insolvent by reason of such transactions, (b) was engaged
in a business or transaction for which its assets constituted unreasonably small
capital or (c) intended to incur, or believed that it would incur, debts beyond
its ability to pay as they matured (as the foregoing terms are defined in or
interpreted under Fraudulent Conveyance Statutes), such court could subordinate
all or a part of the Notes to existing and future indebtedness of the Company,
recover any payments made on the Notes or take other action detrimental to the
holders of the Notes, including, under certain circumstances, invalidating the
Notes.
In the event that under relevant state or federal law a Subsidiary
Guarantor is determined, at the time it executed its Guarantee, to have come
within clauses (i) and (ii) of the first paragraph of this subsection, the
Guarantee by such Subsidiary Guarantor may be voidable (in whole or in part) or
the claim of the holders of the Notes in respect of such Guarantee may be
subordinated (in whole or in part) to other obligations and liabilities of such
Subsidiary Guarantor, in each case based on the theory that such Guarantee
constituted a fraudulent conveyance under applicable Fraudulent Conveyance
Statutes. In the event that such claims are asserted after any payments are made
by a Subsidiary Guarantor under its Guarantee, there is a risk that persons who
received such payments will be ordered by a court to return to such Subsidiary
Guarantor's creditors or its trustee in bankruptcy all or a portion of such
payments.
Under Canadian provincial fraudulent conveyance laws, a court could set
aside the Notes or the Guarantees, on the application of or on behalf of the
creditors or by the trustee in bankruptcy of Sparkling Spring or a Subsidiary
Guarantor, as the case may be, if it were found that the Notes had been issued
or the proceeds of the Notes applied by Sparkling Spring, or the indebtedness
represented by the obligations under the Guarantee incurred by such Subsidiary
Guarantor, with the intent to defeat, hinder, delay or defraud their respective
creditors. In making any such determination, the court would consider factors
such as whether (i) after the transactions Sparkling Spring was
14
<PAGE> 21
insolvent or rendered insolvent by reason of the transactions and (ii) Sparkling
Spring received less than a reasonably equivalent value or fair consideration in
determining whether the Notes were issued with a fraudulent intent. Similarly,
factors such as whether (i) a Guarantor was insolvent or rendered insolvent as a
result of giving its Guarantee or (ii) if Sparkling Spring received less than a
reasonably equivalent value or fair consideration for the Notes would be taken
into account in determining whether the Guarantees were issued with a fraudulent
intent. Under the Canadian Federal Bankruptcy and Insolvency Act, Notes issued
to purchasers who do not deal at arms' length with Sparkling Spring for less
than fair market value may be reviewable by the trustee in bankruptcy and may be
set aside.
The measure of insolvency for the foregoing purposes will vary depending
upon the law of the jurisdiction being applied. Generally, a company will be
considered insolvent for the foregoing purposes if it is unable to pay its debts
as they become due in the usual course of its business or the sum of its debts
is greater than all the company's property at a fair valuation or if the present
fair saleable value of its assets is less than the amount that will be required
to pay its probable liability on its existing debts as they become absolute and
mature.
Based upon the financial and other information currently available to it,
the Company believes that the indebtedness and obligations evidenced by the
Notes and the Guarantees will be incurred and proceeds of the Notes will be used
for proper purposes and in good faith. The Company believes that at the time of,
and after giving effect to, the incurrence of the indebtedness and obligations
evidenced by the Notes and the Guarantees, it will be solvent and will have
sufficient capital to carry on its business and pay its debt obligations as they
mature. No assurance can be given, however, that a court would concur with such
beliefs and positions.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of the Notes will
have the right to require Sparkling Spring to repurchase such holder's Notes at
a price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest to the date of repurchase. See "Description of the Notes -- Change of
Control." If a Change of Control were to occur and any holders were to exercise
their right to require Sparkling Spring to repurchase such holders' Notes, there
can be no assurance that Sparkling Spring would have sufficient financial
resources, or would be able to arrange financing, to pay the repurchase price
for all Notes tendered by the holders thereof. Further, the provisions of the
Indenture may not afford holders of Notes protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect holders of Notes, if
such transaction does not result in a Change of Control. In addition, the terms
of the Credit Agreement are expected to limit Sparkling Spring's ability to
purchase any Notes and are also expected to identify certain events that would
constitute a change of control, as well as certain other events with respect to
Sparkling Spring or its subsidiaries, that would constitute an event of default
under the Credit Agreement. See "Description of the Credit Agreement." Any
future credit agreements or other agreements relating to other indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when Sparkling
Spring is prohibited from purchasing Notes, Sparkling Spring could seek the
consent of its lenders to the purchase of Notes or could attempt to refinance
the borrowings that contain such prohibition. If Sparkling Spring does not
obtain such consent or repay such borrowing, Sparkling Spring would remain
prohibited from purchasing Notes. In such case, Sparkling Spring's failure to
purchase validly tendered Notes would constitute an Event of Default under the
Indenture, which would, in turn, constitute a further default under certain of
the Company's other agreements and may constitute a default under the terms of
other debt agreements that the Company may enter into from time to time. See
"Description of the Notes -- Change of Control."
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<PAGE> 22
DEPENDENCE ON FINANCING FOR EXPANSION; ACQUISITION STRATEGY
A key element of the Company's business strategy has been, and will
continue to be, growth through the acquisition of similar and complementary
businesses. See "The Company -- Acquisition Strategy." The Company's ability to
expand through acquisitions is dependent upon, and may be limited by, the
availability of suitable acquisition candidates, the availability of financing
therefor on suitable terms, and by restrictions contained in the Indenture, the
Credit Agreement and the Company's other existing and future financing
arrangements. Management believes that the market for attractive acquisitions in
the bottled water industry is becoming increasingly competitive, which could
make the Company's acquisition strategy more difficult to achieve. Certain of
the Company's competitors for attractive acquisition candidates may have greater
financial resources than the Company. Further, growth through acquisitions
involves risks that could adversely affect the Company's operating results,
including difficulties in integrating the operations and personnel of acquired
companies and the potential loss of key employees of acquired companies.
In addition, implementation of the Company's proposed expansion strategy
will be substantially dependent upon, among other things, the Company's ability
to hire and retain skilled management, financial, marketing and other personnel,
and successfully manage growth (including monitoring operations, controlling
costs and maintaining effective quality and inventory controls). The Company's
growth strategy and plans may be affected by a number of factors, including
delays in the Company's marketing efforts, changes in economic or market
conditions, its ability to make capital expenditures, competition and other
factors, some of which are beyond management's control. There can be no
assurance that the Company will be able to successfully implement its
acquisition strategy or otherwise expand its operations.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations (including the costs associated with its proposed
expansion), that the net proceeds of the Offering and cash generated from
operations will be sufficient to satisfy its anticipated cash requirements for
the foreseeable future. In the event that the Company's plans change, its
assumptions change or prove to be inaccurate or the proceeds of the Offering
prove to be insufficient to fund the Company's operations (due to unanticipated
expenses, delays, difficulties or more acquisition opportunities than presently
expected or otherwise), the Company would be required to seek additional
financing sooner than anticipated.
The Company may determine, depending upon the opportunities available to
it, to seek additional debt or equity financing to fund the cost of further
expansion. To the extent that the Company incurs additional indebtedness, the
Company will be subject to risks associated with incurring substantial
indebtedness, including the risks that interest rates may fluctuate and cash
flow may be insufficient to pay principal and interest on any such indebtedness.
The Company has no current arrangements with respect to, or sources of,
additional financing, other than the Credit Agreement. There can be no assurance
that additional financing will be available to the Company on commercially
reasonable terms or at all. The inability to obtain additional financing on
commercially reasonable terms, or at all, could have a material adverse effect
on the Company's plan for expansion. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
RISKS OF FOREIGN OPERATIONS
For the nine months ended September 30, 1997, after giving effect to the
Pro Forma Transactions, 42.6% of the Company's revenue would have been generated
in Canada in Canadian dollars, 35.8% of the Company's revenue would have been
generated in the U.K. in pounds sterling and 21.6% of the Company's revenue
would have been generated in the U.S. in U.S. dollars. In addition, a
substantial portion of the expenses incurred by the Company during that period
was denominated in currencies other than U.S. dollars. Foreign operations are
subject to a number of special risks, including, but not limited to, risks with
respect to fluctuations in currency exchange rates, regional and national
economic conditions, economic and political destabilization, other disruptions
of markets, restrictive actions by foreign governments (such as restrictions on
transfer of funds and
16
<PAGE> 23
unexpected changes in regulatory environments), changes in foreign laws
regarding trade and investment and foreign tax laws. There can be no assurance
that one or a combination of these factors will not have a material adverse
effect on the Company's financial position or results of operations. In
addition, the Trustee under the Indenture and the holders of the Notes may be
limited in their ability to enforce judgments against Sparkling Spring and the
Subsidiary Guarantors outside the United States. See "Description of the
Notes -- Enforceability of Judgments."
GOVERNMENT REGULATION
The Company's operations are subject to the jurisdiction of various
governmental and regulatory agencies which regulate the quality of drinking
water and other products, including the United States Federal Food and Drug
Administration (the "FDA") and the Canadian Federal Department of Health and
Welfare. In the United Kingdom, bottled water is governed by the European
Union's Mineral Water Directive and Drinking Water in Containers Regulations.
The Company believes that it is in substantial compliance with all applicable
laws and regulations and has all required permits and licenses to conduct its
business. However, any failure by the Company to comply with existing and future
laws and regulations could subject it to significant penalties. In addition,
there can be no assurance that such laws or regulations will not be modified in
a manner that imposes additional costs on the Company or otherwise has a
material adverse effect on the Company's financial position or results of
operations. See "The Company -- Regulation."
INTERRUPTION OF WATER SOURCES
The Company obtains its water from municipal sources and local natural
springs. Any interruption in the availability of water to the Company from these
sources could have a material adverse effect on the Company's operations until a
suitable replacement source is located. No assurances can be given that any such
interruption would not have a material adverse effect on the Company's financial
position or results of operations. See "The Company -- The Bottling Process."
COMPETITION
The beverage industry in general, and the bottled water market in
particular, are competitive. The Company competes with other national and
regional bottled water companies as well as other beverage companies. Certain of
the Company's competitors possess substantially greater financial, personnel,
marketing and other resources, and are less leveraged, than the Company and may
be better able to withstand market conditions within the beverage industry.
There can be no assurance that the Company will not encounter increased
competition in the future, which could have a material adverse effect on the
Company's business. In addition, the future success of the Company is highly
dependent on consumer tastes and preferences. There can be no assurance that a
change in consumer preferences from bottled water to other forms of purified
water or other beverages will not have a material adverse effect on the
Company's financial position or results of operations. See "The
Company -- Competition."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the continued services of certain members of
its senior management team, which consists of G. John Krediet, Stephen L. Larson
and Stewart E. Allen. The loss of, and inability to attract replacements for,
any of such key personnel could have a material adverse effect on the Company's
financial position or results of operations. See "Management."
CONTROL BY PRINCIPAL SHAREHOLDERS
Messrs. Larson and Allen and a trust for the benefit of Mr. Krediet and his
children beneficially own 63.9% of the outstanding Common Stock of Sparkling
Spring on a pro forma basis after giving effect to the Reorganization and an
additional investment to be made by Mr. Larson in Sparkling Spring in connection
with the Offering, and collectively control the affairs and policies of the
Company. See "Use of Proceeds," "Certain Relationships and Related
Transactions -- Reorganization" and "Security Ownership of Certain Beneficial
Owners and Management." Circumstances may occur in which the interests of these
shareholders could conflict with the interests of the holders of
17
<PAGE> 24
the Notes. In addition, these shareholders may have an interest in pursuing
acquisitions, divestitures or other transactions that, in their judgment, could
enhance their equity investment, even though such transactions might involve
risks to the holders of the Notes.
Pursuant to the Shareholder Agreement (as defined), Clairvest, a holder of
30.4% of the outstanding Common Stock of Sparkling Spring on a pro forma basis
after giving effect to the Reorganization, has the right to appoint two of
Sparkling Spring's seven directors. In addition, certain actions by the Company
require the approval of at least one of the Clairvest nominees. These actions
include, among other things, any acquisition by Sparkling Spring involving
consideration in excess of Cdn. $5.0 million, the making of certain capital
expenditures, the issuance by Sparkling Spring of debt or equity securities, the
disposition by the Company of a material part of its business, any changes in
management compensation, the declaration of dividends by Sparkling Spring and
the approval of Sparkling Spring's annual budget. In addition, under the
Shareholder Agreement, if no liquid public market (as defined in the Shareholder
Agreement) then exists, Clairvest may, any time after March 31, 2003, offer all
of its shares of Common Stock of Sparkling Spring for sale to Sparkling Spring.
If Sparkling Spring does not then repurchase those shares, Clairvest may, under
certain circumstances, require the other parties to the Shareholder Agreement to
join with Clairvest in selling to a third party all of their shares of Common
Stock of Sparkling Spring. See "Certain Relationships and Related
Transactions -- Shareholder Agreement."
POTENTIAL LIABILITY; INSURANCE
The Company is engaged in a business which could expose it to possible
liability claims from others, including personal injury claims. The Company
maintains third party insurance coverage that it believes is typical for
companies in its industry. There can be no assurance, however, that the
Company's insurance will be sufficient to cover potential claims or that an
adequate level of coverage will be available in the future on acceptable terms.
A partially insured or completely uninsured successful claim against the Company
could have a material adverse effect on the Company's financial position and
results of operations.
LACK OF PUBLIC MARKET FOR THE NOTES
The Exchange Notes are a new issue of securities for which there is
currently no market. There can be no assurance regarding the future development
of a market for the Exchange Notes, or the ability of holders of the Exchange
Notes to sell their Exchange Notes or the price at which such holders may be
able to sell their Exchange Notes. If such a market were to develop, the
Exchange Notes could trade at prices that may be higher or lower than their
principal amount depending on many factors, including prevailing interest rates,
Sparkling Spring's and the Subsidiary Guarantors' operating results and the
market for similar securities. The Initial Purchasers have advised Sparkling
Spring that they or their affiliates currently intend to make a market in the
Exchange Notes. The Initial Purchasers are not obligated to do so, however, and
any market-making activities with respect to the Exchange Notes may be
discontinued at any time without notice. Therefore, there is no assurance as to
the liquidity of any trading market for the Exchange Notes or that an active
public market for the Exchange Notes will develop. Sparkling Spring does not
intend to apply for listing or quotation of the Exchange Notes on any securities
exchange or stock market.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There is no assurance that the market for the Exchange Notes will
not be subject to similar disruptions. Any such disruption may have an adverse
effect on holders of the Exchange Notes.
PROCEDURES FOR TENDER OF PRIVATE NOTES
The Exchange Notes will be issued in exchange for the Private Notes only
after timely receipt by the Exchange Agent of such Private Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documentation. Therefore, holders of Private Notes desiring to tender such
Private Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor Sparkling Spring is under
any duty to give
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<PAGE> 25
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof. In addition, any
holder of Private Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. See "The Exchange Offer" and "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE PRIVATE NOTES
The Private Notes have not been registered under the Securities Act and are
subject to substantial restrictions on transfer. Private Notes that are not
tendered in exchange for Exchange Notes or are tendered but not accepted will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. Sparkling Spring does not currently
anticipate that it will register the Private Notes under the Securities Act. To
the extent that Private Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Private Notes
could be adversely affected due to the limited amount, or "float," of the
Private Notes that are expected to remain outstanding following the Exchange
Offer. Generally, a lower "float" of a security could result in less demand to
purchase such security and could, therefore, result in lower prices for such
security. For the same reason, to the extent that a large amount of Private
Notes are not tendered or are tendered and not accepted in the Exchange Offer,
the trading market for the Exchange Notes could be adversely affected. See "Plan
of Distribution" and "The Exchange Offer."
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<PAGE> 26
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain obligations of Sparkling
Spring and the Subsidiary Guarantors under the Registration Rights Agreement.
Sparkling Spring will not receive any cash proceeds from, and has agreed to bear
the expenses of, the Exchange Offer. In consideration for issuing the Exchange
Notes as contemplated in this Prospectus, Sparkling Spring will receive, in
exchange, Private Notes in like principal amount. The Private Notes surrendered
in exchange for the Exchange Notes will be retired and canceled. Accordingly,
issuance of the Exchange Notes will not result in any increase in the
outstanding indebtedness of Sparkling Spring and the Subsidiary Guarantors.
THE OFFERING
On November 19, 1997, Sparkling Spring and the Subsidiary Guarantors
consummated the Offering in a transaction exempt from the registration
requirements of the Securities Act. The price to investors and the principal
amount of the Private Notes was $100.0 million in the aggregate.
The net proceeds to Sparkling Spring from the Offering, after deduction of
discounts and offering expenses, were approximately $96.5 million. Sparkling
Spring used $56.5 million of the net proceeds to repay and retire all of its
outstanding indebtedness under the Existing Credit Facility. The indebtedness of
Sparkling Spring under the Existing Credit Facility which was repaid matured on
December 31, 2002 and accrued interest at fluctuating rates (an average blended
weighted rate of 8.5% per year at September 30, 1997). Sparkling Spring also
used $13.9 million in connection with the Reorganization and approximately $3.6
million will be used to repay amounts outstanding under certain capitalized
leases. The remaining proceeds of the Offering, approximately $22.5 million,
will be used for general corporate purposes, including potential acquisitions.
20
<PAGE> 27
CAPITALIZATION
The following table sets forth the consolidated cash position and
capitalization of the Company as of September 30, 1997, as adjusted to give
effect to the acquisition of Cullyspring for a purchase price of $7.6 million,
the Offering and the Reorganization. The table should be read in conjunction
with "The Offering," "Selected Historical Consolidated Financial Data,"
"Unaudited Pro Forma Consolidated Financial Data" and the consolidated financial
statements of the Company and the related notes thereto included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
AS AT
SEPTEMBER 30,
1997
-------------
PRO FORMA
-------------
(UNAUDITED)
<S> <C>
Cash and cash equivalents.................................................... $23,427
========
Long-term debt (including current maturities):
Capitalized lease obligations.............................................. $--
Existing Credit Facility................................................... --
Seller note................................................................ 1,500
The Notes.................................................................. 100,000
--------
Total long-term debt.................................................... 101,500
Shareholders' equity (deficit)(1)............................................ (6,533)
--------
Total capitalization......................................................... $94,967
========
</TABLE>
- ---------------
(1) Shareholders' equity incorporates (a) the net acquisition of $13.9 million
of Common Stock in connection with the Reorganization and (b) an increase in
the deficit of $0.8 million representing the after-tax impact of the
write-off of deferred financing fees. See "Notes to Unaudited Pro Forma
Consolidated Financial Statements."
21
<PAGE> 28
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial data of the
Company present the Company's unaudited pro forma consolidated statements of
operations for the year ended December 31, 1996 and the nine months ended
September 30, 1996 and 1997 and the unaudited pro forma consolidated balance
sheet of the Company as of September 30, 1997. These pro forma consolidated
financial statements give effect to the Pro Forma Transactions (as defined in
Note 1 of the "Notes to Unaudited Pro Forma Consolidated Financial Statements")
as if they had occurred on January 1, 1996 with respect to the unaudited pro
forma consolidated statements of operations and as of September 30, 1997 with
respect to the unaudited pro forma consolidated balance sheet. The unaudited pro
forma consolidated statements of operations and the unaudited pro forma
consolidated balance sheet (and the notes thereto) are based, in part, upon the
Company's consolidated financial statements and the other historical financial
statements, and the notes thereto, appearing elsewhere in this Prospectus and
should be read in conjunction therewith. The unaudited pro forma consolidated
financial information appearing herein does not purport to represent what the
Company's results of operations or financial position would have been had such
transactions in fact occurred on the dates indicated or to project the financial
position or results of operations of the Company for the present year or for any
future period.
22
<PAGE> 29
SPARKLING SPRING WATER GROUP LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
(dollars in thousands) --------------------------------------------------------------
SPARKLING SPRING ACQUIRED ACQUISITION TOTAL FINANCING
WATER GROUP LIMITED(1) COMPANIES(1) ADJUSTMENTS(2) PRE-FINANCING ADJUSTMENTS(3)(4)(5) PRO FORMA
---------------------- ------------ -------------- ------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Water................. $16,810 $10,395 $-- $27,205 $-- $27,205
Rental................ 7,347 3,594 -- 10,941 -- 10,941
Other................. 3,169 3,279 (79)(A) 6,369 -- 6,369
------- ------- ------- ------- ------- -------
Total revenue..... 27,326 17,268 (79) 44,515 -- 44,515
Cost of sales......... 4,675 5,760 (649)(B) 9,786 -- 9,786
------- ------- ------- ------- ------- -------
Gross profit.......... 22,651 11,508 570 34,729 -- 34,729
Expenses:
Operating expenses.... 15,756 8,805 (2,250)(C) 22,311 -- 22,311
Depreciation and
amortization........ 3,842 1,119 908 (D 5,869 -- 5,869
------- ------- ------- ------- ------- -------
Operating profit...... 3,053 1,584 1,912 6,549 -- 6,549
Interest expense...... 2,481 320 1,815 (E 4,616 7,234 (A 11,850
------- ------- ------- ------- ------- -------
Income before the
following........... 572 1,264 97 1,933 (7,234) (5,301)
Provision for
(recovery of) income
taxes............... 399 101 490 (F 990 (3,255)(B) (2,265)
------- ------- ------- ------- ------- -------
Net income (loss)
before non-
controlling interest
and extraordinary
item................ 173 1,163 (393) 943 (3,979) (3,036)
Non-controlling
interest............ (7) -- -- (7) -- (7)
------- ------- ------- ------- ------- -------
Net income (loss)
before extraordinary
item................ $166 $1,163 $(393) $936 $(3,979) $(3,043)
======= ======= ======= ======= ======= =======
OTHER DATA:
EBITDA................ $12,418
EBITDA margin......... 27.9%
Ratio of EBITDA to
cash interest
expense............. 1.08x
*Ratio of EBITDA to
net cash interest
expense............. 1.20x
</TABLE>
- ---------------
* The ratio of EBITDA to net cash interest expense includes interest income
earned on surplus cash of $22.5 million assuming an investment rate of return
of 5% per annum.
See accompanying notes
23
<PAGE> 30
SPARKLING SPRING WATER GROUP LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
(dollars in thousands) -----------------------------------------------------------------
SPARKLING SPRING ACQUIRED ACQUISITION TOTAL FINANCING
WATER GROUP LIMITED(1) COMPANIES(1) ADJUSTMENTS(2) PRE-FINANCING ADJUSTMENTS(3)(4)(5) PRO FORMA
---------------------- ------------ -------------- ------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Water....................... $13,392 $8,004 $-- $21,396 $-- $21,396
Rental...................... 5,604 2,660 -- 8,264 -- 8,264
Other....................... 2,068 2,431 (61)(A) 4,438 -- 4,438
------- ------- ------- ------- ------- -------
Total revenue........... 21,064 13,095 (61) 34,098 -- 34,098
Cost of sales............... 3,403 4,087 (283)(B) 7,207 -- 7,207
------- ------- ------- ------- ------- -------
Gross profit................ 17,661 9,008 222 26,891 -- 26,891
Expenses:
Operating expenses.......... 12,636 6,301 (1,444)(C) 17,493 -- 17,493
Depreciation and
amortization.............. 2,752 822 671(D) 4,245 -- 4,245
------- ------- ------- ------- ------- -------
Operating profit............ 2,273 1,885 995 5,153 -- 5,153
Interest expense............ 1,703 242 1,343(E) 3,288 5,600(A) 8,888
------- ------- ------- ------- ------- -------
Income before the
following................. 570 1,643 (348) 1,865 (5,600) (3,735)
Provision for (recovery of)
income taxes.............. 348 (8) 547(F) 887 (2,520)(B) (1,633)
------- ------- ------- ------- ------- -------
Net income (loss) before
non-controlling interest
and extraordinary item.... 222 1,651 (895) 978 (3,080) (2,102)
Non-controlling interest.... (7) -- -- (7) -- (7)
------- ------- ------- ------- ------- -------
Net income (loss) before
extraordinary item........ $215 $1,651 $(895) $971 $(3,080) $(2,109)
======= ======= ======= ======= ======= =======
OTHER DATA:
EBITDA...................... $9,398
EBITDA margin............... 27.6%
Ratio of EBITDA to cash
interest expense.......... 1.09x
*Ratio of EBITDA to net cash
interest expense.......... 1.21x
</TABLE>
- ---------------
* The ratio of EBITDA to net cash interest expense includes interest income
earned on surplus cash of $22.5 million assuming an investment rate of return
of 5% per annum.
See accompanying notes
24
<PAGE> 31
SPARKLING SPRING WATER GROUP LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
(dollars in thousands) --------------------------------------------------------------------
SPARKLING SPRING ACQUIRED ACQUISITION TOTAL FINANCING
INCOME STATEMENT DATA: WATER GROUP LIMITED(1) COMPANIES(1) ADJUSTMENTS(2) PRE-FINANCING ADJUSTMENTS(3)(4)(5) PRO FORMA
---------------------- ------------ -------------- ------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Water.................. $ 19,537 $4,007 $ -- $23,544 $ -- $23,544
Rental................. 7,777 997 -- 8,774 -- 8,774
Other.................. 4,484 527 (58)(A) 4,953 -- 4,953
---------- ---------- --------- - ---------- ----------
Total revenue........ 31,798 5,531 (58) 37,271 -- 37,271
Cost of sales.......... 5,864 2,119 (38)(B) 7,945 -- 7,945
---------- ---------- --------- - ---------- ----------
Gross profit........... 25,934 3,412 (20) 29,326 -- 29,326
Expenses:
Operating expenses..... 16,818 2,109 (571)(C) 18,356 -- 18,356
Depreciation and
amortization......... 3,918 215 172(D) 4,305 -- 4,305
---------- ---------- --------- - ---------- ----------
Operating profit....... 5,198 1,088 379 6,665 -- 6,665
Interest expense....... 2,901 8 494(E) 3,403 5,485(A) 8,888
---------- ---------- --------- - ---------- ----------
Income before the
following............ 2,297 1,080 (115) 3,262 (5,485) (2,223)
Provision for (recovery
of) income taxes..... 1,063 -- 343(F) 1,406 (2,468)(B) (1,062)
---------- ---------- --------- - ---------- ----------
Net income (loss)
before
non-controlling
interest and
extraordinary item... $ 1,234 $1,080 $ (458) $ 1,856 $ (3,017) $(1,161)
========== ========== ========== ========== ==========
OTHER DATA:
EBITDA................. $10,970
EBITDA margin.......... 29.4%
Ratio of EBITDA to cash
interest expense..... 1.27x
*Ratio of EBITDA to net
cash interest
expense.............. 1.41x
</TABLE>
- ---------------
* The ratio of EBITDA to net cash interest expense includes interest income
earned on surplus cash of $22.5 million assuming an investment rate of return
of 5% per annum.
See accompanying notes
25
<PAGE> 32
SPARKLING SPRING WATER GROUP LIMITED
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
SPARKLING -----------------------------------------------------
SPRING WATER CULLYSPRING
(dollars in thousands) GROUP LIMITED(1) WATER CO., INC.(1) FINANCING(3) PRO FORMA(1)
----------------- ------------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............. $898 $ -- $22,529(C) $23,427
Accounts receivable................... 9,170....... 359 -- 9,529
Inventories........................... 1,409....... 90 -- 1,499
Prepaid expenses...................... 1,511 -- -- 1,511
-
---------- --------- -----------
Total current assets.......... 12,988...... 449 22,529 35,966
Deferred taxes........................ 232 -- 615(D) 847
Fixed assets.......................... 21,524 1,087 -- 22,611
Goodwill and deferred charges......... 35,338 6,311 2,133(D)(E) 43,782
-
---------- --------- -----------
Total assets.................. $70,082 $ 7,847 $ 25,277 $103,206
= ========== ========= ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Accounts payable and accrued
liabilities......................... $4,875...... $32 $ (1,681)(F) $3,226
Income tax payable.................... 988......... 34 -- 1,022
Unearned revenue...................... 327 -- -- 327
Debt due within one year.............. 958 -- (958)(F) --
-
---------- --------- -----------
Total current liabilities..... 7,148 66 (2,639) 4,575
-
---------- --------- -----------
Customer deposits..................... 3,483....... 181 -- 3,664
Capitalized lease obligations......... 2,580 -- (2,580)(F) --
Existing Credit Facility.............. 47,246...... 7,600 (54,846)(F) --
Seller note........................... 1,500 -- -- 1,500
The Notes............................. -- -- 100,000(E) 100,000
-
---------- --------- -----------
Total long-term liabilities... 54,809 7,781 42,574 105,164
-
---------- --------- -----------
Shareholders' equity (deficit)
Capital stock......................... 8,601 -- (1,455)(G) 7,146
Deficit............................... (42) -- (13,203)(D)(G) (13,245)
Cumulative translation adjustment..... (434) -- -- (434)
-
---------- --------- -----------
Total shareholders' equity
(deficit)................... 8,125 -- (14,658) (6,533)
-
---------- --------- -----------
Total liabilities and
shareholders' equity
(deficit)................... 70,08$2...... $ 7,847 $25,277 $103,206
= ========== ========= ===========
</TABLE>
See accompanying notes
26
<PAGE> 33
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma consolidated financial statements have been
prepared by management from the historical financial statements of the
respective companies included elsewhere in this document as appropriate. In the
opinion of Sparkling Spring Water Group Limited's management, these unaudited
pro forma consolidated financial statements contain all adjustments required for
fair presentation.
The unaudited pro forma consolidated statements of operations reflect the
Reorganization discussed elsewhere in this Prospectus. In addition, the
unaudited pro forma consolidated statements of operations reflect the
acquisitions, as if they occurred on January 1, 1996, of D&D and Company,
Inc.(operating as Mountain Fresh Bottled Water), High Valley Water Limited,
Withey's Water Softening & Purification Limited, Marlborough Employment Limited
(operating as Water At Work Limited), Crystal Springs Bottled Water Co., Inc.,
Soja Enterprises Inc. and Cullyspring Water Co., Inc. discussed in note 21 to
the consolidated financial statements of Sparkling Spring Water Group Limited
included elsewhere in this Prospectus (the "Consolidated Financial Statements").
They also reflect the acquisition of Canadian Springs Water Company Ltd. and
Water Jug Enterprises Limited as described in note 4 to the Consolidated
Financial Statements, as if they occurred on January 1, 1996.
The acquisition transactions described in the preceding paragraph, the
Reorganization, the Offering and the application of the net proceeds to the
Company therefrom as described in "The Offering" are collectively hereinafter
referred to as the "Pro Forma Transactions."
The unaudited pro forma consolidated balance sheet of the Company as of
September 30, 1997 reflects the historical consolidated balance sheet of
Sparkling Spring Water Group Limited as of September 30, 1997, after giving
effect to the Pro Forma Transactions as if they had occurred on September 30,
1997.
References to dollar amounts in the "Notes to Unaudited Pro Forma
Consolidated Financial Statements" are to actual dollars.
2. ACQUISITION ADJUSTMENTS
The following adjustments reflect the effects of the acquisitions included
in the Pro Forma Transactions on the unaudited pro forma consolidated statements
of operations:
(A) Decrease in revenue of $79,000 for the year ended December 31,
1996, $61,000 for the nine months ended September 30, 1996 and $58,000 for
the nine months ended September 30, 1997, reflecting the elimination of
non-recurring gains on sale of assets.
(B) Decrease in cost of sales of $649,000 for the year ended December
31, 1996, $283,000 for the nine months ended September 30, 1996 and $38,000
for the nine months ended September 30, 1997, reflecting the
rationalization of certain production processes upon acquisition by the
Company, including the closure of production facilities.
(C) Decrease in operating expenses of $2,250,000 for the year ended
December 31, 1996, $1,444,000 for the nine months ended September 30, 1996
and $571,000 for the nine months ended September 30, 1997, reflecting
previous owner compensation in excess of post-acquisition compensation
amounts and decreases in operating expenses obtained through streamlining
the delivery and administrative processes upon acquisition.
27
<PAGE> 34
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(D) Increase in depreciation and amortization of $908,000 for the year
ended December 31, 1996, $671,000 for the nine months ended September 30,
1996 and $172,000 for the nine months ended September 30, 1997 for
amortization of goodwill on acquired businesses.
(E) Increase in interest expense of $1,815,000 for the year ended
December 31, 1996, $1,343,000 for the nine months ended September 30, 1996
and $494,000 for the nine months ended September 30, 1997, reflecting
additional borrowings required to fund the acquisitions included in the Pro
Forma Transactions.
(F) Increase in the provision for income taxes of $490,000 for the
year ended December 31, 1996, $547,000 for the nine months ended September
30, 1996 and $343,000 for the nine months ended September 30, 1997,
reflecting the following:
(i) the tax effect of the pro forma statement of operations
adjustments related to the acquisitions included in the Pro Forma
Transactions, excluding non-deductible amortization of goodwill, using
the basic statutory income tax rate applicable to the jurisdiction where
the adjustment occurred; and
(ii) the tax effect of certain acquired companies losing
eligibility for reduced tax rates upon acquisition by the Company.
3. OFFERING ADJUSTMENTS
The effects of the Offering and the application of the net proceeds
therefrom on the unaudited pro forma consolidated financial statements are as
follows:
(A) An increase in interest expense of $7,234,000 for the year ended
December 31, 1996, $5,599,500 for the nine months ended September 30, 1996
and $5,484,500 for the nine months ended September 30, 1997, reflecting the
net of the following:
(i) related interest expense of $11,500,000 for the year ended
December 31, 1996 and $8,625,000 for each of the nine months ended
September 30, 1996 and 1997 on the Notes using an interest rate of
11.5%;
(ii) interest expense reductions of $4,616,000 for the year ended
December 31, 1996, $3,288,000 for the nine months ended September 30,
1996 and $3,403,000 for the nine months ended September 30, 1997,
resulting from the application of a portion of the proceeds of the
Offering to the repayment of outstanding amounts under the Existing
Credit Facility and capital leases; and
(iii) increase in interest expense of $350,000 for the year ended
December 31, 1996 and $262,500 for each of the nine months ended
September 30, 1996 and 1997 relating to the amortization of expenses of
the Offering.
(B) A recovery of income taxes of $3,255,300 for the year ended
December 31, 1996, $2,519,800 for the nine months ended September 30, 1996
and $2,468,000 for the nine months ended September 30, 1997, representing
the tax savings associated with the above increase in net interest expense.
(C) An increase in cash of $22,529,000 reflecting the net of items (E)
through (G) below.
(D) Goodwill and deferred charges have been reduced in the amount of
$1,367,000, deferred taxes have been increased by $615,000 and the deficit
has been increased by $752,000, representing the write-off of deferred
financing fees.
28
<PAGE> 35
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(E) Reflects receipt of net proceeds of the Offering of $96,500,000,
comprised of gross proceeds of $100,000,000 and estimated expenses of
$3,500,000.
(F) Reflects utilization of $60,065,000 of the proceeds of the
Offering to retire the Existing Credit Facility, current maturities and
capitalized lease obligations.
(G) Reflects utilization of $14,168,000 of the proceeds of the
Offering to acquire shares from certain shareholders in connection with the
Reorganization. In addition, the Company intends to sell 9,360 shares of
Common Stock to certain members of management for aggregate gross proceeds
of approximately $262,000.
4. INTEREST ON SURPLUS CASH
The unaudited pro forma consolidated financial statements do not include
the potential earnings resulting from the investment of surplus cash. Had this
surplus cash been invested (assuming a 5.0% per annum rate of return), net
income would increase by approximately $608,000 for the year ended December 31,
1996 and $456,000 for each of the nine months ended September 30, 1996 and 1997.
5. RESTRUCTURING COSTS
The unaudited pro forma consolidated statements of operations do not
include the effect of expensing previously deferred costs of $752,000, net of
applicable taxes, relating to restructured debt or the effect of expensing
$4,511,000 related to the repurchase of previously issued compensatory stock
options. The unaudited pro forma deficit as of September 30, 1997 includes the
effect of both of these amounts.
29
<PAGE> 36
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial data of the
Company for the five years ended December 31, 1996 have been derived from the
consolidated financial statements of the Company which have been audited by
Ernst & Young, independent public accountants. The financial data for the nine
months ended September 30, 1996 and September 30, 1997 have been derived from
the Company's unaudited financial statements, which in the opinion of management
include all adjustments necessary for a fair presentation of the data for
interim periods. The results of operations for the nine months ended September
30, 1997 are not necessarily indicative of the results that may be expected for
the full fiscal year. The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the consolidated financial statements of the
Company, including the notes thereto, and "Unaudited Pro Forma Consolidated
Financial Data" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- ------------------
(dollars in thousands) 1992 1993 1994 1995 1996 1996 1997
------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue.................................... $3,814 $3,867 $8,725 $15,349 $27,326 $21,064 $31,798
Cost of sales.............................. 1,430 1,139 1,755 2,863 4,676 3,403 5,864
Operating expenses......................... 1,839 2,175 5,356 9,041 15,756 12,636 16,818
Depreciation and amortization.............. 333 438 1,095 1,465 3,842 2,752 3,918
Interest expense........................... 228 228 625 1,294 2,481 1,703 2,901
Net income (loss) before extraordinary
items.................................... (8) (63) (94) 411 166 216 1,234
Net (loss) income.......................... (8) (260) (238) 19 (653) (599) 1,234
OTHER DATA:
EBITDA(1).................................. $545 $553 $1,614 $3,445 $6,894 $5,025 $9,116
EBITDA margin.............................. 14.3% 14.3% 18.5% 22.4% 25.2% 23.8% 28.7%
Ratio of EBITDA to interest expense........ 2.39 2.43 2.58 2.66 2.78 2.95 3.14
Net capital expenditures................... 898 1,043 1,257 2,287 6,736 5,475 5,750
Installed cooler base(2)................... 8,321 11,181 23,838 30,344 74,160 67,090 114,971
Ratio (deficiency) of earnings to fixed
charges(3)............................... -- -- -- 1.4x 1.1x 1.2x 1.6x
BALANCE SHEET DATA:
Cash and cash equivalents.................. $31 $731 $67 $860 $2,231 $577 $898
Total assets............................... 3,895 5,398 13,835 18,521 44,409 41,905 70,082
Long-term debt(4).......................... 2,470 3,227 7,623 11,309 30,474 28,906 52,283
Common shareholders' equity................ 49 755 2,331 2,207 7,002 5,134 8,125
</TABLE>
- ---------------
(1) "EBITDA" means operating profit plus depreciation and amortization. EBITDA
is presented because it is a widely accepted financial indicator of a
company's ability to service and/or incur indebtedness. However, EBITDA
should not be considered as an alternative to net income as a measure of
operating results or to cash flow from operations as a measure of liquidity
in accordance with generally accepted accounting principles.
(2) Installed cooler base information as of September 30, 1997 is adjusted to
reflect the acquisition of Cullyspring, which was completed on October 23,
1997.
(3) For the purpose of determining the ratio of earnings to fixed charges
"earnings" consist of net income before provision for corporate income
taxes, non-controlling interest, extraordinary items and fixed charges.
Fixed charges consist of interest expense and the interest portion of the
Company's rent expense (assumed to be one third of rent expense). Earnings
were inadequate to cover fixed charges by approximately $12,000, $95,000 and
$104,000 in the years ended December 31, 1992, 1993 and 1994, respectively.
(4) Includes amounts due under capital lease obligations, seller note and
current maturities.
30
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations of the
Company should be read in conjunction with "Selected Historical Consolidated
Financial Data," "Unaudited Pro Forma Consolidated Financial Data" and the
consolidated financial statements of the Company and the other historical
financial statements, and the notes thereto, included elsewhere in this
Prospectus. This Prospectus contains, in addition to historical information,
forward-looking statements that include risks and uncertainties. The Company's
actual results may differ materially from those anticipated in these
forward-looking statements.
GENERAL
The Company is one of the world's largest providers of bottled water
delivered directly to commercial and residential customers in Canada, the United
Kingdom and the United States. The Company's revenue is primarily generated from
two relatively stable and recurring sources: bottled water sales and the rental
and service of water coolers. Additionally, the Company engages in certain
related activities. The Company's revenue growth in recent years is primarily
attributable to increased water cooler penetration, strategic acquisitions in
existing and new geographic territories and higher sales of ancillary products
sold through the Company's established distribution channels.
In 1996, the Company generated approximately 26.9% of its total revenue
from the rental of water coolers. The Company typically charges its customers a
monthly water cooler rental charge. Total rental revenue is a function of the
size of the installed base of water coolers and the monthly cooler rental
charge. From December 31, 1994 to December 31, 1996, the Company's installed
base of water coolers increased by 211.1% from 23,838 to 74,160. The Company's
average monthly cooler rental charge remained relatively stable during this
period.
Revenue from the sale of bottled water to commercial and residential
markets, which accounted for 61.5% of the Company's total revenue in 1996, is
driven by a number of factors, including the installed base of water coolers,
consumption of bottled water per customer and the price charged per bottle of
water.
The remaining 11.6% of the Company's total revenue in 1996 was generated
from related activities, including the sale of paper cups, coffee, water
filtration devices and water through vending machines. In addition, the Company
provides cooler sanitation services and bottles water for independent beverage
companies and supermarkets. The Company plans to continue these ancillary
activities to maximize the profitability of its established distribution system.
Since 1994, the Company has substantially improved its sales and
profitability by increasing its installed base of water coolers through internal
growth and acquisitions. The Company's operations are characterized by
relatively high fixed costs due to the significant investment required to
establish a bottling and distribution infrastructure. As the Company grows its
revenue base by acquiring and consolidating new routes within its existing route
structure, operating costs decline as a percentage of revenue. This operating
leverage is driven by the following factors: (i) improved route efficiency, (ii)
consolidation of production and distribution facilities; (iii) realization of
savings from greater purchasing volume; (iv) elimination of duplicative
administrative costs; (v) improved management control through centralized
accounting and reporting systems; and (vi) enhanced marketing efficiency. As a
result, positive changes in revenue tend to have a larger corresponding impact
on EBITDA and operating income. The continued consolidation of production and
distribution capabilities is a key component of the Company's business strategy
both within its current markets and in any new markets it may enter.
Consequently, the Company expects operating expenses to grow at a rate less than
that of anticipated revenue growth.
For certain financial information relating to each of the geographic
regions in which the Company operates, see Note 19 to the Notes to Consolidated
Financial Statements of Sparkling Spring Water Group Limited included elsewhere
in this Prospectus.
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RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
statement of operations and other data of the Company.
NINE MONTHS ENDED SEPTEMBER 30, 1997 TO NINE MONTHS ENDED SEPTEMBER 30, 1996
Revenue. Revenue increased $10.7 million, or 51.0%, to $31.8 million in the
nine months ended September 30, 1997 compared to $21.1 million in the nine
months ended September 30, 1996. This increase resulted from the inclusion of
approximately $8.1 million in revenue from the following acquisitions completed
in fiscal 1996: (i) Mountain Fresh, acquired January 2, 1997, contributed
approximately $2.0 million in revenue and 4,600 water cooler customers; (ii)
Withey's Water, acquired January 28, 1997, contributed approximately $1.2
million in revenue and 3,000 water cooler customers; (iii) High Valley, acquired
January 30, 1997, contributed $0.6 million in revenue and 6,000 water cooler
customers; (iv) Water at Work, acquired February 5, 1997, contributed $3.4
million in revenue and 4,500 water cooler customers; and (v) Crystal Springs of
Portland, Oregon, acquired June 23, 1997, contributed $0.9 million in revenue
and 5,900 water cooler customers. The remaining $2.6 million, or 24.3%, was
primarily the result of additional water coolers installed in the Company's
existing territories and a full nine months being recognized in 1997 for the
1996 acquisitions.
After giving effect to the Pro Forma Transactions, the Company's revenue
would have increased $3.2 million, or 9.3%, to $37.3 million in the nine months
ended September 30, 1997 compared to $34.1 million in the nine months ended
September 30, 1996, primarily as a result of an increase in the installed cooler
base from approximately 99,500 to approximately 115,000.
Cost of Sales. Cost of sales increased $2.5 million, or 72.3%, to $5.9
million for the nine months ended September 30, 1997 compared to $3.4 million
for the nine months ended September 30, 1996 largely as a result of the
acquisitions completed in 1996 and 1997. Cost of sales as a percentage of
revenue increased to 18.4% in the nine months ended September 30, 1997 from
16.2% in the nine months ended September 30, 1996 based on faster growth in
revenue derived from ancillary activities, including retail sales of bottled
water and the provision of cooler sanitation services, which typically generate
lower margins.
After giving effect to the Pro Forma Transactions, cost of sales would have
increased $0.7 million, or 10.2%, to $7.9 million for the nine months ended
September 30, 1997 compared to $7.2 million for the nine months ended September
30, 1996 largely as a result of the increase in the installed cooler base. Cost
of sales as a percentage of revenue would have increased slightly to 21.3% in
the nine months ended September 30, 1997 from 21.1% in the nine months ended
September 30, 1996.
Operating Expenses. Operating expenses increased $4.2 million or 33.1% to
$16.8 million in the nine months ended September 30, 1997 compared to $12.6
million in the nine months ended September 30, 1996 as a result of the
acquisitions completed in 1996 and 1997. Operating expenses as a percentage of
revenue decreased to 52.9% in the nine months ended September 30, 1997 from
60.0% in the nine months ended September 30, 1996. This decrease as a percentage
of revenue was the result of incremental sales volumes being applied to
relatively fixed distribution costs; specifically, more efficient utilization of
the existing route fleet through increased route density.
After giving effect to the Pro Forma Transactions, operating expenses would
have increased $0.9 million, or 4.9%, to $18.4 million in the nine months ended
September 30, 1997 compared to $17.5 million in the nine months ended September
30, 1996, as a result of the increase in the installed cooler base. Operating
expenses as a percentage of revenue would have decreased to 49.3% in the nine
months ended September 30, 1997 from 51.3% in the nine months ended September
30, 1996, primarily as a result of incremental sales volume being applied to
relatively fixed distribution costs.
EBITDA. For the reasons stated above, EBITDA for the nine months ended
September 30, 1997 increased by $4.1 million, or 81.4%, to $9.1 million from
$5.0 million for the nine months
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ended September 30, 1996. As a percentage of revenue, EBITDA for the nine months
ended September 30, 1997 increased to 28.7% from 23.8% for the nine months ended
September 30, 1996.
After giving effect to the Pro Forma Transactions, EBITDA would have
increased $1.6 million, or 16.7%, to $11.0 million for the nine months ended
September 30, 1997 compared to $9.4 million for the nine months ended September
30, 1996. As a percentage of revenue, EBITDA would have increased to 29.4% for
the nine months ended September 30, 1997 from 27.6% in the nine months ended
September 30, 1996.
Depreciation and Amortization. Depreciation and amortization expense
increased to $3.9 million in the nine months ended September 30, 1997 from $2.8
million in the nine months ended September 30, 1996. This increase was due to
significant increases in fixed assets as a result of the acquisitions
consummated in the period and the standard levels of capital expenditures for
existing operations.
After giving effect to the Pro Forma Transactions, depreciation and
amortization expense would have increased $0.1 million to $4.3 million in the
nine months ended September 30, 1997 from $4.2 million in the nine months ended
September 30, 1996 due to the higher depreciation expense associated with the
increased installed cooler base.
Interest Expense. Interest expense increased $1.2 million or 70.3% to $2.9
million in the nine months ended September 30, 1997 from $1.7 million in the
nine months ended September 30, 1996. This increase was a result of increased
borrowings made to fund acquisitions.
YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Revenue. Revenue increased $12.0 million, or 78.0%, to $27.3 million in
1996 compared to $15.3 million in 1995. This increase resulted from the
inclusion of approximately $9.9 million of revenue from the following
acquisitions completed in 1996: (i) Water Jug, acquired in May 1996, contributed
$0.8 million in revenue and 2,700 water cooler customers and (ii) Canadian
Springs, acquired in January 1996, contributed $9.1 million in revenue and
26,000 water cooler customers. The remaining $2.1 million, or 17.5%, was
primarily the result of 5,055 additional water coolers installed in the
Company's existing territories.
Cost of Sales. Cost of sales increased $1.8 million, or 63.3%, to $4.7
million in 1996 compared to $2.9 million in 1995, largely as a result of the
acquisitions completed in 1995 and 1996. Cost of sales as a percentage of
revenue decreased to 17.1% in 1996 from 18.7% in 1995 based on the elimination
of duplicate expenses in connection with the Company's acquisitions and
economies of scale realized from an increase in volume.
Operating Expenses. Operating expenses (selling, delivery and
administrative) increased $6.7 million, or 74.3%, to $15.7 million in 1996
compared to $9.0 million in 1995 as a result of acquisitions completed in 1995
and 1996. Operating costs as a percentage of revenue decreased to 57.7% in 1996
from 59.0% in 1995. This decrease as a percentage of revenue was the result of
incremental sales volume being applied to relatively fixed distribution costs;
specifically, the Company achieved more efficient utilization of its existing
route fleet through increased route density.
EBITDA. For the reasons stated above, EBITDA in 1996 increased by $3.5
million, or 100.1%, to $6.9 million from $3.4 million in 1995. As a percentage
of revenue, EBITDA increased to 25.2% in 1996 from 22.4% in 1995.
Depreciation and Amortization. Depreciation and amortization expense
increased $2.4 million to $3.8 million in 1996 from $1.4 million in 1995. This
increase was due to significant increases in the fixed assets as a result of the
acquisitions consummated in such period and the standard levels of capital
expenditures for existing operations.
Interest Expense. Interest expense increased $1.2 million, or 91.7%, to
$2.5 million in 1996 from $1.3 million in 1995. This increase was a result of
increased borrowings made to fund acquisitions and to repay a portion of the
Company's existing indebtedness.
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YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
Revenue. Revenue increased $6.6 million, or 75.9%, to $15.3 million in 1995
compared to $8.7 million in 1994. This increase resulted from the inclusion of
approximately $1.6 million of revenue from the acquisition of Aquaporte UK in
April 1995, which contributed 2,800 water cooler customers to the Company's
operations in the United Kingdom. The remaining $5.0 million was primarily the
result of additional water coolers installed in the Company's Canadian and U.K.
operations and the full year impact of acquisitions made in 1994.
Cost of Sales. Cost of sales increased $1.1 million, or 63.1%, to $2.9
million in 1995 compared to $1.8 million in 1994. Cost of sales as a percentage
of sales decreased to 18.7% in 1995 from 20.1% in 1994. This decrease as a
percentage of revenue was due to the newly acquired businesses, which were
mainly involved in the five- and six-gallon bottled water segment, generating
higher margins.
Operating Expenses. Operating expense (selling, delivery and
administrative) increased $3.7 million, or 68.8%, to $9.0 million in 1995
compared to $5.3 million in 1994, primarily as a result of the acquisitions
completed in 1994 and 1995. Selling, delivery and administrative costs as a
percentage of revenue decreased to 59.0% in 1995 from 61.4% in 1994. Delivery
costs declined as a percentage of revenue as increased sales volumes were
applied to relatively fixed distribution costs. This factor was offset by
administration costs increasing as a percentage of revenue as the Company
incurred additional expenses associated with managing the Company's U.K.
operations.
EBITDA. For the reasons stated above, EBITDA in 1995 increased by $1.8
million, or 113.4%, to $3.4 million from $1.6 million in 1995. As a percentage
of revenue, EBITDA increased to 22.4% in 1995 from 18.5% in 1994.
Depreciation and Amortization. Depreciation and amortization expense
increased $0.4 million to $1.5 million in 1995 from $1.1 million in 1994. This
increase was due to significant increases in fixed assets as a result of the
acquisitions consummated in such period and the standard levels of capital
expenditures for existing operations.
Interest Expense. Interest expense increased $0.7 million, or 107.0%, to
$1.3 million in 1995 from $0.6 million in 1994. This increase was primarily the
result of increased borrowings made to fund acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its capital and operating requirements
with a combination of cash flow from operations, borrowings under the Existing
Credit Facility and equity investments from shareholders. The Company has
utilized these sources of funds to make acquisitions, to fund significant
capital expenditures at its properties, to fund operations and to service debt.
The Company presently expects to fund its future capital and operating
requirements at its existing operations through a combination of cash generated
from operations, excess cash proceeds from the Offering and borrowings under the
Credit Agreement.
Net cash provided by operating activities was $2.9 million for the nine
months ended September 30, 1997 and $2.4 million in the year ended December 31,
1996. Net cash used in investment activities was $26.8 million for the nine
months ended September 30, 1997 and $24.4 million in the year ended December 31,
1996. These amounts related primarily to six acquisitions completed in the nine
months ended September 30, 1997 for $19.8 million and three acquisitions
completed in 1996 for $17.4 million. Capital expenditures include expenditures
related to the addition of bottling lines at existing facilities, construction
of new bottling facilities, and the purchase of water bottles, water coolers and
delivery trucks. The Company made capital expenditures of $5.7 million in the
nine months ended September 30, 1997 and $6.7 million in 1996. Based on the
Company's existing operations, management expects that the Company's capital
expenditure requirements will total approximately $5.0 million from October 1,
1997 through 1998.
Borrowings under the Existing Credit Facility were secured by substantially
all of the Company's assets. At September 30, 1997, borrowings under the
Existing Credit Facility bore interest at a
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blended rate of 8.5% per annum. Borrowings under the Existing Credit Facility as
of September 30, 1997 were $47.3 million, and the Company borrowed an additional
$7.6 million under the Existing Credit Facility in connection with the
Cullyspring acquisition. The Company used a portion of the net proceeds from the
Offering to repay all amounts outstanding under the Existing Credit Facility and
expects to enter into the Credit Agreement. The Indenture specifically permits
the Company to enter into a senior credit facility providing borrowing
availability of up to $30.0 million and also provides for additional general
borrowing capacity of $10.0 million, all or a portion of which may be incurred
under such credit facility. See "Description of the Credit Agreement."
The Company believes that the net proceeds from the Offering, together with
available cash, cash generated from operations and available borrowings under
the Credit Agreement will be sufficient to finance the Company's working capital
and capital expenditure requirements as well as acquisitions for the foreseeable
future. However, there can be no assurance that such resources will be
sufficient to meet the Company's anticipated requirements or that the Company
will not require additional financing within this time frame. In addition, while
the Company has received proposals from certain prospective lenders with respect
to the Credit Agreement, such proposals are non-binding and no assurances can be
given that the Company will enter into the Credit Agreement on the terms
currently contemplated or at all. If the Company is unable to secure financing
pursuant to the Credit Agreement on satisfactory terms, it may be required to
seek alternative sources of financing, which may not be available to the Company
on commercially reasonable terms. The inability of the Company to consummate the
Credit Agreement or obtain other acceptable financing could have a material
adverse effect on the Company's plans for expansion. See "Risk Factors --
Dependence on Financing for Expansion; Acquisition Strategy" and "Description of
the Credit Agreement."
GOVERNMENT REGULATION
The Company's operations are subject to the jurisdiction of the various
governmental and regulatory agencies which regulate the quality of drinking
water and other products, including the FDA in the United States, and the
Federal Department of Health and Welfare in Canada. In the United Kingdom,
bottled water is governed by the European Union's Mineral Water Directive and
Drinking Water in Containers Regulations. The Company believes that it is in
substantial compliance with all applicable laws and regulations and has all
required permits and licenses to conduct its business. Any failure by the
Company to comply with existing and future laws and regulations could subject it
to significant penalties. In addition, there can be no assurance that such laws
or regulations will not be modified in a manner that imposes additional costs on
the Company or otherwise has a material adverse effect on the Company's
financial position or results of operations. See "Risk Factors -- Government
Regulation."
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by Sparkling Spring on November 19, 1997 (the
"Issue Date") to the Initial Purchasers pursuant to the Purchase Agreement. The
Initial Purchasers subsequently sold the Private Notes in the United States to
QIBs, in reliance on Rule 144A and to a limited number of accredited investors
(as defined in Rule 501(A)(1), (2), (3) or (7), and outside the United States in
compliance with Regulation S under the Securities Act. As a condition to the
sale of the Private Notes, Sparkling Spring, the Subsidiary Guarantors and the
Initial Purchasers entered into the Registration Rights Agreement on the Issue
Date. Pursuant to the Registration Rights Agreement, each of Sparkling Spring
and the Subsidiary Guarantors agreed that they would, at their cost, to the
extent not prohibited by any applicable law or applicable interpretation of the
staff of the Commission, (i) prepare and, on or prior to 45 days after the Issue
Date, file with the Commission a Registration Statement under the Securities Act
with respect to the Exchange Offer, (ii) use their reasonable best efforts to
cause the Registration Statement relating to the Exchange Offer to be
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<PAGE> 42
declared effective by the Commission under the Securities Act on or prior to 150
days after the Issue Date, and (iii) commence the Exchange Offer and use their
reasonable best efforts to issue, on or prior to 195 days after the Issue Date,
the Exchange Notes. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Registration Statement is intended to satisfy certain of Sparkling Spring's
and the Subsidiary Guarantors' obligations under the Registration Rights
Agreement and the Purchase Agreement. See "-- Resale of the Exchange Notes."
Pursuant to the Registration Rights Agreement, if (i), because of any
change in law or in currently prevailing interpretations of the staff of the
Commission, Sparkling Spring and the Subsidiary Guarantors are not permitted to
effect the Exchange Offer, (ii) the Exchange Offer is not consummated within 195
days of the Issue Date, (iii) in certain circumstances, certain holders of
unregistered Exchange Notes so request, or (iv) in the case of any holder of
Private Notes that participates in the Exchange Offer, such holder does not
receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such holder as an affiliate of Sparkling Spring within the meaning
of the Securities Act), then in each case, Sparkling Spring and the Subsidiary
Guarantors will (x) promptly deliver to the holders of Private Notes and the
Trustee under the Indenture written notice thereof and (y) at their sole
expense, (a) file a shelf registration statement covering resales of the Private
Notes (the "Shelf Registration Statement"), (b) use their reasonable best
efforts to cause the Shelf Registration Statement to be declared effective under
the Securities Act and (c) use their reasonable best efforts to, subject to
certain exceptions, keep effective the Shelf Registration Statement until the
earlier of two years after the Issue Date or such time all of the applicable
Private Notes have been sold thereunder. Pursuant to the Registration Rights
Agreement, Sparkling Spring will, in the event that a Shelf Registration
Statement is filed, provide to each holder of Private Notes copies of the
prospectus that is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement for the Private Notes has become
effective and take certain other actions as are required to permit unrestricted
resales of the Private Notes. A holder of Private Notes that sells Private Notes
pursuant to the Shelf Registration Statement will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
Securities Act in connection with such sales and will be bound by the provisions
of the Registration Rights Agreement that are applicable to such a holder
(including certain indemnification rights and obligations). Additional interest
(the "Additional Interest") shall become payable by Sparkling Spring and the
Subsidiary Guarantors in respect of the Private Notes:
(i) if (A) neither the Registration Statement relating to the Exchange
Offer (the "Exchange Offer Registration Statement") nor the Shelf
Registration Statement is filed with the Commission on or prior to the date
required by the Registration Rights Agreement or (B) notwithstanding that
Sparkling Spring and the Subsidiary Guarantors have consummated or will
consummate an Exchange Offer, Sparkling Spring and the Subsidiary
Guarantors are required to file a Shelf Registration Statement and such
Shelf Registration Statement is not filed on or prior to the date required
by the Registration Rights Agreement, then commencing on the day after
either such required filing date, Additional Interest shall accrue on the
principal amount of the Private Notes at a rate of 0.50% per annum for the
first 90 days immediately following each such filing date, such Additional
Interest rate increasing by an additional 0.50% per annum at the beginning
of each subsequent 90-day period; or
(ii) if (A) the Exchange Offer Registration Statement is not declared
effective within 150 days after the Issue Date or (B) notwithstanding that
Sparkling Spring and the Subsidiary Guarantors have consummated or will
consummate an Exchange Offer, Sparkling Spring and the Subsidiary
Guarantors are required to file a Shelf Registration Statement and such
Shelf Registration Statement is not declared effective by the Commission on
or prior to the 75th day following the date such Shelf Registration
Statement was filed, then, commencing on the day after the date on which
the applicable Registration Statement was required to be declared
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effective, Additional Interest shall accrue on the principal amount of the
Private Notes at a rate of 0.50% per annum for the first 90 days
immediately following such date, such Additional Interest rate increasing
by an additional 0.50% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) Sparkling Spring and the Subsidiary Guarantors have not
exchanged Exchange Notes for all Private Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date of this Prospectus or (B) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of the Issue Date (other than as permitted by the
Registration Rights Agreement or after such time as all Private Notes have
been disposed of thereunder), then Additional Interest shall accrue on the
principal amount of the Private Notes at a rate of 0.50% per annum for the
first 90 days commencing on (x) the 46th day after such effective Date, in
the case of (A) above, or (y) the day such Shelf Registration Statement
ceases to be effective in the case of (B) above (other than as permitted by
the Registration Rights Agreement), such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period;
provided, however, that the Additional Interest rate on the Private Notes may
not exceed at any one time in the aggregate 2.00% per annum; and provided,
further, that (1) upon the filing of the Exchange Offer Registration Statement
or a Shelf Registration Statement (in the case of clause (i) above), (2) upon
the effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Private Notes tendered (in the case of clause
(iii)(A) above), or upon the effectiveness of the Shelf Registration Statement
which had ceased to remain effective (in the case of clause (iii)(B) above),
Additional Interest on the Private Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue and, in
any case, such Additional Interest shall not be payable in respect of more than
one of the preceding provisions at any one time.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and the Letter of Transmittal, Sparkling Spring will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date.
Sparkling Spring will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of outstanding Private Notes validly
tendered pursuant to the Exchange Offer and not withdrawn prior to the
Expiration Date. Holders may tender some or all of their Private Notes pursuant
to the Exchange Offer; provided, however, that Private Notes may be tendered
only in integral multiples of $1,000. The Exchange Offer is not conditioned upon
any minimum aggregate principal amount of Private Notes being tendered for
exchange.
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Private Notes except that the Exchange
Notes will have been registered under the Securities Act and, therefore, the
Exchange Notes will not bear legends restricting the transfer thereof and
holders of the Exchange Notes will not be entitled to any of the registration
rights of holders of Private Notes under the Registration Rights Agreement (or
related rights to certain interest payments upon the failure of Sparkling Spring
to fulfill certain conditions set forth in the Registration Rights Agreement),
which rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same indebtedness as the Private Notes (which
they replace), and will be issued under, and be entitled to the benefits of, the
Indenture, which also authorized the issuance of the Private Notes, such that
both series of Notes will be treated as a single class of debt securities under
the Indenture. See "-- Resale of the Exchange Notes."
Interest on each Exchange Note will accrue (A) from the later of (i) the
last interest payment date on which interest was paid on the Private Note
surrendered in exchange therefor or (ii) if the
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Private Note is surrendered for exchange on a date in a period on or after the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Private Notes, from the
Issue Date.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of the Private Notes is outstanding, all of which is registered in the name of
Cede & Co., as nominee of the Depositary. Only a registered holder of the
Private Notes (or such holder's legal representative or attorney-in-fact) as
reflected on the records of DTC or the Trustee under the Indenture may
participate in the Exchange Offer. Solely for reasons of administration,
Sparkling Spring has fixed the close of business on , 1997 as
the record date for the Exchange Offer for purposes of determining the persons
to whom this Prospectus and the Letter of Transmittal will be mailed initially.
There will be no fixed record date for determining registered holders of the
Private Notes entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Sparkling Spring intends to
conduct the Exchange Offer in accordance with the provisions of the Registration
Rights Agreement and the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder.
Sparkling Spring shall be deemed to have accepted validly tendered Private
Notes when, as and if Sparkling Spring has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Private Notes for the purposes of receiving the Exchange Notes from
Sparkling Spring.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. Sparkling Spring will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; TERMINATION
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1997, unless Sparkling Spring, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, Sparkling Spring will (i) notify the
Exchange Agent of any extension by oral or written notice and (ii) will make a
public announcement thereof (which shall include disclosure of the approximate
number of Private Notes deposited to date), each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
Sparkling Spring expressly reserves the right, in its sole discretion, (i)
to delay accepting any Private Notes, (ii) to extend the Exchange Offer, (iii)
if any conditions set forth below under "-- Certain Conditions to the Exchange
Offer" shall not have been satisfied (or shall occur), to terminate the Exchange
Offer by giving oral or written notice of such delay, extension or termination
to the Exchange Agent or (iv) to amend the terms of the Exchange Offer in any
manner. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by a press release or other public
announcement thereof. If the Exchange Offer is amended in a manner determined by
Sparkling Spring to constitute a material change, Sparkling Spring will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered holders of Private Notes, and Sparkling Spring
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the amendment and the manner of disclosure to
such registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period. The rights reserved by Sparkling Spring in
this
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paragraph are in addition to Sparkling Spring's rights set forth below under the
caption "-- Certain Conditions to the Exchange Offer."
Without limiting the manner in which Sparkling Spring may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, Sparkling Spring shall have no obligation to publish, advertise
or otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
If Sparkling Spring extends the period of time during which the Exchange
Offer is open, or if it is delayed in accepting for exchange of, or in issuing
and exchanging the Exchange Notes for, any Private Notes, or is unable to accept
for exchange of, or issue Exchange Notes for, any Private Notes pursuant to the
Exchange Offer for any reason, then, without prejudice to Sparkling Spring's
rights under the Exchange Offer, the Exchange Agent may, on behalf of Sparkling
Spring, retain all Private Notes tendered, and such Private Notes may not be
withdrawn except as otherwise provided below in "-- Withdrawal of Tenders." The
adoption by Sparkling Spring of the right to delay acceptance for exchange of,
or the issuance and the exchange of the Exchange Notes for, any Private Notes is
subject to applicable law, including Rule 14e-1(c) under the Exchange Act, which
requires that Sparkling Spring pay the consideration offered or return the
Private Notes deposited by or on behalf of the holders thereof promptly after
the termination or withdrawal of the Exchange Offer.
RESALE OF THE EXCHANGE NOTES
Sparkling Spring is making the Exchange Offer in reliance on the
interpretations of the staff of the Commission as set forth in no-action letters
issued to third parties unrelated to Sparkling Spring. However, Sparkling Spring
has not sought its own no-action letter and there can be no assurance that the
staff of the Commission would make a similar determination with respect to the
Exchange Offer as it has in such no-action letters issued to such third parties.
With respect to the Exchange Notes, based upon these interpretations by the
staff of the Commission, Sparkling Spring believes that a holder (other than (i)
any person who is an "affiliate" of Sparkling Spring within the meaning of Rule
405 under the Securities Act or (ii) a broker-dealer that purchases Notes from
Sparkling Spring to resell pursuant to Rule 144A under the Securities Act or any
other available exemption under the Securities Act) who exchanges Private Notes
for Exchange Notes in the ordinary course of its business and is not engaging,
and has no intention to engage, and has no arrangement or understanding with any
person to participate, in the distribution of the Exchange Notes, will be
allowed to resell the Exchange Notes without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires Exchange Notes in the Exchange Offer for the
purpose of distributing or participating in the distribution of the Exchange
Notes or is a broker-dealer, such holder cannot rely on the position of the
staff of the Commission described above and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction, unless an exemption from registration is otherwise
available. A broker-dealer that will receive Exchange Notes for its own account
in exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, may be
deemed to be an "underwriter" within the meaning of the Securities Act and must
therefore deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. Each such broker-dealer that
receives Exchange Notes for its own account in exchange for Private Notes, where
such Private Notes were acquired by such broker-dealer as a result of
market-making or other trading activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by such a broker-dealer in connection with resales of any Exchange Notes
received in exchange for Private Notes acquired by such a broker-dealer for its
own account, as a result of market-making or other trading activities. Pursuant
to the Registration Rights
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<PAGE> 46
Agreement, Sparkling Spring has agreed to make this Prospectus, as it may be
amended or supplemented from time to time, available to any such broker-dealer
that requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any such resale for a period of up to 90 days after the
Expiration Date. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Exchange Notes may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and complied with. Sparkling Spring
and the Subsidiary Guarantors have agreed, pursuant to the Registration Rights
Agreement (subject to certain specified limitations set forth therein), to use
their reasonable best efforts to register or qualify the Exchange Notes for
offer or sale under the securities or blue sky laws of such jurisdictions as any
holder of the Notes reasonably requests in writing.
PROCEDURES FOR TENDERING
Subject to the terms and conditions hereof and the Letter of Transmittal,
only a registered holder of Private Notes may tender such Private Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes must
complete, sign and date the Letter of Transmittal, or facsimile thereof, have
the signature thereon guaranteed if required by the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal or such facsimile to the
Exchange Agent at the address set forth below under "-- Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Private Notes must be received by the Exchange Agent along with the Letter
of Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes into the Exchange Agent's
account at DTC pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTATION TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY
TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR
PRIVATE NOTES SHOULD BE SENT TO SPARKLING SPRING. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute a binding agreement between such holder and Sparkling Spring in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
Any beneficial owner of the Private Notes whose Private Notes are held
through a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution unless the Private Notes tendered pursuant thereto
are tendered (i) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the NASD, a
commercial bank or trust company having an office or correspondent in the United
States, or another "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (any of the foregoing, an "Eligible
Institution").
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<PAGE> 47
If the Letter of Transmittal is signed by a person other than the
registered holder of any Private Notes (which term includes any participants in
DTC whose name appears on a security position listing as the owner of Private
Notes) or if delivery of the Notes is to be made to a person other than the
registered holder, such Private Notes must be endorsed or accompanied by a
properly completed bond power, in either case, signed by such registered holder
exactly as the name or names of such registered holder or holders name appear(s)
on such Private Notes with the signature on the Private Notes or the bond power
guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Private Notes or assignments or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by Sparkling Spring, evidence satisfactory to Sparkling Spring of
their authority to so act must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be determined
by Sparkling Spring in its sole discretion, which determination will be final
and binding. Sparkling Spring reserves the absolute right to reject any and all
Private Notes not properly tendered or any Private Notes, Sparkling Spring's
acceptance of which would be unlawful. Sparkling Spring also reserves the right
to waive any defects, irregularities or conditions of tender as to particular
Private Notes. Sparkling Spring's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Private Notes must be cured within
such time as Sparkling Spring shall determine. Although Sparkling Spring intends
to request the Exchange Agent to notify holders of defects or irregularities
with respect to tenders of Private Notes, neither Sparkling Spring, the Exchange
Agent nor any other person shall incur any liability for failure to give such
notification. Tenders of Private Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived.
While Sparkling Spring has no present plan to acquire any Private Notes
which are not tendered in the Exchange Offer or to file a registration statement
to permit resales of any Private Notes which are not tendered pursuant to the
Exchange Offer, Sparkling Spring reserves the right in its sole discretion to
purchase or make offers for any Private Notes that remain outstanding subsequent
to the Expiration Date or, as set forth herein under "-- Expiration Date;
Extensions; Termination" and "-- Certain Conditions to the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Private Notes in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering Private Notes pursuant to the Exchange Offer and executing a
Letter of Transmittal, each holder of Private Notes will represent to and agree
with Sparkling Spring that, among other things, (i) the Exchange Notes to be
acquired in connection with the Exchange Offer are being acquired in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the holder, (ii) that neither the holder nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of the Exchange Notes, (iii) such holder acknowledges and
agrees that any person who is a broker-dealer registered under the Exchange Act
or is participating in the Exchange Offer for the purpose of distributing the
Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale of the
Exchange Notes acquired by such person and cannot rely on the position of the
staff of the Commission set forth in certain no-action letters described herein,
(iv) such holder understands that a secondary resale transaction described in
clause (iii) above and any resales of Exchange Notes obtained by such holder in
exchange for
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<PAGE> 48
Private Notes acquired by such holder directly from Sparkling Spring should be
covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission, and (v) such holder or such other person is
not an "affiliate" of Sparkling Spring within the meaning of Rule 405 under the
Securities Act (or, if it is an affiliate, that such holder or other person will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable). If the holder is a broker-dealer that
will receive Exchange Notes for such holder's own account in exchange for
Private Notes, where such Private Notes were acquired by such broker-dealer as a
result of market-making or other trading activities, such holder must
acknowledge in the Letter of Transmittal that such holder will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, such holder will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. See
"Plan of Distribution."
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or any other reason set forth in the terms and conditions of the Exchange
Offer or if Private Notes are withdrawn or are submitted for a greater principal
amount than the holders desire to exchange, such unaccepted, withdrawn or
nonexchanged Private Notes will be returned without expense to the tendering
holder thereof (or, in the case of Private Notes tendered by book-entry transfer
into the Exchange Agent's account at the Depositary pursuant to the book-entry
transfer procedures described below, such Private Notes will be credited to an
account maintained with the Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depositary for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depositary's system may make book-entry
delivery of Private Notes by causing the Depositary to transfer such Private
Notes into the Exchange Agent's account at the Depositary in accordance with the
Depositary's procedures for transfer. However, although delivery of Private
Notes may be effected through book-entry transfer at the Depositary, the Letter
of Transmittal or facsimile thereof, with any required signature guarantees and
any other required documentation, must, in any case, be transmitted to and
received by the Exchange Agent at the address set forth below under "-- Exchange
Agent" on or prior to the Expiration Date or pursuant to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes (or
complete the procedures for book-entry transfer), the Letter of Transmittal or
any other required documentation to the Exchange Agent prior to the Expiration
Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by Sparkling Spring
(by facsimile transmission (receipt confirmed by telephone and an original
delivered by guaranteed overnight courier), mail or hand delivery) setting
forth the name and address of the holder, the certificate number(s) of such
Private Notes (if applicable) and the principal amount of Private Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five New York Stock Exchange trading days after the Expiration
Date, the Letter of Transmittal (or a facsimile thereof), together with the
certificate(s) representing the Private Notes in proper form for transfer
or a Book-Entry Confirmation,
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<PAGE> 49
as the case may be, and any other documentation required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or a facsimile
thereof), as well as the certificate(s) representing all tendered Private
Notes in proper form for transfer or a Book-Entry Confirmation, as the case
may be, and all other documentation required by the Letter of Transmittal
are received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
Any holder who has tendered Private Notes may withdraw the tender by
delivering written notice of withdrawal (which may be sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier) or hand delivery) to the Exchange Agent prior to
the Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having tendered the Private Notes to be withdrawn
(the "Depositor"), (ii) identify the Private Notes to be withdrawn (including
the certificate number or numbers and principal amount of such Private Notes),
(iii) be timely received and signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Private Notes were
tendered or as otherwise set forth in the instructions to the Letter of
Transmittal (including any required signature guarantees), or be accompanied by
documents of transfer sufficient to have the Trustee under the Indenture
register the transfer of such Private Notes pursuant to the terms of the
Indenture into the name of the person withdrawing the tender and (iv) specify
the name in which any such Private Notes are to be registered, if different from
that of the Depositor. If Private Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Private Notes or otherwise comply with the
book-entry transfer facility's procedures. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by Sparkling Spring, in its sole discretion, whose determination
shall be final and binding on all parties. None of Sparkling Spring, any
Subsidiary Guarantor, any employees, agents, affiliates or assigns of Sparkling
Spring, or any Subsidiary Guarantor, the Exchange Agent or any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification. Any Private Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Private Notes so withdrawn are validly
retendered. Properly withdrawn Private Notes may be retendered by following one
of the procedures described above under "-- Procedures for Tendering" at any
time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, Sparkling Spring
shall not be required to accept for exchange, or exchange the Exchange Notes
for, any Private Notes not theretofore accepted for exchange, and may terminate
or amend the Exchange Offer as provided herein before the acceptance of such
Private Notes, if any of the following events shall occur:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency which would be reasonably likely to
materially impair the ability of Sparkling Spring to proceed with the
Exchange Offer or there shall have occurred any material
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adverse development in any existing action or proceeding with respect to
Sparkling Spring or any of its subsidiaries; or
(b) the Exchange Offer shall violate any applicable law, rule,
regulation or interpretation of the staff of the Commission; or
(c) any governmental approval which Sparkling Spring shall deem
necessary for the consummation of the Exchange Offer as contemplated hereby
shall have not been obtained.
If Sparkling Spring determines in its reasonable discretion that any of
these conditions are not satisfied (or any of such events shall have occurred),
Sparkling Spring may (i) refuse to accept any Private Notes and return all
tendered Private Notes to the tendering holders and/or terminate the Exchange
Offer, (ii) extend the Exchange Offer and retain all Private Notes tendered
prior to the expiration of the Exchange Offer, subject, however, to the rights
of holders to withdraw such Private Notes (see "-- Withdrawal of Tenders") or
(iii) waive such unsatisfied conditions with respect to the Exchange Offer and
accept all properly tendered Private Notes which have not been withdrawn. If
such waiver constitutes a material change to the Exchange Offer, Sparkling
Spring will promptly disclose such waiver by means of a prospectus supplement
that will be distributed to the registered holders of the Private Notes, and
Sparkling Spring will extend the Exchange Offer for a period of five to ten
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
Holders may have certain rights and remedies against Sparkling Spring under
the Registration Rights Agreement should Sparkling Spring fail to consummate the
Exchange Offer, notwithstanding a failure of the conditions stated above. Such
conditions are not intended to modify those rights or remedies in any respect.
The foregoing conditions are for the sole benefit of Sparkling Spring and
may be asserted by Sparkling Spring regardless of the circumstances giving rise
to such condition or may be waived by Sparkling Spring in whole or in part at
any time and from time to time in Sparkling Spring's reasonable discretion. The
failure by Sparkling Spring at any time to exercise the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All registration rights under the Registration Rights Agreement of holders
of the Private Notes eligible to participate in the Exchange Offer (and all
rights to receive Additional Interest as described under "-- Purpose of the
Exchange Offer") will terminate upon consummation of the Exchange Offer except
with respect to Sparkling Spring's continuing obligations (i) to indemnify the
holders (including any broker-dealers) and certain parties related to the
holders against certain liabilities (including liabilities under the Securities
Act), and (ii) for a period of up to 90 days after the Expiration Date, to use
its reasonable best efforts to keep the Registration Statement effective and to
provide copies of the latest version of the Prospectus to any broker-dealer that
requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any resale by such broker-dealer of Exchange Notes received for
its own account pursuant to the Exchange Offer. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted pursuant to the
foregoing provisions, Sparkling Spring has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
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<PAGE> 51
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance as well as all correspondence in
connection with the Exchange Offer and the Letter of Transmittal should be
addressed to the Exchange Agent, as follows:
<TABLE>
<S> <C> <C>
By Hand or
Overnight Delivery: Facsimile By Registered or
Transmissions: Certified Mail:
(Eligible Institutions Only)
(212)
To confirm by Telephone or
for Information Call:
(212)
</TABLE>
Requests for additional copies of this Prospectus, the Letter of
Transmittal or the Notice of Guaranteed Delivery should be directed to the
Exchange Agent.
Bankers Trust Company also serves as Trustee under the Indenture.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Sparkling Spring. The
principal solicitation is being made by mail; however, additional solicitation
may be made by facsimile transmission, telephone or in person by officers and
regular employees of Sparkling Spring, the Subsidiary Guarantors and their
affiliates.
Sparkling Spring has not retained any dealer-manager or other soliciting
agent in connection with the Exchange Offer and will not make any payments to
brokers, dealers or others soliciting acceptance of the Exchange Offer.
Sparkling Spring, however, will pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection with the Exchange Offer.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by Sparkling Spring and are estimated in the aggregate to be
approximately $ . Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
Sparkling Spring will pay all transfer taxes, if any, applicable to the
transfer of Private Notes to it or its order pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the exchange of
Private Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder of Private Notes.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
Private Notes that are not exchanged for the Exchange Notes pursuant to the
Exchange Offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) of the Securities Act. Accordingly, such Private Notes will remain
subject to the restrictions on transfer of such Private Notes as set forth in
the legend thereon and may not be offered, sold, pledged or otherwise
transferred except (i) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Securities Act, (ii) in an
offshore transaction complying with Rule 903 or Rule 904 of Regulation S under
the Securities Act, (iii) pursuant to an exemption from registration under the
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<PAGE> 52
Securities Act provided by Rule 144 thereunder (if available), (iv) pursuant to
an effective registration statement under the Securities Act or (v) pursuant to
another available exemption from the registration requirements of the Securities
Act, and, in each case, in accordance with all other applicable securities laws.
See "Risk Factors -- Consequences of Failure to Exchange Private Notes."
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Private Notes as reflected in Sparkling Spring's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the Exchange Notes.
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<PAGE> 53
THE COMPANY
The Company is one of the world's largest providers of bottled water
delivered directly to the residential and commercial markets. Presently, the
Company has the leading market share position in British Columbia and the
Maritime Provinces of Canada, England and Scotland in the United Kingdom, and
the State of Oregon in the United States. In addition, the Company has the
second largest market share in the State of Washington. The Company's strategy
has been to achieve strong market positions in a number of attractive markets
and thereby realize the operating leverage that can be obtained once a
distribution system is established. The Company's primary focus is on the
bottling and delivery of high quality drinking water in five-gallon and
six-gallon bottles to homes and offices, and the rental of water coolers.
The Company has grown through both strong internal growth and the execution
of a proven acquisition strategy. The Company's revenue and EBITDA have
increased from $3.8 million and $0.5 million, respectively, in 1992, to $27.3
million and $6.9 million, respectively, in 1996, representing a CAGR of 63.6%
and 88.6%, respectively. On a pro forma basis, revenue and EBITDA for the nine
months ended September 30, 1997 of $37.3 million and $11.0 million,
respectively, increased by 9.3% and 16.7% compared to the prior year period,
reflecting the significant internal growth of the Company's operations.
The Company has been a leader in the consolidation of the highly fragmented
bottled water industry by executing a disciplined acquisition strategy. In
addition, the Company has significantly improved the operations and
profitability of each company it has acquired. For the four acquired companies
for which the Company has comparable full-year pre-acquisition and
post-acquisition data, revenue and EBITDA increased, on average, by 18.5% and
64.0%, respectively, in the first year after the acquisition. Management
believes that it has realized similar improved performance in its other
acquisitions for which post-acquisition information is available. Since January
1, 1997, the Company has completed seven acquisitions through which it entered
the attractive U.S. bottled water market and expanded its leadership positions
in Canada and the United Kingdom.
BUSINESS STRATEGY
Bottled water continues to be the fastest growing segment of the beverage
industry, growing at a CAGR of 10.5% since 1980 according to Beverage Marketing
Corporation. Management believes this growth stems primarily from two sources:
(i) consumer dissatisfaction with tap water and (ii) increased consumer health
consciousness resulting in the substitution of water for other less-healthy
beverages. The Company expects to benefit from the growing demand for quality
drinking water by increasing its installed base of water coolers, increasing the
water and related products offered through its established distribution system,
and continuing to be a leader in the consolidation of the highly fragmented
bottled water industry. In particular, the Company expects to continue to pursue
the following business strategies:
Focus on the Water Cooler Segment Within the Growing "Alternative to Tap
Water" Market. Management believes that the overall growth of the bottled water
industry and the relatively low level of water cooler penetration in Canada and
the U.K., in particular, provide the Company with significant growth
opportunities. The Company believes that health concerns and problems with the
taste and odor of tap water have generated consumer demand for an "alternative
to tap water," driving consumers to increasingly rely on bottled water and
filtration systems in order to satisfy their drinking water needs. The Company
intends to take advantage of this growth in demand by offering a premium product
through multiple channels (i.e., direct delivery, retail and filtration
systems), with a specific focus on the "direct delivery" water cooler segment.
The water cooler business enjoys higher margins, less competition and
greater operating leverage than either the retail bottled water or the water
filter businesses. Sales in this segment are generally less price sensitive than
retail sales of bottled water because the customer is generally more concerned
with service and convenience. In addition, there are incremental cost and
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<PAGE> 54
inconvenience factors associated with switching suppliers. Furthermore, water
cooler companies generally have lower advertising costs than companies pursuing
retail sales of bottled water because consumers generally do not select a water
cooler provider on the basis of brand name. The water cooler business is also
generally less competitive than other segments of the bottled water industry due
to the relative capital intensity of the operations. Finally, the significant
growth potential in the water cooler market and the low levels of water cooler
penetration allow industry participants to focus on attracting new customers
rather than on capturing market share from competitors.
Leverage Existing Infrastructure. Due to the significantly fixed
distribution system associated with the direct delivery of bottled water in a
geographic area, additional operating leverage can be achieved by increasing
route density through incremental market penetration. In addition to increasing
the overall customer base, the Company expects to continue to benefit as per
capita consumption continues to climb with each existing customer consuming more
water. Finally, the Company utilizes its route systems to offer products which
are complementary to bottled water, including cups, cooler sanitation services,
coffee and related products.
In addition to benefiting from internal growth in its markets, the Company
leverages its infrastructure with each acquisition in adjacent or overlapping
territories. Specific operating initiatives employed by the Company typically
include: (i) maximizing distribution route efficiencies, (ii) consolidating
bottling facilities, (iii) eliminating duplicative administrative costs and (iv)
utilizing favorable purchasing opportunities. The Company's existing
infrastructure and scale of operations provide an attractive opportunity to
continue to add incremental customers at a higher marginal profitability rate.
The Company has achieved significant cost savings in its existing operations as
reflected in the increase in its EBITDA margin from 14.3% in 1992 to 25.2% in
1996 and 28.7% in the nine months ended September 30, 1997.
Pursue Strategic Acquisitions. The Company has successfully pursued a
disciplined acquisition strategy to create value by taking advantage of the
consolidation of the highly fragmented bottled water industry. The Company has
developed and successfully implemented a "hub and spoke" approach to acquiring
companies in new markets by identifying one of the largest bottled water
companies as a platform acquisition, and complementing it with smaller fill-in
acquisitions in neighboring or overlapping geographic territories. The Company
is generally unwilling to enter a new market through an acquisition unless the
company being acquired is both one of the market share leaders and provides the
critical mass and local management talent necessary to act as a platform in that
market. While the purchase price paid for a platform company is typically higher
than that for a fill-in acquisition, the Company is able to reduce its average
acquisition multiple by opportunistically acquiring "spoke" distribution routes
at more attractive prices due to the limited strategic options available to
these smaller operators. In addition to buying companies at relatively low
multiples of EBITDA, management has been able to create value by improving the
operations of acquired entities and by realizing operating synergies. The
Company's recent acquisition of Cullyspring demonstrates its plan to continue to
expand in the U.S. Cullyspring is the second largest water cooler provider in
Washington, and management believes it has the opportunity to enhance its market
position through fill-in acquisitions.
Provide Outstanding Customer Service. The Company believes quality of
service and reliability of delivery are the primary competitive factors in the
water cooler business. The quality of service is measured by the Company's
ability to: (i) reliably deliver bottled water on schedule, (ii) meet customer
shortages with the quick delivery of refills, (iii) provide regular maintenance
and sanitation of water coolers and (iv) effectively address any other needs of
a customer. Management monitors on a monthly basis the Company's customer
"churn" rate (its non-renewal rate with respect to its water cooler rental
agreements) in an effort to continually enhance customer service. The Company's
churn rate was approximately 2.0% per month in 1996 and 1.6% per month for the
nine months ended September 30, 1997, which management believes is significantly
lower than the industry average churn rate.
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INVESTMENT HIGHLIGHTS
Attractive Industry Fundamentals. The Company believes that the
"alternative to tap water" market represents an attractive industry opportunity
due to the strong growth in demand for bottled water in the Company's primary
markets and the ability to enhance profit margins as revenue grows. In the U.S.,
bottled water continues to be the fastest growing segment of the beverage
industry, according to a study prepared by Beverage Marketing Corporation. Total
bottled water consumption in the U.S. increased from 2.8 gallons per capita in
1980 to 11.7 gallons per capita in 1996. According to Zenith International Ltd.,
in the U. K., total bottled water consumption increased at a CAGR of 11.2% from
1990 to 1996, with annual consumption increasing from 1.9 gallons per capita in
1990 to 3.6 gallons per capita in 1996.
Management believes the strong industry growth will continue to be driven
by: (i) concerns related to the quality of tap water, (ii) trends in consumer
selection of healthy products, (iii) taste preferences over tap water and other
refreshment beverages and (iv) favorable demographics.
Leading Market Share. The Company holds leading market share positions in
the water cooler markets which it serves. Based upon its own internal estimates,
the Company believes it has approximately 45% market share in British Columbia,
70% in the Maritime Provinces, 22% in the United Kingdom, 40% in Oregon and 20%
in Washington. The Company believes it is the market share leader in each of
these markets, except in Washington where it believes it is the second largest
provider. By virtue of its leadership position in its markets, the Company
benefits from several competitive advantages over smaller operators, including
more efficient distribution operations, purchasing synergies, superior customer
service and well-established infrastructure. Management believes the Company's
leadership in each of its served markets creates a significant barrier to entry
for prospective competitors.
Significant Installed Cooler Base. The Company delivers bottled water to a
significant installed base of approximately 115,000 water coolers in its served
markets. Customers typically sign a one-year contract, providing the Company
with a dual stream of relatively stable and recurring revenue from both a
monthly cooler rental charge and the sale of bottled water. The Company believes
that direct delivery water cooler companies enjoy several advantages over
retailers of bottled water. Customers suffer both incremental cost and
inconvenience if they choose to switch from one water cooler company to another.
In addition, direct delivery water cooler operators such as the Company have
made significant capital investments in inventories of water coolers and
bottles, a truck fleet and bottling facilities. Management believes the capital
intensity of the water cooler business provides a second significant barrier to
entry.
Proven Beverage Industry Consolidation Track Record. The Company has a
successful record of completing and integrating acquisitions, having made 12
acquisitions since 1993. These acquisitions have enabled the Company to rapidly
expand into attractive markets and increase production capacity. In addition to
completing the acquisitions of fast-growing bottled water companies at
attractive purchase price multiples, management has dramatically improved the
operations and profitability of each acquired company. For the four acquired
companies for which the Company has comparable full-year pre-acquisition and
post-acquisition data, revenues and EBITDA increased, on average, by 18.5% and
64.0%, respectively, in the first year after the acquisition. Management
believes its reputation as a proven and well-capitalized industry consolidator
facilitates its access to additional acquisition candidates and generates
unsolicited offers from prospective sellers.
Experienced Management Team with Significant Equity Ownership. The Company
is led by an experienced senior management team whose members average more than
13 years in the beverage industry. A trust for the benefit of G. John Krediet,
the Chairman of Sparkling Spring, and his children owns 50.9% of the Common
Stock of Sparkling Spring (after giving effect to the Reorganization). Mr.
Krediet successfully executed a consolidation of Canadian Pepsi-Cola bottlers
and, together with Stephen L. Larson, identified the bottled water consolidation
opportunity. Stephen L. Larson, Vice Chairman of Sparkling Spring, has led the
Company's successful acquisition
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<PAGE> 56
strategy. In addition to identifying new acquisition targets, Mr. Larson has
been responsible for the negotiation, financing, consummation and integration of
each of the Company's acquisitions. Stewart E. Allen, President of Sparkling
Spring, has managed the operations of the business focusing on profitably
increasing the penetration levels in each of its markets. The senior management
team is strongly motivated through its equity ownership of 63.9% of the Common
Stock of Sparkling Spring (including shares beneficially owned by a trust for
the benefit of the family of one senior manager), after giving effect to the
Reorganization. Management has successfully consolidated both water cooler
companies and Pepsi-Cola bottlers, and has consistently demonstrated an ability
to achieve strong internal growth and to identify, acquire, integrate and
improve the performance of acquired companies.
Strong Financial Performance. The success of the Company's operating
strategy is evidenced by its growth in revenue and EBITDA over the past five
years. Revenue increased at a CAGR of 63.6% from $3.8 million in 1992 to $27.3
million in 1996. Over the same period, EBITDA increased at a CAGR of 88.6% from
$0.5 million to $6.9 million, with EBITDA margins increasing from 14.3% to
25.2%. In addition to expansion through acquisitions, the Company's operations
exhibit significant internal growth. On a pro forma basis, revenue and EBITDA of
$37.3 million and $11.0 million, respectively, increased 9.3% and 16.7%,
respectively, in the nine months ended September 30, 1997 over the comparable
period in the prior year.
The principal executive offices of Sparkling Spring are located at 19
Fielding Avenue, Dartmouth, Nova Scotia, Canada B3B-1C9, and its telephone
number at that address is (902) 468-8430. The Company also maintains executive
offices in the U.S. at One Landmark Square, Stamford, CT 06901, and its
telephone number at that address is (203) 325-0077.
HISTORY
SSWL, a wholly-owned subsidiary of Sparkling Spring, was founded in 1971 in
Halifax, Nova Scotia to operate in the bottled water industry. In 1988, a
controlling interest in the Company was acquired by MBL, a Pepsi-Cola bottler,
which was managed by G. John Krediet and Stephen L. Larson, principals of CFCC.
When MBL sold its soft drink bottling holdings to Pepsi-Cola Canada Limited in
1992, Messrs. Krediet and Larson retained their ownership of SSWL. Recognizing
the growth opportunities in the bottled water industry, Messrs. Krediet and
Larson identified SSWL as their platform for consolidation and recruited Stewart
E. Allen from MBL to manage the day-to-day operations of the Company. Messrs.
Krediet, Larson and Allen have managed the Company since late 1992, when they
began to grow the water cooler business in Nova Scotia and New Brunswick. Since
1993, the Company has successfully completed 12 acquisitions. These acquisitions
have enabled the Company to rapidly expand into attractive markets and increase
production capacity. Additionally, the management team has been responsible for
introducing new investors to the Company, including Clairvest and certain
members of the MacMillan family.
In connection with the Offering, Sparkling Spring was formed as a holding
company and the shareholders of SSWL received either an equivalent number of
shares of Common Stock of Sparkling Spring or a combination of Common Stock and
cash. The total cash payments to shareholders of SSWL in connection with the
Reorganization were funded with a portion of the net proceeds to the Company
from the Offering. In addition, in connection with the Reorganization and the
Offering, the Company sold shares of Common Stock to certain members of
management for aggregate gross proceeds to the Company of approximately
$262,000.
RECENT DEVELOPMENTS
On October 23, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Cullyspring for $7.6 million, including transaction
expenses. Cullyspring is a Seattle-based bottled water company focusing on the
direct delivery of five-gallon containers to homes and offices,
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<PAGE> 57
and the rental of water coolers. The acquisition represents a continuation of
the Company's consolidation activities in the attractive Pacific Northwest
market. In this market, the Company now services territories from Eugene, Oregon
through British Columbia, with primary markets in Portland, Oregon; Seattle,
Washington; and Vancouver, British Columbia.
INDUSTRY OVERVIEW
Bottled water continues to be one of the fastest growing segments of the
U.S. beverage industry for the past ten years, generating $3.6 billion of sales
in 1996. According to Beverage Marketing Corporation, the U.S. bottled water
market experienced a CAGR of 8.5% from 1986 to 1996, and is projected to grow at
a slightly lower CAGR of 7.3% between 1996 and 2001. Bottled water volume in the
U.S. increased from 629.7 million gallons in 1980 to 3.1 billion gallons in
1996, and is projected to reach 4.4 billion gallons in 2001. Furthermore, per
capita bottled water consumption quadrupled from 1980 to 1996 with annual
consumption in the U.S. increasing from 2.8 gallons per capita in 1980 to 11.7
gallons per capita in 1996. The projected per capita consumption is expected to
reach 15.8 gallons in the U.S. by the year 2001. The water cooler segment
generated approximately $1.2 billion of sales in 1996 or 1.2 billion gallons,
representing 38.5% of the total U.S. bottled water market. The U.S. water cooler
market experienced a CAGR of 3.9% between 1990 and 1996, and is projected to
grow at an annual rate of 6.5% from 1996 to 2001, reaching 1.6 billion gallons
by 2001.
According to Zenith International Ltd., the bottled water market in the
U.K. generated L400.0 million of sales in 1996, experienced a CAGR of 11.6% from
1990 to 1996, and is projected to grow at an annual rate of 9.0% between 1996
and 2000. Bottled water volume has increased from 111.0 million gallons in 1990
to approximately 214.0 million gallons in 1996 and is projected to reach 302.0
million gallons by the year 2000. Annual consumption of bottled water in the
U.K. has increased from 1.9 gallons per capita in 1990 to 3.6 gallons per capita
in 1996 and is projected to grow to 5.1 gallons per capita by 2000. The water
cooler segment generated approximately L65.0 million or 25.1 million gallons,
representing 11.7% of the total U.K. bottled water market in 1996, increasing
from 3.5% in 1990. In addition, the U.K. water cooler market experienced a CAGR
of 36.8% between 1990 and 1996, and is projected to grow at a CAGR of 13.9% from
1996 to 2000, reaching 42.3 million gallons by the year 2000.
Management believes the strong industry growth has been and will continue
to be driven by: (i) concerns related to the quality of tap water sources, (ii)
consumer preferences for healthy products, (iii) taste preferences over tap
water and other refreshment beverages and (iv) favorable demographics.
Tap Water Concerns. The aging of the tap water supply infrastructure and
the high cost of adequately maintaining or replacing existing water delivery
systems have resulted in an increase of tap water contamination incidences in
recent years. Consequently, there has been a decrease in consumers' confidence
in the quality of tap water, accompanied by an increase in consumption of
bottled water. Management believes that this trend will continue.
Healthy Products. There is a movement toward a healthier lifestyle and the
consumption of healthy products. Within the "healthy products" segment, clear or
natural colored products are experiencing significant growth. Bottled water is
perceived as a product with strong health and fitness appeal.
Taste Preferences. The taste of tap water is affected by cleaning
substances used to filter water. The products used to sterilize tap water, such
as chlorine, are safe but often produce an undesirable after-taste and,
consequently, many people prefer to drink bottled water.
Favorable Demographics. Consumption of bottled water is much more prevalent
among younger consumers. According to Beverage Marketing Corporation, adults
between the ages of 25 and 34 comprise the demographic group most likely to
consume bottled water. The Company
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believes that, as younger consumers age and their purchasing power increases,
sales of bottled water will continue to grow.
The bottled water industry is highly fragmented in North America. The
bottled water market is comprised of approximately 2,500 companies generating
approximately $4.0 billion of sales. Of these companies, the five largest
companies account for approximately 55% of the total market, with the remainder
comprised of hundreds of small regional companies. Management believes that the
industry will continue to consolidate as (i) operating leverage of the larger
companies makes the smaller companies uncompetitive, (ii) succession issues at
many smaller, family owned companies lead a number of independent companies to
exit the industry, and (iii) pressure to meet improving water quality standards
eliminates low quality producers.
The Company believes that the competitive structure of the water cooler
segment favors a larger operator with a successful consolidation track record.
As a market leader in each of its geographic markets, the Company believes that
it is well-positioned to benefit from the growth and consolidation trends in the
industry.
BUSINESS AND PRODUCTS
The Company generated approximately 88.4% of its 1996 revenue from the sale
of bottled water products for water coolers and the rental of water coolers. The
remaining 11.6% of revenue in 1996 was generated from related activities
including the sale of paper cups, coffee, water filtration devices and water
through vending machines. In addition, the Company provides cooler sanitation
services and bottles water for independent beverage companies and supermarkets.
Bottled Water. The Company generated approximately 61.5% of its 1996
revenue from the sale of bottled water used in water coolers. Bottled water for
water coolers is primarily sold in two sizes: a five-gallon (19 liter) bottle
and a six-gallon (22 liter) bottle. In each market, a smaller package exists for
residential customers who may not be capable of lifting the five- or six-gallon
product or who may have storage constraints. The Company offers water bottles in
plastic packaging that facilitates storage, and has non-spill caps. While its
pricing varies from market to market and the Company frequently offers
promotional discounts in certain markets, the Company charges on average
approximately $7 for a five-gallon bottle of water.
The Company primarily markets four types of water: spring, premium
drinking, steam-distilled, and fluoridated. The sale of steam-distilled water
and fluoridated water accounted for less than 1.0% of the Company's revenue in
1996. Descriptions of each type of water follow:
Spring Water. Water, which has been naturally filtered by its passage
through various geological layers, is drawn from a protected underground
reservoir called an aquifer. It can then be either bottled at the source or
transported in stainless steel tankers to a more strategically located bottling
facility.
Before bottling, spring water is passed through a micron filter which
removes sediment while retaining the natural mineral content of the water. The
water is then purified through an industry standard purification process known
as ozonation. This sterilization process is over 400 times more effective than
chlorination and does not leave a residual taste.
Premium Drinking Water. This water is drawn from local municipal sources.
It is passed through a series of carbon and sand filters, processed by either
reverse osmosis or deionization, ozonated and then bottled. Premium drinking
water has 99.9% of all impurities removed from it, including its natural mineral
content.
Steam-Distilled Water. This water can be obtained from either a spring or
municipal source. The water is then converted to steam. Once the steam condenses
it is then ozonated and bottled. Steam-distilled water is similar to premium
drinking water since it has 99.9% of all impurities removed.
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Fluoridated Water. Fluoridated water is premium drinking water that has
one part per million of fluoride added. It is a niche market product that
appeals to families with young children.
The following table summarizes the Company's operations in its existing
markets:
<TABLE>
<CAPTION>
REGION PRINCIPAL PRODUCTS BRAND NAMES
- ------------------ ----------------------- --------------------------
<S> <C> <C>
British Columbia Premium Drinking Water Canadian Springs
Premium Drinking Water Water Jug
Spring Water Withey's Canadian Springs
Maritime Provinces Spring Water Sparkling Springs
United Kingdom Spring Water Nature Springs
Spring Water Galloway
Spring Water Water At Work
United States Premium Drinking Water Crystal Springs
Premium Drinking Water Mountain Fresh
Premium Drinking Water Cullyspring
</TABLE>
Water Coolers. The Company generated approximately 26.9% of its revenue in
1996 from the rental of water coolers. The Company enjoys a significant
installed base of approximately 115,000 water coolers in its served markets.
Customers typically sign a one-year contract, providing the Company with a dual
stream of relatively stable and recurring revenue from both a monthly cooler
rental charge and the sale of bottled water. In addition, the Company's large
installed customer base creates operating efficiencies by supporting a level of
infrastructure that can be leveraged to support incremental cooler installations
at an attractive marginal profitability rate. While its pricing varies from
market to market and depends on the water cooler selected by the customer, the
Company's current average monthly rental charge for its coolers is approximately
$11.
The following table presents management estimates of certain information
relating to the Company's installed cooler base as of September 30, 1997, after
giving effect to the acquisition of Cullyspring:
<TABLE>
<CAPTION>
BRITISH COLUMBIA MARITIME PROVINCES UNITED KINGDOM UNITED STATES
---------------- ------------------ -------------- -------------
<S> <C> <C> <C> <C>
Number of Installed Coolers 54,596 14,436 25,906 20,033
% Residential Customers 65% 52% 2% 35%
% Commercial Customers 35% 48% 98% 65%
</TABLE>
The Company purchases its water coolers from one of three preferred
suppliers and maintains a stock of spare parts at delivery depots. The Company
strips down, cleans, and redeploys returned water coolers prior to all new
installations. The Company's average cost per water cooler is approximately
$150, and the Company estimates that the average life of a water cooler is ten
years. The typical pay back period on a water cooler investment (assuming only
rental revenue) is approximately 15 months. In the event of termination of the
rental agreement, water coolers can be readily redeployed at a relatively low
cost to the Company. In addition, in certain markets the Company charges a water
cooler collection fee when a customer opts to discontinue purchasing water. The
Company believes that it could support an additional 20,000 coolers without a
significant increase to its overhead costs.
Other. The remaining 11.6% of the Company's 1996 revenue was generated
through the sale of bottled water in retail sizes, the sale of paper cups,
cooler sanitation services, coffee delivery, the sale of water filtration
devices and the sale of water through vending machines. The Company has a number
of bottling contracts, including Sobey's Own brand spring water and Pepsi-Cola's
Aquafina brand, as well as bottling contracts with supermarkets such as Fred
Meyer, Inc. and Safeway, Inc.
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THE BOTTLING PROCESS
The Company draws its spring water from local sources. The spring water is
bottled at the source, in the case of the Maritime Provinces, or transported to
a Company bottling facility by stainless steel tanker in other locations. Prior
to final bottling, the spring water is filtered and ozonated. Ozonation is a
process whereby impurities not removed through ordinary filtration are removed
through the injection of oxygen. The process involves a special form of oxygen,
ozone, which is the strongest disinfectant and oxidizing agent available for
water treatment. The added oxygen quickly dissipates and results in tasteless
and odorless purification as compared to chlorination. This process is designed
to prevent bacteria and other contaminants from being transferred from the
spring or the tanker to the finished product.
In addition to spring water, the Company also produces premium drinking
water. The Company accesses local, publicly-available water supplies and
processes and purifies the product through reverse osmosis to remove chlorine
and other chemicals frequently found in tap water. The product then goes through
the ozonation process prior to bottling as premium drinking water.
The Company has ten bottling facilities located throughout British
Columbia, the Maritime Provinces of Canada, England, Scotland and the Pacific
Northwestern United States.
British Columbia. The Company operates four bottling facilities located in
Vancouver, Victoria, Kamloops and Prince George, British Columbia. The Vancouver
and Prince George facilities produce both premium drinking water and spring
water. The Company transports the spring water from sources located in the
Coastal Mountains pursuant to a non-exclusive contract without a fixed term. The
bottling line in Victoria is capable of producing both spring water and premium
drinking water but currently only produces premium drinking water.
Maritime Provinces. The Company's bottling line is located in Valley, Nova
Scotia, which is also the site of a spring owned by the Company. Water is
bottled at the source, processed and distributed to the Company's four depots
and distributors in Nova Scotia, New Brunswick and Prince Edward Island.
England. The Company operates its bottling operations in a
newly-constructed production facility, adjacent to its largest distribution
depot, in Buckinghamshire, England. Completed in January 1997, the cost of
construction of the new facility was $1.3 million. The new high speed bottling
line installed at the facility is expected to generate significant cost savings
in the future. Spring water is purchased from various sources and transported to
the bottling line for processing.
Scotland. The Company operates a bottling line which processes water drawn
from a 100-year old well in Dumfries, Scotland. The water is processed and
bottled in a bottling line operated by Natural Water Ltd., a wholly-owned
subsidiary of Sparkling Spring.
United States. From its Portland, Oregon facilities, the Company processes
premium drinking water, as well as spring water shipped from a source in the
Cascade Mountains pursuant to a non-exclusive contract without a fixed term.
From its Seattle, Washington facility, the Company processes premium drinking
water.
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The following table provides certain information regarding the Company's
bottling facilities:
<TABLE>
<CAPTION>
LOCATION TYPE OF WATER BOTTLING CAPACITY
- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C>
Vancouver, British Premium Drinking 490 bottles per hour
Columbia Spring
Victoria, British Premium Drinking 225 bottles per hour
Columbia
Kamloops, British Premium Drinking 300 bottles per hour
Columbia
Prince George, British Premium Drinking 125 bottles per hour
Columbia Spring
Valley, Nova Scotia Spring 485 bottles per hour
Buckinghamshire, England Spring 1,250 bottles per hour
Glasgow, Scotland Spring 200 bottles per hour
Portland, Oregon Premium Drinking 300 bottles per hour
Spring 450 bottles per hour
Seattle, Washington Premium Drinking 425 bottles per hour
</TABLE>
SEASONALITY
Bottled water sales have been subject to seasonal variations with decreased
sales during cold weather months and increased sales during warm weather months.
Water cooler rentals are typically paid monthly and mitigate the seasonal effect
of water sales.
CUSTOMERS
The Company has grown from an installed base of approximately 8,000 water
coolers in 1991 to an installed base of approximately 115,000 water coolers as
of September 30, 1997 (after giving effect to the acquisition of Cullyspring).
Customers typically sign a one-year contract providing the Company with a dual
stream of relatively stable and recurring revenue from both a monthly cooler
rental charge and the sale of bottled water. No customer accounted for more than
1.0% of the Company's revenue in 1996 or in the nine months ended September 30,
1997. Approximately 65% of the Company's revenue in 1996 was derived from sales
to commercial establishments, with the balance attributable to residential
customers. Substantially all of the Company's U.K. customers are commercial
establishments. The Company's commercial customers include not only large
established businesses, but also smaller regional and local shops, offices,
warehouses and production facilities. The Company's customers include British
Rail, British Telecom, the Bank of Scotland, Heathrow Airport, National
Westminster Bank, the Canadian Department of National Defense, Nike, Toronto
Dominion Bank and the Canadian Pacific Railway. Management believes that the
diversity of its customer base protects the Company from reliance on any one
customer or a particular industry segment. In addition, the Company has a number
of bottling contracts with independent beverage companies, including Sobey's and
Pepsi-Cola, as well as with supermarkets such as Fred Meyer, Inc. and Safeway,
Inc.
SALES AND MARKETING
The Company markets its products principally through yellow page
advertisements, newspaper advertisements, mall shows, coupons, product
sponsorship programs, direct mail, radio commercials and various referral
programs which are supported by the efforts of approximately 75 salaried sales
and marketing personnel. Almost half of the Company's new customers are derived
from incoming telephone calls resulting from yellow page advertisements, the key
advertising vehicle for the Company. To supplement this effort, the Company's
marketing team solicits potential new custom-
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ers in specific geographical areas in which the Company desires to increase the
density of existing routes or in which it desires to establish new routes. A
potential new customer may be offered various introductory promotions including
a free trial offer. The Company's marketing activity emphasizes the benefits of
bottled water, the convenience of a water cooler as well as the associated
regular delivery of bottled water and, to a lesser extent, the creation of brand
awareness.
An important part of the Company's sales, marketing and customer service
strategy is its focus on retaining customers. The Company experienced a
relatively low churn rate of its water cooler rental agreements of 2.0% per
month in 1996, which management believes is significantly lower than the
industry average. The Company has also generally lowered the churn rate of the
businesses it has acquired. Its primary strategy for minimizing its churn rate
is a focus on outstanding customer service. In addition, the Company employs
certain strategies to retain customers who indicate they wish to discontinue
receiving bottled water. Customer service representatives are compensated for
the customers they help to retain.
DISTRIBUTION
As of September 30, 1997, the Company owned or leased approximately 100
trucks and employed 190 people in its distribution operations. The average cost
per new truck is approximately $80,000, and the Company generally delivers to
neighborhoods within a ninety minute drive from its distribution centers. Each
truck has a useful life of 7 to 12 years and can hold 120 to 300 five- or six-
gallon bottles. The Company's drivers are generally paid on a
per-delivered-bottle basis, promoting efficiency and higher utilization of the
delivery trucks. On average, a truck driver services approximately 1,000
customers. The average customer typically receives delivery once every two
weeks. In addition, the Company's drivers actively generate sales and are
compensated for each new customer contract they originate.
Management believes that one of the most important success factors in the
delivered bottled water business is delivery route efficiency. Route efficiency
is the critical cost factor in the water cooler business, as the average cost of
local delivery per bottle is over four times the cost of preparing one bottle
for distribution. However, the marginal distribution cost of an additional
bottle on an existing route is relatively low.
ACQUISITION STRATEGY
The Company has successfully pursued a disciplined acquisition strategy to
create value by actively participating in the consolidation of the highly
fragmented bottled water industry. The Company perceives two separate segments
in its acquisition strategy: larger entities with more sophisticated management
and financing alternatives, or "platforms," and smaller, less sophisticated
entities known as "fill-ins" or "spokes" which can be consolidated with
platforms. Accordingly, the Company's approach to acquiring companies in new
markets is to identify one of the largest bottled water companies in a market as
a platform acquisition, and complement it with smaller fill-in acquisitions in
neighboring or overlapping geographic territories. The Company is generally
unwilling to enter a new market through acquisition unless the company being
acquired is both one of the market share leaders and provides the critical mass
necessary to act as a platform in that market. The acquisition of Cullyspring as
a platform is an example of this strategy. While the purchase price paid for a
platform company is higher than that for a fill-in acquisition, the Company is
able to reduce its average acquisition multiple by opportunistically acquiring
the "spoke" distribution routes at more attractive prices due to the limited
strategic options available to these smaller operators. In addition to buying
companies at relatively low multiples of EBITDA, management has been able to
create value by improving the operations of acquired entities and realizing
operating synergies. The Company anticipates that, for the foreseeable future,
attractive acquisition opportunities will exist both in the U.S. and in the
other markets served by the Company. The Company also expects that more
acquisition opportunities will exist in the U.S. than elsewhere. See "Risk
Factors -- Dependence on Financing for Expansion; Acquisition Strategy."
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Platform Acquisitions. The Company faces more competition in the
marketplace for platform acquisitions resulting in the necessity to pay
relatively high multiples of pre-acquisition EBITDA. The Company believes that
its size, management infrastructure and ability to consummate future "spoke"
acquisitions enable it to significantly reduce the purchase price multiple on a
post-acquisition EBITDA basis. For the four acquired companies for which the
Company has comparable full-year pre-acquisition and post-acquisition data,
revenue and EBITDA increased, on average, by 18.5% and 64.0%, respectively, in
the first year after the acquisition. As a large buyer of water coolers, water
bottles and delivery trucks, the Company can factor into its acquisition
valuations significant purchasing cost savings. Additionally, its management
infrastructure can be leveraged to run a substantially larger organization,
thereby resulting in significant general and administrative cost savings.
Finally, the Company eliminates the significant cash and non-cash compensation
paid to the owner/operators of the companies it acquires. As noted above, the
Company seeks to purchase the leader in each market it enters, although in
certain markets it has acquired the second largest bottled water company where
it has seen opportunities to make further consolidating acquisitions.
The market for smaller acquisitions is significantly less competitive than
the market for larger acquisitions. Smaller acquisitions are typically not
brokered (i.e. auctioned) transactions, and to date the Company has sourced 10
of its 12 acquisitions on a privately negotiated basis.
Fill-in Acquisitions. Smaller fill-in acquisitions are consolidated with
larger platform acquisitions to achieve the following cost savings and
synergies:
- Decreased operating costs through elimination of duplicative
administrative costs.
- Decreased production and distribution costs through integration with a
larger, geographically adjacent entity, and the resulting achievement of
greater delivery route density.
- Decreased purchasing costs through realization of economies of scale.
- Improved management control through centralized accounting and reporting
systems.
- Improved marketing efficiency.
The Company seeks to increase the sales and profitability of acquired
companies by implementing the Company's sales and delivery programs and by
improving operating efficiencies of the acquired businesses. Consistent with the
Company's management approach, integration of a platform acquisition involves
creating a new division. The Company centralizes many of the acquired company's
functions including purchasing, accounting, benefits, sales and marketing
programs and general administrative functions. Integration of a fill-in
acquisition generally involves a fundamental change in the operations of the
acquired company, including the consolidation of its distribution and production
operations to maximize operating efficiencies.
ACQUISITIONS
The Company has expanded its operations through a number of acquisitions
designed to consolidate existing markets or enter new markets. The Company has
been successful in integrating acquired companies into its existing operations
and increasing the profitability of acquired companies through the elimination
of duplicative overhead functions, realization of operating and purchasing
efficiencies and implementation of the Company's management systems. As a result
of these acquisitions, the Company has expanded its leadership position in
Canada, entered the attractive U.S. water cooler market and further bolstered
its leading presence in the U.K.
On April 14, 1993, the Company acquired Crystal Springs Limited ("CSL").
CSL served the Cape Breton, Nova Scotia bottled water and cooler rental market.
CSL was subsequently merged into SSWL.
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<PAGE> 64
On June 8, 1994, the Company acquired the water cooler division of Buxton
Mineral Water Company Limited through Sparkling Spring Water (UK) Limited
("SSWUK"), a wholly-owned subsidiary of SSWL. The water cooler industry in the
U.K. was identified as being much less developed than the North American market
and, thus, having a significant growth potential.
On April 24, 1995, the Company acquired Aquaporte (UK) Limited ("Aquaporte
UK"). Aquaporte UK had a predominantly London-based customer list and a depot
close to central London. The operation was merged with SSWUK and the combined
businesses became the largest water cooler company serving the commercial market
in the U.K.
On January 17, 1996, the Company acquired Canadian Springs Water Company
Ltd. ("Canadian Springs"). Canadian Springs is the leading home and office water
cooler company in British Columbia, with operations in Vancouver, Victoria,
Kelowna and Nanaimo. The acquisition served to consolidate the Company's
position in Canada while providing it with access to the fastest growing bottled
water market in Canada.
On May 9, 1996, the Company acquired Water Jug Enterprises Limited ("Water
Jug"). Water Jug, which serves the Kamloops area in British Columbia, has
further solidified the Company's market position in British Columbia.
On January 2, 1997, the Company acquired D & D and Company, Inc., doing
business as Mountain Fresh Bottled Water Co. ("Mountain Fresh"). Mountain Fresh
is headquartered in Portland, Oregon, and held the number three position in the
Oregon market. The acquisition of Mountain Fresh was designed to fulfill the
Company's strategic objective of establishing a platform company in the U.S.
market. The Company believes that the Portland market represents an attractive
water cooler market, sharing many of the same characteristics as the British
Columbia market, where the Company has extensive operations. The Company
believes that this market is experiencing strong economic growth, has strong
consumer awareness about drinking water and has experienced difficulties with
respect to the quality of its municipal water supply. Mountain Fresh is operated
as a small hub and will benefit from its proximity to the Company's Vancouver,
British Columbia operations.
On January 28, 1997, the Company acquired Withey's Water Softening &
Purification Limited ("Withey's Water"). Withey's Water is headquartered in
Prince George, British Columbia, and is the dominant supplier of bottled water
and filtration systems in the rural market of upper British Columbia. Withey's
Water represents a fill-in acquisition, strengthening the Company's already
leading presence in the home and office water cooler market in British Columbia.
On January 30, 1997, the Company acquired High Valley Water Limited ("High
Valley"). High Valley is headquartered in Kelowna, British Columbia and is
comprised of four bottled water distributors.
On February 5, 1997, the Company acquired Water At Work Limited ("Water at
Work"). Water at Work is headquartered in Glasgow, Scotland, and is Scotland's
largest water cooler company and the fourth largest in the U.K., serving both
the Glasgow and Edinburgh markets. The acquisition of Water At Work further
bolsters the Company's leadership position in the U.K. market and establishes
its leading presence in the attractive Scottish market.
On June 4, 1997, the Company acquired the water cooler operations of Soja
Enterprises, Inc. ("Soja"). Soja serves the commercial community of Portland,
Oregon.
On June 23, 1997, the Company acquired Crystal Springs Bottled Water Co.,
Inc. ("Crystal Springs"). Crystal Springs is the second largest five-gallon
distributor serving Oregon and is based in Portland. This acquisition provided
the Company with greater route density in its established Portland market.
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<PAGE> 65
On October 23, 1997, the Company acquired Cullyspring. Cullyspring is a
Seattle-based bottled water company focusing on the direct delivery of
five-gallon containers to homes and offices and the rental of water coolers. See
"The Company -- Recent Developments."
On December 17, 1997, Crystal Springs of Seattle, Inc., a wholly-owned
subsidiary of Sparkling Spring, purchased all of the outstanding capital stock
of Crystal Springs Drinking Water, Inc. ("CSD"). CSD is a Seattle-based bottled
water company focusing on the direct delivery of five-gallon containers to homes
and offices and the rental of water coolers.
COMPETITION
The Company competes in the "alternative to tap water" market in two areas.
First, it competes directly with other home and office delivery bottled water
companies in its geographic markets. This segment is highly fragmented with the
vast majority of the companies being operated as small entrepreneurial and
family-owned businesses. The Company has a leading market share position in
England and Scotland in the U.K., British Columbia and the Maritime Provinces of
Canada, and Oregon in the U.S. Furthermore, it has a second market share
position in the state of Washington. Management believes that its access to
capital, professional management, and sophisticated reporting and accounting
systems are equal to or greater than those of its local competitors in these
markets. The Company believes quality of service and reliability of delivery are
the primary competitive factors in the water cooler business. Additionally, the
Company believes that the capital intensity of its operations creates
significant barriers to entry.
The Company also competes indirectly with companies that distribute water
through retail stores and vending machines. The competitive advantage of water
coolers over these alternative distribution channels is primarily based on the
convenience of home or office delivery and, to a lesser extent, price.
Similarly, the Company competes with providers of on-premises water filtration
systems, including systems distributed through retail outlets, which the Company
believes are aimed at less affluent consumers. In certain markets the Company
itself markets and provides on-premises water filtration systems.
The "alternative to tap water" industry also includes a number of
well-established, well-capitalized companies, most of which do not currently
compete directly in the Company's markets. These include Nestle S.A., which owns
Perrier and the Perrier Group of America. Perrier Group of America operates the
Arrowhead, Poland Spring, Zephyrills, Ozarka, Oasis and Great Bear brands.
Suntory owns Belmont Springs, Hinkley & Schmitt, Crystal, Kentwood, and Polar.
BSN Group owns the Evian and Dannon brands and also operates the Crystal Spring
(Toronto), Spring Valley, and Laurentian businesses. McKesson Corporation
operates the Sparkletts business. Ionics Incorporated operates the Aquacool
businesses. In addition, United States Filter Corp. and Culligan Water
Technologies Inc. compete in the water filtration segment.
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PROPERTIES
The Company maintains its corporate headquarters in Dartmouth, Nova Scotia.
The following table sets forth certain information relating to each of the
Company's facilities:
<TABLE>
<CAPTION>
SIZE OWNED/ LEASE
LOCATION SQ. FT. PURPOSE LEASED EXPIRATION
- -------------------------------- ------- ---------------------------------- ------ ---------------
<S> <C> <C> <C> <C>
CANADA:
Dartmouth, Nova Scotia 14,000 Corporate Headquarters, Leased June 2002
Distribution
Valley, Nova Scotia 14,500 Bottling, Distribution Owned N/A
Sydney, Nova Scotia 4,500 Offices, Distribution Leased June 1998
Moncton, New Brunswick 3,700 Offices, Distribution Leased May 1998
Saint John, New Brunswick 4,300 Offices, Distribution Leased Oct. 1998
Vancouver, British Columbia 19,600 Offices, Bottling, Distribution Leased Feb. 1998
Victoria, British Columbia 7,250 Offices, Bottling, Distribution Leased July 1998
Nanaimo, British Columbia 1,300 Distribution Leased May 1998
Kamloops, British Columbia 4,000 Offices, Bottling, Distribution Leased May 2000
Prince George, British Columbia 7,000 Bottling, Distribution Leased June 2002
UNITED KINGDOM:
Tewkesbury, England 8,600 Offices, Distribution Leased Apr. 2008
High Wycombe, England 18,000 Offices, Distribution Leased Dec. 2006
High Wycombe, England 18,000 Bottling Leased Dec. 2006
Arklo Road, England 8,000 Offices, Distribution Leased Mar. 1998
Glasgow, Scotland 4,000 Offices, Distribution Leased Monthly
Dumfries, Scotland 4,000 Bottling Leased June 2009
Dundee, Scotland 2,000 Offices, Distribution Leased Feb. 2000
UNITED STATES:
Stamford, Connecticut 675 Offices Leased June 2000
Portland, Oregon 30,000 Bottling, Distribution, Offices Leased Oct. 2007
Portland, Oregon 6,000 Bottling, Distribution, Offices Leased June 2000, 2002
Seattle, Washington 25,000 Bottling, Distribution, Offices Leased Oct. 2002
</TABLE>
All of the Company's bottling and distribution facilities, in the opinion
of the Company's management, have been adequately maintained, are in good
operating condition and generally have sufficient capacity to handle all present
sales volume and all sales volume contemplated in the foreseeable future.
EMPLOYEES
As of September 30, 1997, the Company had approximately 464 full-time
employees, of which 95 were in sales and services, 190 in distribution, 24 in
maintenance and service, 67 in production and warehouse and 88 in
administration. The workforce is non-unionized and temporary workers are used
during peak demand periods. The Company believes that it enjoys generally good
relations with its employees.
REGULATION
The Company's operations are subject to various federal, state and local
laws and regulations, which require the Company, among other things, to obtain
licenses for its business and equipment, to pay annual license and inspection
fees, to comply with certain detailed design and quality standards regarding the
Company's bottling plant and equipment, and to continuously control the quality
and quantity of the water dispensed. Several jurisdictions have regulations that
require the Company to obtain certification for its bottled water. The Company
believes that it is currently in substantial compliance with these laws and
regulations and has passed all regulatory inspections. In
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<PAGE> 67
addition, the Company does not believe that the cost of compliance with
applicable government laws and regulations is material to its business. However,
governmental laws and regulations are subject to change, and no assurance can be
given that future actions by governmental authorities will not have an adverse
effect on the Company's business. See "Risk Factors -- Government Regulation."
Each of the Company's operating subsidiaries employs a Quality Control
Manager and follows internal, industry and government testing requirements. In
addition, all water is ozonated to ensure purity of the Company's product.
Ozonation is the government and industry standard for the treatment of water
prior to bottling.
Canada. In Canada, bottled water is considered a food product and, as
such, is governed by the Federal Department of Health and Welfare -- Health
Protection Branch under the Food and Drug Act. The Company's production site is
audited annually according to the Good Manufacturing Practices governing such
plants. This inspection is performed by the National Sanitation Foundation
("NSF") and the Health Protection Branch.
The Company is in good standing with the International Bottled Water
Association (the "IBWA") and the Canadian Bottled Water Association (the
"CBWA"). The IBWA mandates compliance with strict quality control standards on a
global basis. The CBWA is the Canadian chapter of the IBWA.
United Kingdom. In the U.K., bottled water is governed by the European
Union's Mineral Water Directive and Drinking Water in Containers Regulations. In
addition, the Company is a member of the Bottled Water Cooler Association (the
"BWCA") and the IBWA, both of which play a major role in setting industry
standards. The BWCA requires its members to adhere to a Code of Practice and
pass an annual quality inspection conducted by an independent third-party
organization. The current BWCA plant inspection program is administered by the
NSF. The Company believes that it is in good standing with the BWCA.
United States. In the U.S., bottled water is regulated by the FDA and
follows the Quality Standards, Standards of Identity and Current Good
Manufacturing Practices guidelines under the Code of Federal Regulations. As in
the case of Canada and the U.K., inspections of the Company's production sites
in the U.S. are conducted annually by the NSF.
LITIGATION
The Company is not a party to any litigation other than routine legal
proceedings incidental to its business. Management does not expect that these
proceedings will have a material adverse effect on the Company.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to a wide variety of
federal, state, local and international laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes and the
health and safety of employees (collectively, "Environmental Laws"). Such laws,
including but not limited to, those under the Comprehensive Environmental
Response, Compensation & Liability Act may impose joint and several liability
and may apply to conditions at properties presently or formerly owned or
operated by an entity or its predecessor as well as to conditions of properties
at which wastes or other contamination attributable to an entity or its
predecessor have been sent or otherwise come to be located. Based upon its
experience to date, the Company believes that it is in substantial compliance
with existing Environmental Laws and that any liability for known environmental
claims pursuant to such Environmental Laws will not have a material adverse
effect on the Company's financial position or results of operations and cash
flows. However, future events, such as new information, changes in existing
Environmental Laws or their interpretation, and more vigorous enforcement
policies of regulatory agencies, may give rise to additional expenditures or
liabilities that could be material.
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<PAGE> 68
MANAGEMENT
The following table sets forth certain information as of the date of this
Offering Memorandum with respect to each of the directors, executive officers
and key management personnel of Sparkling Spring. The individuals listed below
hold the same positions with Sparkling Spring as they hold in SSWL and have held
these positions since the formation of Sparkling Spring.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH SPARKLING SPRING
- ------------------------------ --- ------------------------------------------
<S> <C> <C>
G. John Krediet............... 46 Chairman of the Board of Directors and
Chief Executive Officer
Stephen L. Larson............. 39 Vice Chairman of the Board of Directors
and Chief Financial Officer
Stewart E. Allen.............. 38 President and Director
Michael Bregman............... 43 Director
C. Sean Day................... 48 Director
Kenneth B. Rotman............. 31 Director
Lucy M. Stitzer............... 36 Director
</TABLE>
G. JOHN KREDIET has been Chairman of the Board of Directors and Chief
Executive Officer of SSWL since January 1991. From 1988 until 1992 he served as
Chairman of the Board of MBL, the Pepsi-Cola franchisee and former parent
company of SSWL. From September 1988 through November 1990 he also served as
Chairman of the Board of Eastern Beverages Ltd., the Pepsi-Cola franchise for
the territory in and around Ottawa, Ontario, Canada. Mr. Krediet initiated and
managed the consolidation of the eastern Canadian Pepsi-Cola bottling business
and arranged its sale to Pepsi-Cola Corporation in 1992. Mr. Krediet was the
founder of CFCC in 1987 and, together with Mr. Larson, obtained direct control
of SSWL in 1992 to use it as an acquisition vehicle for consolidating the
bottled water industry.
Prior to 1987 Mr. Krediet was employed by General Electric Credit
Corporation, AMRO Bank and Citibank, NA. He is a citizen of the Netherlands and
received his graduate degree in economics from Erasmus University in Rotterdam.
STEPHEN L. LARSON has been Vice Chairman of the Board of Directors and
Chief Financial Officer of SSWL since 1992. In addition, he has served as a
managing director of CFCC since 1990 and he has been with CFCC since 1987. Mr.
Larson, in conjunction with Mr. Krediet, developed the consolidation strategy
for the bottled water industry. Mr. Larson has been responsible for qualifying
and selecting acquisition candidates generated by the Company and outside
sources. Mr. Larson is responsible for negotiating the acquisition terms and
related financing. He also oversees consolidation into the Company as well as
the larger capital expenditures. At CFCC, Mr. Larson acted as an intermediary
arranging financing for corporations primarily involved in the area of bottling,
publishing, outdoor advertising and other media. Mr. Larson was principally
involved in the negotiations leading to the acquisition of nine Pepsi-Cola
franchisees, the related consolidation and the ultimate sale to Pepsi-Cola
Corporation.
Mr. Larson worked as a Senior Associate at Claremont Group Limited, a
management buyout firm, from 1986 to 1987. He began his career at Arthur
Andersen & Co. Mr. Larson earned an M.B.A. in Finance from the University of
Chicago and a Bachelor of Science in Accounting from the University of Illinois.
Mr. Larson is a C.P.A. and a member of both the American Institute of Certified
Public Accountants and the Accounting Research Association.
STEWART E. ALLEN has been President of SSWL since 1992. Mr. Allen has been
responsible for overseeing the daily operations of the Company, including
integrating acquired companies and corporate strategic planning. Mr. Allen is
the President of the Canadian Bottled Water Association and a member of the
International Bottled Water Association's International Council.
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Mr. Allen has over 20 years of experience in the beverage industry. He
served as Vice President of Sales and Marketing for MBL, the Pepsi-Cola
franchisee and former parent of the Company, from 1988 to 1992. Mr. Allen was
primarily responsible for consolidating two other bottlers into MBL and for
major cost initiatives, including a reduction in salaried employees, closure of
four warehouses and three wage freezes with unionized employees. Prior to
joining MBL, Mr. Allen spent three years with Crush Canada and Pepsi-Cola
Canada. Prior to this, Mr. Allen held several operational positions in
Pepsi-Cola owned bottler operations in Toronto and Oshawa, Ontario.
MICHAEL BREGMAN has served as a member of the Board of Directors of SSWL
since October 1997. Mr. Bregman is Vice Chairman of the Board of Directors of
Clairvest, a Toronto-based, publicly traded merchant bank with a portfolio in
excess of $180 million, where his primary responsibilities include assessing
investment transactions, with an emphasis on the retail food and beverage
industries. Mr. Bregman is the Chairman and Chief Executive Officer and a major
shareholder of The Second Cup Ltd., a coffee retailer in North America. Mr.
Bregman is also a member of the board of directors of Signature Security Group,
Inc. and Vincor International Inc. In addition, Mr. Bregman was the founder of
the now-divested Mmmuffins Inc., a specialty baking company in Canada. Mr.
Bregman received his M.B.A. degree in 1977 from Harvard Business School and
earned a B.S. in Economics from The Wharton School at the University of
Pennsylvania.
C. SEAN DAY has served as a member of the Board of Directors of SSWL since
March, 1997. Mr. Day is President and Chief Executive Officer of Navios
Corporation, a company engaged in the worldwide operation of ocean going
bulkships. Mr. Day has a wide range of experience in the shipping, finance and
industrial sectors. Prior to joining Navios Corporation, Mr. Day's prior
experience included positions with Citicorp Venture Capital Ltd. in New York,
Fednav Ltd. in Montreal and Jardine, Matheson & Co., Ltd. in Hong Kong and
Taiwan. Mr. Day is also a member of the board of directors of Kirby Corporation.
Mr. Day is a graduate of University of Cape Town and Oxford University.
KENNETH B. ROTMAN has served as a member of the Board of Directors of SSWL
since January 1996. Mr. Rotman is a Managing Director of Clairvest, a
Toronto-based, publicly traded merchant bank with a portfolio in excess of $180
million. Mr. Rotman's role with Clairvest involves the sourcing and execution of
transactions and working closely with the management of companies in which
Clairvest has invested. Mr. Rotman also serves on the board of directors of
Consoltex Group Inc., NRI Industries and Signature Security Group Inc. Mr.
Rotman is a volunteer director of The Power Plant art gallery of Toronto and the
Empire Club of Canada. Prior to joining Clairvest in October, 1993, Mr. Rotman
worked in the Venture Banking Division of E.M. Warburg, Pincus & Co. in New
York. Mr. Rotman received a B.A. in Economics from Tufts University, an M.Sc.
from the London School of Economics, and an M.B.A. from New York University's
Stern School of Business.
LUCY M. STITZER has served as a member of the Board of Directors of SSWL
since January 1994. Ms. Stitzer has also served on the board of directors of
Cargill Inc. since 1992. From 1990 to 1992, Ms. Stitzer was employed as an
associate at Sandler O'Neill and Partners, an investment bank. From 1983 to
1990, Ms. Stitzer was employed by the Consumer Banking Division of Citibank,
N.A., where she attained the position of Assistant Vice President.
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EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation of each
executive officer of Sparkling Spring who earned in excess of $100,000 in annual
salary and bonus during Sparkling Spring's year ended December 31, 1996, for
services rendered in all capacities to the Company in the years ended December
31, 1996, 1995 and 1994. G. John Krediet, Chief Executive Officer of Sparkling
Spring, received compensation from CFCC pursuant to the Management Agreement
rather than directly from the Company. See "Certain Relationships and Related
Transactions -- Management Agreement."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------------- SECURITIES
OTHER UNDERLYING ALL
NAME AND PRINCIPAL ANNUAL OPTIONS/ OTHER
POSITION YEAR SALARY BONUS COMPENSATION SARS COMPENSATION
- ----------------------- ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Stewart E. Allen, 1996 $129,070 -- $ 15,576(1) -- $ 16,957(2)
President 1995 94,122 $36,427 -- 39,595 10,905(2)
1994 76,158 18,330 -- 96,192 6,509(2)
</TABLE>
- ---------------
(1) Includes $13,926 representing a housing allowance.
(2) Consists of contributions of $16,015, $9,530 and $5,568 to a defined
contribution pension plan in 1996, 1995 and 1994, respectively, and annual
premiums of $942 in connection with a group life insurance policy for Mr.
Allen.
EMPLOYMENT AGREEMENTS
Stewart E. Allen, the President of Sparkling Spring, has an employment
agreement with the Company pursuant to which he is paid a base salary of
$219,000. In addition, his employment agreement provides for a bonus payment to
Mr. Allen at the end of each fiscal year based primarily upon the Company
achieving certain levels of EBITDA.
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<PAGE> 71
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
Pursuant to the Management Agreement dated December 16, 1993, as amended
and restated (the "Management Agreement"), between SSWL, CFCC, G. John Krediet
and Stephen L. Larson, CFCC has agreed to perform certain management services
for the Company through December 31, 2002. These services include managing the
operations of the Company and negotiating contracts, financial agreements and
other arrangements. The Management Agreement provides that CFCC shall not take
any action with respect to certain extraordinary transactions without the
approval of the Board of Directors of Sparkling Spring, including material
acquisitions and capital expenditures, issuances of securities, sale or
disposition of a material portion of the business of the Company, compensation
of CFCC, merger of the Company, liquidation and declaration of dividends.
The Management Agreement provides that CFCC shall receive annual
compensation for its services in the form of a base fee of $400,000 during the
fiscal year ended December 31, 1996, and in each successive year a base fee
equal to the prior year's base fee plus an amount equal to the prior year's base
fee multiplied by the percentage increase or decrease, as the case may be, of
the Company's total annual revenue from the prior year, but the base fee may not
exceed $750,000 in any given year. An annual bonus of up to 75% of the base fee
is due to CFCC each year in the event that the Company achieves certain targeted
levels of per share earnings before depreciation and amortization. In the event
such targets are not met, lesser amounts may be paid. The Company has also
agreed to pay CFCC a fee in respect of its investment banking advisory services
rendered to the Company in connection with successful acquisitions. The total
amounts paid to CFCC pursuant to the Management Agreement for the years 1994,
1995 and 1996 and the nine months ended September 30, 1997 were $277,000,
$521,000, $769,000 and $1,032,500, respectively. The Company may also pay to
Messrs. Krediet and Larson non-cash options, incentives or other remuneration,
consistent with industry standards. The Company is also responsible for
reasonable disbursements and office expenses incurred by CFCC.
SHAREHOLDER AGREEMENT
Sparkling Spring, Clairvest, Gaspar Limited (a corporation wholly-owned by
a trust organized for the benefit of G. John Krediet and his children), Stephen
L. Larson, Lucy Stitzer, Stewart E. Allen and certain other shareholders of the
Company are parties to a shareholder agreement, dated as of October 22, 1997
(the "Shareholder Agreement"), which provides, among other things, for
preemptive rights in favor of the shareholders under certain circumstances if
Sparkling Spring issues additional securities and for certain registration
rights. The Shareholder Agreement also provides restrictions on the transfer of
the Company's capital stock, for rights of first refusal and for rights of
certain shareholders to require all other shareholders to join with them in
their sale of the Company's capital stock. The Shareholder Agreement fixes the
number of directors comprising Sparkling Spring's Board of Directors at seven,
and provides that Gaspar Limited shall be entitled to nominate four directors,
Clairvest shall be entitled to nominate two directors and Lucy Stitzer and her
affiliates shall be entitled to nominate one director. Certain actions by the
Company require the approval of at least one of the Clairvest nominees (which
approval shall not be unreasonably withheld). These actions include, among other
things, any acquisition by the Company in excess of Cdn $5.0 million, the making
of certain capital expenditures, the issuance by the Company of debt or equity
securities, the disposition by the Company of a material part of its business,
any change in management compensation, the declaration of dividends by the
Company and the approval of the Company's annual budget. In addition, under the
Shareholder Agreement, if no liquid public market (as defined in the Shareholder
Agreement) then exists, Clairvest may, any time after March 31, 2003, offer all
of its shares of capital stock of Sparkling Spring for sale to Sparkling Spring.
If Sparkling Spring does not then repurchase those shares, Clairvest may, under
certain circumstances, require the other parties to the Shareholder Agreement to
join with Clairvest in selling to a third party all of
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<PAGE> 72
their shares of Common Stock of Sparkling Spring, which could cause a change of
control. See "Risk Factors -- Change of Control."
REORGANIZATION
The shareholders of Sparkling Spring have approved the Reorganization,
which management expects to be completed by January 1998. Under the
Reorganization, the former shareholders of SSWL transferred their shares of SSWL
to Sparkling Spring. As a part of the Reorganization, certain shareholders have
reduced their interest in Sparkling Spring by exchanging their shares of common
stock of SSWL for Common Stock of Sparkling Spring and cash or for cash only.
See "The Offering." Other shareholders simply exchanged their shares of common
stock of SSWL for Common Stock of Sparkling Spring on a one-for-one basis.
Certain key managers of the Company have subscribed for an aggregate of
9,360 shares of Common Stock of Sparkling Spring at $28.00 per share, the same
purchase price per share used for the purpose of the Reorganization. These
managers have granted an option to Sparkling Spring enabling Sparkling Spring to
repurchase those shares of Common Stock at any time at an agreed-upon formula
price. Similarly, Sparkling Spring is obligated, under certain circumstances, to
purchase those shares for the same formula price at the option of the key
managers.
OTHER TRANSACTIONS
Each shareholder of Sparkling Spring pledged all of his or its outstanding
shares of Common Stock as collateral in favor of the lenders under the Existing
Credit Facility. A portion of the gross proceeds from the Offering was used by
Sparkling Spring to repay the entire principal amount and accrued interest
outstanding under the Existing Credit Facility. See "The Offering." Upon the
repayment of the Existing Credit Facility, the pledges were terminated.
In connection with their purchase of shares of common stock of SSWL,
Stephen L. Larson and Stewart E. Allen incurred indebtedness to the Company in
the amounts of $122,000 and $108,000, respectively. In connection with the
Reorganization, the shares were subsequently exchanged for shares of Common
Stock of Sparkling Spring. See "-- Reorganization." The loans bear interest at a
rate of 7% per annum and mature on January 31, 1998. Each of the borrowers has
pledged his shares of Common Stock to the Company to secure his loan.
On June 6, 1994, trusts formed for the benefit of Lucy M. Stitzer, a
Director of Sparkling Spring, and her sister, Alexandra M. Daitch, together with
their father, W. Duncan MacMillan, loaned SSWL an aggregate of $1,300,000. In
return for the loan, SSWL issued its unsecured redeemable subordinated notes,
bearing interest at a rate of 8% per annum, and warrants to purchase an
aggregate of 60,099 shares of common stock of SSWL. On January 18, 1996, the
Company redeemed the unsecured redeemable subordinated notes and the attached
warrants for a cash consideration of $1,816,041.
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<PAGE> 73
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of Common Stock of Sparkling Spring after giving effect to the Reorganization,
with respect to (i) each person known by the Company to own beneficially more
than 5.0% of the outstanding shares of Common Stock, (ii) each of the Sparkling
Spring's directors, (iii) each person named in the Summary Compensation Table
and (iv) all directors and officers as a group. Except as otherwise indicated,
each of the shareholders has sole voting and investment power with respect to
the shares of Common Stock beneficially owned. Unless otherwise indicated, the
address for each shareholder is in care of the Company, 19 Fielding Avenue,
Dartmouth Nova Scotia, Canada B3B-1C9.
After giving effect to the Reorganization, there were outstanding an
aggregate of 1,392,688 shares of Common Stock and an aggregate of 252,197
options and warrants to purchase shares of Common Stock. All shares of Common
Stock issuable upon exercise of options and warrants are not entitled to vote on
matters submitted to a vote of the shareholders of Sparkling Spring.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------
SHARES OF
NAME OF BENEFICIAL OWNER COMMON STOCK PERCENT
- ------------------------------------------------------------------- ------------ -------
<S> <C> <C>
Gaspar Limited..................................................... 713,300(2) 50.9%
c/o Cartrust Corporated Limited
White Park House
White Park Road
Bridgetown, Barbados
Clairvest Group Inc................................................ 423,190 30.4%
22 St. Clair Avenue East
Toronto, Ontario
G. John Krediet.................................................... 8,250(3) *
Stephen L. Larson.................................................. 172,996(4) 12.0%
Stewart E. Allen................................................... 110,378(5) 7.4%
Lucy M. Stitzer.................................................... 94,010 6.8%
Michael Bregman.................................................... --(6) --
Kenneth B. Rotman.................................................. --(7) --
C. Sean Day........................................................ 8,994 *
All Directors and Executive Officers as a Group (7 persons)........ 1,099,678 70.5%
</TABLE>
- ---------------
* Less than one percent.
(1) Shares of Common Stock which an individual or group has a right to acquire
at any time pursuant to the exercise of options or warrants, whether or not
currently vested or exercisable, are deemed to be outstanding for the
purpose of computing the percentage ownership of that individual or group,
but are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table. Information in
this Prospectus regarding the ownership of the Common Stock of Sparkling
Spring is calculated in accordance with the foregoing methodology.
(2) Gaspar Limited is a Barbados corporation wholly-owned by a trust organized
for the benefit of G. John Krediet and his children. Includes 8,250 shares
of Common Stock issuable upon exercise of options held by Mr. Krediet.
(3) Includes 8,250 shares of Common Stock issuable upon exercise of options.
Does not include shares owned by Gaspar Limited.
(4) Includes 53,787 shares of Common Stock issuable upon exercise of options.
(5) Includes 104,706 shares of Common Stock issuable upon exercise of options.
(6) Excludes 423,190 shares held by Clairvest Group Inc., of which Mr. Bregman
is the Vice Chairman and a Director, and with respect to which Mr. Bregman
disclaims beneficial ownership.
(7) Excludes 423,190 shares held by Clairvest Group Inc., of which Mr. Rotman
is a Managing Director, and with respect to which Mr. Rotman disclaims
beneficial ownership.
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<PAGE> 74
DESCRIPTION OF THE CREDIT AGREEMENT
The Company intends to enter into a credit agreement (the "Credit
Agreement") for the purposes of financing its future acquisitions and providing
for its ongoing working capital requirements. The Company has received proposals
from BT Bank of Canada and Toronto Dominion Bank with respect to the terms and
conditions of a proposed Credit Agreement.
The proposed Credit Agreement is anticipated to be structured as a
multi-currency revolving credit facility having a term of five years. The
Indenture specifically permits the Company to enter into a senior credit
facility providing borrowing availability of up to $30.0 million and also
provides for additional general borrowing capacity of $10.0 million, all or a
portion of which may be incurred under such credit facility. The Company's
payment obligations under the proposed Credit Agreement would be secured by a
first priority security interest granted in favor of the lenders in
substantially all of the assets of the Company.
Amounts outstanding under the proposed Credit Agreement would bear interest
at specified rates. The Company would be required to prepay its outstanding
loans from: (i) the cash proceeds derived from the sale or other disposition of
any of its properties or assets other than in the ordinary course of its
business; (ii) the net cash proceeds received from its issuance of debt or
equity securities; or (iii) a portion of its excess cash flow (as defined) for
each year.
It is expected that the Credit Agreement will contain financial and other
covenants customary for agreements of this type, including limitations on liens,
indebtedness, contingent obligations, mergers and acquisitions, investments,
loans, asset sales, leases, transactions with affiliates and capital
expenditures.
Events of default under the proposed Credit Agreement would include, among
others, (i) failure of the Company to make payments when due, (ii) defaults
under certain other evidences of indebtedness, (iii) non-compliance with
covenants, (iv) breaches of representations and warranties, (v) bankruptcy, (vi)
changes of control (as defined) and (vii) material invalidity or non-perfection
of security interests in lender collateral.
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<PAGE> 75
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following summary of the material anticipated Federal income tax
consequences of the Exchange Offer is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the final, temporary and proposed
regulations promulgated thereunder, and administrative rulings and judicial
decisions now in effect, all of which are subject to change (possibly with
retroactive effect) or different interpretations. Holders of Notes should note
the following summary is not binding on the Internal Revenue Service (the
"Service") and there can be no assurance that the Service will take a similar
view with respect to the tax consequences described below. No ruling has been or
will be requested by Sparkling Spring from the Service on any tax matters
relating to the Private Notes of the Exchange Notes. This summary is not
intended to be applicable to all categories of investors, some of which, such as
dealers in securities, financial institutions, insurance companies and
tax-exempt organizations may be subject to special rules. ALL HOLDERS OF NOTES
ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE
NOTES.
The exchange of the Exchange Notes for the Private Notes pursuant to the
Exchange Offer should not be treated as an "exchange" for federal income tax
purposes because Exchange Notes should not be considered to differ materially in
kind or extent from Private Notes. Rather, Exchange Notes received by a holder
should be treated as a continuation of Private Notes in the hand of such holder.
As a result, there should be no federal income tax consequences to holders
exchanging Private Notes for the Exchange Notes pursuant to the Exchange Offer.
If, however, the exchange of the Private Notes for the Exchange Notes were
treated as an "exchange" for federal income tax purposes, such exchange should
constitute a recapitalization for federal income tax purposes. Holders
exchanging the Private Notes pursuant to such recapitalization should not
recognize any gain or loss upon the exchange.
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<PAGE> 76
DESCRIPTION OF THE NOTES
The Notes were issued under an indenture (the "Indenture"), dated November
19, 1997, among the Company, the Subsidiary Guarantors and Bankers Trust
Company, as Trustee (the "Trustee"). The following summary of certain provisions
of the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Trust Indenture Act of 1939, as
amended (the "TIA"), and to all of the provisions of the Indenture, including
the definitions of certain terms therein and those terms made a part of the
Indenture by reference to the TIA as in effect on the date of the Indenture. A
copy of the Indenture may be obtained from the Company or the Initial
Purchasers. The definitions of certain capitalized terms used in the following
summary are set forth below under "-- Certain Definitions." For purposes of this
section, references to the "Company" include only Sparkling Spring and not its
Subsidiaries.
The Notes are unsecured obligations of the Company, ranking subordinate in
right of payment to all Senior Indebtedness of the Company.
The Notes are issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as Paying Agent and Registrar for the Notes. The Notes may be presented
for registration or transfer and exchange at the offices of the Registrar, which
initially will be the Trustee's corporate trust office. The Company may change
any Paying Agent and Registrar without notice to holders of the Notes (the
"Holders"). The Company will pay principal (and premium, if any) on the Notes at
the Trustee's corporate office in New York, New York. At the Company's option,
interest may be paid at the Trustee's corporate trust office or by check mailed
to the registered address of Holders. Any Notes that remain outstanding after
the completion of the Exchange Offer, together with the Exchange Notes issued in
connection with the Exchange Offer, shall constitute a single class of
securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $100,000,000 and
will mature on November 15, 2007. Interest on the Notes will accrue at the rate
of 11 1/2% per annum and will be payable semiannually in cash on each May 15 and
November 15, commencing on May 15, 1998, to the persons who are registered
Holders at the close of business on the May 1 and November 1 immediately
preceding the applicable interest payment date. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from and including the date of issuance.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
REDEMPTION
Optional Redemption. The Notes will be redeemable at the Company's option,
in whole at any time or in part from time to time, on and after November 15,
2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on November 15 of the year
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------ ----------
<S> <C>
2002.................................................. 105.750%
2003.................................................. 103.833%
2004.................................................. 101.917%
2005 and thereafter................................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. Notwithstanding the
foregoing, at any time, or from time to time, on or prior to November 15, 2000,
the Company may, at its option, redeem up to $30.0 million aggregate principal
amount of the Notes originally issued with the net
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<PAGE> 77
cash proceeds of one or more Public Equity Offerings (as defined below) by the
Company at a redemption price equal to 111.50% of the principal amount thereof,
plus accrued interest to the date of redemption, provided that at least $70.0
million in aggregate principal amount of the Notes originally issued remains
outstanding immediately following such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 60 days after the consummation
of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act, or a comparable filing under the laws of any province of Canada,
in either case yielding gross proceeds to the Company of at least $35.0 million.
Optional Redemption upon the Occurrence of Certain Tax Events. In addition
to the foregoing, the Notes are redeemable, in whole but not in part, at the
option of the Company upon not less than 30 nor more than 60 days' notice mailed
to each Holder at a redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of redemption in
the event the Company has become obligated to pay Additional Amounts in respect
of the Notes pursuant to the provisions set forth in "-- Taxation; Redemption
for Tax Reasons," and such obligation cannot be avoided by the Company taking
reasonable measures available to it, such obligation did not arise, directly or
indirectly, from any transaction, action or omission by the Company (whether or
not such transaction, action or omission is otherwise permitted under the terms
of the Indenture) and certain other conditions are satisfied. See "-- Taxation;
Redemption for Taxation Reasons."
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part; provided
further, however, that if a partial redemption is made with the proceeds of a
Public Equity Offering, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to DTC procedures), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Indebtedness whether outstanding on the Issue Date, or
thereafter incurred including, without limitation, the Company's obligations
under the Credit Agreement. Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Indebtedness
shall first be paid in full in cash or Cash
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<PAGE> 78
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Indebtedness, before any payment or distribution of any kind
or character is made on account of any Obligations on the Notes, or for the
acquisition of any of the Notes for cash or property or otherwise.
No direct or indirect payment by or on behalf of the Company of principal
of, premium, if any, or interest on, the Notes whether pursuant to the terms of
the Notes or upon acceleration or otherwise shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of
principal of, premium, if any, or interest on, any Designated Senior
Indebtedness (and the Trustee has received written notice thereof), and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Senior Indebtedness. In
addition, if any other event of default occurs and is continuing with respect to
any Designated Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing such Designated Senior Indebtedness,
permitting the holders of such Designated Senior Indebtedness then outstanding
to accelerate the maturity thereof and if the Representative for the respective
issue of Designated Senior Indebtedness gives written notice of the event of
default to the Trustee (a "Default Notice"), then, unless and until all events
of default have been cured or waived or have ceased to exist or the Trustee
receives notice from the Representative for the respective issue of Designated
Senior Indebtedness terminating the Blockage Period (as defined below), during
the 179 days after the delivery of such Default Notice (the "Blockage Period"),
neither the Company nor any other Person on its behalf shall (x) make any
payment of any kind or character with respect to any Obligations on the Notes or
(y) acquire any of the Notes for cash or property or otherwise. Notwithstanding
anything herein to the contrary, in no event will a Blockage Period extend
beyond 179 days from the date the payment on the Notes was due and only one such
Blockage Period may be commenced within any 360 consecutive days. No event of
default which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Indebtedness shall be, or
be made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Indebtedness.
As of September 30, 1997, on a pro forma basis, after giving effect to the
Offering and the application of the net proceeds therefrom, the Company would
have had no Senior Indebtedness outstanding. However, the Indenture permits the
Company to enter into a senior credit facility providing borrowing availability
of up to $30.0 million and also provides for additional borrowing capacity of
$10.0 million, all or a portion of which may be incurred under such credit
facility and which would constitute Senior Indebtedness or Guarantor Senior
Indebtedness.
GUARANTEES
Each Subsidiary Guarantor has unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, to each Holder and the Trustee, the
full and prompt performance of the Company's obligations under the Indenture and
the Notes, including the payment of principal of and interest on the Notes. The
Guarantees are subordinated to Guarantor Senior Indebtedness on the same basis
as the Notes are subordinated to Senior Indebtedness. As of September 30, 1997,
on a pro forma basis after giving effect to the Offering and the application of
the net proceeds therefrom, the Subsidiary Guarantors would have had
approximately $1.5 million of Guarantor Senior Indebtedness outstanding.
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<PAGE> 79
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount which, after giving effect to all other contingent and fixed liabilities
of such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result in the
obligations of such Subsidiary Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal, state or other
applicable law. In addition, the obligations of each Subsidiary Guarantor
organized outside the United States will be limited to the maximum amount
permitted under applicable Canadian, English, Scottish or other foreign law.
Each Subsidiary Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in an amount pro rata, based on the net assets of each Subsidiary
Guarantor, determined in accordance with GAAP.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor that is a Wholly Owned
Subsidiary without limitation, or with or to the Persons upon the terms and
conditions set forth in the Indenture. See "-- Certain Covenants -- Merger,
Consolidation and Sale of Assets." In the event all of the Capital Stock of a
Subsidiary Guarantor is sold by the Company and/or one or more of its
Subsidiaries and the sale complies with the provisions set forth in "-- Certain
Covenants -- Limitation on Asset Sales," such Subsidiary Guarantor will be
released from all of its obligations under its Guarantee.
The Subsidiary Guarantors are Wholly Owned Subsidiaries of the Company and
are jointly and severally liable with respect to the Company's Obligations
pursuant to the Notes. In addition, the aggregate assets, liabilities, earnings
and equity of the Subsidiary Guarantors are substantially equivalent to the
assets, liabilities, earnings and equity of the Company on a consolidated basis.
Accordingly, the separate financial statements of the Subsidiary Guarantors are
not included herein because the Company has determined that they would not be
material to investors.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full all indebtedness, and terminate all
commitments, under the Credit Agreement and all other Senior Indebtedness the
terms of which require repayment upon a Change of Control or offer to repay in
full all indebtedness, and terminate all commitments, under the Credit Agreement
and all other such Senior Indebtedness and to repay the Indebtedness owed to
each lender which has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement and all other Senior Indebtedness to permit the
repurchase of the Notes as provided below. The Company shall first comply with
the covenant in the immediately preceding sentence before it shall be required
to repurchase Notes pursuant to the provisions described below. The Company's
failure to comply with the second preceding sentence shall be governed by clause
(iii), and not clause (iv), of "Events of Default" below.
Within 30 days following the date upon which a Change of Control occurs,
the Company must send, by first class mail, a notice to each Holder, with a copy
to the Trustee, which notice shall govern the terms of the Change of Control
Offer. Such notice shall state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 45 days from the date such notice
is mailed, other than as may be required by law (the "Change of Control Payment
Date"). Holders electing to have a Note purchased pursuant to a Change of
Control Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of
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<PAGE> 80
the Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third business day prior to the Change of
Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would need to seek third party financing to the extent it does
not have available funds to meet its purchase obligations. However, there can be
no assurance that the Company would be able to obtain any such financing.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
its Subsidiaries to incur additional Indebtedness, to grant liens on its
property, to make Restricted Payments and to make Asset Sales may also make more
difficult or discourage a takeover of the Company, whether favored or opposed by
the management of the Company. Consummation of any such transaction in certain
circumstances may require redemption or repurchase of the Notes, and there can
be no assurance that the Company or the acquiring party will have sufficient
financial resources to effect such redemption or repurchase. Such restrictions
and the restrictions on transactions with Affiliates may, in certain
circumstances, make more difficult or discourage any leveraged buyout of the
Company or any of its Subsidiaries by the management of the Company. While such
restrictions cover a wide variety of arrangements which have traditionally been
used to effect highly leveraged transactions, the Indenture may not afford the
Holders of Notes protection in all circumstances from the adverse aspects of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
The definition of the term "Change of Control" includes a phrase relating
to the sale, lease, exchange, transfer or other disposition of "all or
substantially all" of the assets of the Company and its Subsidiaries taken as a
whole. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder to require the
Company to repurchase its Notes as a result of a sale, lease, exchange, transfer
or other disposition of less than all of the assets of the Company and its
Subsidiaries to another Person or Group may be uncertain.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not cause or permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur"), any Indebtedness (including, without limitation,
Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the
foregoing, if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, (x) the Company may incur Senior Indebtedness (including, without
limitation, Acquired Indebtedness) if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.25 to 1.0 if such
incurrence occurs on or prior to December 31, 1999 and
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<PAGE> 81
2.50 to 1.0 if such incurrence occurs thereafter and (y) the Company may
otherwise incur Indebtedness (which does not constitute Senior Indebtedness) if
on the date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than 2.0 to 1.0 if such incurrence occurs on or prior to December 31,
1999 and 2.25 to 1.0 if such incurrence occurs thereafter.
Prior to any incurrence of Indebtedness pursuant to the last sentence of
the preceding paragraph (other than Permitted Indebtedness), the Company shall
deliver to the Trustee an Officer's Certificate setting forth the calculations
by which such incurrence was determined to be permitted.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Subsidiaries to, directly or indirectly, (a) declare or pay
any dividend or make any distribution (other than dividends or distributions
made to the Company or any Wholly-Owned Subsidiary of the Company and other than
any dividend or distribution payable solely in Qualified Capital Stock of the
Company) on or in respect of shares of the Company's Capital Stock to holders of
such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock (other than the
exchange of such Capital Stock or any warrants, rights or options to acquire
shares of any class of Capital Stock of the Company for Qualified Capital Stock
of the Company), (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company or a Subsidiary Guarantor that is subordinate or
junior in right of payment to the Notes or such Subsidiary Guarantor's Guarantee
or (d) make any Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to
as a "Restricted Payment"), if at the time of such Restricted Payment or
immediately after giving effect thereto, (i) a Default or an Event of Default
shall have occurred and be continuing, or (ii) the Company is not able to incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant above, or (iii) the aggregate amount of all Restricted Payments
(including such proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash, being the fair
market value of such property as determined reasonably and in good faith by the
Board of Directors of the Company) shall exceed the sum of: (v) 50% of the
cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Company earned during the
period beginning on the first day of the fiscal quarter including the Issue Date
and ending on the last day of the fiscal quarter ending at least 30 days prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting period); plus (w) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company, including
treasury stock; plus (x) without duplication of any amounts included in clause
(iii) (w) above, 100% of the aggregate net cash proceeds of any equity
contribution received by the Company from a holder of the Company's Capital
Stock (excluding, in the case of clauses (iii) (w) and (x), any net cash
proceeds from a Public Equity Offering to the extent used to redeem the Notes
and any net cash proceeds received by the Company from the sale of Qualified
Capital Stock of the Company or equity contribution which has been financed,
directly or indirectly, using funds (1) borrowed from the Company or any of its
Subsidiaries, unless and until and to the extent such borrowing is repaid or (2)
contributed, extended, guaranteed or advanced by the Company or by any of its
Subsidiaries); plus (y) to the extent that any Investment made after the Issue
Date has been treated as a Restricted Payment and such Investment is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Investment (less the cost of disposition,
if any) (but only to the extent not included in clause (iii)(v) above), and (B)
the initial amount of such Investment.
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<PAGE> 82
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph shall not prohibit: (1) the payment of any dividend or
consummation of irrevocable redemption within 60 days after the date of
declaration of such dividend or giving of irrevocable redemption notice if the
dividend or redemption would have been permitted on the date of declaration or
giving of irrevocable redemption notice; (2) if no Default or Event of Default
shall have occurred and be continuing, the acquisition of any shares of Capital
Stock of the Company, either (i) solely in exchange for shares of Qualified
Capital Stock of the Company or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes either (i) solely in exchange for shares of Qualified
Capital Stock of the Company, or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) if no Default or Event of Default shall have
occurred and be continuing, payments by the Company to repurchase Capital Stock
or other securities of the Company from shareholders of the Company (other than
Permitted Holders) in an aggregate amount not to exceed $500,000 in any calendar
year and $2,500,000 in the aggregate; and (5) during the period ending 60 days
after the Issue Date, the application of the proceeds of the Offering to fund
the Reorganization in an amount not to exceed the amount set forth in "Use of
Proceeds" above. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, amounts expended pursuant to clauses (1), (2) (ii), and (3)
(ii) (A) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officer's Certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not cause or
permit any of its Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors); (ii) at least 75% of the consideration received
by the Company or the Subsidiary, as the case may be, from such Asset Sale shall
be in the form of cash or Cash Equivalents and is received at the time of such
disposition; and (iii) upon the consummation of an Asset Sale, the Company shall
apply, or cause such Subsidiary to apply, the Net Cash Proceeds relating to such
Asset Sale within 360 days of receipt thereof either (A) to prepay any Senior
Indebtedness or Guarantor Senior Indebtedness and, in the case of any Senior
Indebtedness or Guarantor Senior Indebtedness under any revolving credit
facility, effect a permanent reduction in the commitment available under such
revolving credit facility, (B) to make an investment in properties and assets
that replace the properties and assets that were the subject of such Asset Sale
or in properties and assets that will be used in the business of the Company and
its Subsidiaries as existing on the Issue Date or in businesses reasonably
related thereto (as determined in good faith by the Company's Board of
Directors) ("Replacement Assets"), or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii) (A) and (iii) (B). Pending
final application, the Company or the applicable Subsidiary may temporarily
reduce Indebtedness under any revolving credit facility or invest in cash or
Cash Equivalents. On the 361st day after an Asset Sale or such earlier date, if
any, as the Board of Directors of the Company or of such Subsidiary determines
not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in
clauses (iii) (A), (iii) (B) and (iii) (C) of the next preceding sentence (each,
a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds
which the Company or such Subsidiary has failed to apply on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (iii) (A), (iii) (B) and
(iii) (C) of the next
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preceding sentence (each, a "Net Proceeds Offer Amount") shall be applied by the
Company or such Subsidiary to make an offer to purchase (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date, from
all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
received by the Company or any Subsidiary of the Company, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this covenant. The Company or any such Subsidiary of
the Company, as the case may be, may defer the Net Proceeds Offer until there is
an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0
million resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0
million, shall be applied as required pursuant to this paragraph).
Notwithstanding the immediately preceding paragraph, the Company and its
Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraphs to the extent (i) at least 75% of the consideration for
such Asset Sale constitutes Replacement Assets and/or Cash Equivalents and (ii)
such Asset Sale is for fair market value; provided, however, that any
consideration not constituting Replacement Assets received by the Company or any
of its Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the preceding paragraph.
Notice of each Net Proceeds Offer will be mailed to the record Holders as
shown on the register of Holders within 25 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a pro rata basis (based on amounts tendered). A Net
Proceeds Offer shall remain open for a period of 20 business days or such longer
period as may be required by law. To the extent the amount of Notes tendered is
less than the offer amount, the Company may use the remaining Net Proceeds Offer
Amount for general corporate purposes and such Net Proceeds Offer Amount shall
be reset to zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary of the Company to (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or advances or to pay any
Indebtedness or other obligation owed to the Company or any other Subsidiary of
the Company; or (c) transfer any of its property or assets to the Company or any
other Subsidiary of the Company, except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) the Indenture; (3) the
Credit Agreement; (4) non-assignment provisions of any contract or any lease
governing a leasehold interest of any Subsidiary of the Company; (5) any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or
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assets of any Person, other than the Person or the properties or assets of the
Person so acquired; (6) agreements existing on the Issue Date to the extent and
in the manner such agreements are in effect on the Issue Date; or (7) an
agreement governing Indebtedness incurred to Refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (3), (5)
or (6) above; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such Indebtedness are no less
favorable to the Company or to the Holders in any material respect as determined
by the Board of Directors of the Company in its reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (3), (5) or (6),
respectively.
Limitation on Preferred Stock of Subsidiaries. The Company will not permit
any of its Subsidiaries to issue any Preferred Stock (other than to the Company
or to a Wholly Owned Subsidiary of the Company) or permit any Person (other than
the Company or a Wholly Owned Subsidiary of the Company) to own any Preferred
Stock of any Subsidiary of the Company.
Limitation on Liens. The Company will not, and will not cause or permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or permit
or suffer to exist any Liens of any kind against or upon any property or assets
of the Company or any of its Subsidiaries whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom unless (i) in the case
of Liens securing Indebtedness that is expressly subordinate or junior in right
of payment to the Notes or any Guarantee, the Notes and such Guarantee, as the
case may be, are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Liens and (ii) in all other cases, the Notes and the
Guarantees are equally and ratably secured, except for (A) Liens existing as of
the Issue Date to the extent and in the manner such Liens are in effect on the
Issue Date; (B) Liens securing Senior Indebtedness; (C) Liens securing the Notes
and the Guarantees; (D) Liens of the Company or a Wholly Owned Subsidiary of the
Company on assets of any Subsidiary of the Company; (E) Liens securing
Refinancing Indebtedness which is incurred to Refinance any Indebtedness which
has been secured by a Lien permitted under the Indenture and which has been
incurred in accordance with the provisions of the Indenture; provided, however,
that such Liens (1) are no less favorable to the Holders and are not more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced and (2) do not extend to or cover
any property or assets of the Company or any of its Subsidiaries not securing
the Indebtedness so Refinanced (other than property or assets subject to Liens
under clause (B) above); and (F) Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. The Company will not
incur or suffer to exist Indebtedness that by its terms is senior in right of
payment to the Notes and subordinate in right of payment to any other
Indebtedness of the Company. No Subsidiary Guarantor shall incur or suffer to
exist Indebtedness that by its terms is senior in right of payment to the
Guarantees and subordinate in right of payment to any other Indebtedness of such
Subsidiary Guarantor.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or into
any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or
cause or permit any Subsidiary of the Company to sell, assign, transfer, lease,
convey or otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and its Subsidiaries)
unless: (i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and of the Company's Subsidiaries
substantially as an entirety (the "Surviving Entity") (x) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia or the federal laws of Canada or any
province thereof and (y) shall expressly assume as primary obligor, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual
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payment of the principal of, and premium, if any, and interest on all of the
Notes and the performance of every covenant of the Notes, the Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed, as the case may be; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i) (2) (y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction and (2) shall be
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the "-- Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) immediately before and immediately after giving
effect to such transaction and the assumption contemplated by clause (i) (2) (y)
above (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (iv) the Company or
the Surviving Entity, as the case may be, shall have delivered to the Trustee an
officer's certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of the Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture and the Notes with the same effect as if such
surviving entity had been named as such.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
the Indenture in connection with any transaction complying with the provisions
of the Indenture described under "-- Limitation on Asset Sales") will not, and
the Company will not cause or permit any Subsidiary Guarantor to, consolidate
with or merge with or into any Person other than the Company or another
Subsidiary Guarantor that is a Wholly Owned Subsidiary unless: (a) the entity
formed by or surviving any such consolidation or merger (if other than the
Subsidiary Guarantor) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any state thereof or the District of Columbia
or the federal laws of Canada or any province thereof; (b) such entity assumes
by execution of a supplemental indenture all of the obligations of the
Subsidiary Guarantor under its Guarantee; (c) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (d) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (ii) of the first paragraph of this covenant.
Any merger or consolidation of a Subsidiary Guarantor with and into the Company
(with the Company being the surviving entity) or another Subsidiary Guarantor
that is a Wholly Owned Subsidiary need only comply with clause (iv) of the first
paragraph of this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not cause or permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of
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any property or the rendering of any service) with, or for the benefit of, any
of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained or are obtainable in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or such
Subsidiary. All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1.0 million
shall be evidenced by an Officer's Certificate certifying that such transaction
complies with the foregoing provisions. If the Company or any Subsidiary of the
Company enters into an Affiliate Transaction (or a series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $10.0 million,
the Company or such Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees, consultants or agents of the Company or any
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Company and any of its Wholly Owned Subsidiaries or exclusively between or
among such Wholly Owned Subsidiaries, provided such transactions are not
otherwise prohibited by the Indenture; (iii) any agreement as in effect as of
the Issue Date (including, without limitation, the Management Agreement and the
Shareholder Agreement) or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) or in any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; and (iv) Restricted Payments permitted
by the Indenture.
Additional Subsidiary Guarantees. If the Company or any of its Subsidiaries
transfers or causes to be transferred, in one transaction or a series of related
transactions, any property to any Subsidiary that is not a Subsidiary Guarantor,
or if the Company or any of its Subsidiaries shall organize, acquire or
otherwise invest in another Subsidiary, then such transferee or acquired or
other Subsidiary shall (a) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
Subsidiary shall unconditionally guarantee all of the Company's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(b) deliver to the Trustee an opinion of counsel that such supplemental
indenture has been duly authorized, executed and delivered by such Subsidiary
and constitutes a legal, valid, binding and enforceable obligation of such
Subsidiary. After the execution and delivery of such supplemental indenture,
such Subsidiary shall be a Subsidiary Guarantor for all purposes of the
Indenture.
Conduct of Business. The Company will not and will not cause or permit any
of its Subsidiaries to engage in any businesses other than the businesses in
which the Company is engaged on the Issue Date, and any businesses reasonably
related thereto (as determined in good faith by the Company's Board of
Directors).
Reports to Holders. The Company will file with the Commission all
information, documents and reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Company
is then subject to such filing requirements. The Company will file with the
Trustee, within 15 days after it files them with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Company files with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company will cause its consolidated financial statements, comparable to
that which would have
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been required to appear in annual or quarterly reports, to be delivered to the
Trustee and the Holders. The Company will also make such reports available to
prospective purchasers of the Notes or the Exchange Notes, as applicable,
securities analysts and broker-dealers upon their request. In addition, the
Indenture will require that for so long as of the Notes remain outstanding the
Company will make available to any prospective purchaser of the Notes or
beneficial owner of the Notes in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act, until such
time as the Company has either exchanged the Notes for securities identical in
all material respects which have been registered under the Securities Act or
until such time as the holders thereof have disposed of such Notes pursuant to
an effective registration statement filed by the Company. The Company will also
comply with the other provisions of TIA sec. 314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest (including Additional Interest, if
any) on any Notes when the same becomes due and payable and the default
continues for a period of 30 days (whether or not such payment shall be
prohibited by the subordination provisions of the Indenture);
(ii) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon acceleration, upon
redemption or otherwise (including the failure to make a payment to
purchase Notes tendered pursuant to a Change of Control Offer or a Net
Proceeds Offer) (whether or not such payment shall be prohibited by the
subordination provisions of the Indenture);
(iii) a default in the observance or performance of any other
covenant or agreement contained in the Indenture which default continues
for a period of 30 days after the Company receives written notice
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Notes (except in the case of a default with respect to the
"Merger, Consolidation and Sale of Assets" covenant, which will constitute
an Event of Default with such notice requirement but without such passage
of time requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness if the
aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to
pay principal at final maturity or which has been accelerated, aggregates
$10.0 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $10.0
million shall have been rendered against the Company or any of its
Subsidiaries and such judgments remain undischarged, unpaid or unstayed for
a period of 60 days after such judgment or judgments become final and
non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries;
(vii) any of the Guarantees cease to be in full force and effect or
any of the Guarantees are declared to be null and void or invalid and
unenforceable or any of the Subsidiary Guarantors denies or disaffirms its
liability under its Guarantee (other than by reason of the release of a
Subsidiary Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above) shall occur and be continuing, the Trustee or the Holders of at
least 25% in principal amount of outstanding Notes may declare the principal of
and accrued interest on all the Notes to be due and payable by notice in writing
to the Company and the Trustee specifying the respective Event of
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Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall become immediately due and payable or (ii) if there are
any amounts outstanding under the Credit Agreement, shall become due and payable
upon the first to occur of an acceleration under the Credit Agreement, or five
business days after receipt by the Company and the Representative under the
Credit Agreement of such Acceleration Notice, unless all Events of Default
specified in such Acceleration Notice (other than any Event of Default in
respect of non-payment of principal) shall have been cured or waived. In the
event of a declaration because an Event of Default set forth in clause (iv) of
the preceding paragraph has occurred and is continuing, such declaration of
acceleration shall be automatically annulled if the missed payments in respect
of such Indebtedness have been paid or if the holders of the Indebtedness that
is subject to acceleration have rescinded their declaration of acceleration and
the Trustee has received written notice of such Indebtedness having been repaid
in full, in each case within 60 days thereof and if (i) the annulment of such
acceleration would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default, except non-payment
of principal or interest which have become due solely because of the
acceleration, have been cured or waived and (iii) the Company has delivered an
Officer's Certificate to the Trustee to the effect of clauses (i) and (ii)
above. If an Event of Default specified in clause (vi) above occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and
unpaid interest on all of the outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in principal amount of the Notes may rescind and
cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an officers' certificate
and an opinion of counsel that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a default in the payment of the principal of or interest on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge of
any Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, except
for (i) the rights of Holders to receive payments in respect of the principal
of, premium, if any, and interest on the Notes when such payments are due, (ii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and its Subsidiaries released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including nonpayment, bankruptcy,
receivership, reorganization and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in United States dollars, non-callable United States
government obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the Notes
on the stated date for payment thereof or on the applicable redemption date, as
the case may be; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) (w) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling or (x)
since the date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and, in either case, that the Holders will be subjected to U.S.
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred and (B) an
opinion of counsel in Canada reasonably acceptable to the Trustee confirming
that the Holders will not recognize income, gain or loss for Canadian federal
income tax purposes as a result of such Legal Defeasance and will be subject to
Canadian federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee (A) an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred and (B) an opinion of
counsel in Canada reasonably acceptable to the Trustee confirming that the
Holders will not recognize income, gain or loss for Canadian federal income tax
purposes as a result of such Covenant Defeasance and will be subject to Canadian
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred; (iv)
no Default or Event of Default shall have occurred and be continuing on the date
of such deposit or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after the
date of deposit (other than a Default or Event of Default resulting from the
incurrence of Indebtedness all or a portion of the proceeds of which will be
used to defease the Notes concurrently with such incurrence); (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, the Indenture or any other material agreement or
instrument to which the Company or any of its Subsidiaries is a party
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or by which the Company or any of its Subsidiaries is bound; (vi) the Company
shall have delivered to the Trustee an officers' certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
(vii)the Company shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with; (viii) the Company shall have delivered to the Trustee an opinion
of counsel to the effect that (A) the trust funds will not be subject to any
rights of holders of Indebtedness of the Company other than the Notes and (B)
after the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; and (ix) certain other customary
conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has delivered to the Trustee an officers' certificate and
an opinion of counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Subsidiary Guarantors and the Trustee,
without the consent of the Holders, may amend the Indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies, so
long as such change does not, in the opinion of the Trustee, adversely affect
the rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence
as it deems appropriate, including, without limitation, solely on an opinion of
counsel. Other modifications, waivers and amendments of the Indenture may be
made with the consent of the Holders of a majority in principal amount of the
then outstanding Notes issued under the Indenture, except that, without the
consent of each Holder affected thereby, no amendment or waiver may: (i) reduce
the amount of Notes whose Holders must consent to an amendment; (ii) reduce the
rate of or change or have the effect of changing the time for payment of
interest, including defaulted interest, on any Notes; (iii) reduce the principal
of or change or have the effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to redemption or repurchase,
or reduce the redemption or repurchase price therefor; (iv) make any Notes
payable in money other than that stated in the Notes; (v) make any change in
provisions of the Indenture protecting the right of each Holder to receive
payment of principal of and interest on such Note on or after the due date
thereof or to bring suit to enforce such payment, or permitting Holders of a
majority in principal amount of Notes to waive Defaults or Events of Default;
(vi) amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer in the event of a
Change of Control or make and consummate a Net Proceeds Offer with respect to
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any Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto; (vii) modify or change any provision of the
Indenture or the related definitions affecting the subordination or ranking of
the Notes or any Guarantee in a manner which adversely affects the Holders;
(viii) modify or amend the obligation of the Company to pay Additional Amounts;
or (ix) release any Subsidiary Guarantor from any of its obligations under its
Guarantee or the Indenture other than in accordance with the terms of the
Indenture.
TAXATION; REDEMPTION FOR TAXATION REASONS
All payments by the Company in respect of the Notes or any Subsidiary
Guarantor in respect of its Guarantee shall be made free and clear of and
without withholding or deduction for or on account of any present or future
taxes, duties, assessments or other governmental charges of whatever nature,
including penalties, interest and any other liabilities related thereto
("Taxes"), imposed or levied by or on behalf of Canada or any relevant
jurisdiction or any political subdivision or authority thereof or therein having
power to tax. The Indenture provides that if the Company or any Subsidiary
Guarantor is required to make any withholding or deduction for or on account of
any Taxes from any payment made under or with respect to the Notes or the
Guarantees, the Company or such Subsidiary Guarantor, as the case may be, will
pay such additional amounts ("Additional Amounts") as may be necessary so that
the net amount received by each Holder (including Additional Amounts) after such
withholding or deduction will not be less than the amount the Holder would have
received had such Taxes not been withheld or deducted; provided, that no
Additional Amounts will be payable to a Holder (an "Excluded Holder") (i) with
which the Company does not deal at arm's length (within the meaning of the
Income Tax Act (Canada)) at the time of making such payment, (ii) which is
subject to such Taxes by reason of its being connected with the jurisdiction
imposing such tax or authority thereof otherwise than by the mere holding of the
Notes or the receipt of payments thereunder, (iii) which presents any Note for
payment of principal more than 60 days after the later of (x) the date on which
payment first became due and (y) if the full amount payable has not been
received by the Trustee on or prior to such due date, the date on which, the
full amount payable having been so received, notice to that effect shall have
been given to the Holders by the Trustee, except to the extent that the Holder
would have been entitled to such Additional Amounts on presenting such Note for
payment on the last day of the applicable 60-day period, (iv) which failed to
duly and timely comply with a timely request of the Company to provide
information, documents or other evidence concerning the Holder's nationality,
residence, entitlement to treaty benefits, identity or connection with the
jurisdiction imposing such tax, if and to the extent that due and timely
compliance with such request would have reduced or eliminated any Taxes as to
which Additional Amounts would have otherwise been payable to such Holder but
for this clause (iv), (v) on account of any estate, inheritance, gift, sale,
transfer, personal property or other similar Tax, (vi) which is a fiduciary, a
partnership or not the beneficial owner of any payment on a Note, if and to the
extent that any beneficiary or settlor of such fiduciary, any partner in such
partnership or the beneficial owner of such payment (as the case may be) would
not have been entitled to receive Additional Amounts with respect to such
payment if such beneficiary, settlor, partner or beneficial owner had been the
Holder of such Note or (vii) any combination of the foregoing numbered clauses
of this proviso.
The Company and each Subsidiary Guarantor will also (i) make such
withholding or deduction as required by applicable law and (ii) remit the full
amount deducted or withheld to the relevant authority in accordance with
applicable law. The Company or any Subsidiary Guarantor, as the case may be,
will furnish to the Trustee, within 60 days after the date the payment of any
Taxes is due pursuant to applicable law, copies of tax receipts evidencing that
such payment has been made by the Company or such Subsidiary Guarantor, in such
form as provided in the normal course by the taxing authority imposing such
Taxes and as is reasonably available to the Company or such Subsidiary
Guarantor. The Trustee shall make such evidence available to the Holders of
Notes upon request.
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The Company and each Subsidiary Guarantor, jointly and severally, will
indemnify and hold harmless each Holder of Notes that are outstanding on the
date that withholding or deduction was required pursuant to applicable law
(other than an Excluded Holder) and upon written notice reimburse each such
Holder for the amount of (i) any taxes so levied or imposed and paid by such
Holder as a result of payments made under or with respect to the Notes or the
Guarantees, (ii) any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto and (iii) any taxes imposed with
respect to any reimbursement under clause (i) or (ii) above.
Whenever in the Indenture there is mentioned, in any context, (a) the
payment of principal (and premium, if any), (b) purchase prices in connection
with a repurchase of Notes, (c) interest or (d) any other amount payable on or
with respect to any of the Notes, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this section to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof. The foregoing obligations shall survive any termination of
the Indenture or the defeasance of any obligations pursuant to the Indenture.
The Company may redeem, at its option, all, but not less than all, the
Notes at a redemption price equal to 100% of the principal amount so redeemed,
plus accrued and unpaid interest, if any, thereon to the date of redemption if
the Company determines and certifies to the Trustee immediately prior to the
giving of the notice of redemption that (i) it has or will become obligated to
pay any Additional Amounts in respect of the Notes as a result of any change in
or amendment to the laws (or any regulations or rulings promulgated thereunder)
of Canada or any relevant jurisdiction or any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in any official
position regarding the application or interpretation of such laws, regulations
or rulings (including a holding by a court of competent jurisdiction) which
change, amendment, application or interpretation is announced or becomes
effective on or after the Issue Date, (ii) such obligation cannot be avoided by
the Company taking reasonable measures available to it, (iii) such obligation
did not arise, directly or indirectly, from any transaction, action or omission
by the Company (whether or not such transaction, action or omission is otherwise
permitted under the terms of the Indenture) and (iv) certain other conditions
set forth in the Indenture are satisfied. Notice of redemption shall be mailed
by first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address.
The Company will pay any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise in any jurisdiction from the execution, delivery or registration of the
Notes or the Guarantees or any other document or instrument referred to in the
Indenture or the Notes.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be required
thereby.
ENFORCEABILITY OF JUDGMENTS
Since a substantial portion of the assets of the Company and the Subsidiary
Guarantors are outside the United States, any judgment obtained in the United
States against them, including judgments with respect to the payment of
principal, premium, if any, or interest on the Notes, may not be collectible
within the United States.
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The Company has been informed by its counsel, Stewart McKelvey Stirling
Scales, that the laws of the province of Nova Scotia permit an action to be
brought in a court of competent jurisdiction in the province of Nova Scotia (a
"Canadian Court") on any final and conclusive judgment in personam of any
federal or state court located in the Borough of Manhattan in the City of New
York (a "New York Court") that is not impeachable as void or voidable under the
internal laws of the State of New York for a sum certain if (i) the court
rendering such judgment had jurisdiction over the judgment debtor, as recognized
by a Canadian Court (and submission by the Company in the Indenture to the
jurisdiction of the New York Court will be sufficient for the purpose); (ii)
such judgment was not obtained by fraud or in a manner contrary to natural
justice and the enforcement thereof would not be inconsistent with public
policy, as such term is understood under the laws of the province of Nova
Scotia; (iii) the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriatory or penal laws;
(iv) the action to enforce such judgment is commenced within six years of the
date of such judgment; and (v) certain other conditions are satisfied. In the
opinion of such counsel, a Canadian Court would not avoid enforcement of
judgments of a New York Court respecting the Indenture, the Notes or the
Guarantees on the basis of public policy, as that term is understood under the
laws of the province of Nova Scotia and the federal laws of Canada applicable
therein.
Certain of the existing Subsidiary Guarantors are organized or operate
outside the United States and Canada. In addition, the Company may form or
acquire additional subsidiaries after the Issue Date that become Subsidiary
Guarantors which are organized or conduct operations outside the United States
or Canada. The ability of the Trustee or the holders of the Notes to enforce
judgments against such Subsidiary Guarantors may be significantly limited by the
application of foreign law.
CONSENT TO JURISDICTION AND SERVICE
The Indenture provides that each of the Company and the Subsidiary
Guarantors will appoint CT Corporation System, 1633 Broadway, New York, New York
10019 as its agent for service of process in any suit, action or proceeding with
respect to the Indenture, the Notes or the Guarantees and for actions brought
under Federal or state securities laws brought in any Federal or state court
located in the borough of Manhattan in the City of New York and will submit to
such jurisdiction.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the Indenture, and use the same
degree of care and skill in its exercise as a prudent man or woman would
exercise or use under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions; provided, however,
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" of a Person means Indebtedness of another Person or
any of its Subsidiaries existing at the time such other Person becomes a
Subsidiary of the referent Person or at the time it merges or consolidates with
the referent Person or any of the referent Person's
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Subsidiaries or is assumed by the referent Person or any Subsidiary of the
referent Person in connection with the acquisition of assets from such other
Person and in each case not incurred by such other Person in connection with, or
in anticipation or contemplation of, such Person becoming a Subsidiary of the
referent Person or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise (and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing); provided, however, that beneficial ownership of 10% or more of the
voting securities of a Person shall be deemed to constitute control.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company; or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sale shall not
include (i) any transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than $2.0
million in any twelve-month period, (ii) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of the
Company as permitted under "Merger, Consolidation and Sale of Assets" or any
disposition that constitutes a Change of Control, and (iii) the sale, lease,
conveyance, disposition or other transfer by the Company or any Subsidiary of
assets or property to one or more Wholly Owned Subsidiaries in connection with
Investments permitted under the "Limitation on Restricted Payments" covenant.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or the Canadian
Government or issued by any agency
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thereof and backed by the full faith and credit of the United States or Canada,
in each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or province of Canada or any political subdivision of any such state or
province or any public instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either Standard & Poor's Corporation ("S&P")
or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing
no more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or Canada or any province thereof or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $250,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above.
"Change of Control" means (i) any sale, lease, exchange, transfer or other
disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a "Group"), together with any Affiliates thereof (whether or
not otherwise in compliance with the provisions of the Indenture); (ii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture); (iii) any Person or Group
other than the Permitted Holders or a Group controlled by the Permitted Holders
shall become the owner, directly or indirectly, beneficially or of record, of
shares representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Company; or (iv)
the replacement of a majority of the Board of Directors of the Company from the
directors who constituted the Board of Directors of the Company on the Issue
Date, and such replacement shall not have been approved by a vote of at least a
majority of the Board of Directors of the Company then still in office who
either were members of such Board of Directors on the Issue Date or whose
election as a member of such Board of Directors was previously so approved.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business), (B) Consolidated Interest Expense and
(C) Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be
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calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence or repayment of any Indebtedness of such
Person or any of its Subsidiaries (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any incurrence or repayment
of other Indebtedness (and the application of the proceeds thereof), other than
the incurrence or repayment of Indebtedness in the ordinary course of business
for working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of such
Person or one of its Subsidiaries (including any Person who becomes a Subsidiary
as a result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any Consolidated EBITDA
(including any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act as in effect on the
Issue Date) (provided that such Consolidated EBITDA shall be included only to
the extent includable pursuant to the definition of "Consolidated Net Income")
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or, liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If such
Person or any of its Subsidiaries directly or indirectly guarantees Indebtedness
of a third Person, the preceding sentence shall give effect to the incurrence of
such guaranteed Indebtedness as if such Person or any Subsidiary of such Person
had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (3) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (a)
any amortization of debt discount, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP, minus amortization or write off of deferred
financing costs.
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"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided, however, that there shall be excluded therefrom (a) gains (and losses)
on an after tax effected basis from asset sales or abandonments or reserves
relating thereto, (b) items classified as extraordinary or nonrecurring gains or
losses on an after tax effected basis, (c) the net income or loss of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Subsidiary of the referent Person, (d) the net income
(but not loss) of any Subsidiary of the referent Person for such period to the
extent that the declaration of dividends or similar distributions by that
Subsidiary to the referent Person or any Subsidiary thereof of that income is
restricted, directly or indirectly, by operation of the terms of its charter or
constituent documents or any agreement, instrument, judgment, decree, law,
order, statute, rule, governmental regulation or for any other reason
whatsoever, (e) the net income or loss of any other Person, other than a
Subsidiary of the referent Person, except to the extent (in the case of net
income) of cash dividends or distributions paid to the referent Person, or to a
Wholly Owned Subsidiary of the referent Person, by such other Person, (f) any
restoration to income of any contingency reserve of an extraordinary,
nonrecurring or unusual nature, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date, (g) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued), and (h) in the
case of a successor to the referent Person by consolidation or merger or as a
transferee of the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Income of such Person
and its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charge which requires an accrual of or
a reserve for cash charges for any future period).
"Credit Agreement" means any credit agreement or facility entered into on
or after the Issue Date between the Company and/or any Subsidiary of the Company
and one or more financial institutions that provides borrowing availability to
the Company and its Subsidiaries on a senior secured basis, as any such
agreement or facility may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided, however, that such increase in borrowings is permitted by
the "Limitation on Incurrence of Additional Indebtedness" covenant above) or
adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) Indebtedness under or in respect
of the Credit Agreement and (ii) any other Indebtedness constituting Senior
Indebtedness or Guarantor Senior Indebtedness which, at the time of
determination, has an aggregate principal amount of at least $5.0
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million and is specifically designated in the instrument evidencing such Senior
Indebtedness or Guarantor Senior Indebtedness as "Designated Senior
Indebtedness" by the Company or the applicable Subsidiary Guarantor, as the case
may be.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Except as otherwise
specified in the Indenture, fair market value shall be determined by the Board
of Directors of the Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the Company.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect on the Issue Date.
"Guarantor Senior Indebtedness" means, with respect to any Subsidiary
Guarantor, the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of such
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Guarantees. Without limiting the
generality of the foregoing, "Guarantor Senior Indebtedness" shall also include
the principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, to the extent such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (x) all monetary obligations of every nature of a Subsidiary Guarantor under
the Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations and (z) all
obligations under Currency Agreements, in each case whether outstanding on the
Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor
Senior Indebtedness" shall not include (i) any Indebtedness of a Subsidiary
Guarantor to a Subsidiary of such Subsidiary Guarantor or any Affiliate of such
Subsidiary Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness
to, or guaranteed on behalf of, any shareholder, director, officer or employee
of the Company or any Subsidiary of the Company (including, without limitation,
amounts owed for compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by a Subsidiary Guarantor,
(vi) Indebtedness incurred in violation of the Indenture provisions set forth
under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness
which, when incurred and without respect to any election under Section 1111 (b)
of Title 11, United States Code is without recourse to a Subsidiary Guarantor
and (viii) any Indebtedness which is, by its express terms, subordinated in
right of payment to any other Indebtedness of a Subsidiary Guarantor.
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"Holder" means any holder of Notes.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all Obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 60 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and its Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of the Company or such Subsidiary, as the case may be.
For the purposes of the "Limitation on Restricted Payments" covenant, the amount
of any Investment shall be the original cost of such Investment plus the cost of
all additional Investments by the Company or any of its Subsidiaries, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or writeoffs with respect to such Investment, reduced by the payment of
dividends or distributions in connection with such Investment or any other
amounts received in respect of such Investment; provided, however, that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be
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included in Consolidated Net Income. If the Company or any Subsidiary of the
Company sells or otherwise disposes of any Common Stock of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, the Company no longer owns, directly or indirectly, greater
than 50% of the outstanding Common Stock of such Subsidiary, the Company shall
be deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such former Subsidiary not
sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Management Agreement" means the Management Agreement, dated December 16,
1993, as amended on October 22, 1997, among the Company, C.F. Capital
Corporation, G. John Krediet and Stephen L. Larson.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Subsidiaries from such Asset Sale net of (a)
reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), (b) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements, (c)repayment of Indebtedness that
is required to be repaid in connection with such Asset Sale and (d) appropriate
amounts to be provided by the Company or any Subsidiary, as the case may be, as
a reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by the Chairman, Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer, Controller or any Treasurer of such
Person that shall comply with applicable provisions of the Indenture.
"Permitted Holders" means: (i) G. John Krediet, Stephen L. Larson, Stewart
E. Allen, any trust solely for the benefit of G. John Krediet, Stephen L. Larson
or Stewart E. Allen or any of their respective immediate family members, and any
partnership all the partnership interests in which are, or holding company all
the Capital Stock of which is, beneficially owned by any of the foregoing
(including, without limitation, Gaspar Limited); provided that with respect to
(a) any such partnership or holding company, G. John Krediet, Stephen L. Larson
or Stewart E. Allen, as applicable, shall at all times have the exclusive power
to direct, directly or indirectly, the voting of the Capital Stock of the
Company held by such partnership or holding company and (b) any such trust, G.
John Kredict, Stephen L. Larson or Stewart E. Allen or their immediate family
members shall at all times either have the exclusive power to direct, directly
or indirectly, the voting of the Capital Stock of the Company held by such trust
or be the sole beneficiaries of such trust; and (ii) Clairvest Group Inc.
("Clairvest").
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"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Notes, the Indenture and the Guarantees;
(ii) Indebtedness of the Company or any of its Subsidiaries incurred
pursuant to the Credit Agreement in an aggregate principal amount at any
time outstanding not to exceed $30.0 million in the aggregate reduced by
any required permanent repayments pursuant to the provisions set forth
under "Certain Covenants -- Limitation on Asset Sales" (which are
accompanied by a corresponding permanent commitment reduction) thereunder
(it being recognized that a reduction in the borrowing base in and of
itself shall not be deemed a required permanent repayment);
(iii) Interest Swap Obligations of the Company covering Indebtedness
of the Company or any of its Subsidiaries; provided, however, that such
Interest Swap Obligations are entered into to protect the Company and its
Subsidiaries from fluctuations in interest rates on Indebtedness incurred
in accordance with the Indenture to the extent the notional principal
amount of such Interest Swap Obligation does not exceed the principal
amount of the Indebtedness to which such Interest Swap Obligation relates;
(iv) Indebtedness under Currency Agreements; provided, however, that
in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(v) Indebtedness of a Subsidiary to the Company or to a Wholly Owned
Subsidiary of the Company for so long as such Indebtedness is held by the
Company or a Wholly Owned Subsidiary of the Company, in each case subject
to no Liens held by any Person other than the Company or a Wholly Owned
Subsidiary of the Company; provided, however, that if as of any date any
Person other than the Company or a Wholly Owned Subsidiary of the Company
owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by the issuer of such Indebtedness;
(vi) Indebtedness of the Company to a Wholly Owned Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned
Subsidiary of the Company, in each case subject to no Lien; provided,
however, that (a) any Indebtedness of the Company to any Wholly Owned
Subsidiary of the Company is unsecured and subordinated, pursuant to a
written agreement, to the Company's obligations under the Indenture and the
Notes and (b) if as of any date any Person other than a Wholly Owned
Subsidiary of the Company owns or holds any such Indebtedness or a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(viii) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or similar requirements in the ordinary course of business;
(ix) Indebtedness existing on the date hereof;
(x) Refinancing Indebtedness;
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(xi) Indebtedness permitted by clause (viii) of the definition of
"Permitted Investments"; and
(xii) additional Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount not to exceed $10.0 million
at any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company in any Person that is or will become immediately after
such Investment a Wholly-Owned Subsidiary of the Company or that will merge or
consolidate into the Company or a Wholly-Owned Subsidiary of the Company; (ii)
Investments in the Company by any Subsidiary of the Company; provided, however,
that any Indebtedness evidencing such Investment by a Subsidiary is unsecured
and subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and the Indenture; (iii) Investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $500,000 at any one time outstanding; (v) Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
the Company's or its Subsidiaries' businesses and otherwise in compliance with
the Indenture; (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (vii) Investments
made by the Company or its Subsidiaries as a result of non-cash consideration
received in connection with an Asset Sale made in compliance with the
"Limitation on Asset Sales" covenant; and (viii) additional Investments in an
amount outstanding at any one time not to exceed $2.5 million.
"Permitted Liens" means the following types of Liens:
(i) Liens in favor of the Trustee in its capacity as trustee for the
Holders;
(ii) Liens securing Indebtedness outstanding under the Credit
Agreement;
(iii) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(iv) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(v) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(vi) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(vii) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries;
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(viii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, however, that such Liens do not extend to any
property or assets which is not leased property subject to such Capitalized
Lease Obligation;
(ix) Liens to secure Purchase Money Indebtedness of the Company or any
Subsidiary not to exceed $5.0 million in the aggregate at any one time
outstanding; provided, however, that (A) the related Purchase Money
Indebtedness is permitted to be incurred in accordance with the "Limitation
on Incurrence of Additional Indebtedness" covenant, (B) the related
Purchase Money Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or
any Subsidiary of the Company other than the property and assets so
acquired and (C) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
(x) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(xi) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(xii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the
Company or any of its Subsidiaries, including rights of offset and set-off;
(xiii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xiv) Liens securing Indebtedness under Currency Agreements; and
(xv) Liens securing Acquired Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant;
provided, however, that (A) such Liens secured such Acquired Indebtedness
at the time of and prior to the incurrence of such Acquired Indebtedness by
the Company or a Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the Company and (B) such
Liens do not extend to or cover any property or assets of the Company or of
any of its Subsidiaries other than the property or assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or a Subsidiary of the Company and are no more
favorable to the lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of which
are used to finance the cost (including the cost of construction) of property or
assets acquired in the normal course of business by the Person incurring such
Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
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"Receivables" means any right of payment from or on behalf of any obligor,
whether constituting an account, chattel paper, instrument, general intangible
or otherwise, arising from the financing by the Company or any Subsidiary of the
Company of merchandise or services, and monies due thereunder, security in the
merchandise and services financed thereby, records related thereto, and the
right to payment of any interest or finance charges and other obligations with
respect thereto, proceeds from claims on insurance policies related thereto, any
other proceeds related thereto, and any other related rights.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Indebtedness incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant (provided that
Refinancing Indebtedness shall not include Indebtedness described in clauses
(ii), (iii), (iv), (v), (vi), (vii), (viii), (x), (xi) or (xii) of the
definition of Permitted Indebtedness), in each case that does not (1) result in
an increase in the aggregate principal amount of Indebtedness of such Person as
of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the Company
or such Subsidiary, as the case may be, in connection with such Refinancing),
except to the extent that any such increase in Indebtedness is otherwise
permitted by the Indenture or (2) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being Refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being Refinanced; provided, however, that (x)
if such Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes or the
Guarantees, then such Refinancing Indebtedness shall be subordinate to the Notes
or the Guarantees, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the Issue Date among the Company, the Subsidiary Guarantors and the
Initial Purchasers.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided,
however, that if, and for so long as, any Designated Senior Indebtedness lacks
such a representative, then the Representative for such Designated Senior
Indebtedness shall at all times constitute the holders of a majority in
outstanding principal amount of such Designated Senior Indebtedness in respect
of any Designated Senior Indebtedness.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of the Company of any property, whether
owned by the Company or any Subsidiary of the Company at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Senior Indebtedness" means, the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the
98
<PAGE> 105
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, to the extent such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of, (x) all monetary obligations of
every nature of the Company under the Credit Agreement, including, without
limitation, obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities, (y) all Interest Swap
Obligations and (z) all obligations under Currency Agreements, in each case
whether outstanding on the Issue Date or thereafter incurred. Notwithstanding
the foregoing, "Senior Indebtedness" shall not include (i) any Indebtedness of
the Company to a Subsidiary of the Company or any Affiliate of the Company or
any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on
behalf of, any shareholder, director, officer or employee of the Company or any
Subsidiary of the Company (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in
violation of the Indenture provisions set forth under "Limitation on Incurrence
of Additional Indebtedness," (vii) Indebtedness which, when incurred and without
respect to any election under Section 1111 (b) of Title 11, United States Code
is without recourse to the Company and (viii) any Indebtedness which is, by its
express terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Shareholder Agreement" means the Shareholder Agreement, dated as of
October 22, 1997, among Sparkling Spring, SSWL, Clairvest, Gaspar Limited, C.
Sean Day, Stephen L. Larson, Kevin Newman, Mark Stitzer, Lucy Stitzer, and
Stewart E. Allen.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantor" means (a) each of the Company's Subsidiaries as of
the Issue Date and (b) each of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such Subsidiary agrees to be bound by
the terms of the Indenture as a Subsidiary Guarantor; provided, however, that
any Person constituting a Subsidiary Guarantor as described above shall cease to
constitute a Subsidiary Guarantor when its Guarantee is released in accordance
with the terms of the Indenture.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking, fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities normally entitled to vote in the
election of directors are owned by such Person or any Wholly Owned Subsidiary of
such Person.
99
<PAGE> 106
BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Exchange Notes (and the
related Guarantees) initially will be represented by one or more permanent
global certificates in definitive, fully registered form (the "Global Notes").
The Global Notes will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC") and registered in the name of a nominee of
DTC. Except as set forth below, each Global Note may be transferred, in whole
and not in part, only to another nominee of the Depositary or to a successor of
the Depositary or its nominee.
THE GLOBAL NOTES
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Notes, DTC or its custodian will credit, on its
internal system, the principal amount of Exchange Notes of the individual
beneficial interests represented by such Global Notes to the respective accounts
of persons who have accounts with such depositary and (ii) ownership of
beneficial interests in the Global Notes will be shown on, and the transfer of
such ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Ownership of beneficial interest in the Global Notes will be limited to persons
who have accounts with DTC ("participants") or persons who hold interests
through participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Notes for
all purposes under the Indenture. No beneficial owner of an interest in the
Global Notes will be able to transfer that interest except in accordance with
DTC's procedures, in addition to those provided for under the Indenture with
respect to the Exchange Notes.
Payments of the principal of, premium (if any) and interest (including
Additional Interest) on the Global Notes will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, and interest (including Additional Interest) on the
Global Notes, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the Global Notes as shown on the records of DTC or its nominee. The Company
also expects that payments by participants to owners of beneficial interests in
the Global Notes held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of
certificates for Exchange Notes for any reason, including to sell Exchange Notes
to persons in states that require physical delivery of the Exchange Notes, or to
pledge such securities, such holder must transfer its interest in the Global
Notes, in accordance with the normal procedures of DTC and with the procedures
set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Notes for
exchange as described below) only at the direction of one or more participants
to whose account the DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of Exchange Notes as
100
<PAGE> 107
to which such participant or participants has or have given such direction.
However, if there is an Event of Default under the Indenture, DTC will exchange
the Global Notes for Certificated Securities, which it will distribute to its
participants.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform such procedures and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, Certificated Securities will be issued in exchange for the
Global Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Private
Notes, where such Private Notes were acquired by such broker-dealer as a result
of market-making or other trading activities. Sparkling Spring has agreed to
make this Prospectus, as it may be amended or supplemented from time to time,
available to any such broker-dealer that requests copies of this Prospectus in
the Letter of Transmittal for use in connection with any such resale for a
period of up to 90 days after the Expiration Date. In addition, until
1998, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
Sparkling Spring will not receive any proceeds from any sale of Exchange
Notes by broker-dealers or any other persons. Exchange Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes,
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers of
any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account pursuant to the Exchange Offer and any broker
that participates in a distribution of such Exchange Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such person may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a
101
<PAGE> 108
prospectus a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, Sparkling Spring will
promptly send additional copies of this Prospectus or any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. Sparkling Spring and the Subsidiary Guarantors
have agreed to pay all expenses incident to Sparkling Spring's and the
Subsidiary Guarantors' performance of, or compliance with, the Registration
Rights Agreement and will indemnify the holders of Private Notes (including any
broker-dealers), and certain parties related to such holders, against certain
liabilities, including liabilities under the Securities Act.
See "The Exchange Offer" for additional information concerning the Exchange
Offer and interpretations of the staff of the Commission with respect to
prospectus delivery obligations of broker-dealers.
LEGAL MATTERS
The validity of the Notes and the Guarantees offered hereby will be passed
upon for Sparkling Spring and the Subsidiary Guarantors by Robinson & Cole LLP,
Stamford, Connecticut. Certain legal matters governed by Canadian law will be
passed upon for Sparkling Spring and the Subsidiary Guarantors by Stewart
McKelvey Stirling Scales, Halifax, Nova Scotia. Robinson & Cole LLP may rely (i)
as to matters governed by Canadian law, on the opinions of Stewart McKelvey
Stirling Scales, (ii) as to matters of United Kingdom law, on the opinions of
Norton Rose, London, England, (iii) as to matters of Scottish law, on the
opinions of Dundas & Wilson Edinburgh, Scotland, and (iv) as to matters of
Washington law, on the opinions of Lane Powell Spears Lubersky LLP, Seattle,
Washington.
INDEPENDENT AUDITORS
The consolidated financial statements of Sparkling Spring Water Limited as
of December 31, 1996 and 1995 and for each of the years in the three year period
ended December 31, 1996 included in this Prospectus have been audited by Ernst &
Young, independent auditors, as stated in their report appearing herein.
The financial statements of Canadian Springs Water Company Ltd. as of
January 17, 1996 and for the 292 days then ended and as of March 31, 1995 and
for the year then ended included in this Offering Memorandum have been audited
by Ernst & Young, independent auditors, as stated in their report appearing
herein.
The financial statements of Cullyspring Water Co., Inc. as of December 31,
1996 and 1995 and for the years then ended included in this Offering Memorandum
have been audited by Ernst & Young, independent auditors, as stated in their
report appearing herein.
The financial statements of D & D and Company, Inc. as of December 31, 1996
and for the year then ended included in this Offering Memorandum have been
audited by Ernst & Young, independent auditors, as stated in their report
appearing herein.
The financial statements of Marlborough Employment Limited and Subsidiaries
as of January 31, 1997 and 1996 and for the years then ended included in this
Offering Memorandum have been audited by Kidsons Impey, independent auditors, as
stated in their report appearing herein.
102
<PAGE> 109
ADDITIONAL INFORMATION
Sparkling Spring and the Subsidiary Guarantors have filed with the
Commission a Registration Statement on Form F-4 (which together with any
amendments thereto is referred to as the "Registration Statement") under the
Securities Act with respect to the Exchange Notes and Guarantees offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus,
which is part of the Registration Statement, omits certain information, exhibits
and undertakings contained in the Registration Statement. For further
information with respect to Sparkling Spring, the Subsidiary Guarantors and the
Exchange Notes and Guarantees offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to herein are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Sparkling Spring will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to Sparkling Spring at One Landmark Square, Stamford, Connecticut
06901, telephone number (203) 325-0077, attention: Stephen L. Larson.
The Registration Statement (and the exhibits and schedules thereto) may be
inspected and copies at the public reference section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Registration Statement (and the exhibits and
schedules thereto) can also be reviewed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System, which is publicly available through
the Commission's Web Site (http://www.sec.gov).
The Indenture provides that Sparkling Spring will deliver to the Trustee
under the Indenture within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture
further provides that, notwithstanding that Sparkling Spring may not be subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act,
Sparkling Spring will provide the Trustee under the Indenture, holders of Notes
and QIBs which request such information from Sparkling Spring and indicate a
bona fide interest in purchasing Notes, with consolidated financial statements
of Sparkling Spring and a related "Management's Discussion and Analysis of
Financial Condition and Results of Operations" comparable to those which would
have been required to appear in quarterly or annual reports of Sparkling Spring
and, to holders of Private Notes, any other information required under Rule 144A
(d) (4) or any successor provision under the Securities Act. In addition,
Sparkling Spring will provide the Trustee under the Indenture and holders of
Notes with unaudited combined financial data of Sparkling Spring and the
Subsidiary Guarantors, substantially in the form provided under the caption
"Summary -- Summary Historical and Unaudited Pro Forma Consolidated Financial
Data" in this Prospectus, for each fiscal year of Sparkling Spring and for the
first three fiscal quarters of each fiscal year of Sparkling Spring. Sparkling
Spring will also comply with the other provisions of TIA sec. 314(a).
103
<PAGE> 110
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SPARKLING SPRING WATER GROUP LIMITED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPARKLING SPRING WATER GROUP LIMITED
Auditors' Report to the Directors..................................................... F-4
Consolidated Balance Sheets as at December 31, 1996 and 1995.......................... F-5
Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and
1994................................................................................ F-6
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996,
1995 and 1994....................................................................... F-7
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and
1994................................................................................ F-8
Notes to Consolidated Financial Statements............................................ F-9
Unaudited Consolidated Balance Sheet as at September 30, 1997 and Comparative Balance
Sheet as at December 31, 1996....................................................... F-22
Unaudited Consolidated Statement of Operations and Deficit for the nine months ended
September 30, 1997 and 1996......................................................... F-23
Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30,
1997 and 1996....................................................................... F-24
Notes to Unaudited Consolidated Financial Statements.................................. F-25
CANADIAN SPRINGS WATER COMPANY LTD.
Auditors' Report to the Directors..................................................... F-28
Balance Sheets as at January 17, 1996 and March 31, 1995.............................. F-29
Statements of Income and Retained Earnings for the 292 days ended January 17, 1996 and
the year ended March 31, 1995....................................................... F-30
Statements of Cash Flows for the 292 days ended December 31, 1996 and year ended March
31, 1995............................................................................ F-31
Notes to Financial Statements......................................................... F-32
CULLYSPRING WATER CO., INC.
Auditors' Report to the Directors..................................................... F-38
Balance Sheets as at December 31, 1996 and December 31, 1995.......................... F-39
Statements of Income for the years ended December 31, 1996 and 1995................... F-40
Statements of Shareholders' Equity for the years ended December 31, 1996 and 1995..... F-41
Statements of Cash Flows for the years ended December 31, 1996 and 1995............... F-42
Notes to Financial Statements......................................................... F-43
Unaudited Balance Sheet as at September 30, 1997 with comparative figures as at
December 31, 1996................................................................... F-46
Unaudited Statements of Income and Retained Earnings for the nine months ended
September 30, 1997 and 1996......................................................... F-47
Unaudited Statements of Cash Flows for the nine months ended September 30, 1997 and
1996................................................................................ F-48
Notes to Unaudited Financial Statements............................................... F-49
</TABLE>
F-1
<PAGE> 111
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
D & D AND COMPANY, INC. (Operating as Mountain Fresh Bottled Water)
Auditors' Report to the Directors..................................................... F-51
Balance Sheet as at December 31, 1996................................................. F-52
Statement of Income for the year ended December 31, 1996.............................. F-53
Statement of Shareholders' Equity for the year ended December 31, 1996................ F-54
Statement of Cash Flows for the year ended December 31, 1996.......................... F-55
Notes to Financial Statements......................................................... F-56
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES(Operating as Water At Work Limited)
Company Information................................................................... F-62
Director's Report..................................................................... F-63
Statement of Director's Responsibilities.............................................. F-64
Auditors' Report to the Members of Marlborough Employment Limited and Subsidiaries.... F-65
Profit and Loss Account for the years ended 31 January 1997 and 1996.................. F-66
Balance Sheets as at 31 January 1997 and 1996......................................... F-67
Cash Flow Statement for the years ended 31 January 1997 and 1996...................... F-68
Notes on Financial Statements......................................................... F-69
</TABLE>
F-2
<PAGE> 112
CONSOLIDATED FINANCIAL STATEMENTS
SPARKLING SPRING
WATER GROUP LIMITED
F-3
<PAGE> 113
AUDITORS' REPORT
To the Directors of
Sparkling Spring Water Group Limited
We have audited the consolidated balance sheets of Sparkling Spring Water
Group Limited as at December 31, 1996 and 1995 and the consolidated statements
of operations, shareholders' equity and cash flows for each of the years in the
three year period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1996 and 1995 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended December 31, 1996
in accordance with accounting principles generally accepted in the United
States.
<TABLE>
<S> <C>
Halifax, Canada ERNST & YOUNG
November 19, 1997 Chartered Accountants
</TABLE>
F-4
<PAGE> 114
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
SHAREHOLDERS'
EQUITY AS AT
AS AT DECEMBER 31, DECEMBER 31,
1995 1996 1996
----------- ----------- -------------
(UNAUDITED)
[NOTE 2]
<S> <C> <C> <C>
ASSETS [note 11]
Current
Cash and cash equivalents................................. $ 860,298 $ 2,230,735
Accounts receivable (net of allowance for doubtful
accounts of $210,058, 1995 -- $471,824 [note 5])........ 3,126,781 4,799,080
Inventories [note 6]...................................... 589,311 940,520
Prepaid expenses.......................................... 557,063 1,278,530
Current portion of deferred taxes......................... -- 95,681
---------- ----------
Total current assets............................. 5,133,453 9,344,546
Deferred taxes............................................ 243,147 440,856
Fixed assets [note 7]..................................... 8,545,403 15,823,231
Goodwill and deferred charges [note 8].................... 4,598,952 18,800,535
---------- ----------
Total assets..................................... $18,520,955 $44,409,168
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities.................. $ 2,436,523 $ 4,073,847
Income tax payable........................................ -- 76,890
Unearned revenue.......................................... 385,166 161,790
Debt due within one year [note 9]......................... 2,236,816 1,581,036
---------- ----------
Total current liabilities........................ 5,058,505 5,893,563
---------- ----------
Customer deposits......................................... 1,890,526 2,620,495
Obligations under capital leases [note 10]................ 814,685 1,926,325
Loans payable [note 11]................................... 5,904,841 26,966,493
Subordinated notes payable [note 12]...................... 2,353,068 --
---------- ----------
Total long-term liabilities...................... 10,963,120 31,513,313
---------- ----------
Non-controlling interest [note 4]......................... 292,465 --
---------- ----------
Shareholders' equity [Notes 2 and 13]
Capital Stock
Authorized
1,000,000 Class A Voting Common Shares, par value Cdn
$0.0001.................................................
1,000,000 Class B Voting Common Shares, par value Cdn
$6.779..................................................
1,000,000 Class C Voting Common Shares, par value Cdn
$13.4699................................................
10,000,000 Class D Voting Common Shares, without nominal
or par value............................................
10,000,000 Class E Non-Voting Common Shares, without
nominal or par value....................................
1,000,000 Class F Voting Common Shares, par value Cdn
$0.9401.................................................
10,000,000 Special Preferred Shares, par value Cdn $1.00,
issuable in series......................................
Issued and outstanding:
Common shares 1,720,746 (1995 and 1994 -- 1,216,308)...... 1,607,218 8,641,048 7,185,356
Common share warrants, (1995 and 1994 -- 165,767)......... 1,136,730 -- --
---------- ---------- ----------
2,743,948 8,641,048 7,185,356
Cumulative translation adjustment......................... 85,864 (362,935) (362,935)
Deficit................................................... (622,947) (1,275,821) (14,478,842)
---------- ---------- ----------
Total shareholders' equity....................... 2,206,865 7,002,292 (7,656,421)
---------- ----------
Total liabilities and shareholders' equity....... $18,520,955 $44,409,168
========== ==========
Commitments [note 10 and 16]
</TABLE>
See accompanying notes
F-5
<PAGE> 115
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Water............................................ $5,594,853 $ 9,640,919 $16,809,749
Rental........................................... 2,202,941 4,135,650 7,347,386
Other............................................ 927,512 1,572,545 3,169,214
--------- ---------- ----------
Total revenue.......................... 8,725,306 15,349,114 27,326,349
--------- ---------- ----------
Cost of sales:
Water............................................ 1,200,176 2,118,880 3,400,298
Other............................................ 554,375 743,867 1,275,321
--------- ---------- ----------
Total cost of sales.................... 1,754,551 2,862,747 4,675,619
--------- ---------- ----------
Gross profit..................................... 6,970,755 12,486,367 22,650,730
Expenses:
Selling, delivery and administrative [note 18]... 5,355,969 9,040,529 15,756,452
Depreciation and amortization.................... 1,094,538 1,464,668 3,841,614
--------- ---------- ----------
Operating profit................................. 520,248 1,981,170 3,052,664
Interest expense................................. 624,532 1,294,371 2,481,005
--------- ---------- ----------
Income (loss) before the following............... (104,284) 686,799 571,659
Provision for (recovery of) income taxes [note
17]............................................ (6,943) 299,107 398,325
--------- ---------- ----------
Net (loss) income before non-controlling interest
and extraordinary item......................... (97,341) 387,692 173,334
Non-controlling interest [note 4]................ 3,358 22,996 (6,894)
--------- ---------- ----------
Net (loss) income before extraordinary items..... (93,983) 410,688 166,440
Extraordinary item [note 14]..................... (143,732) (391,626) (819,314)
--------- ---------- ----------
Net (loss) income................................ $ (237,715) $ 19,062 $ (652,874)
========= ========== ==========
Primary (loss) earnings per share before
extraordinary item............................. $ (0.081) $ 0.291 $ 0.097
========= ========== ==========
Fully diluted earnings (loss) per share before
extraordinary item............................. $ (0.081) $ 0.291 $ 0.095
========= ========== ==========
Primary (loss) earnings per share................ $ (0.206) $ 0.014 $ (0.445)
========= ========== ==========
</TABLE>
See accompanying notes
F-6
<PAGE> 116
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
---------------------------------------------------------------------------
COMMON SHARE
COMMON STOCK PURCHASE WARRANTS CUMULATIVE
---------------------- ---------------------- TRANSLATION
SHARES AMOUNT WARRANTS AMOUNT ADJUSTMENT DEFICIT
--------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1993 as
restated [note 3].......... 1,096,116 $1,136,034 -- $ -- $ 207,022 $ (404,294)
Net loss..................... (237,715)
Shares issued for cash....... 120,192 492,759
Common share purchase
warrants issued in
connection with
subordinated notes [notes
12 and 13]................. 165,767 1,135,149
Foreign currency translation
adjustments................ 2,602
--------- --------- -------- ---------- -------- ----------
Balance December 31, 1994.... 1,216,308 1,628,793 165,767 1,135,149 209,624 (642,009)
Net income................... 19,062
Foreign currency translation
adjustments................ (21,575) 1,581 (123,760)
--------- --------- -------- ---------- -------- ----------
Balance December 31, 1995.... 1,216,308 1,607,218 165,767 1,136,730 85,864 (622,947)
Net loss..................... (652,874)
Redemption of common share
purchase warrants [note
13]........................ (165,767) (1,136,730)
Shares issued for cash....... 504,438 7,077,716
Foreign currency
translation................ (43,886) (448,799)
--------- --------- -------- ---------- -------- ----------
Balance December 31, 1996.... 1,720,746 $8,641,048 -- $ -- $(362,935) $(1,275,821)
========= ========= ======== ========== ======== ==========
</TABLE>
See accompanying notes
F-7
<PAGE> 117
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1994 1995 1996
----------- ----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income.............................. $ (237,715) $ 19,062 $ (652,874)
Items not requiring cash
Depreciation and amortization................ 1,094,538 1,464,668 3,841,614
Deferred taxes............................... (57,439) 85,673 (293,390)
Foreign exchange loss........................ 8,571 1,815 1,043
Non-controlling interest..................... (3,358) (22,996) 6,894
Amortization of deferred financing costs..... 38,113 460,951 --
Amortization of subordinated notes payable
discount.................................. 57,238 130,824 --
----------- ---------- ----------
899,948 2,139,997 2,903,287
Net change in non-cash working capital balances
[note 15].................................... (30,693) (766,406) (460,132)
----------- ---------- ----------
Cash provided by operating activities.......... 869,255 1,373,591 2,443,155
----------- ---------- ----------
INVESTING ACTIVITIES
Purchase of fixed assets....................... (1,437,435) (2,741,204) (7,272,814)
Sale of fixed assets, net...................... 180,695 453,927 536,627
Acquisitions [note 4].......................... (6,322,571) (1,932,057) (17,432,167)
Increase in deferred charges................... (451,737) (36,980) (190,462)
----------- ---------- ----------
Cash used in investing activities.............. (8,031,048) (4,256,314) (24,358,816)
----------- ---------- ----------
FINANCING ACTIVITIES
Increase in customer deposits.................. 168,457 118,735 197,951
Increase in long-term debt..................... 5,300,176 4,456,924 20,893,151
Repayment of long-term debt.................... (3,019,277) (868,466) (1,239,400)
Issuance of common shares...................... 492,759 -- 7,077,716
Issue of common shares by subsidiary to
minority shareholders........................ 309,686 -- --
Issue (redemption) of common share warrants.... 1,135,149 -- (1,136,730)
Issue (redemption) of subordinated notes
payable...................................... 2,159,777 -- (2,159,777)
Effect of translation on cash.................. (48,210) (31,421) (346,813)
----------- ---------- ----------
Cash provided by financing activities.......... 6,498,517 3,675,772 23,286,098
----------- ---------- ----------
Increase (decrease) in cash and cash
equivalents during the year.................. (663,276) 793,049 1,370,437
Cash and cash equivalents, beginning of year... 730,525 67,249 860,298
----------- ---------- ----------
Cash and cash equivalents, end of year......... $ 67,249 $ 860,298 $ 2,230,735
=========== ========== ==========
</TABLE>
See accompanying notes
F-8
<PAGE> 118
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. DESCRIPTION OF BUSINESS
Sparkling Spring Water Group Limited ("Sparkling Spring") provides
containered water to home and office markets in British Columbia and the
Maritime provinces of Canada, England and Scotland.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared on a historic cost basis by
management in accordance with accounting principles generally accepted in the
United States ("US GAAP"), the more significant of which are as follows:
BASIS OF PRESENTATION
On November 19, 1997, the shareholders of Sparkling Spring and Sparkling
Spring Water Limited ("SSWL") approved a reorganization whereby the former
shareholders of SSWL transferred their shares of SSWL to Sparkling Spring. As
part of the reorganization, certain shareholders have reduced their interest in
Sparkling Spring by exchanging their shares of common stock of SSWL for Common
Stock of Sparkling Spring and cash or for cash only. Other shareholders
exchanged their shares of common stock of SSWL for common stock of Sparkling
Spring on a one-for-one basis. Subsequent to the reorganization, Sparkling
Spring owns 100% of the issued and outstanding shares of SSWL. Authorized share
capital is presented after giving effect to the reorganization.
The reorganization has been accounted for using the continuity of interests
method of accounting whereby the consolidated financial statements reflect the
consolidated historical carrying value of the assets, liabilities and
shareholders' equity, and the consolidated historical operating results of SSWL
for each of the periods presented. Sparkling Spring was incorporated on October
22, 1997 and, accordingly, had no assets, liabilities or shareholders' equity or
historical operating results for the periods presented.
The pro forma shareholders' equity at December 31, 1996 gives effect to the
maximum reduction in shareholders' equity resulting from the decrease by certain
shareholders in their interest in Sparkling Spring discussed above.
BASIS OF CONSOLIDATION
These consolidated financial statements include the accounts of Sparkling
Spring and its subsidiaries, principally SSWL, Sparkling Spring Water U.K.
Limited ("SSWUK"), Canadian Springs Water Company Ltd. ("Canadian Springs") and
Water Jug Enterprises Limited ("Water Jug") (collectively referred to as the
"Company") (see note 4).
REPORTING CURRENCY
The Company uses the United States dollar as its reporting currency and the
Canadian dollar as its functional currency. Assets and liabilities are
translated into United States dollars at the exchange rates in effect at the
balance sheet date. The revenues and expenses have been translated into United
States dollars at average exchange rates prevailing during the year. The gains
and losses on translation are included in a separate component of shareholders'
equity titled "Cumulative translation adjustment".
Foreign currency denominated assets and liabilities of Canadian operations
are translated into Canadian dollars at exchange rates prevailing at the balance
sheet date for monetary items and at
F-9
<PAGE> 119
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
exchange rates prevailing at the transaction date for non-monetary items. Gains
or losses on translation are recognized in the statement of operations.
Balance sheet accounts denominated in foreign currencies and translated at
year-end exchange rates have been translated to U.S. dollars at the following:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Canadian Dollars............................... $0.713 $0.733 $0.730
U.K. Pounds Sterling........................... $1.564 $1.552 $1.705
</TABLE>
INVENTORIES
Inventories are valued at the lower of cost, determined on a first-in,
first-out basis, and net realizable value.
FIXED ASSETS
Fixed assets are recorded at cost less related government grants and
investment tax credits. Depreciation is provided on the declining balance basis
at the following annual rates:
<TABLE>
<S> <C>
Well and buildings................................................... 5%
Machinery, equipment and coolers..................................... 10-20%
Motor vehicles....................................................... 30%
Roadways............................................................. 8%
Returnable bottles................................................... 20%
</TABLE>
Equipment, computer hardware and motor vehicles under capital lease and
leasehold improvements are amortized on a straight-line basis over the term of
the related lease.
ACQUISITIONS, GOODWILL
On the acquisition of businesses, the excess of the purchase price over the
fair value of the underlying net identifiable assets acquired is recognized as
goodwill. Goodwill is amortized on a straight-line basis over periods of 20 to
40 years. The method used to assess if there has been a permanent impairment in
the value of goodwill is based on projected and discounted cash flows.
DEFERRED FINANCING COSTS
Deferred financing costs represent professional fees and other related
costs incurred in relation to long-term financing agreements. These costs are
amortized on the interest method over the term of the related financing.
DEBT DISCOUNT COSTS
Debt discount costs are amortized to income under the interest method over
the term of the related debt.
UNEARNED REVENUE
Unearned revenue represents the prepayment of cooler leases and bottled
water charges. These amounts are recognized as revenue in the period to which
the lease relates or the product is provided.
F-10
<PAGE> 120
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
CUSTOMER DEPOSITS AND RETURNABLE BOTTLES
Deposits received on bottles and crates are classified as a long-term
liability as they substantially are not required to be repaid in the current
period. Returnable bottles are classified as fixed assets and are amortized to
income based on estimated actual usage.
FINANCIAL INSTRUMENTS
The Company's primary financial instruments consist of accounts receivable,
accounts payable, customer deposits and long-term debt. The difference between
the carrying values and the fair market values of the primary financial
instruments are not material due to the short-term maturities and, or the credit
terms of those instruments.
The Company has at any one time a significant number of commitments to
extend credit. The accounts receivable are owed from a large number of customers
on normal credit terms and therefore there is minimal customer concentration and
credit risk.
The Company does not have any exposure relating to derivative instruments.
EARNINGS PER SHARE
Primary and fully diluted earnings per share is calculated using the
weighted average number of common shares outstanding during the period adjusted
for the effect of the exercise of all outstanding options and warrants in
accordance with APB 15.
LEASES
Leases are classified as capital or operating leases. Assets are recorded
as capital leases when the substantial benefits and risks of ownership have been
transferred to the Company. Obligations recorded under capital leases are
reduced by lease payments, net of imputed interest.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
INCOME TAXES
Income taxes are accounted for in accordance with SFAS 109, "Accounting for
Income Taxes". Under SFAS 109, an assets and liability approach is required.
Such approach results in the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
book carrying amounts and the tax basis of assets and liabilities.
The Company and its subsidiaries file separate federal, state, and foreign
income tax returns and, accordingly, provide for such income taxes on separate
company basis.
3. CHANGE IN ACCOUNTING POLICY
As a result of increased business activity in the United States, the
Company has retroactively changed its reporting policy from Canadian dollars and
Canadian generally accepted accounting
F-11
<PAGE> 121
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
principles to United States dollars and United Stated generally accepted
accounting principles, effective January 1, 1997.
The historical financial statements have been translated to U.S. dollars at
the exchange rates in effect at the balance sheet dates and the revenue and
expenses have been translated into U.S. dollars at average exchange rates
prevailing during the year.
In order to comply with accounting principles generally accepted in the
United States the following accounting policies have also been changed:
EXPORT DEVELOPMENT COSTS
Costs to develop export markets were previously deferred and amortized over
five years. The Company has changed its accounting policy to expense these items
in the period in which the expenditures were incurred.
FOREIGN CURRENCY
The Company previously deferred and amortized unrealized foreign exchange
gains and losses on long-term monetary items over the remaining term of the
item. These gains and losses are now charged to income during the period of the
unrealized gain or loss.
INCOME TAXES
The Company now follows SFAS 109 for accounting for income taxes which
requires an assets and liabilities approach, subject to a valuation allowance
for deferred tax assets. The Company previously followed the deferral method.
The effect of the changes to these accounting policies had the following
impact on net assets, net income and cumulative translation adjustment:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ----------
<S> <C> <C> <C>
Goodwill and deferred charges................ $(140,340) $ (76,442) $ (217,280)
Deferred taxes, asset........................ 328,820 243,147 147,530
-------- -------- ---------
NET ASSETS (DECREASE) INCREASE............... $ 188,480 $ 166,705 $ (69,750)
======== ======== =========
Operating expenses........................... (167,873) 42,952 (406,361)
Depreciation and amortization................ 23,844 24,410 61,186
Provision for income taxes................... 6,943 (299,107) (529,301)
Extraordinary item........................... (143,732) (391,626) (819,314)
Unusual items................................ 211,652 596,541 1,456,927
-------- -------- ---------
NET INCOME DECREASE.......................... $ (69,166) $ (26,830) $ (236,863)
======== ======== =========
CUMULATIVE TRANSLATION ADJUSTMENT INCREASE
(DECREASE)................................. $ (30,587) $ 4,755 $ 408
======== ======== =========
</TABLE>
The retroactive application of the changes in accounting policies described
above also had the effect of reducing the deficit at January 1, 1994 from
$692,527 to $404,294.
F-12
<PAGE> 122
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
4. ACQUISITIONS
1996
On January 18, 1996, the Company acquired 100% of the shares of Canadian
Springs and on May 19, 1996 the Company acquired 100% of the shares of Water
Jug, companies located in British Columbia, Canada. The acquisitions have been
accounted for under the purchase method of accounting and accordingly the
results of operations since the dates of acquisition have been included in the
consolidated statement of (loss) income.
The following summarizes the transactions (in thousands):
<TABLE>
<CAPTION>
CANADIAN SPRINGS WATER JUG
---------------- ---------
<S> <C> <C>
Net working capital............................. $ 778 $ 29
Fixed assets.................................... 2,996 341
Customer deposits............................... (459) (86)
Assumption of debt obligations.................. (694) (155)
Goodwill........................................ 12,993 972
------- ------
Total cash consideration........................ $ 15,614 $ 1,101
======= ======
</TABLE>
During 1996, the Company also acquired the non-controlling interest in
SSWUK from the minority shareholder for cash consideration of $717,135,
including goodwill of $391,024.
1995
On April 26, 1995, SSWUK acquired 100% of the shares of Aquaporte (UK)
Limited ("Aquaporte"), a company registered in England and Wales. The
acquisition has been accounted for under the purchase method of accounting and
accordingly the results of operations since the date of acquisition have been
included in the consolidated statement of (loss) income.
The following summarizes the transaction (in thousands):
<TABLE>
<S> <C>
Net working capital................................................. $ (179)
Fixed assets........................................................ 663
Customer deposits................................................... (262)
Goodwill............................................................ 1,710
------
Total cash consideration............................................ $1,932
======
</TABLE>
1994
On June 7, 1994, a newly formed subsidiary of the Company, SSWUK, acquired
the assets of the cooler division of Buxton Mineral Water Company Limited
("Buxton"), a company registered in Hertfordshire, England and a wholly-owned
subsidiary of Perrier (UK) Limited. The acquisition has been accounted for under
the purchase method of accounting and accordingly the results of operations
since the date of acquisition have been included in the consolidated statement
of (loss) income.
F-13
<PAGE> 123
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
The following summarizes the transaction (in thousands):
<TABLE>
<S> <C>
Net working capital................................................. $ 481
Fixed assets........................................................ 3,907
Customer deposits................................................... (743)
Goodwill............................................................ 2,677
------
Total acquisition................................................... $6,322
======
</TABLE>
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the acquisitions of Canadian Springs,
Water Jug and the non-controlling interest in SSWUK had occurred at January 1,
1995 and the acquisitions of Aquaporte and Buxton had occurred at January 1,
1994.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Total revenue........................... $ 13,128,851 $ 23,715,444 $ 27,986,741
Net (loss) income....................... 141,974 1,644,798 (696,642)
Extraordinary item...................... (143,732) (391,626) (819,314)
Primary (loss) earnings per share....... $ 0.115 $ 1.17 $ (0.407)
</TABLE>
5. ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<S> <C>
Balance January 1, 1994........................................ $ 19,672
Additions...................................................... 320,713
Write-offs..................................................... (24,270)
------------
Balance December 31, 1994...................................... 316,115
Additions...................................................... 175,924
Write-offs..................................................... (20,215)
------------
Balance December 31, 1995...................................... 471,824
Additions...................................................... 116,444
Write-offs..................................................... (378,210)
------------
Balance December 31, 1996...................................... 210,058
</TABLE>
6. INVENTORIES
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Packaging -- materials............................... $388,664 $480,537
Goods for resale..................................... 103,472 215,306
Cooler parts......................................... 26,007 77,897
Advertising materials................................ 36,366 74,459
Other................................................ 34,802 92,321
------- -------
$589,311 $940,520
======= =======
</TABLE>
F-14
<PAGE> 124
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
7. FIXED ASSETS
<TABLE>
<CAPTION>
1995 1996
---------------------------- ----------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Land and well................ $ 68,130 $ 3,533 $ 489,670 $ 42,349
Buildings and roadways....... 897,521 135,399 745,695 142,193
Coolers...................... 5,872,847 1,600,496 10,931,290 4,631,002
Machinery and equipment...... 1,260,055 501,692 4,395,170 1,598,854
Equipment and computer
hardware under capital
lease...................... 977,514 298,916 1,525,163 836,621
Motor vehicles............... 618,082 300,404 911,010 705,555
Motor vehicles under capital
lease...................... 733,824 252,325 2,906,758 746,227
Leasehold improvements....... 141,419 66,361 646,211 220,794
Returnable bottles........... 1,381,945 246,808 2,852,141 656,282
---------- --------- ---------- ---------
11,951,337 $3,405,934 25,403,108 $9,579,877
Accumulated depreciation..... 3,405,934 9,579,877
---------- ----------
Net book value............... $ 8,545,403 $15,823,231
========== ==========
</TABLE>
8. GOODWILL AND DEFERRED CHARGES
<TABLE>
<CAPTION>
1995 1996
--------------------------- ----------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Goodwill...................... $4,900,882 $312,251 $19,588,100 $945,502
Deferred financing costs...... -- -- 116,201 41,693
Other......................... 10,321 -- 83,429 --
--------- ------- ---------- -------
4,911,203 $312,251 19,787,730 $987,195
Accumulated amortization...... 312,251 987,195
--------- ----------
Net book value................ $4,598,952 $18,800,535
========= ==========
</TABLE>
9. DEBT DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Current portion of obligations under capital leases [note
9]...................................................... $ 580,096 $ 1,104,315
Current portion of loans payable [note 10]................ 1,656,720 476,721
--------- ---------
$ 2,236,816 $ 1,581,036
========= =========
</TABLE>
F-15
<PAGE> 125
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
10. OBLIGATIONS UNDER CAPITAL LEASES
The obligations under capital leases are recorded net of the related
imputed interest calculated at an average rate of 10%. Total minimum annual
lease commitments are as follows:
<TABLE>
<S> <C>
1997............................................... $ 1,363,727
1998............................................... 808,614
1999............................................... 595,889
2000............................................... 474,125
2001............................................... 373,771
Thereafter in aggregate............................ 450,608
----------
4,066,734
Less imputed interest.............................. 1,036,094
----------
3,030,640
Less current portion............................... 1,104,315
----------
$ 1,926,325
==========
</TABLE>
11. LOANS PAYABLE
<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Term loans ($17,747,328 Cdn. and L8,204,760) bearing interest at
prime plus 1 1/4%............................................. $7,136,588 $26,866,624
Term loans bearing interest at prime plus 2% repayable in
monthly installments of principal and interest of $2,093
maturing in varying amounts to 2004........................... -- 112,812
Unsecured loan (L273,400) bearing interest at 7%, interest and
principal repayable upon maturity on June 8, 1997............. 424,973 463,778
--------- ----------
7,561,561 27,443,214
Less portion due within one year................................ 1,656,720 476,721
--------- ----------
$5,904,841 $26,966,493
========= ==========
</TABLE>
On January 28, 1997, the Company replaced its $27 million term loans with a
revolving credit facility of $51.1 million available in multiple currencies at
Libor plus 2.75% and, or prime rate plus 1.25%. In addition to refinancing the
term loans, funds were used to finance acquisitions. Terms of the January 28,
1997 revolving credit facility provide for the drawn portion of the loan to
convert into a term loan after two years and to mature on December 31, 2002.
A general assignment of book debts and a floating charge demand debenture
in the amount of $36.5 million over essentially all of the Company's other
assets have been pledged as collateral for the term loans.
F-16
<PAGE> 126
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
The following repayment schedule represents the required annual principal
repayments of long-term debt for each of the next five years based upon debt
payment terms negotiated subsequent to year end:
<TABLE>
<S> <C>
1997.................................................... $ 476,721
1998.................................................... 14,494
1999.................................................... 4,314,891
2000.................................................... 6,466,167
2001.................................................... 6,464,288
Thereafter in aggregate................................. 9,706,653
</TABLE>
12. SUBORDINATED NOTES PAYABLE
<TABLE>
<CAPTION>
1995 1996
---------- ----
<S> <C> <C>
Unsecured redeemable subordinated notes payable bearing interest at 8%,
interest payable semi-annually........................................ $3,300,000 $--
Less unamortized discount value......................................... (946,932) --
--------- ---
$2,353,068 $--
========= ===
</TABLE>
The subordinated noteholders held as additional consideration common share
warrants which were assigned a value of $1,136,730 as described in note 13.
During 1996, the Company redeemed its subordinated notes payable and all
attached common share warrants for cash consideration of $4.7 million. The
$1,253,552 excess of this payment over the book value of the debt and warrants
has been expensed in these financial statements as described in note 14.
13. CAPITAL STOCK
During 1994, the Company issued 165,767 common share purchase warrants to
the holders of subordinated notes payable. The warrants were exercisable at $1
upon repayment of the notes or in the event of default of interest payments
required on these notes. The warrants were assigned a value of $1,136,730
representing the estimated fair value of the warrants at the date of issuance.
During 1996 the subordinated notes were redeemed together with the related
common share purchase warrants (note 12).
The Company maintains a stock option plan for management and directors
where options to acquire Class E common shares are issued with strike prices
approximating the estimated value of the shares at the date of issuance.
F-17
<PAGE> 127
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
At December 31, 1996 the following options, all of which expire October 30,
2001, were outstanding under the above plan:
<TABLE>
<CAPTION>
YEAR OF ISSUE # OF SHARES STRIKE PRICE
--------------------------------------------------- ----------- ------------
<S> <C> <C>
1993............................................... 96,192 $ 1.82 Cdn.
1994............................................... 5,000 $ 5.50 Cdn.
1994 and 1995...................................... 244,701 $ 4.326
1996............................................... 5,000 $ 10.27
1996............................................... 5,000 $ 14.00
1996............................................... 43,500 $ 20.00
-------
399,393
=======
</TABLE>
The Company accounts for the issuance of these options in accordance with
APB 25.
In October, 1995 SFAS 123 "Accounting, for Stock Based Compensation" was
issued requiring companies to recognize a compensation expense for grants of
stock options or other equity investments based on their fair value or provide
pro-forma disclosure of the effect on net income in the notes to the financial
statements. The following proforma information presents a summary of the results
of operations had the company followed the recommendations in SFAS 123, using
the minimum value approach for valuation as permitted by SFAS 123 for non-public
companies:
<TABLE>
<CAPTION>
1994 1995 1996
--------- -------- ---------
<S> <C> <C> <C>
Net (loss) income as reported........... $(237,715) $ 19,062 $(652,874)
Compensation expense on issuance of
stock options......................... (256,847) (14,071) (215,496)
-------- ------- --------
Pro forma net (loss) income............. (494,562) 4,991 (868,370)
-------- ------- --------
Pro forma primary (loss) earnings
per share............................. $ (.428) $ .003 $ (.591)
======== ======= ========
</TABLE>
14. EXTRAORDINARY ITEM
The Company restructured its long-term financing agreements in each of the
last three years. Costs incurred related to new loan financing arrangements have
been deferred in accordance with the Company's accounting policy for deferred
financing costs. Costs, in the amount of $819,314 (1995 -- $391,626;
1994 -- $143,732) related to debt that was restructured have been expensed in
the year, net of applicable income tax recoveries of $434,238 (1995 -- $204,915;
1994 -- $67,920).
F-18
<PAGE> 128
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
15. STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
(Increase) decrease in
Accounts receivable........... $(1,419,369) $ (875,321) $(1,672,299)
Inventories................... (139,275) (173,756) (351,209)
Prepaid expenses.............. (269,993) (198,454) (721,467)
---------- ---------- ----------
(1,828,637) (1,247,531) (2,744,975)
---------- ---------- ----------
Increase (decrease) in
Accounts payable and accrued
liabilities................ 1,367,091 317,510 1,637,324
Unearned revenue.............. (16,479) 316,146 (223,376)
Income taxes payable.......... -- -- 76,890
---------- ---------- ----------
1,350,612 633,656 1,490,838
---------- ---------- ----------
Net change in non-cash working
capital balances.............. (478,025) (613,875) (1,254,137)
Less net working capital
acquired on acquisitions [note
4]............................ 480,983 (179,446) 803,344
Effect of translation........... (33,651) 26,915 (9,339)
---------- ---------- ----------
$ (30,693) $ (766,406) $ (460,132)
========== ========== ==========
</TABLE>
16. LEASE COMMITMENTS
The Company is committed under operating leases extending for various
periods to 2008. Future minimum lease payments are as follows:
<TABLE>
<S> <C>
1997............................................ $ 697,746
1998............................................ 592,826
1999............................................ 525,457
2000............................................ 494,002
2001............................................ 390,195
Thereafter in aggregate......................... 1,398,445
</TABLE>
17. INCOME TAXES
A reconciliation of the provision for income taxes based on the combined
federal and provincial income tax rates of 45% (1995 -- 45%; 1994 -- 44%) is as
follows:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Provision for (recovery of) income
taxes at statutory rates........... $ (44,409) $ 319,408 $ 254,144
Non deductible amortization.......... -- -- 132,910
Difference in foreign tax rates...... 27,026 (5,640) 14,414
Other................................ 10,440 (14,661) (3,143)
------- ------- -------
$ (6,943) $ 299,107 $ 398,325
======= ======= =======
</TABLE>
F-19
<PAGE> 129
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
The provision for (recovery of)
income taxes includes:
Current income taxes -- Canada....... $ -- $ -- $ 90,000
------- ------- -------
Deferred income taxes -- Canada...... 67,378 269,107 357,325
-- Foreign..... (74,321) 30,000 (49,000)
------- ------- -------
(6,943) 299,107 308,325
------- ------- -------
$ (6,943) $ 299,107 $ 398,325
======= ======= =======
</TABLE>
The deferred tax asset is comprised of the following timing differences:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Excess accounting expenses over
tax................................ $ 151,060 $ 106,792 $ 561,774
Non capital loss carryforwards....... 176,475 169,341 185,657
Excess of tax over book
depreciation....................... -- (42,743) (204,149)
Other differences.................... 1,285 9,757 (6,745)
------- ------- -------
$ 328,820 $ 243,147 $ 536,537
======= ======= =======
</TABLE>
The non capital loss carryforwards at December 31, 1996 have no expiry.
18. RELATED PARTY TRANSACTIONS
During the year the Company paid approximately $529,400 (1995 -- $386,000;
1994 -- $215,460) to an affiliated company for management and related services.
19. SUMMARY OF BUSINESS SEGMENTS
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenue
Canada.......................... $ 4,478,547 $ 5,061,581 $15,363,998
United Kingdom.................. 4,246,757 10,287,533 11,962,351
---------- ---------- ----------
8,725,306 15,349,114 27,326,349
========== ========== ==========
Net income (loss) before income
taxes, Non-controlling
interest and extraordinary
item
Canada.......................... 124,292 622,549 726,937
United Kingdom.................. (228,576) 64,250 (155,278)
---------- ---------- ----------
(104,284) 686,799 571,659
========== ========== ==========
Identifiable Assets
Canada.......................... 5,475,904 5,664,794 27,177,107
United Kingdom.................. 8,358,856 12,856,161 17,232,061
---------- ---------- ----------
$13,834,760 $18,520,955 $44,409,168
========== ========== ==========
</TABLE>
F-20
<PAGE> 130
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
20. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform with
the presentation adopted in the current year.
21. SUBSEQUENT EVENTS
(a) Subsequent to year end, the Company completed the following
acquisitions:
<TABLE>
<CAPTION>
ACQUISITION
ACQUISITION INTEREST COST
COMPANY LOCATION DATE ACQUIRED (000'S)
- --------------------------- --------------------- --------------- -------- -----------
<S> <C> <C> <C> <C>
D&D and Company, Inc....... Portland, Oregon January, 1997 100% $ 4,012
High Valley Water
Limited.................. Kelowna, BC January, 1997 100% 1,824
Withey's Water Softening
and Purification
Limited.................. Prince George, BC January, 1997 100% 1,386
Marlborough Employment
Limited.................. Glasgow, Scotland February, 1997 100% 8,230
Soja Enterprises, Inc...... Portland, Oregon June, 1997 100% 150
Crystal Spring Bottled
Water Co. Inc............ Portland, Oregon June, 1997 100% 4,501
Cullyspring Water Co.,
Inc. .................... Seattle, Washington October, 1997 100% 7,600
</TABLE>
The transactions were funded from working capital and approximately $25
million of proceeds from the issuance of long-term debt. The acquisitions will
be accounted for under the purchase method of accounting.
(b) On November 19, 1997, the Company completed a $100,000,000 private
placement of 11 1/2% Senior Subordinated Notes due 2007 (the "Private Notes").
The Company used the net proceeds of this offering to repay $60.1 million of its
existing credit facility and capitalized leases and to pay $13.9 million to
certain Company shareholders (see note 2).
The Company offered to each holder of Private Notes equivalent exchange
notes (the "Exchange Notes"). The Exchange Notes are identical in form and terms
to the Private Notes, except that upon the effectiveness of a registration
statement filed with the United States Securities and Exchange Commission
covering the Exchange Notes, the holders of Exchange Notes may offer the Notes
for sale to the general public.
F-21
<PAGE> 131
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS AT SEPTEMBER 30
(UNAUDITED) PRO FORMA
(WITH COMPARATIVE FIGURES SHAREHOLDERS
AS AT DECEMBER 31) EQUITY AS AT
-------------------------- SEPTEMBER 30,
1996 1997 1997
----------- ----------- -------------
[NOTE 2]
<S> <C> <C> <C>
ASSETS
Current
Cash and cash equivalents.......................... $ 2,230,735 $ 897,869
Accounts receivable................................ 4,799,080 9,169,788
Inventories........................................ 940,520 1,408,681
Prepaid expenses................................... 1,278,530 1,511,572
Current portion of deferred taxes.................. 95,681 --
------------ ------------
Total current assets.......................... 9,344,546 12,987,910
Deferred taxes..................................... 440,856 231,963
Fixed assets....................................... 15,823,231 21,524,242
Goodwill and deferred charges...................... 18,800,535 35,338,105
------------ ------------
Total assets.................................. $44,409,168 $70,082,220
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities........... $ 4,073,847 $ 4,874,588
Income tax payable................................. 76,890 988,353
Unearned revenue................................... 161,790 327,389
Debt due within one year........................... 1,581,036 957,942
------------ ------------
Total current liabilities..................... 5,893,563 7,148,272
------------ ------------
Customer deposits.................................. 2,620,495 3,483,330
Obligations under capital leases................... 1,926,325 2,580,013
Loans payable...................................... 26,966,493 47,245,425
Seller note........................................ -- 1,500,000
------------ ------------
Total long-term liabilities................... 31,513,313 54,808,768
------------ ------------
Shareholders' equity
Capital stock...................................... 8,641,048 8,601,286 7,145,594
Deficit............................................ (1,275,821) (42,122) (13,245,143)
Cumulative translation adjustment.................. (362,935) (433,984) (433,984)
------------ ------------
Total shareholders' equity............... 7,002,292 8,125,180 (6,533,533)
------------ ------------
Total liabilities and shareholders'
equity................................. $44,409,168 $70,082,220
============ ============
</TABLE>
See accompanying notes
F-22
<PAGE> 132
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30
(UNAUDITED)
1996 1997
$ $
----------- -----------
<S> <C> <C>
Revenue:
Water........................................................ $13,391,893 $19,536,818
Rental....................................................... 5,604,317 7,776,599
Other........................................................ 2,067,630 4,484,361
----------- -----------
Total revenue................................................ 21,063,840 31,797,778
Cost of sales................................................ 3,403,176 5,863,637
----------- -----------
Gross profit................................................. 17,660,664 25,934,141
Expenses:
Operating.................................................... 12,635,503 16,817,876
Depreciation and amortization................................ 2,751,599 3,918,398
----------- -----------
Operating profit............................................. 2,273,562 5,197,867
Interest expense............................................. 1,702,781 2,900,528
----------- -----------
Income before the following.................................. 570,781 2,297,339
Provision for income taxes................................... 347,634 1,063,640
----------- -----------
Net income before non-controlling interest and extraordinary
item....................................................... 223,147 1,233,699
Non-controlling interest..................................... (6,912) --
----------- -----------
Net income before extraordinary item......................... 216,235 1,233,699
Extraordinary item........................................... (815,181) --
----------- -----------
Net income (loss)............................................ (598,946) 1,233,699
Deficit, beginning of period................................. (622,947) (1,275,821)
----------- -----------
Deficit, end of period....................................... $(1,221,893) $ (42,122)
----------- -----------
Primary earnings per share before extraordinary item......... $ .13 $ .63
----------- -----------
Fully diluted earnings per share before extraordinary item... $ .13 $ .61
----------- -----------
Primary earnings (loss) per share............................ $ (.35) $ .63
----------- -----------
Fully diluted earnings (loss) per share...................... $ (.35) $ .61
----------- -----------
</TABLE>
See accompanying notes
F-23
<PAGE> 133
SPARKLING SPRING WATER GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 (UNAUDITED)
----------------------------
1996 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............................................. $ (598,946) $ 1,233,699
Items not requiring cash
Depreciation and amortization............................... 2,751,599 3,918,398
Deferred taxes.............................................. (146,974) 301,794
Minority interest........................................... 6,912 --
----------- -----------
2,012,591 5,453,891
Net change in non-cash working capital balances............... 325,507 (2,515,403)
----------- -----------
Cash provided by operating activities......................... 2,338,098 2,938,488
----------- -----------
INVESTING ACTIVITIES
Purchase of fixed assets...................................... (5,909,161) (5,935,130)
Sale of fixed assets, net..................................... 434,612 185,369
Acquisitions (Increase)....................................... (17,478,311) (19,835,497)
(Increase) decrease in deferred charges....................... 61,810 (1,174,907)
----------- -----------
Cash used in investing activities............................. (22,891,050) (26,760,165)
----------- -----------
FINANCING ACTIVITIES
Increase in customer deposits................................. 181,590 601,531
Increase in long-term debt.................................... 20,021,054 24,048,786
Repayment of long-term debt................................... (1,023,835) (1,998,069)
Issuance of common shares..................................... 4,529,056 19,153
Redemption of subordinated notes payable...................... (2,159,777) --
Redemption of common share warrants........................... (1,136,730) --
Effect of translation on cash................................. (141,344) (182,590)
----------- -----------
Cash provided by financing activities......................... 20,270,014 22,488,811
----------- -----------
Decrease in cash and cash equivalents during the period....... (282,938) (1,332,866)
Cash and cash equivalents, beginning of period................ 860,298 2,230,735
----------- -----------
Cash and cash equivalents, end of period...................... $ 577,360 $ 897,869
=========== ===========
</TABLE>
See accompanying notes
F-24
<PAGE> 134
SPARKLING SPRING WATER GROUP LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Sparkling Spring Water Group Limited ("Sparkling Spring") provides
containered water to home and office markets in British Columbia and the
Maritime Provinces at Canada, England, Scotland and the Pacific Northwestern
United States.
2. BASIS OF PRESENTATION
On November 19, 1997, the Shareholders of Sparkling Spring and Sparkling
Spring Water Limited ("SSWL") approved a reorganization whereby the former
shareholders of SSWL transferred their shares of SSWL to Sparkling Spring. As
part of the reorganization, certain shareholders have reduced their interest in
Sparkling Spring by exchanging their shares of common stock of SSWL for Common
Stock of Sparkling Spring and cash or for cash only. Other shareholders
exchanged their shares of common stock of SSWL for common stock of Sparkling
Spring on a one-for-one basis. Subsequent to the reorganization, Sparkling
Spring owns 100% of the issued and outstanding shares of SSWL.
The reorganization has been accounted for using the continuity of interests
method of accounting whereby the consolidated financial statements reflect the
consolidated historical carrying value of the assets, liabilities and
shareholders' equity and the consolidated historical operating results of SSWL
for each of the periods presented. Sparkling Spring was incorporated on October
22, 1997 and, accordingly, had no assets, liabilities or shareholders' equity or
historical operating results for the periods presented.
The pro forma shareholders' equity at September 30, 1997 gives effect to
the maximum reduction in shareholders equity resulting from the decrease by
certain shareholders in their interest in Sparkling Spring discussed above.
3. SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements include the accounts of Sparkling
Spring and its subsidiaries, SSWL, Sparkling Spring Water U.K. Limited, Canadian
Springs Water Company Ltd., Water Jug Enterprises Limited and Spring Water Inc.
and the subsidiaries referred to in note 4 (collectively referred to as the
"Company"), in accordance with accounting principles generally accepted in the
United States.
These unaudited interim consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. The adjustments
are of a normal recurring nature.
4. ACQUISITIONS
(a) During 1996 and 1997 the Company completed a number of acquisitions.
The acquisitions have been accounted for under the purchase method of accounting
and accordingly the results of
F-25
<PAGE> 135
operations since the dates of acquisition have been included in the consolidated
statement of income (loss) and deficit.
<TABLE>
<CAPTION>
BUSINESS ACQUIRED LOCATION DATE OF ACQUISITION
- ---------------------------------- ----------------- --------------------
<S> <C> <C>
<CAPTION>
<S> <C> <C>
Canadian Springs Water Company
Ltd............................. Vancouver, BC January 1996
Water Jug Enterprises Limited..... Kamloops, BC May 1996
Sparkling Spring U.K.
Limited(remaining 10%).......... London, England March 1996
D&D and Company, Inc.............. Portland, Oregon January 1997
High Valley Water Limited......... Kelowna, BC January 1997
Withey's Water Softening and
Purification Limited............ Prince George, BC January 1997
Marlborough Employment Limited.... Glasgow, Scotland February 1997
Soja Enterprises, Inc............. Portland, Oregon June 1997
Crystal Springs Bottled Water Co.,
Inc............................. Portland, Oregon June 1997
</TABLE>
The following summarizes the transactions:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Net working capital............................... $ 809,606 $ 706,472
Fixed assets...................................... 3,672,515 3,655,741
Customer deposit.................................. (546,358) (281,714)
Assumption of debt obligations.................... (851,365) (849,619)
Goodwill.......................................... 14,393,913 16,604,617
---------- ----------
Total cash consideration.......................... $17,478,311 $19,835,497
========== ==========
</TABLE>
The following unaudited pro forma information presents a summary of
consolidated results of operations as if the above acquisitions had occurred on
January 1, 1996.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED (IN THOUSANDS)
-----------------------------------------
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Revenue................................. $ 34,098 $ 37,271
Net income before extraordinary item.... $ 971 $ 1,856
</TABLE>
5. EXTRAORDINARY ITEM
The Company restructured its long-term financing agreements during the nine
months ended September 30, 1996. Costs incurred related to new loan financing
arrangements have been deferred in accordance with the Company's accounting
policy for deferred financing costs. Costs, in the amount of $815,181 related to
debt that was restructured have been expensed during the period, net of
applicable income tax recoveries of $434,238.
6. SUBSEQUENT EVENT
On November 19, 1997, the Company completed a $100,000,000 private
placement of 11 1/2% Senior Subordinated Notes due 2007 (the "Private Notes").
The Company used the net proceeds of this offering to repay $60.1 million of its
existing credit facility and capitalized leases and to pay $13.9 million to
certain Company shareholders (see note 2).
The Company offered to each holder of Private Notes equivalent exchange
notes (the "Exchange Notes"). The Exchange Notes are identical in form and terms
to the Private Notes, except that upon the effectiveness of a registration
statement filed with the United States Securities and Exchange Commission
covering the Exchange Notes, the holders of Exchange Notes may offer the Notes
for sale to the general public.
F-26
<PAGE> 136
FINANCIAL STATEMENTS
CANADIAN SPRINGS WATER
COMPANY LTD.
JANUARY 17, 1996 AND MARCH 31, 1995
F-27
<PAGE> 137
AUDITORS' REPORT
To the Directors of
Sparkling Spring Water Limited
We have audited the balance sheet of Canadian Springs Water Company Ltd. as
at January 17, 1996 and March 31, 1995 and the statements of income and retained
earnings and cash flows for the 292 days ended January 17, 1996 and the year
ended March 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at January 17, 1996 and March
31, 1995 and the results of its operations and the changes in its financial
position for the periods then ended in accordance with accounting principles
generally accepted in Canada.
Halifax, Canada ERNST & YOUNG
July 11, 1997 Chartered Accountants
F-28
<PAGE> 138
CANADIAN SPRINGS WATER COMPANY LTD.
INCORPORATED UNDER THE LAWS OF BRITISH COLUMBIA
BALANCE SHEET
<TABLE>
<CAPTION>
AS AT JANUARY 17, 1996
(WITH COMPARATIVE FIGURES
AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
ASSETS [Note 3]
Current
Accounts receivable............................................... $1,475,228 $1,708,888
Inventory......................................................... 227,480 325,861
Prepaid expenses.................................................. 212,883 191,406
--------- ---------
Total current assets.................................... 1,915,591 2,226,155
Deferred income taxes............................................. 11,340 17,340
Fixed assets [note 2]............................................. 3,298,167 2,872,967
--------- ---------
Total assets............................................ $5,225,098 $5,116,462
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness................................................. $ 288,278 $ 838,143
Accounts payable and accrued liabilities.......................... 1,482,464 1,195,979
Income taxes payable.............................................. 11,456 14,036
Deposits payable.................................................. -- 11,361
Dividends payable................................................. -- 923,500
Debt due within one year [note 3]................................. 624,542 202,305
Due to shareholders and related parties [note 4].................. 1,681,907 1,735,979
--------- ---------
Total current liabilities............................... 4,088,647 4,921,303
--------- ---------
Long-term debt [note 3]........................................... 307,242 146,212
--------- ---------
Shareholders' equity
Share capital [note 5]............................................ 18 18
Retained earnings................................................. 829,191 48,929
--------- ---------
Total shareholders' equity.............................. 829,209 48,947
--------- ---------
Total liabilities and shareholders' equity.............. $5,225,098 $5,116,462
========= =========
Commitments [Note 8 and 9]
</TABLE>
See accompanying notes
F-29
<PAGE> 139
CANADIAN SPRINGS WATER COMPANY LTD.
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
292 DAYS ENDED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES
FOR THE YEAR ENDED MARCH
31)
(IN CDN DOLLARS)
---------------------------
1995 1996
----------- -----------
<S> <C> <C>
Revenue........................................................ $10,401,440 $10,154,150
Cost of sales.................................................. 4,880,620 5,272,844
----------- -----------
Gross profit................................................... 5,520,820 4,881,306
----------- -----------
Expenses
Wages and benefits............................................. 2,711,797 1,882,134
Advertising and selling........................................ 489,864 693,779
Depreciation................................................... 727,986 572,519
Professional fees.............................................. 70,105 368,673
Office supplies and stationery................................. 284,105 285,935
Promotion, travel and entertainment............................ 242,786 212,838
Interest on long-term debt..................................... 258,787 152,577
Postage........................................................ 158,640 136,252
Bank charges and interest on short-term debt................... 96,655 130,567
Bad debts and collection fees.................................. 77,184 111,408
Telephone...................................................... 98,311 95,899
Rent and property taxes........................................ 44,540 40,462
Corporation capital tax........................................ 9,900 9,025
----------- -----------
5,270,660 4,692,068
----------- -----------
Net income before income taxes................................. 250,160 189,238
----------- -----------
Income taxes
Current...................................................... 45,500 52,000
Deferred..................................................... 20,360 (6,000)
----------- -----------
65,860 46,000
----------- -----------
Net income..................................................... 184,300 143,238
Dividends...................................................... -- (923,500)
Retained earnings, beginning of year........................... 644,891 829,191
----------- -----------
Retained earnings, end of year................................. $ 829,191 $ 48,929
=========== ===========
</TABLE>
See accompanying notes
F-30
<PAGE> 140
CANADIAN SPRINGS WATER COMPANY LTD.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
292 DAYS ENDED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES
FOR THE YEAR ENDED MARCH
31)
(IN CDN DOLLARS)
-------------------------
1995 1996
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................................... $ 184,300 $ 143,238
Add items not involving a flow of cash
Depreciation................................................... 727,986 572,519
Deferred income taxes.......................................... 20,360 (6,000)
Net change in non-cash working capital balances [note 6]......... 148,002 (583,108)
----------- ---------
Cash provided by operating activities............................ 1,080,648 126,649
----------- ---------
INVESTING ACTIVITIES
Additions to fixed assets (net).................................. (1,281,567) (147,319)
----------- ---------
Cash used in investing activities................................ (1,281,567) (147,319)
----------- ---------
FINANCING ACTIVITIES
Issuance of long-term debt....................................... 894,327 --
Repayment of long-term debt...................................... (536,145) (583,267)
Increase (decrease) in due to shareholders and related parties... (45,739) 54,072
----------- ---------
Cash (used in) provided by financing activities.................. 312,443 (529,195)
----------- ---------
(Decrease) increase in cash...................................... 111,524 (549,865)
Bank indebtedness, beginning of year............................. (399,802) (288,278)
----------- ---------
Bank indebtedness, end of year................................... $ (288,278) $(838,143)
=========== =========
</TABLE>
See accompanying notes
F-31
<PAGE> 141
CANADIAN SPRINGS WATER COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
1. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in accordance
with accounting principles generally accepted in Canada, the more significant of
which are as follows:
FIXED ASSETS
Fixed assets are valued at cost. Depreciation is provided on the declining
balance basis over the expected useful lives of the assets at the following
rates:
<TABLE>
<S> <C>
Rental equipment -- dispensers........................................... 20%
Furniture, fixtures and equipment........................................ 20%
Purification equipment................................................... 50%
Vehicles................................................................. 30%
Buildings................................................................ 4%
Computer................................................................. 30%-100%
</TABLE>
Leasehold improvements are amortized on a straight line basis over the term
of the related lease.
Depreciation is reduced to one-half the normal rate in the year of
acquisition for the respective assets.
INVENTORY
Inventory is value at the lower of cost determined on a first-in, first-out
basis, and net realizable value.
LEASES
Leases which transfer substantially all of the benefits and risks of
ownership are recorded as acquisition of assets and incurrence of obligations.
Under this method of accounting, assets are amortized over their expected useful
lives and interest arising from the obligations is expensed over the life of the
lease. Rents on operating leases are expensed as incurred.
INCOME TAXES
In accounting for income taxes, the company follows the tax allocation
method. The major timing differences relate to fixed assets and lease
obligations.
F-32
<PAGE> 142
CANADIAN SPRINGS WATER COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
2. FIXED ASSETS
<TABLE>
<CAPTION>
1995 1996
--------------------------- ---------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Rental equipment --
dispensers................ $ 4,234,322 $1,987,590 $ 4,648,585 $2,568,516
Purification equipment...... 845,178 609,291 147,146 135,913
Vehicles.................... 737,764 581,920 731,476 618,468
Furniture, fixtures and
equipment................. 385,962 130,893 653,889 428,483
Computer.................... 360,494 234,863 505,817 340,175
Leasehold improvements...... 241,655 101,806 265,781 126,046
Buildings................... 42,222 2,067 42,222 3,348
Land........................ 99,000 -- 99,000 --
--------- --------- --------- ---------
6,946,597 3,648,430 7,093,916 4,220,949
Accumulated depreciation.... 3,648,430 4,220,949
--------- ---------
Net book value.............. $ 3,298,167 $ 2,872,967
========= =========
</TABLE>
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1996
-------- -----------
<S> <C> <C>
Demand term loan.......................................... $ 26,644 $ --
Demand term loan.......................................... 270,015 --
Capital lease obligations [note 8]........................ 635,125 348,517
------- -------
931,784.. 348,517
Less portion due within one year.......................... 624,542 202,305
------- -------
$307,242 $ 146,212
======= =======
</TABLE>
The following has been pledged as collateral for bank indebtedness and the
term loans:
a) General security agreement over all existing and subsequently acquired
assets;
b) General assignment of book debts; and
c) Postponement of shareholder loans.
F-33
<PAGE> 143
CANADIAN SPRINGS WATER COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
4. DUE TO SHAREHOLDERS AND RELATED PARTIES
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Due to shareholders, no interest or specific terms of
repayment............................................... $ 756,907 $1,699,679
Due to related parties, interest only payable at prime
plus 2% per annum with no specific terms of repayment... 100,000 36,300
Due to shareholder, interest only payable at $5,000 per
month with no specific terms of repayment............... 430,000 --
Due to shareholder, interest only payable at $8,667 per
month with no specific terms of repayment............... 395,000 --
--------- ---------
$1,681,907 $1,735,979
========= =========
</TABLE>
5. SHARE CAPITAL
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Authorized
10,000 Class A voting shares without par value
100 Class B non-voting shares without par value
100 Class C voting shares without par value
1,000 Class D non-voting redeemable and retractable shares without par
value
Issued and outstanding
6 Class B shares................................................. $ 6 $ 6
6 Class C shares................................................. 6 6
996 Class D shares.................................................. 6 6
-- --
$18 $18
== ==
</TABLE>
F-34
<PAGE> 144
CANADIAN SPRINGS WATER COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
6. STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
(Increase) decrease in
Accounts receivable...................................... $(334,110) $(233,660)
Inventory................................................ (70,456) (98,381)
Prepaid expenses......................................... (37,268) 21,477
--------- ---------
(441,834) (310,564)
--------- ---------
Increase (decrease) in
Accounts payable and accrued liabilities................. 564,710 (286,485)
Income taxes payable..................................... 25,126 2,580
Deposits payable......................................... -- 11,361
--------- ---------
589,836 (272,544)
--------- ---------
Net change in non-cash working capital balances............ $ 148,002 $(583,108)
========= =========
</TABLE>
7. RELATED PARTY TRANSACTIONS
During the year, the company had the following transactions with related
parties:
a) Interest of $98,644 (1995 -- $154,750) was paid to shareholders.
b) Interest of nil (1995 -- $14,584) was paid to related parties.
c) Management and consulting fees of $183,622 (1995 -- nil) were paid to
related parties.
8. CAPITAL LEASE OBLIGATIONS
The company has lease commitments with respect to capital lease obligations
as follows:
<TABLE>
<S> <C>
1997...................................................................... $214,800
1998...................................................................... 150,570
--------
Total minimum lease payments.............................................. 365,370
Less imputed interest..................................................... 16,853
--------
Present value of minimum lease payments................................... 348,517
Less current portion...................................................... 202,305
--------
$146,212
========
</TABLE>
F-35
<PAGE> 145
CANADIAN SPRINGS WATER COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
JANUARY 17, 1996
(WITH COMPARATIVE FIGURES AS AT MARCH 31, 1995)
(IN CDN DOLLARS)
9. COMMITMENTS
The company has certain minimum operating lease commitments with respect to
premises and delivery trucks over the next five years as follows:
<TABLE>
<S> <C>
1996................................................ $ 276,000
1997................................................ 199,000
1998................................................ 193,000
1999................................................ 124,000
2000................................................ 100,000
</TABLE>
10. UNITED STATES ACCOUNTING PRINCIPLES
These financial statements are expressed in Canadian dollars and are
prepared in accordance with generally accepted accounting principles in Canada
("Canadian GAAP") which, for the purposes of these financial statements, conform
in all material respects with those in the United States ("U.S. GAAP"), with the
exception of the statement of cash flow where bank indebtedness is treated as a
cash equivalent. Under US GAAP this would be treated as a financing activity
which would increase cash provided by financing activities for the 292 days
ended January 17, 1996 by $549,865 and decrease cash provided by financing
activities for the year ended March 31, 1995 by $111,524.
11. COMPARATIVE FIGURES
Certain of the 1995 financial statement figures have been reclassified to
conform with the 1996 presentation.
F-36
<PAGE> 146
FINANCIAL STATEMENTS
CULLYSPRING WATER CO., INC.
DECEMBER 31, 1996 AND 1995
F-37
<PAGE> 147
AUDITORS' REPORT
To the Directors of
Sparkling Spring Water Limited
We have audited the balance sheets of Cullyspring Water Co., Inc. as of
December 31, 1996 and 1995 and the statements of income, shareholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1996 and 1995
and the results of its operations and the changes in its financial position for
the years then ended in accordance with accounting principles generally accepted
in the United States.
Halifax, Canada Ernst & Young
October 10, 1997 Chartered Accountants
F-38
<PAGE> 148
CULLYSPRING WATER CO., INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
AS AT DECEMBER 31
---------------------------
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents........................................ $ 681,970 $ 769,185
Accounts receivable.............................................. 323,263 300,258
Inventories...................................................... 64,534 90,648
Refundable deposits.............................................. 575 575
--------- ---------
Total current assets........................................ 1,070,342 1,160,666
Fixed assets [note 3]............................................ 866,046 982,230
--------- ---------
Total assets................................................ 1,936,388 2,142,896
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities......................... 100,073 65,236
Debt due within one year [note 4]................................ 20,518 38,351
Current portion of obligations under capital leases [note 5]..... 24,521 --
--------- ---------
Total current liabilities................................... 145,112 103,587
--------- ---------
Long-term debt [note 4].......................................... 21,516 38,226
Obligations under capital lease [note 5]......................... 18,060 --
Customer deposits................................................ 175,079 176,644
--------- ---------
Total long-term liabilities................................. 214,655 214,870
--------- ---------
Shareholders' equity
Common stock (no par value, 50,000 shares authorized, 1,000
shares issued and outstanding)................................. 50,000 50,000
Contributed surplus.............................................. 37,866 37,866
Retained earnings................................................ 1,488,755 1,736,573
--------- ---------
Total shareholders equity................................... 1,576,621 1,824,439
--------- ---------
Total liabilities and shareholders' equity.................. $ 1,936,388 $ 2,142,896
========= =========
</TABLE>
See accompanying notes
F-39
<PAGE> 149
CULLYSPRING WATER CO., INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1995 1996
----------- -----------
<S> <C> <C>
Revenue.......................................................... $ 3,753,611 $ 4,029,591
Cost of sales.................................................... 2,019,019 2,104,283
--------- ---------
Gross profit..................................................... 1,734,592 1,925,308
--------- ---------
Expenses
Corporate and administrative..................................... 1,045,172 1,084,148
Depreciation and amortization.................................... 341,800 375,942
Interest and bank charges........................................ 17,052 7,140
--------- ---------
1,404,024 1,467,230
--------- ---------
Income before the following...................................... 330,568 458,078
Interest income.................................................. 15,388 18,700
Gain on sale of fixed assets..................................... 15,000 2,150
--------- ---------
Net income before income taxes................................... 360,956 478,928
Income tax expense............................................... 33,451 --
--------- ---------
Net income....................................................... $ 327,505 $ 478,928
========= =========
</TABLE>
See accompanying notes
F-40
<PAGE> 150
CULLYSPRING WATER CO., INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------
COMMON STOCK
--------------------- CONTRIBUTED RETAINED
SHARES AMOUNT SURPLUS EARNINGS
-------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Balance December 31, 1994................ 50,000 $50,000 $37,866 $1,165,750
Shares surrendered....................... (50,000)
Issuance of shares....................... 1,000
Net income............................... 327,505
Dividends................................ (4,500)
------- ------ ------ ---------
Balance December 31, 1995................ 1,000 50,000 37,866 1,488,755
Net income............................... 478,928
Dividends................................ (231,110)
------- ------ ------ ---------
Balance December 31, 1996................ 1,000 $50,000 $37,866 $1,736,573
======= ====== ====== =========
</TABLE>
See accompanying notes
F-41
<PAGE> 151
CULLYSPRING WATER CO., INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1995 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................ $ 327,505 $ 478,928
Items not requiring cash
Depreciation and amortization................................... 341,800 375,942
Gain on sale of fixed assets.................................... (15,000) (2,150)
Net change in non-cash working capital balances [note 6].......... (61,490) (37,946)
-------- --------
Cash provided by operating activities............................. 592,815 814,774
-------- --------
INVESTING ACTIVITIES
Purchase of fixed assets.......................................... (370,455) (531,973)
Sale of fixed assets.............................................. 15,000 41,997
-------- --------
Cash used in investing activities................................. (355,455) (489,976)
-------- --------
FINANCING ACTIVITIES
Dividends......................................................... (4,500) (231,110)
Issuance of long-term debt........................................ 24,597 55,061
Repayment of long-term debt....................................... (129,691) (20,518)
Repayment of obligations under capital lease...................... (22,629) (42,581)
Increase in customer deposits..................................... 13,651 1,565
-------- --------
Cash used in financing activities................................. (118,572) (237,583)
-------- --------
Increase in cash during the year.................................. 118,788 87,215
Cash and cash equivalents, beginning of year...................... 563,182 681,970
-------- --------
Cash and cash equivalents, end of year............................ $ 681,970 $ 769,185
======== ========
</TABLE>
See accompanying notes
F-42
<PAGE> 152
CULLYSPRING WATER CO., INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. NATURE OF OPERATIONS
Cullyspring Water Co., Inc. operates a bottling plant in Seattle,
Washington producing drinking and distilled water. Water is purified in a
multistage process before it is bottled in five gallon refillable containers or
nonrefillable plastic bottles. The five gallon bottles are distributed to
commercial or residential customers who rent free-standing dispensers on a
monthly basis. The non refillable containers are generally distributed through
grocery outlets.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in accordance
with accounting principles generally accepted in the United States, the more
significant of which are as follows:
INVENTORIES
Inventories consisting principally of bottling materials and supplies are
valued at the lower of cost determined on a first-in, first-out basis and net
realizable value.
FIXED ASSETS
Fixed assets are recorded at cost less accumulated depreciation based on
lives of 3 through 7 years. Declining balance depreciation methods are used.
Leasehold improvements are amortized evenly over 7 to 31.5 years.
FINANCIAL INSTRUMENTS
The Company's primary financial instruments consist of accounts receivable,
accounts payable, customer deposits, debt due within one year and long-term
debt. The difference between the carrying values and the fair market values of
the primary financial instruments are not material due to the short term
maturities and or the credit terms of those instruments.
The Company has at any one time a significant number of commitments to
extend credit. The accounts receivable are owed from a large number of customers
on normal credit terms and therefore there is a minimal customer concentration
and credit risk.
At year end the Company did not have any exposure relating to derivative
instruments.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
INCOME TAXES
The company has elected S corporation status effective July 1, 1995. Under
this status net income flows through to the stockholders and is taxable to them.
Accordingly, the Company has not incurred any provision for income tax
obligations.
F-43
<PAGE> 153
CULLYSPRING WATER CO., INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996
3. FIXED ASSETS
<TABLE>
<CAPTION>
1995 1996
--------------------------- ---------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Machinery and equipment..... $1,710,472 $1,309,184 $2,030,166 $1,500,016
Equipment under capital
lease..................... 173,613 123,804 65,422 65,422
Motor vehicles.............. 586,879 514,530 633,148 521,808
Leasehold improvements...... 346,208 72,556 375,397 88,129
Returnable bottles.......... 442,060 373,112 457,935 404,463
--------- --------- --------- ---------
3,259,232 2,393,186 3,562,068 2,579,838
Accumulated depreciation.... 2,393,186 2,579,838
--------- ---------
Net book value.............. $ 866,046 $ 982,230
========= =========
</TABLE>
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Loan payable bearing interest at 9% repayable in monthly
instalments of principal and interest of $814 to February
1999....................................................... $ -- $18,495
Loan payable bearing interest at 9.25% repayable in monthly
instalments of principal and interest of $406 to July
1999....................................................... -- 10,849
Loan payable bearing interest at 10.3% repayable in monthly
instalments of principal and interest of $875 to November
1999....................................................... -- 25,717
Loan payable bearing interest at 8% repayable in monthly
instalments of principal and interest of $1,336 to August
1997....................................................... 22,436 8,939
Loan payable bearing interest at 10.5% repayable in monthly
instalments of principal and interest of $799 to June
1998....................................................... 19,598 12,577
------ ------
42,034 76,577
Less: portion due within one year............................ 20,518 38,351
------ ------
$21,516 $38,226
====== ======
</TABLE>
The Company has pledged as collateral for the loans payable a first fixed
charge on the vehicles associated with the loans.
Principal repayments required in each of the next three years are as
follows:
<TABLE>
<S> <C>
1997................................................. $ 38,351
1998................................................. 26,693
1999................................................. 11,533
</TABLE>
5. OBLIGATIONS UNDER CAPITAL LEASES
During 1996 the Company paid out the capital leases in full.
F-44
<PAGE> 154
CULLYSPRING WATER CO., INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996
6. STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
(Increase) decrease in
Accounts receivable............................................... $(40,978) $ 23,005
Inventories....................................................... (19,853) (26,114)
------- -------
(60,831) (3,109)
Decrease in accounts payable and accrued liabilities................ (659) (34,837)
------- -------
Net change in non-cash working capital balances..................... $(61,490) $(37,946)
======= =======
</TABLE>
7. RELATED PARTY TRANSACTIONS
During the year the Company paid approximately $132,000 (1995 -- $144,000)
to an affiliated company for building rent.
F-45
<PAGE> 155
CULLYSPRING WATER CO., INC.
BALANCE SHEET
<TABLE>
<CAPTION>
AS AT SEPTEMBER 30
(WITH COMPARATIVE FIGURES AS
AT DECEMBER 31)
----------------------------
1996 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents........................................ $ 769,185 $ 892,186
Accounts receivable.............................................. 300,258 371,602
Inventories...................................................... 90,648 90,345
Refundable deposits.............................................. 575 575
--------- ---------
Total current assets........................................ 1,160,666 1,354,708
Fixed assets..................................................... 982,230 936,033
--------- ---------
Total assets................................................ 2,142,896 2,290,741
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities......................... 65,236 61,037
Debt due within one year......................................... 38,351 38,351
--------- ---------
Total current liabilities................................... 103,587 99,388
--------- ---------
Long-term debt................................................... 38,226 55,074
Customer deposits................................................ 176,644 188,838
--------- ---------
Total long-term liabilities................................. 214,870 243,912
--------- ---------
Shareholders' equity
Common stock (no par value, 50,000 shares authorized, 1,000
shares issued and outstanding)................................. 50,000 50,000
Contributed surplus.............................................. 37,866 37,866
Retained earnings................................................ 1,736,573 1,859,575
--------- ---------
Total shareholders' equity.................................. 1,824,439 1,947,441
--------- ---------
Total liabilities and shareholders' equity.................. $ 2,142,896 $ 2,290,741
========= =========
</TABLE>
F-46
<PAGE> 156
CULLYSPRING WATER CO., INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30
----------------------------
1996 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenue.......................................................... $ 3,077,358 $ 3,183,296
Cost of sales.................................................... 1,619,001 1,606,833
--------- ---------
Gross profit..................................................... 1,458,357 1,576,463
--------- ---------
Expenses
Corporate and administrative..................................... 752,524 893,092
Depreciation and amortization.................................... 262,055 263,491
Interest and bank charges........................................ 5,377 5,692
--------- ---------
1,019,956 1,162,275
--------- ---------
Income before the following...................................... 438,401 414,188
Interest income.................................................. 13,787 13,992
Gain on sale of fixed assets..................................... 2,150 --
--------- ---------
Net income....................................................... 454,338 428,180
Retained earnings, beginning of year............................. 1,488,755 1,736,573
Dividends........................................................ (216,109) (305,178)
--------- ---------
Retained earnings, end of year................................... $ 1,726,984 $ 1,859,575
========= =========
</TABLE>
F-47
<PAGE> 157
CULLYSPRING WATER CO., INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-------------------------
1996 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................ $ 454,338 $ 428,180
Items not requiring cash
Depreciation and amortization................................... 262,055 263,491
-------- --------
Gain on sale of fixed assets.................................... (2,150) --
Net change in non-cash working capital balances................... 77,984 (63,046)
-------- --------
Cash provided by operating activities............................. 792,227 628,625
INVESTING ACTIVITIES
Purchase of fixed assets.......................................... (416,273) (168,491)
Sale of fixed assets.............................................. 2,150 --
-------- --------
Cash used in investing activities................................. (414,123) (168,491)
-------- --------
FINANCING ACTIVITIES
Dividends......................................................... (216,109) (302,665)
Repayment of long-term debt....................................... (31,749) (34,468)
Repayment of obligations under capital lease...................... (16,004) --
-------- --------
Cash used in financing activities................................. (263,862) (337,133)
-------- --------
Increase in cash during the period................................ 114,242 123,001
Cash and cash equivalents, beginning of period.................... 681,970 769,185
-------- --------
Cash and cash equivalents, end of period.......................... $ 796,212 $ 892,186
======== ========
</TABLE>
F-48
<PAGE> 158
CULLYSPRING WATER CO., INC.
NOTES TO FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. The adjustments
are of a normal recurring nature.
F-49
<PAGE> 159
FINANCIAL STATEMENTS
D&D AND COMPANY, INC.
(OPERATING AS MOUNTAIN FRESH BOTTLED WATER)
DECEMBER 31, 1996
F-50
<PAGE> 160
AUDITORS' REPORT
To the Directors of
Sparkling Spring Water Limited
We have audited the balance sheet of D&D And Company, Inc. as at December
31, 1996 and the statements of income, shareholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1996 and the
results of its operations and the changes in its financial position for the year
then ended in accordance with accounting principles generally accepted in the
United States.
The financial statements for the year ended December 31, 1995 are
unaudited.
Halifax, Canada ERNST & YOUNG
October 10, 1997 Chartered Accountants
F-51
<PAGE> 161
D&D AND COMPANY, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
AS AT DECEMBER 31
------------------------
1996
1995 --------
-----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents.......................................... $ 14,102 $ 17,641
Accounts receivable................................................ 132,900 170,695
Inventories........................................................ 40,298 46,089
-------- --------
Total current assets.......................................... 187,300 234,425
Other assets....................................................... 12,824 9,795
Note receivable.................................................... 5,548 5,548
Fixed assets [note 3].............................................. 649,996 535,874
-------- --------
Total assets.................................................. 855,668 785,642
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities........................... 62,066 51,090
Income tax payable................................................. 564 564
Debt due within one year [note 4].................................. 185,910 178,897
-------- --------
Total current liabilities..................................... 248,540 230,551
-------- --------
Long term debt [note 4]............................................ 384,091 295,080
Other liabilities.................................................. 5,793 4,394
-------- --------
Total long-term liabilities................................... 389,884 299,474
-------- --------
Shareholders' equity
Common stock (no par value, 5,000 shares authorized, 2,000 shares
issued and outstanding).......................................... 20,630 20,630
Retained earnings.................................................. 196,614 234,987
-------- --------
Total shareholders' equity.................................... 217,244 255,617
-------- --------
Total liabilities and shareholders' equity.................... $ 855,668 $785,642
======== ========
Commitments (Note 6)
</TABLE>
See accompanying notes
F-52
<PAGE> 162
D&D AND COMPANY, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1996
1995 -----------
----------
(UNAUDITED)
<S> <C> <C>
Revenue............................................................ $1,892,461 $2,233,062
Cost of sales...................................................... 370,687 425,003
---------- ----------
Gross profit....................................................... 1,521,774 1,808,059
---------- ----------
Expenses
Corporate and administrative....................................... 1,150,709 1,303,337
Depreciation and amortization...................................... 221,210 236,527
Interest and bank charges.......................................... 57,375 59,764
---------- ----------
1,429,294 1,599,628
---------- ----------
Net income before the following.................................... 92,480 208,431
Gain on sale of fixed assets....................................... 9,215 --
---------- ----------
Net income......................................................... $ 101,695 $ 208,431
========== ==========
</TABLE>
See accompanying notes
F-53
<PAGE> 163
D&D AND COMPANY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
COMMON STOCK
----------------- RETAINED
SHARES AMOUNT EARNING
------ ------- ---------
<S> <C> <C> <C>
Balance December 31, 1994 [unaudited]......................... 2,000 $20,630 $ 214,749
Net income [unaudited]........................................ 101,695
Dividends [unaudited]......................................... (119,830)
----- ----- -------
Balance December 31, 1995..................................... 2,000 20,630 196,614
Net income.................................................... 208,431
Dividends..................................................... (170,058)
----- ----- -------
Balance December 31, 1996..................................... 2,000 $20,630 $ 234,987
===== ===== =======
</TABLE>
See accompanying notes
F-54
<PAGE> 164
D&D AND COMPANY, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1996
1995 ---------
-----------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................................... $ 101,695 $ 208,431
Items not requiring cash
Depreciation and amortization............................... 221,210 236,527
Gain on sale of fixed assets................................ (9,215) --
-------- --------
313,690 444,958
Net change in non-cash working capital balances [note 5]......... (49,115) (54,562)
-------- --------
Cash provided by operating activities............................ 264,575 390,396
-------- --------
INVESTING ACTIVITIES
Purchase of fixed assets......................................... (20,196) (122,405)
Sale of fixed assets, net........................................ 8,000 --
Decrease in other assets......................................... 2,858 3,029
-------- --------
Cash used in investing activities................................ (9,338) (119,376)
-------- --------
FINANCING ACTIVITIES
Decrease in other liabilities.................................... -- (1,399)
Increase in long-term debt....................................... 47,192 88,743
Repayment of long-term debt...................................... (169,344) (184,767)
Reduction in note receivable..................................... 556 --
Dividends........................................................ (119,830) (170,058)
-------- --------
Cash used in financing activities................................ (241,426) (267,481)
-------- --------
Increase in cash and cash equivalents during the year............ 13,811 3,539
Cash and cash equivalents, beginning of year..................... 291 14,102
-------- --------
Cash and cash equivalents, end of year........................... $ 14,102 $ 17,641
======== ========
</TABLE>
See accompanying notes
F-55
<PAGE> 165
D&D AND COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. NATURE OF OPERATIONS
D&D And Company, Inc. operates a bottling plant producing drinking and
distilled water. Water is purified in a multistage process before it is bottled
in five gallon refillable containers or non-refillable plastic bottles. The five
gallon bottles are distributed to commercial or residential customers who rent
free-standing dispensers on a monthly basis. The non-refillable containers are
generally distributed through grocery outlets.
The Company also distributes coffee and coffee products to commercial and
residential customers. Coffee brewers are rented to customers on a monthly
basis.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in accordance
with accounting principles generally accepted in the United States, the more
significant of which are as follows:
INVENTORIES
Inventories consisting principally of bottling materials are valued at the
lower of cost determined on a last in, first out basis and net realizable value.
FIXED ASSETS
Fixed assets are recorded at cost less accumulated depreciation based on
lives of 3 through 7 years. Declining balance depreciation methods are used.
Straight line depreciation is used for assets purchased before 1993. Leasehold
improvements are amortized evenly over the remaining terms of the leases.
FINANCIAL INSTRUMENTS
The Company's primary financial instruments consist of accounts receivable,
note receivable, accounts payable, debt due within one year and long-term debt.
The difference between the carrying values and the fair market values of the
primary financial instruments are not material due to the short term maturities
and, or the credit terms of those instruments.
The Company has at any one time a significant number of commitments to
extend credit. The accounts receivable are owed from a large number of customers
on normal credit terms and therefore there is a minimal customer concentration
and credit risk.
At year end the Company did not have any exposure relating to derivative
instruments.
INCOME TAXES
The company has elected S corporation status. Upper this status net income
flows through to the stockholders and is taxable to them. Accordingly, the
company has not incurred any provision for income tax obligations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities an
disclosure of contingent assets and liabilities at the date of the financial
F-56
<PAGE> 166
D&D AND COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
3. FIXED ASSETS
<TABLE>
<CAPTION>
1995 1996
--------------------------- --------------------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Coolers...................... $ 772,071 $ 398,571 $ 849,644 $ 542,803
Machinery and equipment...... 465,564 241,900 483,799 317,916
Motor vehicles............... 127,458 84,359 147,917 94,244
Leasehold improvements....... 10,000 267 10,000 523
---------- -------- ---------- --------
1,375,093 725,097 1,491,360 955,486
Accumulated depreciation..... 725,097 955,486
---------- ----------
Net book value............... $ 649,996 $ 535,874
========== ==========
</TABLE>
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1996
--------- -----------
(UNAUDITED)
<S> <C> <C>
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $1,520, maturing
August 1998............................................ $ 43,090 $ 28,125
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $447, maturing
February 2001.......................................... -- 18,590
Note payable bearing interest at 11%, repayable in
monthly principal and interest instalments of $4,894,
maturing August 2000................................... 214,926 178,020
Note payable bearing interest at 10.75%, repayable in
monthly principal and interest instalments of $1,735,
maturing March 1998.................................... 41,445 24,250
Note payable bearing interest at 11%, repayable in
monthly principal and interest instalments of $1,305,
maturing September 2000................................ 57,716 47,929
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $595, maturing
September 2000......................................... 27,511 22,649
Note payable bearing interest at 9.82%, repayable in
monthly principal and interest instalments of $2,446,
maturing August 1999................................... -- 68,618
Note payable bearing interest at 10%, repayable in
monthly principal and interest instalments of $261,
maturing July 1998..................................... 7,101 4,566
</TABLE>
F-57
<PAGE> 167
D&D AND COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996
<TABLE>
<CAPTION>
1995 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Note payable bearing interest at 12%, repayable in
monthly principal and interest instalments of $462,
maturing August 1997................................... -- 3,535
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $589, maturing
July 2000.............................................. 26,438 21,555
Note payable bearing interest at 10.75%, repayable in
monthly principal and interest instalments of $854,
maturing December 1998................................. 26,167 18,360
Note payable bearing interest at 8.58%, repayable in
monthly principal and interest instalments of$2,537,
maturing October 1997.................................. 51,609 24,552
Note payable bearing interest at 8.47%, repayable in
monthly principal and interest instalments of $2,259,
maturing June 1997..................................... 38,062 13,228
Note payable bearing interest at 10.75%, repayable in
monthly principal and interest instalments of $397..... 837 --
Note payable bearing interest at 8.75%, repayable in
monthly principal and interest instalments of
$1,821................................................. 20,846 --
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $785............. 3,084 --
Note payable bearing interest at 9%, repayable in monthly
principal and interest instalments of $895............. 6,926 --
Note payable bearing interest at 9.5%, repayable in
monthly principal and interest instalments of $490..... 4,243 --
-------- --------
570,001 473,977
Less portion due within one year......................... 185,910 178,897
-------- --------
$ 384,091 $ 295,080
======== ========
</TABLE>
The Company has pledged as collateral for the notes payable a first fixed
and floating charge on the fixed assets.
Principal repayments required in each of the next five years are as
follows:
<TABLE>
<S> <C>
1997................................................ $178,897
1998................................................ 126,964
1999................................................ 100,995
2000................................................ 66,233
2001................................................ 888
</TABLE>
F-58
<PAGE> 168
D&D AND COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996
5. STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
1995 1996
-------- -----------
(UNAUDITED)
<S> <C> <C>
(Increase) decrease in
Accounts receivable....................................... $(10,433) $ (37,795)
Inventories............................................... (5,109) (5,791)
Prepaid expenses.......................................... 300 --
-------- --------
(15,242) (43,586)
Decrease in accounts payable and accrued liabilities........ (33,873) (10,976)
-------- --------
Net change in non-cash working capital balances............. $(49,115) $ (54,562)
======== ========
</TABLE>
6. LEASE COMMITMENTS
The Company is committed under operating leases extending for various
periods to 2000. Future minimum lease payments are as follows:
<TABLE>
<S> <C>
1997................................................. $ 66,907
1998................................................. 56,185
1999................................................. 33,037
2000................................................. 4,982
</TABLE>
F-59
<PAGE> 169
FINANCIAL STATEMENTS
MARLBOROUGH EMPLOYMENT LIMITED
AND SUBSIDIARIES
(OPERATING AS WATER AT WORK LIMITED)
31 JANUARY 1997 AND 1996
KIDSONS IMPEY
CHARTERED ACCOUNTANTS
GLASGOW
F-60
<PAGE> 170
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 JANUARY 1997 AND 1996
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Company information................................................................... F-62
Director's report..................................................................... F-63
Statement of director's responsibilities.............................................. F-64
Auditors' report...................................................................... F-65
Profit and loss account............................................................... F-66
Balance sheet......................................................................... F-67
Cash flow statement................................................................... F-68
Notes................................................................................. F-69
</TABLE>
F-61
<PAGE> 171
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
COMPANY INFORMATION
31 JANUARY 1997 AND 1996
<TABLE>
<S> <C>
DIRECTOR........... S. Larson
SECRETARY.......... C. M. M. Hurley
REGISTERED Breckenridge House
OFFICE........... 274 Sauchiehall
Street
Glasgow
G2 3EH
AUDITORS........... Kidsons Impey
Chartered
Accountants
Breckenridge House
274 Sauchiehall
Street
Glasgow
G2 3EH
</TABLE>
F-62
<PAGE> 172
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
DIRECTOR'S REPORT
31 JANUARY 1997
The director presents his report and the audited financial statements for
the year ended 31 January 1997.
PRINCIPAL ACTIVITY
The principal activities of the group were the provision of management
services to a subsidiary company; the supply of mineral water cooling systems
and mineral water and; arranging distributors of drinks as an agent for the
holding company.
DIRECTOR
The director of the company during the year and his interest in the shares
of the company as recorded in the register of directors' interests was as
follows
<TABLE>
<CAPTION>
31 JANUARY 1997 1 FEBRUARY 1996
ORDINARY ORDINARY
SHARES SHARES
--------------- ---------------
<S> <C> <C>
J. Duffy................................... 19,999 19,999
</TABLE>
On 6 February 1997, J. Duffy and E. Duffy resigned as director and
secretary respectively. On the same date, S. Larson and C. M. M. Hurley were
appointed as director and secretary respectively. J. Duffy transferred his
shares to Sparkling Spring Water UK Limited on 6 February 1997.
AUDITORS
Kidsons Impey have agreed to offer themselves for re-appointment as
auditors.
SMALL COMPANY EXEMPTIONS
This report is prepared in accordance with the special provisions of Part
VII of the Companies Act 1985 relating to small companies.
On behalf of the board
S. Larson
Director
28 October, 1997
Breckenridge House
274 Sauchiehall Street
Glasgow
G2 3EH
F-63
<PAGE> 173
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
STATEMENT OF DIRECTOR'S RESPONSIBILITIES
Company law requires the director to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the director is required to
- select suitable accounting policies and apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The director is responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable him to ensure that the financial statements comply with
the Companies Act 1985. He is also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
On behalf of the board
S. Larson
Director
28 October, 1997
F-64
<PAGE> 174
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
AUDITORS' REPORT
AUDITORS' REPORT TO THE MEMBERS OF
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
We have audited the financial statements on pages F-65 to F-74 which have
been prepared under the historical cost convention and the accounting policies
set out on pages F-68 and F-69.
RESPECTIVE RESPONSIBILITIES OF THE DIRECTOR AND AUDITORS
As described on page F-63, the company's director is responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the director in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or error or other
irregularity. In forming our opinion we also evaluated the overall adequacy of
the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of the group's affairs as at 31 January 1997 and 1996 and of its profit
for the years then ended and have been properly prepared in accordance with the
Companies Act 1985.
Kidsons Impey
Glasgow Registered Auditors
Chartered Accountants
Glasgow
28 October, 1997
F-65
<PAGE> 175
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
PROFIT AND LOSS ACCOUNT
FOR THE YEARS ENDED 31 JANUARY 1997 AND 1996
<TABLE>
<CAPTION>
1996 1997
NOTE L L
---- ---------- ----------
<S> <C> <C> <C>
Turnover.................................................. 2 1,751,035 2,305,308
Cost of sales............................................. (447,314) (568,628)
----------
Gross profit.............................................. 1,303,721 1,736,680
Net operating expenses
Administrative expenses................................... (1,179,889) (1,346,427)
Other operating income.................................... 4,000 4,665
----------
Operating profit.......................................... 3 127,832 394,918
Interest payable.......................................... 5 (43,442) (40,182)
----------
Profit on ordinary activities before taxation............. 84,390 354,736
Taxation.................................................. (15,866) (99,755)
----------
Profit on ordinary activities after taxation.............. 68,524 254,981
Dividends................................................. 6 (10,000) --
----------
Retained profit for the year.............................. 15 58,524 254,981
==========
</TABLE>
Movements in reserves are shown in the notes to the financial statements.
None of the company's activities were acquired or discontinued during the
above two financial years.
There are no recognised gains and losses in 1997 or 1996 other than the
profit for the year.
F-66
<PAGE> 176
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
BALANCE SHEET
AT 31 JANUARY 1997 AND 1996
<TABLE>
<CAPTION>
1996 1997
--------------------- ---------------------
NOTE L L L L
---- -------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible assets...................... 7 110,367 165,229
Current assets
Stocks............................... 8 494,033 442,996
Debtors.............................. 9 319,043 566,264
Cash at bank and in hand............. 50,778 58,416
-------- ---------
863,854 1,067,676
Creditors: amounts falling due within
one year........................... 10 (698,651) (772,969)
-------- ---------
Net current assets................... 165,203 294,707
-------- -------
Total assets less current
liabilities.............. 275,570 459,936
Creditors: amounts falling due after
more than one year................. 11 (145,468) (74,853)
-------- -------
130,102 385,083
======== =======
Capital and reserves
Called up share capital.............. 13 20,000 20,000
Other reserves....................... 14 23,002 23,002
Profit and loss account.............. 15 87,100 342,081
-------- -------
Total shareholders'
funds.................... 12 130,102 385,083
======== =======
</TABLE>
These financial statements are prepared in accordance with the special
provisions of Part VII of the Companies Act 1985 relating to small companies.
The financial statements on pages 5 to 16 were approved by the director on
28 October, 1997.
S. Larson
Director
F-67
<PAGE> 177
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
CASH FLOW STATEMENT
FOR THE YEARS ENDED 31 JANUARY 1997 AND 1996
<TABLE>
<CAPTION>
1996 1997
------------------- ---------------------
NOTE L L L L
---- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net cash inflow from operating
activities.............................. 17 152,922 268,221
Returns on investments and servicing of
finance
Interest paid............................. (27,393) (24,389)
Interest element of finance lease rental
payments................................ (16,049) (15,793)
------- --------
(43,442) (40,182)
Taxation
Corporation tax paid...................... (7,386) (17,337)
Capital expenditure and financial
investment
Purchase of tangible fixed assets......... (33,217) (125,411)
Sale of tangible fixed assets............. 47,527 46,410
------- --------
14,310 (79,001)
------- --------
116,404 131,701
Equity dividends paid..................... (10,000) --
------- --------
106,404 131,701
Financing
Debt due within a year:
Bank loan repayments.................... (24,800) (31,738)
Debt due beyond a year:
Bank loan (repayments)/advances......... 91,076 (1,433)
Capital element of finance lease
rentals................................. (84,101) (90,892)
------- --------
(17,825) (124,063)
-------
Increase in cash.......................... 88,579 7,638
======= ========
</TABLE>
F-68
<PAGE> 178
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS
31 JANUARY 1997 AND 1996
1 ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost
accounting rules.
TURNOVER
Turnover represents the amount derived from the provision of goods and
services falling within the company's activities after deduction of trade
discounts and value added tax.
DEPRECIATION
Depreciation of fixed assets is calculated to write off their cost or
valuation less any residual value over their estimated useful lives as follows:
<TABLE>
<S> <C>
Leasehold property....................... straight line over term of lease
Improvements to property................. 12.5% straight line/over term of lease
Computer equipment/plant and machinery... 33.3% straight line/20% reducing balance
Motor vehicles........................... 25% reducing balance
Fixtures and fittings.................... 12.5% straight line/20% reducing balance
</TABLE>
LEASES AND HIRE PURCHASE CONTRACTS
Tangible fixed assets acquired under finance leases and hire purchase
contracts are capitalised at the estimated fair value at the date of inception
of each lease or contract. The total finance charges are allocated over the
period of the lease in such a way as to give a reasonably constant charge on the
outstanding liability.
Rentals paid under operating leases are charged to income as incurred.
STOCKS
Stocks are valued at the lower of cost and net realisable value. Cost is
computed on a first in first out basis. Net realisable value is based on
estimated selling price less the estimated cost of disposal.
DEFERRED TAXATION
Deferred taxation is provided on the liability method in respect of the
taxation effect of all timing differences to the extent that tax liabilities are
likely to crystallise in the foreseeable future.
PENSIONS
DEFINED CONTRIBUTION SCHEME
Contributions are charged to the profit and loss account as they become
payable in accordance with the rules of the scheme.
F-69
<PAGE> 179
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATION
These financial statements have been prepared by consolidating the
following financial statements:
Your Label Water Company Limited
Natural Water Company Limited
Water at Work Limited
The financial statements represent the results of the group as a whole and
do not show the individual company position.
2 TURNOVER
In the opinion of the directors, none of the turnover of the company is
attributable to geographical markets outside the UK. (1996 nil)
3 OPERATING PROFIT
<TABLE>
<CAPTION>
1996 1997
L L
------ ------
<S> <C> <C>
Operating profit is stated after crediting
Rent receivable........................................ 4,000 4,000
Interest receivable.................................... -- 665
------ ------
and after charging
Auditors' remuneration................................. 6,200 6,750
Loss on sale of assets................................. 25,742 11,390
------ ------
Depreciation of tangible fixed assets (note 7)
owned assets........................................... 10,617 32,985
leased assets.......................................... 18,608 10,739
------ ------
29,225 43,724
====== ======
The total amount charged against profits in respect of
finance leases and hire purchase contracts is.......... 34,657 26,532
====== ======
(of which part is shown as depreciation and the balance
is shown as interest payable in note 5)
</TABLE>
4 DIRECTORS
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Directors' emoluments.................................... 21,781 33,001
====== ======
</TABLE>
DEFINED CONTRIBUTION PENSION SCHEME
The company operates a defined contribution scheme. The assets of the
scheme are held separately from those of the company in an independently
administered fund. The pension cost charge represents contributions payable by
the company to the fund and amounted to L10,601 (1996 L7,381). Contributions
totalling L0 (1996 L0) were payable to the fund at 31 January 1997 and are
included in creditors. These contributions are payable in respect of both the
director and the employees of the company.
F-70
<PAGE> 180
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
5 INTEREST PAYABLE
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Finance lease and hire purchase contracts................ 16,049 15,793
Other interest payable................................... 27,393 24,389
------ ------
43,442 40,182
====== ======
</TABLE>
6 DIVIDENDS
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Equity -- ordinary/final................................. 10,000 --
====== ======
</TABLE>
7 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
PLANT FIXTURES LEASEHOLD
MOTOR AND AND PROPERTY/
VEHICLES MACHINERY FITTINGS IMPROVEMENTS TOTAL
L L L L L
-------- --------- -------- ------------ -------
<S> <C> <C> <C> <C> <C>
COST
1 February 1996................. 60,908 73,412 25,869 15,872 176,061
Additions....................... 44,775 110,589 1,022 -- 156,386
Disposals....................... (28,921) (47,265) (5,054) (1,446) (82,686)
------- ------- ------ ------ -------
31 January 1997................. 76,762 136,736 21,837 14,426 249,761
------- ------- ------ ------ -------
DEPRECIATION
1 February 1996................. 22,572 28,324 11,911 2,887 65,694
Charge for year................. 16,141 24,272 2,429 882 43,724
Disposals....................... (10,373) (11,875) (2,638) -- (24,886)
------- ------- ------ ------ -------
31 January 1997................. 28,340 40,721 11,702 3,769 84,532
------- ------- ------ ------ -------
NET BOOK AMOUNT
31 January 1997................. 48,422 96,015 10,135 10,657 165,229
======= ======= ====== ====== =======
1 February 1996................. 38,336 45,088 13,958 12,985 110,367
======= ======= ====== ====== =======
</TABLE>
The net book amount of fixed assets includes L30,141 (1996 L61,651) in
respect of assets held under finance leases and hire purchase contracts, the
depreciation of which is shown in note 3.
INTANGIBLE FIXED ASSETS
In addition to the above tangible fixed assets, the group has an intangible
fixed asset in the form of a lease over the site and the spring which has 13
years to run, with an option to extend it for a further 20 years. The company
also owns 3 boreholes, each of which has an abundant supply of water. These
assets have not been incorporated into the financial statements, but the former
director was of the opinion that they could realise the sum of L150,000.
8 STOCKS
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Stocks................................................. 494,033 442,996
======= =======
</TABLE>
F-71
<PAGE> 181
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
9 DEBTORS
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade debtors.......................................... 289,704 402,241
Other debtors.......................................... 29,339 164,023
------- -------
319,043 566,264
======= =======
</TABLE>
'Other debtors' includes balances in respect of directors' overdrawn
current accounts totalling L139,548 (1996 L0). This was repaid on 6 February
1997.
10 CREDITORS: amounts falling due within one year
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Bank loans and overdrafts.............................. 31,738 66,643
Trade creditors........................................ 108,729 117,602
Obligations under finance leases and hire purchase
contracts -- note 11................................. 62,081 40,386
Corporation tax........................................ 27,076 109,494
Other taxation and social security..................... 168,967 88,511
Other creditors........................................ 300,060 350,333
------- -------
698,651 772,969
======= =======
</TABLE>
F-72
<PAGE> 182
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
11 CREDITORS: amounts falling due after more than one year
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Bank loans............................................. 68,076 --
Other creditors........................................ 77,392 74,853
------- -------
145,468 74,853
======= =======
MATURITY OF DEBT INCLUDED ABOVE
In one year or less, or on demand...................... 31,738 66,643
Between one and two years.............................. 35,500 --
Between two and five years............................. 32,576 --
------- -------
99,814 66,643
======= =======
CREDITORS OTHER THAN FINANCE LEASE AND HIRE PURCHASE
CONTRACTS
SECURED CREDITORS
Bank loans and overdrafts.............................. 99,814 66,643
OBLIGATIONS UNDER FINANCE LEASES AND HIRE PURCHASE
CONTRACTS
Amounts included above are repayable over varying
periods by monthly instalments as follows:
In the next year....................................... 62,081 40,386
In the second to fifth years........................... 38,222 --
------- -------
100,303 40,386
======= =======
</TABLE>
12 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1996 1997
L L
------- -------
<S> <C> <C>
Profit for the financial year.......................... 68,524 254,981
Dividends.............................................. (10,000) --
------- -------
Net addition to shareholders' funds.................... 58,524 254,981
Opening shareholders' funds............................ 71,578 130,102
------- -------
Closing shareholders' funds............................ 130,102 385,083
======= =======
</TABLE>
13 CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1996 1997
-------------------- --------------------
NUMBER OF NUMBER OF
SHARES L SHARES L
--------- ------ --------- ------
<S> <C> <C> <C> <C>
AUTHORISED
Ordinary shares of L1 each...................... 50,000 50,000 50,000 50,000
====== ====== ====== ======
ALLOTTED CALLED UP AND FULLY PAID
Ordinary shares of L1 each...................... 20,000 20,000 20,000 20,000
====== ====== ====== ======
</TABLE>
F-73
<PAGE> 183
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
14 OTHER RESERVES
<TABLE>
<CAPTION>
1997
L
-------
<S> <C>
Negative goodwill................................................. 23,002
======
</TABLE>
15 PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
1997
L
-------
<S> <C>
1 February 1996................................................... 87,100
Retained profit for the year...................................... 254,981
-------
31 January 1997................................................... 342,081
=======
</TABLE>
16 ULTIMATE PARENT UNDERTAKING
During the year the company did not have a holding company. On 6 February
1997, the whole of the company's issued share capital was acquired by Sparkling
Spring Water UK Limited, a company incorporated in England.
17 NOTES TO THE CASH FLOW STATEMENT
RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
<TABLE>
<CAPTION>
1996 1997
L L
-------- ---------
<S> <C> <C>
Operating profit.................................... 127,832 394,918
Depreciation charges................................ 29,225 43,724
Loss on sale of fixed assets........................ 25,742 11,390
Decrease/(increase) in stocks....................... (110,830) 51,037
Increase in debtors................................. (46,850) (247,221)
Increase in creditors............................... 127,803 14,373
-------- --------
Net cash inflow from operating activities........... 152,922 268,221
======== ========
</TABLE>
ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
AT START CASH OTHER AT END
OF YEAR FLOWS CHANGES OF YEAR
L L L L
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash in hand, at bank.......................... 50,778 7,638 -- 58,416
Overdrafts..................................... -- -- -- --
--------
7,638
--------
Debt due within 1 year......................... (31,738) 31,738 (66,643) (66,643)
Debt due after 1 year.......................... (68,076) 1,433 66,643 --
Finance leases................................. (100,303) 90,892 (30,975) (40,386)
--------
124,063
-------- -------- ------- -------
Total................................ (149,339) 131,701 (30,975) (48,613)
======== ======== ======= =======
</TABLE>
F-74
<PAGE> 184
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
1996 1997
L L
-------- --------
<S> <C> <C>
Increase in cash in the year......................... 88,579 7,638
Cash outflow from decrease in debt and lease
financing.......................................... 17,825 124,063
-------- --------
Change in net debt resulting from cash flows......... 106,404 131,701
New finance leases................................... (22,366) (30,975)
-------- --------
Movement in net debt in the year..................... 84,038 100,726
Net debt at 1 February 1996.......................... (233,377) (149,339)
-------- --------
Net debt at 31 January 1997.......................... (149,339) (48,613)
======== ========
</TABLE>
19 DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United Kingdom, which conform, in all
material respects, with accounting principles generally accepted in the United
States except as explained below.
If Marlborough Employment Limited had followed the US basis, the net effect
on consolidated profits would be:
<TABLE>
<CAPTION>
1996 1997
L L
------ --------
<S> <C> <C>
Retained profits, UK basis............................. 58,524 254,981
Reallocation to reserves -- dividends.................. 10,000 --
-------- --------
Retained profits, US basis............................. 68,524 254,981
======== ========
</TABLE>
F-75
<PAGE> 185
MARLBOROUGH EMPLOYMENT LIMITED AND SUBSIDIARIES
NOTES ON FINANCIAL STATEMENTS -- (CONTINUED)
======================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained herein and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any security other than those to which it
relates nor does it constitute an offer to sell, or a solicitation of an offer
to buy, to any person in any jurisdiction in which such offer or solicitation is
not authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor the exchange
proposed to be made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
time subsequent to the date hereof.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Summary............................... 1
Risk Factors.......................... 12
Use of Proceeds....................... 20
The Offering.......................... 20
Capitalization........................ 21
Unaudited Pro Forma Consolidated
Financial Data...................... 22
Selected Historical Consolidated
Financial Data...................... 30
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 31
The Exchange Offer.................... 35
The Company........................... 47
Management............................ 62
Certain Relationships and Related
Transactions........................ 65
Security Ownership of Certain
Beneficial Owners and Management.... 67
Description of the Credit Agreement... 68
Certain Federal Income Tax
Considerations...................... 69
Description of the Notes.............. 70
Book Entry; Delivery and Form......... 100
Plan of Distribution.................. 101
Legal Matters......................... 102
Independent Auditors.................. 102
Additional Information................ 103
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
======================================================
======================================================
-------------------
PROSPECTUS
-------------------
$100,000,000
LOGO
SPARKLING SPRING WATER GROUP LIMITED
OFFER TO EXCHANGE
11 1/2% SENIOR SUBORDINATED NOTES
DUE 2007
, 1997
======================================================
<PAGE> 186
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law contains detailed
provisions for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation.
Article Tenth of the Certificate of Incorporation of each of Spring Water,
Inc., a wholly-owned subsidiary of Sparkling Spring ("Spring Water"), Mountain
Fresh Acquisition Corp., a wholly-owned subsidiary of Sparkling Spring ("MFA"),
and Crystal Spring Acquisition, Inc., a wholly-owned subsidiary of Sparkling
Spring ("CSA"), provides that each company shall indemnify its officers and
directors to the fullest extent permitted by law and further provides that to
the fullest extent permitted by the Delaware General Corporation Law as the same
exists or may hereafter be amended, a director of the company shall not be
liable to the company or its stockholders for monetary damages for breach of
fiduciary duty as a director.
Section 145 of the Delaware General Corporation Law further permits each of
Spring Water, MFA and CSA to insure itself for such indemnification.
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act contains detailed provisions for indemnification of directors
and officers of Washington corporations against expenses, judgments, fines and
settlements in connection with litigation.
Section 23B.08.580 Washington Business Corporation Act further permits
Cullypring to insure itself for such indemnification.
Each of Spring Water, MFA, CSA and Cullyspring maintains insurance coverage
for its directors and officers with respect to certain liabilities incurred in
their capacities as such and for each company with respect to any payments which
it becomes obligated to make to such persons under the foregoing statutory
provisions.
Each of Sparkling Spring, SSWL, Water Jug, Canadian Springs, 3003969 Nova
Scotia Limited (a wholly-owned subsidiary of Sparkling Spring), High Valley,
Aqua Care Water Softening & Purification Inc. (a wholly-owned subsidiary of
Sparkling Spring) and Withey's Water have similar articles of association which
provide that every director or officer or former director or officer who acts at
the company's request as a director or officer of the company shall be
indemnified by the company against, and it shall be the duty of the directors
out of the funds of the company to pay, all costs, losses and expenses including
any amount paid to settle an action or a claim that such director or officer may
incur or become liable to pay in respect of any claim against such person by
reason of being or having been a director or officer of the company.
In addition, Sparkling Spring and SSWL have entered into a specific
indemnity agreement with a certain officer by which they have agreed on behalf
of themselves and each of their Canadian subsidiary companies to indemnify and
hold such officer harmless from and against any damage which he may suffer as a
result of having acted as an officer or director of Sparkling Spring or any of
its subsidiary companies.
SSWL maintains insurance coverage for its directors and officers with
respect to certain liabilities which may be incurred in their capacities as
officers and directors and which the companies become obligated to make to such
persons under the foregoing provisions of the companies constating documents.
Sparkling Spring is in the process of obtaining similar insurance.
Section 310 of the Companies Act 1985 (the "CA") makes void any provision,
whether contained in the articles of the company or any contract with the
company or otherwise, for exempting any officer of the company or any person
(whether an officer or not) employed by the company as auditor from, or
indemnifying him against, any liability which by virtue of any rule of law would
otherwise attach to him in respect of any negligence, default or breach of duty
or breach of trust of which he may be guilty of in relation to the company.
II-1
<PAGE> 187
However, Section 137 of the Companies Act 1989 substituted a new Subsection
3 for Section 310 of the CA which provides that a company may purchase and
maintain for any officer or auditor insurance against the liabilities which may
attach to such person in respect of any negligence, default, breach of duty or
breach of trust. Furthermore, Section 310(3)(b) of the CA allows a company to
indemnity an officer or auditor who is a successful defendant in civil or
criminal proceedings or who successfully applies for relief under Section 144(3)
of the CA (acquisition of shares by innocent nominee) or Section 727 of the CA
(general power to grant relief in cases of honest and reasonable conduct) in
which relief is granted to him by the court.
The articles of association of SSWUK provide that every director, auditor,
secretary or other officer of SSWUK shall be entitled to be indemnified by SSWUK
against all costs, charges, claims, expenses and liabilities incurred by him in
the execution and/or discharge of his duty and all the exercise of his powers
and/or otherwise in relation to or in connection with his duties, including any
liability incurred by him in defending criminal or civil proceedings in which
judgment is given in his favor or in which he is acquitted or in connection with
any application under any statute for relief from liability in which relief is
granted to him by the court.
The articles of association of Aquaporte UK provide that every director,
secretary, auditor or other officer of Aquaporte UK shall be entitled to be
indemnified by Aquaporte UK against all losses and liabilities incurred by him
in the exercise of his duties, including any liability incurred in defending any
civil or criminal proceedings in which judgment is given in his favor or in
which he is acquitted or in connection with any application in which relief is
granted to him by the court from liability in respect of the act or omission
done.
The articles of association of Natural Water Limited, a wholly-owned
subsidiary of Sparkling Spring, provide that each director and officer of
Natural Water Limited shall be entitled to be indemnified against costs,
charges, losses and expenses incurred in defending any proceedings civil or
criminal in which judgment is given in his favor in which he is acquitted or in
connection with any application under Section 144(3) or (4) or Section 77 of the
CA in which the court relieves him from liability.
There is no specific provision included in the articles of association of
Marlborough Employment Limited, a wholly-owned subsidiary of Sparkling Spring,
dealing with directors indemnities. The Articles of Table A of the Companies Act
1948 apply to Marlborough Employment Limited. The relevant provision dictates
that each director and other officer shall be indemnified out of the assets of
the company against any liability incurred in defending any proceedings (whether
criminal or civil) in which judgment is given in his favor or in which he is
acquitted or in connection with any application under Section 448 of the
Companies Act 1948 in which relief is granted by the court.
In addition to the indemnity contained in Article 118 of Table A of the CA,
the articles of association of Water at Work provide that every director,
officer or official shall be indemnified for all costs, charges, losses,
expenses and liability incurred in the execution of his duties. Article 118 of
Table A of the CA provides that each director and officer of the company shall
be indemnified out of the assets of the company against any liability incurred
in defending any proceedings, civil or criminal, in which judgment is given in
his favor or in which he is acquitted or in connection with any application in
which relief is granted to him by the court from liability from negligence,
default, breach of duty or breach of trust in relation to the affairs of the
company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<C> <S>
3.1 Memorandum of Association of Sparkling Spring Water Group Limited, as amended.
3.2 Articles of Association of Sparkling Spring Water Group Limited.
3.3 Memorandum of Association of Sparkling Spring Water Limited.
3.4 Articles of Association of Sparkling Spring Water Limited.
3.5 Certificate of Incorporation of Spring Water, Inc.
</TABLE>
II-2
<PAGE> 188
<TABLE>
<C> <S>
3.6 By-laws of Spring Water, Inc.
3.7 Articles of Incorporation of Cullyspring Water Co., Inc.
3.8 By-laws of Cullyspring Water Co., Inc., as amended.
3.9 Certificate of Incorporation of Crystal Spring Acquisition, Inc.
3.10 By-laws of Crystal Spring Acquisition, Inc.
3.11 Certificate of Incorporation of Mountain Fresh Acquisition Corp.
3.12 By-laws of Mountain Fresh Acquisition Corp.
3.13 Memorandum of Association of Water Jug Enterprises Limited.
3.14 Articles of Association of Water Jug Enterprises Limited.
3.15 Memorandum of Association of Withey's Water Softening & Purification Ltd.
3.16 Articles of Association of Withey's Water Softening & Purification Ltd.
3.17 Memorandum of Association of Aqua Care Water Softening & Purification Inc.
3.18 Articles of Association of Aqua Care Water Softening & Purification Inc.
3.19 Memorandum of Association of High Valley Water Limited.
3.20 Articles of Association of High Valley Water Limited.
3.21 Memorandum of Association of 3003969 Nova Scotia Limited.
3.22 Articles of Association of 3003969 Nova Scotia Limited.
3.23 Memorandum of Association of Canadian Springs Water Company Limited.
3.24 Articles of Association of Canadian Springs Water Company Limited.
3.25 Memorandum of Association of Sparkling Spring Water (UK) Limited.
3.26 Articles of Association of Sparkling Spring Water (UK) Limited.
3.27 Memorandum of Association of Aquaporte (UK) Limited.
3.28 Articles of Association of Aquaporte (UK) Limited.
3.29 Memorandum of Association of Marlborough Employment Limited.
3.30 Articles of Association of Marlborough Employment Limited.
3.31 Memorandum of Association of Water at Work Limited.
3.32 Articles of Association of Water at Work Limited.
3.33 Memorandum of Association of Natural Water Limited.
3.34 Articles of Association of Natural Water Limited.
4 Indenture, dated as of November 19, 1997, among Sparkling Spring Water Group Limited,
as Issuer, Bankers Trust Company, as Trustee, and the Subsidiary Guarantors named
therein.
5.1 Opinion of Robinson & Cole LLP.
5.2 Opinion of Lane Powell Spears Lubersky LLP.
5.3 Opinion of Stewart McKelvey Stirling Scales.
5.4 Opinion of Norton Rose.
5.5 Opinion of Dundas & Wilson.
10.1 Purchase Agreement, dated November 14, 1997, among Sparkling Spring Water Group
Limited, BT Alex. Brown Incorporated, NatWest Capital Markets Limited and the
Guarantors named therein.
10.2 Registration Rights Agreement, dated as of November 19, 1997, among Sparkling Spring
Water Group Limited and the Guarantors named therein, as Issuers, and BT Alex. Brown
Incorporated and NatWest Capital Markets Limited as Initial Purchasers.
10.3 Employment Agreement, dated October 2, 1997, between Sparkling Spring Water Limited
and Stewart E. Allen.
10.4 Shareholder Agreement, dated as of October 22, 1997, among Sparkling Spring Water
Group Limited, Sparkling Spring Water Limited, and the Shareholders named therein.
10.5 Management Agreement, as amended and restated January 12, 1996, among Sparkling
Spring Water Limited, C.F. Capital Corporation, G. John Krediet and Stephen L.
Larson.
10.6 Amendment Agreement, dated October 22, 1997, among Sparkling Spring Water Limited,
C.F. Capital Corporation, G. John Krediet, Stephen L. Larson and Sparkling Spring
Water Group Limited.
</TABLE>
II-3
<PAGE> 189
<TABLE>
<C> <S>
10.7 Form of Exchange Agent Agreement between Sparkling Spring Water Group Limited and
Bankers Trust Company, as Exchange Agent.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young.
23.2 Consent of Kidsons Impey.
23.3 Consent of Robinson & Cole LLP (included in Exhibit 5.1).
23.4 Consent of Lane Powell Spears Lubersky LLP (included in Exhibit 5.2).
23.5 Consent of Stewart McKelvey Stirling Scales (included in Exhibit 5.3).
23.6 Consent of Norton Rose (included in Exhibit 5.4).
23.7 Consent of Dundas & Wilson (included in Exhibit 5.5).
24.1 Power of Attorney for Sparkling Spring Water Group Limited (included in signature
page of Sparkling Spring Water Group Limited on page II-6).
24.2 Power of Attorney for Sparkling Spring Water Limited (included in signature page of
Sparkling Spring Water Limited on page II-7).
24.3 Power of Attorney for Spring Water, Inc. (included in signature page of Spring Water,
Inc. on page II-8).
24.4 Power of Attorney for Cullyspring Water Co., Inc. (included in signature page of
Cullyspring Water Co., Inc. on page II-9).
24.5 Power of Attorney for Crystal Spring Acquisition, Inc. (included in signature page of
Crystal Spring Acquisition, Inc. on page II-10).
24.6 Power of Attorney for Mountain Fresh Acquisition Corp (included in signature page of
Mountain Fresh Acquisition Corp on page II-11).
24.7 Power of Attorney for Water Jug Enterprises Limited (included in signature page of
Water Jug Enterprises Limited on page II-12).
24.8 Power of Attorney for Withey's Water Softening & Purification Ltd. (included in
signature page of Withey's Water Softening & Purification Ltd. on page II-13).
24.9 Power of Attorney for Aqua Care Water Softening & Purification Inc. (included in
signature page of Aqua Care Water Softening & Purification Inc. on page II-14).
24.10 Power of Attorney for High Valley Water Limited (included in signature page of High
Valley Water Limited on page II-15).
24.11 Power of Attorney for 3003969 Nova Scotia Limited (included in signature page of
3003969 Nova Scotia Limited on page II-16).
24.12 Power of Attorney for Canadian Springs Water Company Limited (included in signature
page of Canadian Springs Water Company Limited on page II-17).
24.13 Power of Attorney for Sparkling Spring Water (UK) Limited (included in signature page
of Sparkling Spring Water (UK) Limited on page II-18).
24.14 Power of Attorney for Aquaporte (UK) Limited (included in signature page of Aquaporte
(UK) Limited on page II-19).
24.15 Power of Attorney for Marlborough Employment Limited (included in signature page of
Marlborough Employment Limited on page II-20).
24.16 Power of Attorney for Water at Work Limited (included in signature page of Water at
Work Limited on page II-21).
24.17 Power of Attorney for Natural Water Limited (included in signature page of Natural
Water Limited on page II-22).
25 Statement of Eligibility on Form T-1 of Trustee under the Indenture.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
(B) FINANCIAL STATEMENT SCHEDULES.
All schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission are not required under the related
instructions or are inapplicable or the required information is included in the
financial statements or notes thereto and, therefore, have been omitted.
II-4
<PAGE> 190
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes: (i) to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means; and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests. The
undertaking in subparagraph (i) above includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 191
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
SPARKLING SPRING WATER GROUP LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen L. Larson and Richard A. Krantz his true
and lawful attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes may lawfully do and
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ G. JOHN KREDIET Principal Executive Officer and Director
- ---------------------------------------------
G. John Krediet
/s/ STEPHEN L. LARSON Principal Financial and Accounting Officer,
- --------------------------------------------- Authorized Representative in the United
Stephen L. Larson States and Director
/s/ MICHAEL BREGMAN Director
- ---------------------------------------------
Michael Bregman
/s/ C. SEAN DAY Director
- ---------------------------------------------
C. Sean Day
/s/ KENNETH B. ROTMAN Director
- ---------------------------------------------
Kenneth B. Rotman
</TABLE>
II-6
<PAGE> 192
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
SPARKLING SPRING WATER LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen L. Larson and Richard A. Krantz his true
and lawful attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes may lawfully do and
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ G. JOHN KREDIET Principal Executive Officer and Director
- ---------------------------------------------
G. John Krediet
/s/ STEPHEN L. LARSON Principal Financial and Accounting Officer,
- --------------------------------------------- Authorized Representative in the United
Stephen L. Larson States and Director
/s/ MICHAEL BREGMAN Director
- ---------------------------------------------
Michael Bregman
/s/ C. SEAN DAY Director
- ---------------------------------------------
C. Sean Day
/s/ KENNETH B. ROTMAN Director
- ---------------------------------------------
Kenneth B. Rotman
</TABLE>
II-7
<PAGE> 193
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
SPRING WATER, INC.
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Stephen L.
- --------------------------------------------- Larson Principal Financial and Accounting
Stephen L. Larson Officer and Director
</TABLE>
II-8
<PAGE> 194
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
CULLYSPRING WATER CO., INC.
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Stephen L.
- --------------------------------------------- Larson Principal Financial and Accounting
Stephen L. Larson Officer and Director
</TABLE>
II-9
<PAGE> 195
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
CRYSTAL SPRING ACQUISITION, INC.
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer and
Stephen L. Larson Director
</TABLE>
II-10
<PAGE> 196
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
MOUNTAIN FRESH ACQUISITION CORP.
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer and
Stephen L. Larson Director
</TABLE>
II-11
<PAGE> 197
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
WATER JUG ENTERPRISES LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-12
<PAGE> 198
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
WITHEY'S WATER SOFTENING & PURIFICATION LTD.
By: /s/ STEPHEN L. LARSON
-----------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Stephen L. Larson
- --------------------------------------------- Principal Financial and Accounting Officer,
Stephen L. Larson Authorized Representative in the United
States and Director
</TABLE>
II-13
<PAGE> 199
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
AQUA CARE WATER SOFTENING & PURIFICATION
INC.
By: /s/ STEPHEN L. LARSON
-----------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Stephen L. Larson
- --------------------------------------------- Principal Financial and Accounting Officer,
Stephen L. Larson Authorized Representative in the United
States and Director
</TABLE>
II-14
<PAGE> 200
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
HIGH VALLEY WATER LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-15
<PAGE> 201
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
3003969 NOVA SCOTIA LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-16
<PAGE> 202
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
CANADIAN SPRINGS WATER COMPANY LIMITED
By: /s/ STEPHEN L. LARSON
-------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-17
<PAGE> 203
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
SPARKLING SPRING WATER (UK) LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-18
<PAGE> 204
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
AQUAPORTE (UK) LIMITED
By: /s/ STEPHEN L. LARSON
------------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- --------------------------------------------- Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-19
<PAGE> 205
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
MARLBOROUGH
EMPLOYMENT LIMITED
By: /s/ STEPHEN L. LARSON
--------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -----------------------------------------------
<S> <C>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- ------------------------------------------ Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-20
<PAGE> 206
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
WATER AT WORK LIMITED
By: /s/ STEPHEN L. LARSON
--------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -----------------------------------------------
<S> <C>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- ------------------------------------------ Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-21
<PAGE> 207
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on this 22nd day of December 1997.
NATURAL WATER LIMITED
By: /s/ STEPHEN L. LARSON
--------------------------------
Stephen L. Larson
Vice Chairman of the Board
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard A. Krantz his true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, acting alone, full power and authority to do and
perform to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting alone,
or his substitute or substitutes may lawfully do and cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on December 22,
1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -----------------------------------------------
<S> <C>
/s/ STEPHEN L. LARSON Principal Executive Officer, Principal
- ------------------------------------------ Financial and Accounting Officer, Authorized
Stephen L. Larson Representative in the United States and
Director
</TABLE>
II-22
<PAGE> 208
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ------------------------------------------------------------------------- ----------
<C> <S> <C>
3.1 Memorandum of Association of Sparkling Spring Water Group Limited, as
amended.
3.2 Articles of Association of Sparkling Spring Water Group Limited.
3.3 Memorandum of Association of Sparkling Spring Water Limited.
3.4 Articles of Association of Sparkling Spring Water Limited.
3.5 Certificate of Incorporation of Spring Water, Inc.
3.6 By-laws of Spring Water, Inc.
3.7 Articles of Incorporation of Cullyspring Water Co., Inc.
3.8 By-laws of Cullyspring Water Co., Inc., as amended.
3.9 Certificate of Incorporation of Crystal Spring Acquisition, Inc.
3.10 By-laws of Crystal Spring Acquisition, Inc.
3.11 Certificate of Incorporation of Mountain Fresh Acquisition Corp.
3.12 By-laws of Mountain Fresh Acquisition Corp.
3.13 Memorandum of Association of Water Jug Enterprises Limited.
3.14 Articles of Association of Water Jug Enterprises Limited.
3.15 Memorandum of Association of Withey's Water Softening & Purification Ltd.
3.16 Articles of Association of Withey's Water Softening & Purification Ltd.
3.17 Memorandum of Association of Aqua Care Water Softening & Purification
Inc.
3.18 Articles of Association of Aqua Care Water Softening & Purification Inc.
3.19 Memorandum of Association of High Valley Water Limited.
3.20 Articles of Association of High Valley Water Limited.
3.21 Memorandum of Association of 3003969 Nova Scotia Limited.
3.22 Articles of Association of 3003969 Nova Scotia Limited.
3.23 Memorandum of Association of Canadian Springs Water Company Limited.
3.24 Articles of Association of Canadian Springs Water Company Limited.
3.25 Memorandum of Association of Sparkling Spring Water (UK) Limited.
3.26 Articles of Association of Sparkling Spring Water (UK) Limited.
3.27 Memorandum of Association of Aquaporte (UK) Limited.
3.28 Articles of Association of Aquaporte (UK) Limited.
3.29 Memorandum of Association of Marlborough Employment Limited.
3.30 Articles of Association of Marlborough Employment Limited.
3.31 Memorandum of Association of Water at Work Limited.
3.32 Articles of Association of Water at Work Limited.
3.33 Memorandum of Association of Natural Water Limited.
3.34 Articles of Association of Natural Water Limited.
4 Indenture, dated as of November 19, 1997, among Sparkling Spring Water
Group Limited, as Issuer, Bankers Trust Company, as Trustee, and the
Subsidiary Guarantors named therein.
5.1 Opinion of Robinson & Cole LLP.
5.2 Opinion of Lane Powell Spears Lubersky LLP.
5.3 Opinion of Stewart McKelvey Stirling Scales.
5.4 Opinion of Norton Rose.
5.5 Opinion of Dundas & Wilson.
10.1 Purchase Agreement, dated November 14, 1997, among Sparkling Spring Water
Group Limited, BT Alex. Brown Incorporated, NatWest Capital Markets
Limited and the Guarantors named therein.
</TABLE>
II-23
<PAGE> 209
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ------------------------------------------------------------------------- ----------
<C> <S> <C>
10.2 Registration Rights Agreement, dated as of November 19, 1997, among
Sparkling Spring Water Group Limited and the Guarantors named therein, as
Issuers, and BT Alex. Brown Incorporated and NatWest Capital Markets
Limited as Initial Purchasers.
10.3 Employment Agreement, dated October 2, 1997, between Sparkling Spring
Water Limited and Stewart E. Allen.
10.4 Shareholder Agreement, dated as of October 22, 1997, among Sparkling
Spring Water Group Limited, Sparkling Spring Water Limited, and the
Shareholders named therein.
10.5 Management Agreement, as amended and restated January 12, 1996, among
Sparkling Spring Water Limited, C.F. Capital Corporation, G. John Krediet
and Stephen L. Larson.
10.6 Amendment Agreement, dated October 22, 1997, among Sparkling Spring Water
Limited, C.F. Capital Corporation, G. John Krediet, Stephen L. Larson and
Sparkling Spring Water Group Limited.
10.7 Form of Exchange Agent Agreement between Sparkling Spring Water Group
Limited and Bankers Trust Company, as Exchange Agent.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young.
23.2 Consent of Kidsons Impey.
23.3 Consent of Robinson & Cole LLP (included in Exhibit 5.1).
23.4 Consent of Lane Powell Spears Lubersky LLP (included in Exhibit 5.2).
23.5 Consent of Stewart McKelvey Stirling Scales (included in Exhibit 5.3).
23.6 Consent of Norton Rose (included in Exhibit 5.4).
23.7 Consent of Dundas & Wilson (included in Exhibit 5.5).
24.1 Power of Attorney for Sparkling Spring Water Group Limited (included in
signature page of Sparkling Spring Water Group Limited on page II-6).
24.2 Power of Attorney for Sparkling Spring Water Limited (included in
signature page of Sparkling Spring Water Limited on page II-7).
24.3 Power of Attorney for Spring Water, Inc. (included in signature page of
Spring Water, Inc. on page II-8).
24.4 Power of Attorney for Cullyspring Water Co., Inc. (included in signature
page of Cullyspring Water Co., Inc. on page II-9).
24.5 Power of Attorney for Crystal Spring Acquisition, Inc. (included in
signature page of Crystal Spring Acquisition, Inc. on page II-10).
24.6 Power of Attorney for Mountain Fresh Acquisition Corp (included in
signature page of Mountain Fresh Acquisition Corp on page II-11).
24.7 Power of Attorney for Water Jug Enterprises Limited (included in
signature page of Water Jug Enterprises Limited on page II-12).
24.8 Power of Attorney for Withey's Water Softening & Purification Ltd.
(included in signature page of Withey's Water Softening & Purification
Ltd. on page II-13).
24.9 Power of Attorney for Aqua Care Water Softening & Purification Inc.
(included in signature page of Aqua Care Water Softening & Purification
Inc. on page II-14).
24.10 Power of Attorney for High Valley Water Limited (included in signature
page of High Valley Water Limited on page II-15).
24.11 Power of Attorney for 3003969 Nova Scotia Limited (included in signature
page of 3003969 Nova Scotia Limited on page II-16).
24.12 Power of Attorney for Canadian Springs Water Company Limited (included in
signature page of Canadian Springs Water Company Limited on page II-17).
</TABLE>
II-24
<PAGE> 210
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ------------------------------------------------------------------------- ----------
<C> <S> <C>
24.13 Power of Attorney for Sparkling Spring Water (UK) Limited (included in
signature page of Sparkling Spring Water (UK) Limited on page II-18).
24.14 Power of Attorney for Aquaporte (UK) Limited (included in signature page
of Aquaporte (UK) Limited on page II-19).
24.15 Power of Attorney for Marlborough Employment Limited (included in
signature page of Marlborough Employment Limited on page II-20).
24.16 Power of Attorney for Water at Work Limited (included in signature page
of Water at Work Limited on page II-21).
24.17 Power of Attorney for Natural Water Limited (included in signature page
of Natural Water Limited on page II-22).
25 Statement of Eligibility on Form T-1 of Trustee under the Indenture.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
II-25
<PAGE> 1
Exhibit 3.1
MEMORANDUM OF ASSOCIATION
OF
3012919 NOVA SCOTIA LIMITED
1. The name of the Company is 3012919 NOVA SCOTIA LIMITED.
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
(1) to sell or dispose of its undertaking, or a substantial part
thereof;
(2) to distribute any of its property in specie among its members; and
(3) to amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The Company proposes to issue:
(a) 1,000,000 Class A Voting Common Shares with a par value of $0.0001
each;
(b) 1,000,000 Class B Voting Common Shares with a par value of $6.7790
each;
(c) 1,000,000 Class C Voting Common Shares with a par value of $1.8406
each;
(d) 10,000,000 Class D Voting Common Shares without nominal or par
value;
(e) 10,000,000 Class E Non-Voting common shares without a nominal or par
value; and
(f) 10,000,000 Special Preferred Shares with a par value of $1.00 each,
issuable in series;
each having the rights, conditions, restrictions and limitations set out
in Exhibit A-1 hereto, with power to divide the shares in the capital for
the time being into classes or series and to attach thereto respectively
any preferred, deferred or qualified rights, privileges or conditions,
including restrictions on voting rights and including redemption, purchase
and other acquisition of such shares, subject, however, to the provisions
of the Companies Act (Nova Scotia).
I, the undersigned, whose name, address and occupation are subscribed, am
desirous of being formed into a company in pursuance of this Memorandum of
Association, and I agree to
<PAGE> 2
take the number and kind of shares in the capital stock of the Company written
opposite my name.
NAME, ADDRESS & OCCUPATION NO. & KIND OF SARES TAKEN OF
SUBSCRIBER BY THE SUBSCRIBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL SHARES TAKEN: one common share
DATED this 22nd day of October, 1997.
Witness to the above signature: --------------------------------
Name of Witness
900-1959 Upper Water St.,
Halifax, Nova Scotia, B3J 2X2
--------------------------------
Address
--------------------------------
Occupation
<PAGE> 3
EXHIBIT A-1
3012919 NOVA SCOTIA LIMITED
Class A Common Shares, Class B Common Shares, Class C Common Shares,
Class D Common Shares and Class E Common Shares
Conditions attaching to Class A Common Shares, Class B Common Shares, Class C
Common Shares, Class D Common Shares and Class E Common Shares:
1. The Class A Common Shares, the Class B Common Shares, the Class C Common
Shares, the Class D Common Shares and the Class E Common Shares shall rank
equal, pari passu, share for share, with each other and entitle the
respective holders thereof to the same rights and benefits except as
otherwise provided for by these conditions.
2. The Class A Common Shares, the Class B Common Shares, the Class C Common
Shares, and the Class D Common Shares shall carry the right to one vote
per share at all meetings of the shareholders of the Company.
3. The holders of the Class E Common Shares shall not be entitled to receive
notice of any meeting of the shareholders of the Company or to attend any
such meeting or to vote thereat.
Special Preferred Shares
Rights, privileges, restrictions and conditions applicable to Special Preferred
Shares:
1. Issuable in Series
(a) The Special Preferred Shares may at any time and from time to time be
issued in one or more series as determined by the Board of Directors of the
Company (the "Directors").
2. Directors' Authority to Issue in One or More Series
(a) Before any shares of a particular series are issued, the Directors by
resolution shall fix the number of shares in such series and shall determine,
subject to any limitations set out in the articles, the designation, rights,
privileges, restrictions and conditions to attach to the shares of such series
including, without limiting or restricting the generality of the foregoing, the
rate or- rates, amount or method or methods of calculation of preferential
dividends, whether cumulative, non-cumulative or partially cumulative, and
whether such rate(s), amount or method(s) of calculation shall be subject to
change or adjustment in the future, the currency or currencies of payment, the
date or dates and place or places of payment thereof and the date or dates from
which such preferential dividends shall accrue, the redemption price and terms
and conditions of redemption (if any), the rights of retraction (if any), and
the prices and other terms and conditions of any rights of retraction and
whether any additional
<PAGE> 4
rights of retraction may be provided to such holders in the future, voting
rights and conversion or exchange rights (if any) and any sinking fund, purchase
fund or other provisions attaching thereto. Such resolution shall be the only
authorization required to fix such designation, priorities, preferences, rights,
privileges, restrictions and conditions and to authorize such issuance and no
approval, sanction or confirmation of such resolution by the shareholders of the
Company or otherwise shall be required.
3. Ranking of Special Preferred Shares
(a) Dissolution
The Special Preferred Shares of each series shall rank on a parity with
the Special Preferred Shares of every other series with respect to priority in
the distribution of assets of the Company in the event of the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, or
any other distribution of the assets of the Company among its shareholders for
the purpose of winding up its affairs.
(b) Dividends
Subject to any priorities with respect to dividends which may be attached
to any series of Special Preferred Shares over any other series of Special
Preferred Shares, the Special Preferred Shares of each series shall participate
rateably with the Special Preferred Shares of every other series with respect to
dividends.
(c) Redemption or Repurchase
Subject to any redemption or repurchase rights which may from time to time
be attached to any series of Special Preferred Shares, the Special Preferred
Shares of each series shall participate rateably with the Special Preferred
Shares of every other series with respect to redemption or repurchase rights.
(d) Voting Rights
Except as hereinafter referred to or as otherwise provided by law or in
accordance with any voting rights which may from time to time be attached to any
series of Special Preferred Shares, the holders of the Special Preferred Shares
as a class shall not be entitled as such to receive notice of, to attend or to
vote at any meeting of the shareholders of the Company.
(e) Other Preferences
The Special Preferred Shares of any series may also be given such other
preferences not inconsistent with the provisions hereof over all classes of
common shares in the capital stock of the Company and over any other shares
ranking junior to the Special Preferred Shares as may be determined in the case
of such series of Special Preferred Shares.
2
<PAGE> 5
4. Approval of Holders of Special Preferred Shares
(a) The rights, privileges, restrictions and conditions attaching to the
Special Preferred Shares as a class may be added to, changed or removed but only
with the approval of the holders of the Special Preferred Shares given as
hereinafter specified.
(b) The approval of the holders of Special Preferred Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Special Preferred Shares as a class or to any other matter requiring the consent
of the holders of the Special Preferred Shares as a class may be given in such
manner as may then be required by law, subject to a minimum requirement that
such approval shall be given by resolution passed by the affirmative vote of at
least three-quarters of the votes cast at a meeting of the holders of Special
Preferred Shares duly called for that purpose. The formalities to be observed in
respect of the giving of notice of any such meeting or any adjourned meeting and
the conduct thereof shall be those from time to time required by the Companies
Act (Nova Scotia) and prescribed in the Articles of the Company with respect to
meetings of shareholders and modification of rights of shareholders. On every
poll taken at a meeting of holders of Special Preferred Shares as a class, each
holder entitled to vote thereat shall have one vote in respect of each $1 of the
issue price of each Special Preferred Share held.
3
<PAGE> 1
Exhibit 3.2
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 2
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 4
25. Shareholder advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 5
<PAGE> 2
-ii-
LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 6
45. Right of executor of sole shareholder 6
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 7
51. Terms of issue of new shares 7
52. New shares may be offered to existing shareholders 7
53. New capital within control of directors 7
54. Reduction of capital 7
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 8
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 8
<PAGE> 3
-iii-
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 9
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 9
63. Securities assignable free from equities 9
64. Securities at discount, premium, with preference 9
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 10
68. Notice of meeting - Waiver of notice 10
69. Notice of two meetings for special resolution 10
70. Accidental omission of notice 10
RECORD DATES
71. Setting record dates - when no record date set 10
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 10
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 11
76. If quorum not present - dissolution or adjournment 11
77. Resolution by show of hands - demand of poll 11
78. Conduct of poll 11
79. Casting vote 11
80. Adjournment of meeting 11
81. Poll on question of adjournment, election of chairman 11
82. Effect of demand of poll on continuance of meeting 11
VOTES OF SHAREHOLDERS
83. Voting generally 11
84. Votes on transmission by death, bankruptcy, etc. 12
85. Votes of joint registered shareholders 12
86. Voting in person, by proxy, by corporate representative 12
87. Proxy requirements generally 12
88. Votes of shareholders of unsound mind 12
89. Depositing proxies before meeting 12
90. Votes by proxy after authority revoked 12
91. Form of proxy 12
92. Votes when call due on shares 12
<PAGE> 4
-iv-
93. Resolution of directors ratified by shareholders 13
94. Resolution in writing without meeting 13
DIRECTORS
95. Number of directors - maximum and minimum 13
96. First directors 13
97. Remuneration of directors 13
98. Directors may act notwithstanding vacancy 13
99. Directors may also be officers 13
100. Vacation of office on bankruptcy, etc. 13
101. Directors' conflicts of interest 13
ELECTION OF DIRECTORS
102. Election of directors at general meeting 14
103. Retiring directors remain in office until succeeded 14
104. Number of directors elected, qualification 14
105. Removal of director 14
106. When directors may be appointed by other directors 14
MANAGING DIRECTOR
107. Authority to appoint managing director 14
108. Resignation and removal of managing director 14
109. Remuneration of managing director 14
110. Powers and duties of managing director 14
CHAIRMAN OF THE BOARD
111. Chairman of the Board 14
PRESIDENT AND VICE-PRESIDENTS
112. President 15
113. Vice-Presidents 15
SECRETARY AND TREASURER
114. Secretary 15
115. Treasurer 15
OFFICERS
116. Other officers 15
117. Same person may hold more than one office 15
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 15
119. Participation at meeting by telephone 15
120. Place of meetings - When notice required 15
121. Summoning of meetings 16
122. Questions decided by majority - casting vote - proxies 16
<PAGE> 5
-v-
123. Chairman of directors' meetings 16
124. Authority of meeting when quorum present 16
125. Committees of directors 16
126. Proceedings of committees of directors 16
127. Effect on meeting of defectively appointed director 16
128. Resolution of directors in writing without meeting 16
129. Remuneration of directors for extra services 16
REGISTERS
130. Registers and branch registers 17
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 17
POWERS OF DIRECTORS
132. General powers of directors 17
133. Specifically enumerated powers of directors 17
SOLICITORS
134. Solicitors 19
THE SEAL
135. Use of common seal 19
136. Facsimiles of common seal 19
137. Facsimile seal for use outside Nova Scotia 19
DIVIDENDS
138. Declaration of dividends 19
139. Dividends payable from profits, etc. 19
140. Declaration of amount of profits, etc., conclusive 19
141. Interim dividends 19
142. Dividends differentiated by paid-up capital 20
143. Right to set off debts against dividends 20
144. Where lien on dividends 20
145. Dividends on shares of deceased, etc. 20
146. Setting off calls and dividends 20
147. Cash dividend, dividend in kind, stock dividend, etc. 20
148. Power of directors to settle issues re dividends 20
149. Dividends on jointly registered shares 20
150. Satisfaction of dividend 20
ACCOUNTS
151. Directors' duty to keep accounts 20
152. Where books to be kept 21
153. Inspection of books by shareholders 21
154. Reports on accounts to general meeting 21
<PAGE> 6
-vi-
AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 21
156. First auditors 21
157. Directors may fill casual vacancy 21
158. Persons qualified for appointment as auditors 21
159. Removal of auditor 21
160. Remuneration 21
161. Duties of auditors 21
NOTICES
162. How notice given 21
163. Notice to shareholder without registered address 21
164. Holders of share warrants not entitled to notice 21
165. Notice to joint holders 22
166. When notice deemed given - proof of notice 22
167. Transferees bound by prior notice 22
168. Notice valid though shareholder deceased 22
169. How notice to be signed 22
170. How time to be counted 22
INDEMNITY
171. Indemnity of directors, officers, etc. 22
172. Individual liability of directors, officers, etc. 22
REMINDERS
173. Reminders to directors of obligations under Act 23
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
3012919 NOVA SCOTIA LIMITED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
-2-
5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
-3-
CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 10
-4-
rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue, or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 15
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 19
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
<PAGE> 20
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
<PAGE> 21
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PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting.
<PAGE> 22
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(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
<PAGE> 23
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REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 25
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 26
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 27
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
<PAGE> 28
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 29
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 30
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Name(s) of Subscriber(s)
Dated at Halifax, Nova Scotia the day of
, 199 .
Witness to above signature(s):
_______________________________________________
Halifax, Nova Scotia
<PAGE> 31
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CERTIFICATE OF NAME CHANGE
Companies Act
Registry Number
3012919
Name of Company
3012919 NOVA SCOTIA LIMITED
I hereby certify that the above-mentioned company has with approval of the
Registrar of Joint Stocks changed its name to:
SPARKLING SPRING WATER GROUP LIMITED
_________________________________________ __________________________________
Deputy Registrar of Joint Stock Companies Date of Name Change
<PAGE> 1
Exhibit 3.3
COMPANIES ACT
CHAPTER 81, R.S.N.S. 1989
ARTICLES OF CONTINUANCE OF SPARKLING SPRING WATER LIMITED
1. The name of the Company is SPARKLING SPRING WATER LIMITED.
2. There are no restrictions on the objects and powers of the Company.
3. Pursuant to subsection (11) of Section 26 of the Companies Act, to the
intent that subsection (9) of Section 26 not apply to the Company, the
following powers are hereby expressly conferred upon the Company:
The Company shall have power to:
(a) sell or dispose of its undertaking or a substantial part
thereof;
(b) subject to the provisions of the Act with respect to
reduction of capital, distribute any of its property in
specie among its members; and
(c) amalgamate with any company or other body or persons.
4. The liability of the members is limited.
5. The Company is authorized to issue Ten Million ($10,000,000) common shares
without nominal or par value and One Million (1,000,000) Class A preferred
shares without nominal or par value, both common and Class A preferred
shares subject to the terms and conditions set forth in Schedule "A"
annexed hereto, with power to divide the shares in the capital for the
time being into several classes and/or to attach thereto respectively any
preferential, common, deferred, or qualified rights, privileges or
conditions, including restrictions on voting and including redemption on
purchase of such shares, subject, however, to the provisions of the
Companies Act and amendments thereto.
<PAGE> 2
SPARKLING SPRING WATER LIMITED
SCHEDULE "A" TO ARTICLES OF AMENDMENT
TERMS AND CONDITIONS OF SHARES
The Corporation is authorized to issue Ten Million (10,000,000) Common
without nominal or par value and One Million (1,000,000) Class A Preferred
shares of nominal or par value.
COMMON SHARES
The holders of the Common shares shall be entitled to notice of and to One
(1) vote in respect of each Common share held at all meetings of the
Shareholders of the Corporation.
The holders of the Common shares shall be entitled to receive and the
Corporation shall pay thereon, such dividends as may be declared by the Board of
Directors of the Corporation from time to time from the monies of the
Corporation properly applicable to the payment of dividends.
In the event of the liquidation, dissolution or winding up of the
Corporation, or other distribution of assets of the Corporation among its
shareholders for the purpose of winding up its affairs, the holders of the
Common shares shall be entitled to receive the assets and property of the
Corporation available for distribution.
____ SHARES
A holder of a fractional share of a class of shares (the "particular
class") is entitled, in respect to his fractional shares, to that fraction of
the votes, if any, that attach to and that fraction of the amount, if any, of
the dividends, distributions or redemption price, as the case may be, that is to
be paid or made on or in respect of whole shares of the particular class.
CLASS A PREFERRED SHARES
1. The holders of the Class A Preferred shares shall not be entitled to vote
at any meeting of the shareholders of the Corporation unless and except to
the extent expressly granted the rights to vote by law.
2. The holders of the Class A Preferred shares, in priority to the Common
shares, shall be entitled to receive pro rata, and the Corporation shall
pay thereon, as and when declared by the Board of Directors of the
Corporation, cumulative, preferential cash dividends at the rate of eight
(8%) percent of the stated capital of the Class A Preferred shares per
annum, payable on such dates as the Board of Directors of the Corporation
may from time to time determine. such dividends shall accrue from the date
of issue. If on any dividend payment date the dividend payable on such
date is not paid in full on all of the Class A Preferred shares then
issued and outstanding, such dividend or the unpaid part thereof
<PAGE> 3
shall be paid on a subsequent date or dates determined by the Board of
Directors of the Corporation on which the Corporation shall have
sufficient monies properly applicable to the payment of the same before
any dividend is paid on the Common shares.
3. The holders of the Class A Preferred shares shall be entitled on the
liquidation, dissolution or wind-up of the Corporation, or other
distribution of the assets of the Corporation among its shareholders for
the purpose of winding up its affairs, to receive from the assets and
property of the Corporation for each Class A Preferred Share held by them
respectively a sum equivalent to the result obtained when the amount of
the stated capital account for the Class A Preferred shares is divided by
the number of issued and outstanding Class A Preferred shares, together
with all accrued and unpaid preferential cumulative cash dividends thereon
before any amount shall be paid or any property or assets distributed to
the holders of the Common shares; after payment to the holders of the
Class A Preferred shares of the amounts above provided, they shall not be
entitled to share in any further distribution of the property or assets of
the Corporation on dissolution.
4. The Corporation may any time, upon giving notice as hereinafter provided,
redeem the whole or from time to time any part of the then outstanding
Class A Preferred shares on payment for each share to be redeemed of a sum
equivalent to the result obtained when the amount in the stated capital
account for the Class A Preferred Shares is divided by the number of
issued and outstanding Class A Preferred shares, together with all accrued
and unpaid preferential cumulative cash dividend thereon (herein referred
to as the "redemption price"). In case a part only of the then outstanding
Class A Preferred shares is at any time redeemed, the shares so to be
redeemed shall be selected pro rata according to the number of Class A
Preferred shares held by each holder of record as at the date of notice of
redemption or in such other manner as the Board of Directors of the
Corporation, in its sole discretion, shall decide.
5. In any case of redemption of Class A Preferred shares under the provisions
of the last preceding paragraph hereof, the Corporation shall at least
thirty (30) days before the date specified for redemption mail to each
person who at the date of mailing is a registered holder of Class A
Preferred shares to be redeemed a notice in writing of the intention of
the Corporation to redeem such Class A Preferred shares. Such notice shall
be mailed in a prepaid letter addressed to each such shareholder at his
address as it appears on the books of the Corporation or in the event of
the address of any such shareholder not so appearing then to the last
known address of such shareholder, provided, however, that accidental
failure to give any such notice to one 91) or more of such shareholders
shall not affect the validity of such redemption as to the other holders.
Such
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<PAGE> 4
notice shall set our the redemption price and the date on which redemption
is to take place and if part only of the shares held by the person to whom
it is addressed is to be redeemed the number thereof so to be redeemed. On
and after the date so specified for redemption the Corporation shall pay
or cause to be paid to or to the order of the registered holders of the
Class A Preferred shares to be redeemed the redemption price thereon on
presentation and surrender at the head office of the Corporation or any
other place designated in such notice of the certificates for the Class A
Preferred shares called for redemption. Such Class A Preferred shares
shall thereupon be and be deemed to be redeemed and shall be cancelled. If
a part only of the shares represented by any certificate be redeemed, a
new certificate for the balance shall be issued at the expense of the
Corporation. From and after the date specified in any such notice the
Class A Preferred shares called for redemption shall cease to be entitled
to dividends and the holders thereof shall not be entitled to exercise any
of the rights of shareholders in respect thereof unless payment of the
redemption price shall not be made upon presentation of certificates in
accordance with the foregoing provisions, in which case the rights of the
holders shall remain unaffected. The Corporation shall have the right at
any time after the mailing of notice of its intention to redeem any Class
A Preferred shares as aforesaid to deposit the redemption price of the
shares so called for redemption or of such of the said shares represented
by certificates which have not at the date of such deposit been
surrendered by the holders thereof in connection with such redemption to a
special account in any chartered bank or any trust company in Canada named
in such notice to be paid without interest to or to the order of the
respective holders such Class A Preferred shares called for redemption
upon presentation and surrender to such bank or trust company of the
certificates representing the same and upon such deposit being made or
upon the date specified for redemption in such notice, whichever is the
latter, the Class A Preferred shares in respect whereof such deposit shall
have been made shall be deemed to be redeemed and shall be cancelled and
the rights of the holders thereof after such deposit or such redemption
date, as the case may be, shall be limited to receiving without interest
their proportionate part of the total redemption price no deposited agent
presentation and surrender of the said certificates held by them
respectively.
6. No class of shares may be created or issued ranking as to capital or
dividends in priority to or on a parity with the Class A Preferred shares
nor shall the authorized amount of the Class A Preferred shares be
increased without the approval of the holders of the Class A Preferred
shares increased without the approval of the holders of the Class A
Preferred shares in addition to any approval required by the Canada
Business Corporations Act.
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<PAGE> 1
Exhibit 3.4
ARTICLES OF ASSOCIATION
OF
SPARKLING SPRING WATER LIMITED
STEWART McKELVEY STIRLING SCALES
BARRISTERS & SOLICITORS
Halifax, Nova Scotia
<PAGE> 2
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 2
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 3
25. Shareholder advances on unpaid shares 3
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 4
<PAGE> 3
-ii-
LIEN ON SHARES
34. Lien on shares for debts of shareholder 4
35. Sale of shares not paid up to enforce lien 4
36. Application of proceeds of shares by Company 4
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 5
42. Fee on transfer 5
43. Transfer instrument to remain with Company 5
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 5
45. Right of executor of sole shareholder 5
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 6
51. Terms of issue of new shares 6
52. New shares may be offered to existing shareholders 6
53. New capital within control of directors 6
54. Reduction of capital 6
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 7
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 7
<PAGE> 4
-iii-
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 8
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 8
63. Securities assignable free from equities 8
64. Securities at discount, premium, with preference 8
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 9
68. Notice of meeting - Waiver of notice 9
69. Notice of two meetings for special resolution 9
70. Accidental omission of notice 9
RECORD DATES
71. Setting record dates - when no record date set 9
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 9
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 10
76. If quorum not present - dissolution or adjournment 10
77. Resolution by show of hands - demand of poll 10
78. Conduct of poll 10
79. Casting vote 10
80. Adjournment of meeting 10
81. Poll on question of adjournment, election of chairman 10
82. Effect of demand of poll on continuance of meeting 10
VOTES OF SHAREHOLDERS
83. Voting generally 10
84. Votes on transmission by death, bankruptcy, etc. 11
85. Votes of joint registered shareholders 11
86. Voting in person, by proxy, by corporate representative 11
87. Proxy requirements generally 11
88. Votes of shareholders of unsound mind 11
89. Depositing proxies before meeting 11
90. Votes by proxy after authority revoked 11
91. Form of proxy 11
92. Votes when call due on shares 12
<PAGE> 5
-iv-
93. Resolution of directors ratified by shareholders 12
94. Resolution in writing without meeting 12
DIRECTORS
95. Number of directors - maximum and minimum 12
96. First directors 12
97. Remuneration of directors 12
98. Directors may act notwithstanding vacancy 12
99. Directors may also be officers 12
100. Vacation of office on bankruptcy, etc. 12
101. Directors' conflicts of interest 12
ELECTION OF DIRECTORS
102. Election of directors at general meeting 13
103. Retiring directors remain in office until succeeded 13
104. Number of directors elected, qualification 13
105. Removal of director 13
106. When directors may be appointed by other directors 13
MANAGING DIRECTOR
107. Authority to appoint managing director 13
108. Resignation and removal of managing director 13
109. Remuneration of managing director 13
110. Powers and duties of managing director 13
CHAIRMAN OF THE BOARD
111. Chairman of the Board 13
PRESIDENT AND VICE-PRESIDENTS
112. President 13
113. Vice-Presidents 14
SECRETARY AND TREASURER
114. Secretary 14
115. Treasurer 14
OFFICERS
116. Other officers 14
117. Same person may hold more than one office 14
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 14
119. Participation at meeting by telephone 14
120. Place of meetings - When notice required 14
121. Summoning of meetings 14
122. Questions decided by majority - casting vote - proxies 14
<PAGE> 6
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123. Chairman of directors' meetings 15
124. Authority of meeting when quorum present 15
125. Committees of directors 15
126. Proceedings of committees of directors 15
127. Effect on meeting of defectively appointed director 15
128. Resolution of directors in writing without meeting 15
129. Remuneration of directors for extra services 15
REGISTERS
130. Registers and branch registers 15
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 15
POWERS OF DIRECTORS
132. General powers of directors 16
133. Specifically enumerated powers of directors 16
SOLICITORS
134. Solicitors 17
THE SEAL
135. Use of common seal 17
136. Facsimiles of common seal 17
137. Facsimile seal for use outside Nova Scotia 18
DIVIDENDS
138. Declaration of dividends 18
139. Dividends payable from profits, etc. 18
140. Declaration of amount of profits, etc., conclusive 18
141. Interim dividends 18
142. Dividends differentiated by paid-up capital 18
143. Right to set off debts against dividends 18
144. Where lien on dividends 18
145. Dividends on shares of deceased, etc. 18
146. Setting off calls and dividends 18
147. Cash dividend, dividend in kind, stock dividend, etc. 18
148. Power of directors to settle issues re dividends 18
149. Dividends on jointly registered shares 19
150. Satisfaction of dividend 19
ACCOUNTS
151. Directors' duty to keep accounts 19
152. Where books to be kept 19
153. Inspection of books by shareholders 19
154. Reports on accounts to general meeting 19
<PAGE> 7
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AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 19
156. First auditors 19
157. Directors may fill casual vacancy 19
158. Persons qualified for appointment as auditors 19
159. Removal of auditor 19
160. Remuneration 20
161. Duties of auditors 20
NOTICES
162. How notice given 20
163. Notice to shareholder without registered address 20
164. Holders of share warrants not entitled to notice 20
165. Notice to joint holders 20
166. When notice deemed given - proof of notice 20
167. Transferees bound by prior notice 20
168. Notice valid though shareholder deceased 20
169. How notice to be signed 20
170. How time to be counted 20
INDEMNITY
171. Indemnity of directors, officers, etc. 20
172. Individual liability of directors, officers, etc. 21
REMINDERS
173. Reminders to directors of obligations under Act 21
<PAGE> 8
ARTICLES OF ASSOCIATION
OF
SPARKLING SPRING WATER LIMITED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution.
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 9
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5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 10
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CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 11
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rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 12
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 13
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 14
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 15
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 16
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 17
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 18
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 19
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 20
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
<PAGE> 21
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
PRESIDENT AND VICE-PRESIDENTS
<PAGE> 22
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112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
<PAGE> 23
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121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad
or otherwise for any of the purposes of the Company or the business
thereof, the Company may remunerate the director or directors so doing,
either by a fixed sum or by a percentage of profits or otherwise. Such
remuneration shall be determined by the directors and may be either in
addition to or in substitution for remuneration otherwise authorized by
these Articles.
REGISTERS
<PAGE> 24
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130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 25
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 26
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 27
-20-
142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 28
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
<PAGE> 29
-22-
165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 30
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 31
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SPARKLING SPRING WATER LIMITED
SPECIAL RESOLUTION OF THE
SHAREHOLDERS
WHEREAS the authorized capital of the Company consists of 10,000,000
common shares without nominal or par value and 1,000,000 Class A preferred
shares without nominal or par value;
AND WHEREAS it is deemed desirable to increase the capital of the Company;
BE IT THEREFORE RESOLVED as a Special Resolution of the Company;
1. THAT the capital of the Company be and is hereby increased from 10,000,000
common shares without nominal or par value and 1,000,000 Class A preferred
shares without par value to:
10,000,000 common shares without nominal or par value;
1,000,000 Class A preferred Shares without nominal or par value;
10,000,000 Class B non-voting common shares without nominal or par value;
by the creation of 10,000,000 Class B non-voting common shares without nominal
or par value, having the rights and subject to the terms and conditions set
forth in Schedule "A" annexed hereto; and
2. THAT the Secretary of the Company give notice to the Registrar of Joint
Stock Companies of the said increase in capital.
************************************************************************
CERTIFICATE
I HEREBY CERTIFY that the above resolution is a true copy of a Special
Resolution passed by the Shareholders of the Company in the manner authorized by
law and that such Special Resolution is now in full force and effect.
WITNESS my hand the corporate seal of the said Corporation this ____ day
of ____________, 1994.
------------------------------------
Stephen Larson, Vice Chairman of
Sparkling Spring Water Limited
<PAGE> 32
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SPRARKLING SPRING WATER LIMITED
SHARE CONDITIONS - CLASS B NON-VOTING COMMON SHARES
The terms and conditions of the 10,000,000 Class B non-voting common
shares without nominal or par value (the "Non-Voting Shares") shall be as
follows:
Non-Voting:
1. The holders of the Non-voting Shares shall not be entitled to receive
notice of, to attend or to vote at any meeting of the shareholders of the
shareholders of the Company;
Dividends:
2. The Non-Voting Shares shall confer upon the holders thereof the right to
receive dividends when and as declared by the directors of the Company out
of the monies of the Company properly available for dividends on a pro
rata share-for-share basis equal to that of the holders of common shares
of the Company;
Dissolution:
3. In the event of the winding-up or dissolution of the Company, whether
voluntary or involuntary, or for reorganization or otherwise, whereupon
any distribution of capital, the holders of Non-Voting Shares shall fully
participate in the assets of the Company on a pro rata basis,
share-for-share with the holders of the common shares of the Company;
Rank:
4. Except as otherwise provide for herein, the Non-Voting Shares shall rank
equally with the common shares of the Company.
<PAGE> 33
SPARKLING SPRING WATER LIMITED
SPECIAL SHAREHOLDERS' RESOLUTION
BE IT RESOLVED AS A SPECIAL RESOLUTION OF THE SHAREHOLDERS OF THE COMPANY
THAT:
1. The Articles of Association of the Company be amended by the deleting of
Section 98 thereof and replacing it with the following:
"98. The number of the directors of the Company shall not be less than
one or greater than twelve persons";
2. The Secretary of the Company is authorized to file a copy of this
Resolution at the Registry of Joint Stock Companies in Halifax, Nova
Scotia.
DATED at Halifax, Nova Scotia, this 4th day of January, 1996.
- --------------------------------------------------------------------------------
CERTIFICATE
I HEREBY CERTIFY that the above resolution is a true copy of a Special
Resolution signed by all of the Shareholders of the Company in the manner
authorized by law and that such Special Resolution is now in full force and
effect.
WITNESS my hand and the corporate seal of the said Corporation this ____
day of January, 1996.
------------------------------------
STEPHEN L. LARSON, Vice-Chairman
SPARKLING SPRING WATER LIMITED
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
SPRING WATER, INC.
* * * * *
FIRST: The name of the Corporation is Spring Water, Inc.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is ten thousand (10,000) shares of common stock, no par
value per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
---- ---------------
Felicia Dedominicis Robinson & Cole
695 East Main Street
Stamford, CT 06904
(203) 462-7526
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized to make, alter, amend
or repeal the bylaws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the bylaws may provide. The
-1-
<PAGE> 2
books of the Corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the board or directors or in the bylaws of the
Corporation.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of the State of Delaware, as now or
hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. The indemnification provided by this Section shall not limit or
exclude any rights, indemnities or limitations of liability to which any person
may be entitled, whether as a matter of law, under the by-laws of the
Corporation, by agreement, vote of the stockholders or disinterested directors
of the Corporation or otherwise. Except as specifically required by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 16th day of December, 1996.
/s/ Felicia Dedominicis
---------------------------
Felicia DeDominicis
Sole Incorporator
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Exhibit 3.6
BY-LAWS
OF
SPRING WATER, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place either within
or without the State of Delaware as may be designated by the Board of Directors
from time to time. Any other proper business may be transacted at the annual
meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board, if any, the President or the
Board of Directors, to be held at such date, time and place either within or
without the State of Delaware as may be stated in the notice of the meeting. A
special meeting of stockholders shall be called by the Secretary upon the
written request, stating the purpose of the meeting, of stockholders who
together own of record a majority of the outstanding shares of each class of
stock entitled to vote at such meeting. Business transacted at any special
meeting shall be limited to the purposes stated in the notice of the special
meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are
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announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in the absence of the Chairman of
the Board by the President, or in the absence of the President by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, or
in the absence of the Secretary by an Assistant Secretary, or in their absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for such stockholder by proxy, but no such
proxy shall be voted or acted upon after
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three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. Voting at meetings of
stockholders need not be by written ballot and need not be conducted by
inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy at such
meeting shall so determine. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. With
respect to other matters, unless otherwise provided by law or by the certificate
of incorporation or these by-laws, the affirmative vote of the holders of a
majority of the shares of all classes of stock present in person or represented
by proxy at the meeting and entitled to vote on the subject matter shall be the
act of the stockholders, provided that (except as otherwise required by law or
by the certificate of incorporation) the Board of Directors may require a larger
vote upon any such matter. Where a separate vote by class is required, the
affirmative vote of the holders of a majority of the shares of each class
present in person or represented by proxy at the meeting shall be the act of
such class, except as otherwise provided by law or by the certificate of
incorporation or these by-laws.
Section 1.8. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is
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necessary, shall be the day on which the first written consent is expressed; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise
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provided by law or in the certificate of incorporation. The Board shall consist
of one or more members, the number thereof to be determined from time to time by
the Board. Directors need not be stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the annual meeting of stockholders next
succeeding his or her election and until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Any director may
resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. Any
director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors; except that, if the certificate of incorporation provides for
cumulative voting and less than the entire Board is to be removed, no director
may be removed without cause if the votes cast against his or her removal would
be sufficient to elect him or her if then cumulatively voted at an election of
the entire Board, or, if there be classes of directors, at an election of the
class of directors of which he or she is a part. Whenever the holders of any
class or series of stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series and not to the vote of the outstanding shares as a whole.
Unless otherwise provided in the certificate of incorporation or these by-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having the
right to vote as a single class or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director. Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by the
sole remaining director so elected.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from
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time to time determine, and if so determined notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the President
or by any two directors. Reasonable notice thereof shall be given by the person
or persons calling the meeting.
Section 2.5. Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall
constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors one-third of the entire Board shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the President, or in their absence by a chairman chosen
at the meeting. The Secretary, or in the absence of the Secretary an Assistant
Secretary, shall act as secretary of the meeting, but in the absence of the
Secretary and any Assistant Secretary the chairman of the meeting may appoint
any person to act as secretary of the meeting.
Section 2.8. Action by Directors Without a Meeting. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of
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proceedings of the Board or committee.
Section 2.9. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
bylaws; and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each
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committee shall conduct its business in the same manner as the Board conducts
its business pursuant to Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Officers; Election. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall elect
a President and a Secretary, and it may, if it so determines, elect from among
its members a Chairman of the Board. The Board may also elect one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers as the Board may deem desirable or appropriate and may give any of them
such further designations or alternate titles as it considers desirable. Any
number of offices may be held by the same person.
Section 4.2. Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until the first meeting of the Board
after the annual meeting of stockholders next succeeding his or her election,
and until his or her successor is elected and qualified or until his or her
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Board or to the President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board may remove any officer with or without cause at
any time. Any such removal shall be without prejudice to the contractual rights
of such officer, if any, with the Corporation, but the election of an officer
shall not of itself create contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board at any regular or
special meeting.
Section 4.3. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present and shall have and may exercise such powers
as may, from time to time, be assigned to him or her by the Board and as may be
provided by law.
Section 4.4. President. In the absence of the Chairman of
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the Board, the President shall preside at all meetings of the Board of Directors
and of the stockholders at which he or she shall be present. The President shall
be the chief executive officer and shall have general charge and supervision of
the business of the Corporation and, in general, shall perform all duties
incident to the office of president of a corporation and such other duties as
may, from time to time, be assigned to him or her by the Board or as may be
provided by law.
Section 4.5. Vice Presidents. The Vice President or Vice Presidents, at
the request of the President, shall perform the duties of the President, and
when so acting shall have the powers of the President. If there be more than one
Vice President, the Board of Directors may determine which one or more of the
Vice Presidents shall perform any of such duties; or if such determination is
not made by the Board, the President may make such determination; otherwise any
of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from time to time, be assigned to him or her or them by the Board or the
President or as may be provided by law.
Section 4.6. Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of the stockholders, the Board of Directors and any
committees in a book to be kept for that purpose, shall see that all notices are
duly given in accordance with the provisions of these by-laws or as required by
law, shall be custodian of the records of the Corporation, may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly authorized, and when so affixed may attest the same, and,
in general, shall perform all duties incident to the office of secretary of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 4.7. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his or her duties, with such
surety or sureties as the Board may determine. The Treasurer shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Corporation, shall render to the President and to the Board,
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whenever requested, an account of the financial condition of the Corporation,
and, in general, shall perform all the duties incident to the office of
treasurer of a corporation and such other duties as may, from time to time, be
assigned to him or her by the Board or the President or as may be provided by
law.
Section 4.8. Other Officers. The other officers, if any, of the
Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors which
is not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Board may require any officer, agent or employee to give security for
the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman of the Board of Directors, if any, or the President
or a Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, of the Corporation, certifying the number
of shares owned by such holder in the Corporation. If such certificate is
manually signed by one officer or manually countersigned by a transfer agent or
by a registrar, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
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ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders. Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 6.4. Indemnification of Directors, Officers, and Employees and
Agents. The Corporation shall indemnify its directors, officers, employees and
agents in accordance with the provisions set forth in its certificate of
incorporation.
Section 6.5. Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the
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committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
the material facts as to his or her relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (3) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board, a committee thereof, or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board or of a committee which authorizes the contract or
transaction.
Section 6.6. Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
ADOPTED: December 17, 1996
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Exhibit 3.7
ARTICLES OF INCORPORATION
OF
CULLYSPRING WATER CO., INC.
THE UNDERSIGNED, STEFFEN HAUG, being over the age of 21 years, as
incorporator of a corporation under the Washington Business Corporation Act,
does hereby adopt in triplicate and deliver to the Secretary of State of the
State of Washington the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be CULLYSPRING WATER CO., INC., and its
existence shall be perpetual.
ARTICLE II
The purpose or purposes for which the corporation is organized are:
1. To buy, sell or trade real or personal property or any interest
therein, of whatsoever kind and description, and to buy, sell, trade, grant or
accept any evidence of debt or security devices in real or personal property.
2. To engage in the development of real estate.
3. To build and construct residential and commercial buildings,
apartments, warehouses and other structures.
4. To enter into any and all fields directly or indirectly related to the
purchase or sale of real property or structures or their development or
construction.
5. To apply for, obtain, register, purchase, lease, or otherwise acquire,
and to hold, own, use, develop, operate, and introduce, and to sell, assign,
mortgage, pledge, grant, or
<PAGE> 2
otherwise turn to account or dispose of, any copyrights, trademarks, tradenames,
brands, labels, concessions or territorial rights or licenses.
6. To have offices, conduct this business, and promote its objects within
and without the State of Washington, in other states, the District of Columbia,
the territories and colonies of the United States of America, or of any other
country or government.
7. To carry on any other business, whether transportation, manufacturing,
or otherwise, which may seem to the company capable of being conveniently
carried on in connection with its business, or calculated to directly or
indirectly enhance or render profitable any of the company's property rights,
and to lease, purchase, or otherwise acquire, and to own, sell, encumber,
transfer, or otherwise deal in real estate or personal property of any kind or
nature whatsoever, in connection with said business.
8. To enter into a partnership, or into any arrangement for sharing of
profits, union of interest, joint venture, reciprocal concession, or otherwise,
with any person or company carrying on or engaging in any business or
transaction which this corporation is authorized to carry on or engage in.
9. To acquire by purchase, exchange or otherwise, all or any part of, or
any interest in, the properties, assets, business, and goodwill of any one or
more persons, firms, associations, or corporations, now or hereafter engaged in
any business for which the corporation may now or hereafter be organized under
the Business Corporation Law of the State of Washington; to pay for the same in
cash, property, its own or other securities; to hold, operate, reorganize,
liquidate, mortgage, grant a security interest in, pledge, sell, exchange, or in
any other manner, deal in or with or dispose of the whole or any part thereof;
in connection therewith to assume or guaranty performance of any liabilities,
obligations, or contracts of such persons, firms,, -associations, or
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corporations, and to conduct in any lawful manner the whole or any part of any
business thus acquired, provided such business is of a kind herein stated.
10. To make contracts and guarantees and incur liabilities, borrow money
at such rates of interest as the corporation may determine, from any person,
firm or corporation; to issue its notes, bonds, debentures, and/or other
obligations of this corporation from time to time for any of the objects of this
corporation; and to secure the same by mortgage, pledge, trust, or by any other
lawful means.
11. To lend money for its corporate purposes, including loans to officers
and directors, and to invest and reinvest its funds and take and hold real and
personal property as security for the payment of funds so loaned or invested.
12. To borrow money of any person, firm or corporation; to issue bonds,
debentures or obligations of this corporation from time to time for any of the
objects of this corporation; and to secure the same by mortgage, pledge, trust,
or by any other lawful means.
13. To subscribe or cause to be subscribed for, and to purchase or
otherwise acquire, hold for investment, sell, assign, transfer, of the
mortgages, deeds of trust, debentures, securities, obligations, notes, or other
evidence of indebtedness of any corporation, stock company or association, now
or hereafter existing, and whether created by or under the laws of the State of
Washington or otherwise, and while owners of any stock of -the said shares of
capital stock, or bonds, or other property, to exercise all the rights, powers,
and privileges or ownership of every kind and description, including the right
to vote thereon, with power to designate some person for that purpose from time
to time to the same extent as natural persons might or could do.
14. Without limiting any of the objects and powers of the corporation, it
is hereby expressly declared and provided that the corporation shall have power
to do all things
-3-
<PAGE> 4
hereinbefore enumerated; and also to issue or exchange stocks, bonds, or other
obligations in payment for property purchased or acquired by it, or for any
other object in or about its business; to borrow money; to mortgage or pledge
its franchises, real or personal property, income or profit accruing to it, any
stocks, bonds, or other obligations, or any property which may be acquired by it
issued or incurred.
15. To such extent as a corporation organized under the Business
Corporation Law of the State of Washington may now or hereafter lawfully do, to
do each and every thing necessary, suitable, convenient, or proper for, or in
connection with, or incidental to, the accomplishment of any one or more of the
purposes or the exercise of any one or more of the powers herein enumerated, or
designed directly or indirectly to promote the interests of the corporation or
to enhance the value of its properties; and in general to do any and all things
and exercise any and all powers, for which the corporation may now or here-after
be organized under the Business Corporation Law of the State of Washington, or
under any act, amendatory thereof, supplemental thereto, or substituted
therefor.
ARTICLE III
The registered agent of this corporation, shall be GARY M. ABOLOFIA,
Attorney at Law. The address of the initial registered office of the corporation
is 17130 Avondale Way N.E., Suite 114, Redmond, Washington, 98052.
ARTICLE IV
The authorized capital of this corporation shall be $50,000 and the
corporation shall issue therefor 50,000 shares of common stock of a par value of
$1.00 each. The corporation shall commence Business with the issuance of 500
shares.
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<PAGE> 5
ARTICLE V
The Board of Directors for the corporation shall be authorized to adopt
and implement a plan for the issuance of "Section 1244" stock as such term is
defined in Section 1244 of the Internal Revenue Code of the United States of
America.
ARTICLE VI
This corporation shall not commence business until at least $500 has been
received by it as consideration for the issuance of its shares.
ARTICLE VII
The owners of shares of stock of this corporation shall not be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities, convertible into stock of any class whatsoever,
whether issued for cash, property, services, by way of dividends, or otherwise.
ARTICLE VIII
Each shareholder entitled to vote in any election of directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected, and for whose election he
has the right to vote. And no shareholder shall be entitled to accumulate his
votes.
ARTICLE IX
Section 1. The Board of Directors shall have full power to adopt, alter,
amend,. or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend or appeal the
Bylaws.
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<PAGE> 6
Section 2. This corporation reserves the right to amend, alter, change or
repeal any of the provisions contained in these Articles of Incorporation now or
hereafter prescribed or permitted by statute. All rights of shareholders of this
corporation are granted subject to this reservation.
Section 3. This corporation may enter into contracts and otherwise
transact business as vendor, purchaser, or otherwise, with its directors,
officers and shareholders, and with corporations, associations, firms, and
entities in which they are or may be or become interested as directors,
officers, shareholders, members of otherwise, as freely as though such adverse
interest did not exist, even though the vote, action, or presence of such
director, officer, or shareholder, may be necessary to obligate the corporation
upon such contracts or transactions; and in the absence of fraud, no such
contract or transaction shall be voided and no such director, officer, or
shareholder shall be held liable to account to the corporation by reason of such
adverse interest or by reason of any fiduciary relationship to the corporation
arising out of such officer stock ownership, for any profit or benefit realized
by him through any such contract or transaction; provided that in the case of
directors and officers of the corporation (but not in the case of shareholders
who are not directors or officers), the nature of the interest of such director
or officer, though not necessarily the details or extent thereof, be disclosed
or known to the Board of Directors of this corporation, at the meeting thereof
at which such contract or transaction is authorized or confirmed. A general
notice that a director or officer of the corporation is interested in any
corporation, association, firm or entity, shall be sufficient disclosure as to
such director or officer with respect to all contracts and transactions with
that corporation, association, firm or entity.
ARTICLE X
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<PAGE> 7
The number, qualifications, terms of office, manner of election, time and
place of meetings, the powers and duties of the directors shall be prescribed by
the Bylaws, but the number of first directors shall be two (2), a number equal
to the number -of shareholders, and they shall serve until the first meeting of
shareholders-and until their successors Are elected and qualified, and their
names and post office addresses are as follows:
STEFFEN HAUG 4601 S.W. 100th
Seattle, WA 98146
MARGARET HAUG 4601 S.W. 100th
Seattle, WA 98146
The name and address of the incorporator is STEFFEN HAUG, 4601 S.W. 100th,
Seattle, Washington, 98146.
______________________________________
STEFFEN HAUG
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this day personally appeared before me STEFFEN HAUG, to me known to be
the individual described in and who executed the within and foregoing instrument
and acknowledged the same as his free and voluntary act and deed for the uses
and purposes therein mentioned.
GIVEN under my hand and official seal this 29th day of June, 1983.
____________________________________________
NOTARY PUBLIC in and for the State of
Washington Residing at___________________.
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<PAGE> 8
CONSENT TO SERVE AS REGISTERED AGENT
GARY M. ABOLOFIA hereby consents to serve as Registered Agent in the State
of Washington for the following corporation:
CULLYSPRING WATER CO., INC.
I understand that as agent for the corporation it will be my
responsibility to receive service of process in the name of the corporation; to
forward all mail to the corporation, and to immediately notify the office of the
Secretary of State in the event of my resignation, or of any changes in the
registered office address of the corporation for which I am agent.
DATED this 29th day of June, 1983.
______________________________________
GARY M. ABOLOFIA
17130 Avondale Way N.E.
Suite 114
Redmond, WA 98052
<PAGE> 1
Exhibit 3.8
BYLAWS, AS AMENDED
OF
CULLYSPRING WATER CO., INC.
ARTICLE I
Meeting of Shareholders
Section 1. The annual meeting of the shareholders shall be held in the
registered office of the corporation on the ____ day of _______________ of each
year.
Section 2. Special meetings of shareholders may be held at the principal
office, or at any other convenient place, upon the call of the Board of
Directors or President, after notice of time, place, and purpose of such meeting
shall be delivered to the Secretary of the corporation at least five (5) days
prior to the time so appointed, or at any time when all the shareholders are
present in person or by proxy and consent thereto; or may be held by consent and
agreement, as provided by statute.
Section 3. Any adjournment or adjournments of any annual or special
meeting may be taken without any notice being given but any meeting at which
Directors are to be elected shall be adjourned for no longer than one (1) week
intervals until such Directors have been elected.
Section 4. The presence in person or by proxy of a majority of the voting
power of all shareholders shall constitute a quorum for the transaction of
business at a shareholders' meeting.
ARTICLE II
Board of Directors
Section 1. The business of the corporation shall be managed by a board of
not less than one (1) nor more than nine (9) Directors, the specific number for
any year to be fixed by the shareholders at the annual meeting, or at any other
meeting held for the purpose of electing a Director or directors provided,
however, during any period in which, as exists at the adoption of these Bylaws,
there exists fewer than three (3) shareholders the number of directors shall be
equal to the number of shareholders. Each Director shall be elected to serve for
a period of three (3) years, from March 15 of the year elected until March 14
three (3) years hence; and until their successors are elected and shall qualify.
<PAGE> 2
Section 2. Vacancies in the Board of directors shall be filled by the
remaining members of the Board, and each person so elected shall be a Director
until his successor is elected by the shareholders, who may make such election
at the next annual meeting of the shareholders, or at any special meeting duly
called for that purpose and held prior thereto.
Section 3. The annual meeting of Directors at which the other officers of
the corporation shall be elected shall be held at the registered office of the
corporation immediately following the final adjournment of the annual
shareholders' meeting.
Section 4. Meetings of the Board of Directors other than the annual
meeting of Directors may be held at such place whether in this State or
elsewhere, as a majority of the Directors may from time to time appoint.
Section 5. A meeting of the Board of Directors may be called by the
President or Secretary of the corporation at any time, and may be held after the
giving of sufficient notice to each Director to enable him to attend; or may be
held by consent and agreement, as provided by statute.
ARTICLE III
Officers
Section 1. The officers of this corporation shall be a President, a
Vice-President, a Secretary, and a Treasurer, who shall be elected by the Board
of Directors at the annual meeting of the board, to serve for a period of one
(1) year from he 15th day of March to the 14th day of March of the following
year and until their successors are elected and have qualified. Vacancies in any
office may be filled by the Board of Directors at any meeting.
Section 2. The President shall preside at all Directors' and shareholders'
meetings, shall have general management of the affairs of the corporation,,
shall sign all stock certificates and written consents of the corporation, shall
appoint and discharge all agents and employees, subject always to the approval
of the Board of Directors, to remove or discharge the same, and shall perform
all such other duties as are incident to his office or as may be required of him
by the Board of Directors, and shall have the right to create and appoint an
executive committee for specific duties and powers, subject to the right of the
Board of Directors to change or approve the same.
Section 3. The Vice President shall, in the absence or incapacity of the
President, perform the duties of that office.
Section 4. The Secretary of the corporation shall keep the minutes of all
Directors' and shareholders' meetings. He shall attend to the giving and serving
of all notices of the corporation, shall be custodian of the corporate seal,
shall attest with his signature and impress
2
<PAGE> 3
with the corporate seal all stock certificates and written contracts of the
corporation, and shall perform all other duties as are incident to his office or
may be required of him by the Board of Directors.
Section 5. The Treasurer shall keep regular books of account and shall
permit them, together with all of his other records and papers, to the Board of
Directors at any meeting when required to so do. He shall, if required to do so
by the Board of Directors, give such bond for the faithful performance of his
duties as the Board may determine, and shall perform all such other duties as
are incident to his office or as may be required by the Board of Directors.
Section 6. In addition to the foregoing officers, the Board of Directors
may, from time to time, elect such other officers as they may see fit, with such
duties as the Board may deem proper.
ARTICLE IV
Stock
Section 1. Certificates of stock, when the shares represented thereby have
been fully paid for, shall be issued to each shareholder, evidencing the number
of shares of stock held by him, and the same shall be signed by the President or
Vice President and the Secretary, and the corporate seal shall be affixed
thereto.
Section 2. Transfers of stock shall be made only in the books of the
corporation, and the old certificate properly endorsed shall be surrendered and
canceled before a new certificate is issued. The Board of Directors may fix a
time not exceeding twenty (2o) days preceding the date of any meeting of
shareholders or the date fixed for the payment of any dividend or distribution
as a record date for the determination of the shareholders entitled to notice of
and to vote at any such meeting or entitled to receive payment of any such
dividend or allotment or rights, and in such case only the shareholder of record
on the date so fixed shall be entitled to notice of and to vote at such meeting,
or to receive payment of such dividend or to the allotment of rights and
notwithstanding any transfer if any shares on the books of the corporation after
any record date fixed as aforesaid, the Board of Directors may close the books
of the corporation against transfers of shares during the whole or any part of
such period.
Section 3. In the event of the loss or destruction of a certificate of
stock, a new certificate shall be issued in lieu thereof upon satisfactory proof
of the Secretary of such loss or destruction, and upon the giving of security by
bond or otherwise, satisfactory to the Secretary, against loss to the
corporation. Any such new certificates shall be plainly marked "duplicate" upon
its face.
Section 4. The person in whose names the certificates of stock stand upon
the books of the corporation shall be the only ones entitled to notice of
shareholders' meetings, and such persons or their duly authorized proxies shall
be the only ones entitled to vote at any shareholders' meeting.
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<PAGE> 4
Section 5. Shares of stock shall not be sold, assigned, transferred or
encumbered by any shareholder to any person or corporation unless the same shall
first have been offered for sale to this corporation, said offer to the
corporation shall be made in writing, setting forth the asking price by the
offering shareholder, and the terms of sale, and the corporation shall have
thirty (30) days in which to accept or reject the said offer, in writing; and a
failure to act within said thirty (30) days shall constitute a rejection of the
offer. If the offer be rejected by the corporation, and the offering shareholder
shall thereafter offer said shares at a price or on terms other than those
offered to the corporation, the shares so offered shall again be offered to the
corporation on the new terms, to be accepted or rejected as hereinabove set
forth.
Section 6. In the event the corporation shall be unable or unwilling to
purchase shares of stock so offered, the stock shall then be offered to the
remaining shareholders, with the remaining shareholders or any of them, to have
the right to buy the stock offered in proportion to their stockholdings at the
time of offer. The remaining shareholders, or any of them, shall have thirty
(30) days in which to accept or reject said offer, in writing; and the failure
to act within said thirty (30) day period shall constitute a rejection of the
offer. In the event both the corporation and the remaining shareholder or
shareholders shall fail or refuse to purchase stock so offered then the stock
may be offered to any other person or persons, partnership, corporation, or
other business entity. If the shares be so offered to any other person or
persons, partnership, corporation, or other business entity under terms
different from the terms upon which the stock was offered to the remaining
shareholder or shareholders of the corporation, the shares so offered shall
again be offered to the remaining shareholders of the corporation upon the new
terms and conditions to be accepted or rejected as hereinabove set forth.
ARTICLE V
Amendments
Section 1. These Bylaws may be amended by the shareholders of the
corporation at any annual meeting, or at any special meeting properly called for
that purpose at which a quorum is present, by the affirmative vote of a majority
of the outstanding shares actually present and represented in person or by
proxy.
Section 2. There Bylaws may be amended by the Board of Directors at any
annual meeting or at any special meeting properly called for that purpose at
which a quorum is present by the affirmative vote of a majority of the Directors
present, subject to the power of shareholders to change or repeal such Bylaws.
4
<PAGE> 5
ARTICLE VI
Seal
Section 1. The corporation may by resolution adopt a corporate seal.
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the corporation shall begin on the 1st day
of January, of each year and terminate on the 31st day of December of each year.
RATIFIED AND APPROVED this ____ day of _______________, 1983.
_________________________________________
STEFFEN HAUG
_________________________________________
MARGARET HAUG
5
<PAGE> 1
EXHIBIT 3.9
CERTIFICATE OF INCORPORATION
OF
CRYSTAL SPRING ACQUISITION, INC.
* * * * *
FIRST: The name of the Corporation is Crystal Spring Acquisition, Inc.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is ten thousand (10,000) shares of common stock, no par
value per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
---- ---------------
Bruce S. Pailet Robinson & Cole LLP
Financial Centre
695 East Main Street
Stamford, CT 06901
(203) 462-7500
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized to make, alter, amend
or repeal the bylaws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
<PAGE> 2
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board or directors or in the bylaws of the Corporation.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of the State of Delaware, as now or
hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. The indemnification provided by this Section shall not limit or
exclude any rights, indemnities or limitations of liability to which any person
may be entitled, whether as a matter of law, under the by-laws of the
Corporation, by agreement, vote of the stockholders or disinterested directors
of the Corporation or otherwise. Except as specifically required by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 12th day of June, 1997.
/s/Bruce S. Pailet
------------------
Bruce S. Pailet
Sole Incorporator
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<PAGE> 1
EXHIBIT 3.10
BY-LAWS
OF
CRYSTAL SPRING ACQUISITION, INC.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place either within
or without the State of Delaware as may be designated by the Board of Directors
from time to time. Any other proper business may be transacted at the annual
meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board, if any, the President or the
Board of Directors, to be held at such date, time and place either within or
without the State of Delaware as may be stated in the notice of the meeting. A
special meeting of stockholders shall be called by the Secretary upon the
written request, stating the purpose of the meeting, of stockholders who
together own of record a majority of the outstanding shares of each class of
stock entitled to vote at such meeting. Business transacted at any special
meeting shall be limited to the purposes stated in the notice of the special
meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the
<PAGE> 2
meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in the absence of the Chairman of
the Board by the President, or in the absence of the President by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, or
in the absence of the Secretary by an Assistant Secretary, or in their absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for such stockholder by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors unless the holders of a majority
of the outstanding shares of all classes of stock entitled to vote thereon
present in person or by proxy at such meeting shall so determine. At all
meetings of stockholders for the election of directors a plurality of the votes
cast shall be sufficient to elect each director. With respect to other matters,
unless otherwise provided by law or by the certificate of incorporation or these
by-laws, the affirmative vote of the holders of a majority of the shares of all
classes of stock present in person or
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<PAGE> 3
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, provided that (except as otherwise
required by law or by the certificate of incorporation) the Board of Directors
may require a larger vote upon any such matter. Where a separate vote by class
is required, the affirmative vote of the holders of a majority of the shares of
each class present in person or represented by proxy at the meeting shall be the
act of such class, except as otherwise provided by law or by the certificate of
incorporation or these by-laws.
Section 1.8. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written consent is expressed; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be
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<PAGE> 4
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the certificate of
incorporation. The Board shall consist of one or more members, the number
thereof to be determined from time to time by the Board. Directors need not be
stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the annual meeting of stockholders next
succeeding his or her election and until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Any director may
resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. Any
director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors; except that, if the certificate of incorporation provides for
cumulative voting and less than the entire Board is to be removed, no director
may be removed without cause if the votes cast against his or her removal would
be sufficient to elect him or her if then cumulatively voted at an election of
the entire Board, or, if there be classes of directors, at an election of the
class of directors of which he or she is a part. Whenever the holders of any
class or series of stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series and not to the vote of the outstanding shares as a whole.
Unless otherwise provided in the certificate of incorporation or these by-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having the
right to vote as a single class or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director. Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by the
sole remaining director so elected.
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Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so determined
notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the President
or by any two directors. Reasonable notice thereof shall be given by the person
or persons calling the meeting.
Section 2.5. Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall
constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors one-third of the entire Board shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the President, or in their absence by a chairman chosen
at the meeting. The Secretary, or in the absence of the Secretary an Assistant
Secretary, shall act as secretary of the meeting, but in the absence of the
Secretary and any Assistant Secretary the chairman of the meeting may appoint
any person to act as secretary of the meeting.
Section 2.8. Action by Directors Without a Meeting. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors.
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ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
bylaws; and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board conducts its business pursuant to
Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Officers; Election. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall elect
a President and a Secretary, and it may, if it so determines, elect from among
its members a Chairman of the Board. The Board may also elect one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers as the Board may deem desirable or appropriate and may give any of them
such further designations
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<PAGE> 7
or alternate titles as it considers desirable. Any number of offices may be held
by the same person.
Section 4.2. Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until the first meeting of the Board
after the annual meeting of stockholders next succeeding his or her election,
and until his or her successor is elected and qualified or until his or her
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Board or to the President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board may remove any officer with or without cause at
any time. Any such removal shall be without prejudice to the contractual rights
of such officer, if any, with the Corporation, but the election of an officer
shall not of itself create contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board at any regular or
special meeting.
Section 4.3. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present and shall have and may exercise such powers
as may, from time to time, be assigned to him or her by the Board and as may be
provided by law.
Section 4.4. President. In the absence of the Chairman of the Board,
the President shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. The President shall be the
chief executive officer and shall have general charge and supervision of the
business of the Corporation and, in general, shall perform all duties incident
to the office of president of a corporation and such other duties as may, from
time to time, be assigned to him or her by the Board or as may be provided by
law.
Section 4.5. Vice Presidents. The Vice President or Vice Presidents, at
the request of the President, shall perform the duties of the President, and
when so acting shall have the powers of the President. If there be more than one
Vice President, the Board of Directors may determine which one or more of the
Vice Presidents shall perform any of such duties; or if such determination is
not made by the Board, the President may make such determination; otherwise any
of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from time to time, be assigned to him or her or them by the Board or the
President or as may be provided by law.
Section 4.6. Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of the stockholders, the Board of Directors and any
committees in a book to be kept for that purpose, shall see that all notices are
duly given in accordance with the provisions of these by-laws or as required by
law, shall be custodian of the records of the Corporation, may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly
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authorized, and when so affixed may attest the same, and, in general, shall
perform all duties incident to the office of secretary of a corporation and such
other duties as may, from time to time, be assigned to him or her by the Board
or the President or as may be provided by law.
Section 4.7. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his or her duties, with such
surety or sureties as the Board may determine. The Treasurer shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Corporation, shall render to the President and to the Board, whenever
requested, an account of the financial condition of the Corporation, and, in
general, shall perform all the duties incident to the office of treasurer of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 4.8. Other Officers. The other officers, if any, of the
Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors which
is not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Board may require any officer, agent or employee to give security for
the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman of the Board of Directors, if any, or the President
or a Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, of the Corporation, certifying the number
of shares owned by such holder in the Corporation. If such certificate is
manually signed by one officer or manually countersigned by a transfer agent or
by a registrar, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore
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<PAGE> 9
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such owner's legal representative, to give the Corporation a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders. Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 6.4. Indemnification of Directors, Officers, and Employees and
Agents. The Corporation shall indemnify its directors, officers, employees and
agents in accordance with the provisions set forth in its certificate of
incorporation.
Section 6.5. Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith
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<PAGE> 10
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or (2) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
ADOPTED: June 12, 1997.
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Exhibit 3.11
CERTIFICATE OF INCORPORATION
OF
MOUNTAIN FRESH ACQUISITION CORP.
* * * * *
FIRST: The name of the Corporation is MOUNTAIN FRESH ACQUISITION CORP.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is ten thousand (10,000) shares of common stock, no par
value per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
William C. Baskin III Robinson & Cole LLP
One Commercial Plaza
Hartford, CT 06103-3597
(860) 275-8200
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized to make, alter, amend
or repeal the bylaws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
<PAGE> 2
NINTH: Meetings of stockholders may be held within or without the State
of Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board or directors or in the bylaws of the Corporation.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of the General Corporation Law of the State of Delaware, as now or
hereafter in effect, indemnify all persons whom it may indemnify under such
provisions. The indemnification provided by this Section shall not limit or
exclude any rights, indemnities or limitations of liability to which any person
may be entitled, whether as a matter of law, under the by-laws of the
Corporation, by agreement, vote of the stockholders or disinterested directors
of the Corporation or otherwise. Except as specifically required by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 11th day of June, 1997.
/s/ William C. Baskin III
-----------------------------------
William C. Baskin III
Sole Incorporator
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<PAGE> 1
Exhibit 3.12
BY-LAWS
OF
MOUNTAIN FRESH ACQUISITION CORP.
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place either within
or without the State of Delaware as may be designated by the Board of Directors
from time to time. Any other proper business may be transacted at the annual
meeting.
Section 1.2. Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board, if any, the President or the
Board of Directors, to be held at such date, time and place either within or
without the State of Delaware as may be stated in the notice of the meeting. A
special meeting of stockholders shall be called by the Secretary upon the
written request, stating the purpose of the meeting, of stockholders who
together own of record a majority of the outstanding shares of each class of
stock entitled to vote at such meeting. Business transacted at any special
meeting shall be limited to the purposes stated in the notice of the special
meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the
<PAGE> 2
meeting.
Section 1.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of each class of stock
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided by Section 1.4 of these by-laws until a
quorum shall attend. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in the absence of the Chairman of
the Board by the President, or in the absence of the President by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, or
in the absence of the Secretary by an Assistant Secretary, or in their absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for such stockholder by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors unless the holders of a majority
of the outstanding shares of all classes of stock entitled to vote thereon
present in person or by proxy at such meeting shall so determine. At all
meetings of stockholders for the election of directors a plurality of the votes
cast shall be sufficient to elect each director. With respect to other matters,
unless otherwise provided by law or by the certificate of incorporation or these
by-laws, the affirmative vote of the holders of a majority of the shares of all
classes of stock present in person or
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represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, provided that (except as otherwise
required by law or by the certificate of incorporation) the Board of Directors
may require a larger vote upon any such matter. Where a separate vote by class
is required, the affirmative vote of the holders of a majority of the shares of
each class present in person or represented by proxy at the meeting shall be the
act of such class, except as otherwise provided by law or by the certificate of
incorporation or these by-laws.
Section 1.8. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written consent is expressed; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be
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necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Qualifications. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the certificate of
incorporation. The Board shall consist of one or more members, the number
thereof to be determined from time to time by the Board. Directors need not be
stockholders.
Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the annual meeting of stockholders next
succeeding his or her election and until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Any director may
resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. Any
director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors; except that, if the certificate of incorporation provides for
cumulative voting and less than the entire Board is to be removed, no director
may be removed without cause if the votes cast against his or her removal would
be sufficient to elect him or her if then cumulatively voted at an election of
the entire Board, or, if there be classes of directors, at an election of the
class of directors of which he or she is a part. Whenever the holders of any
class or series of stock are entitled to elect one or more directors by the
provisions of the certificate of incorporation, the provisions of the preceding
sentence shall apply, in respect to the removal without cause of a director or
directors so elected, to the vote of the holders of the outstanding shares of
that class or series and not to the vote of the outstanding shares as a whole.
Unless otherwise provided in the certificate of incorporation or these by-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having the
right to vote as a single class or from any other cause may be filled by a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director. Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by the
sole remaining director so elected.
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<PAGE> 5
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so determined
notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the President
or by any two directors. Reasonable notice thereof shall be given by the person
or persons calling the meeting.
Section 2.5. Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this by-law shall
constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors one-third of the entire Board shall constitute a quorum for
the transaction of business. The vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the President, or in their absence by a chairman chosen
at the meeting. The Secretary, or in the absence of the Secretary an Assistant
Secretary, shall act as secretary of the meeting, but in the absence of the
Secretary and any Assistant Secretary the chairman of the meeting may appoint
any person to act as secretary of the meeting.
Section 2.8. Action by Directors Without a Meeting. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.9. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors.
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<PAGE> 6
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of dissolution, removing or indemnifying directors or amending these
bylaws; and, unless the resolution expressly so provides, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board conducts its business pursuant to
Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Officers; Election. As soon as practicable after the
annual meeting of stockholders in each year, the Board of Directors shall elect
a President and a Secretary, and it may, if it so determines, elect from among
its members a Chairman of the Board. The Board may also elect one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers and such other
officers as the Board may deem desirable or appropriate and may give any of them
such further designations
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<PAGE> 7
or alternate titles as it considers desirable. Any number of offices may be held
by the same person.
Section 4.2. Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until the first meeting of the Board
after the annual meeting of stockholders next succeeding his or her election,
and until his or her successor is elected and qualified or until his or her
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Board or to the President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board may remove any officer with or without cause at
any time. Any such removal shall be without prejudice to the contractual rights
of such officer, if any, with the Corporation, but the election of an officer
shall not of itself create contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board at any regular or
special meeting.
Section 4.3. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present and shall have and may exercise such powers
as may, from time to time, be assigned to him or her by the Board and as may be
provided by law.
Section 4.4. President. In the absence of the Chairman of the Board,
the President shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. The President shall be the
chief executive officer and shall have general charge and supervision of the
business of the Corporation and, in general, shall perform all duties incident
to the office of president of a corporation and such other duties as may, from
time to time, be assigned to him or her by the Board or as may be provided by
law.
Section 4.5. Vice Presidents. The Vice President or Vice Presidents, at
the request of the President, shall perform the duties of the President, and
when so acting shall have the powers of the President. If there be more than one
Vice President, the Board of Directors may determine which one or more of the
Vice Presidents shall perform any of such duties; or if such determination is
not made by the Board, the President may make such determination; otherwise any
of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from time to time, be assigned to him or her or them by the Board or the
President or as may be provided by law.
Section 4.6. Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of the stockholders, the Board of Directors and any
committees in a book to be kept for that purpose, shall see that all notices are
duly given in accordance with the provisions of these by-laws or as required by
law, shall be custodian of the records of the Corporation, may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly
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<PAGE> 8
authorized, and when so affixed may attest the same, and, in general, shall
perform all duties incident to the office of secretary of a corporation and such
other duties as may, from time to time, be assigned to him or her by the Board
or the President or as may be provided by law.
Section 4.7. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his or her duties, with such
surety or sureties as the Board may determine. The Treasurer shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Corporation, shall render to the President and to the Board, whenever
requested, an account of the financial condition of the Corporation, and, in
general, shall perform all the duties incident to the office of treasurer of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 4.8. Other Officers. The other officers, if any, of the
Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors which
is not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Board may require any officer, agent or employee to give security for
the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman of the Board of Directors, if any, or the President
or a Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, of the Corporation, certifying the number
of shares owned by such holder in the Corporation. If such certificate is
manually signed by one officer or manually countersigned by a transfer agent or
by a registrar, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore
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<PAGE> 9
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such owner's legal representative, to give the Corporation a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 6.3. Waiver of Notice of Meetings of Stockholders. Directors
and Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 6.4. Indemnification of Directors, Officers, and Employees and
Agents. The Corporation shall indemnify its directors, officers, employees and
agents in accordance with the provisions set forth in its certificate of
incorporation.
Section 6.5. Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith
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<PAGE> 10
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or (2) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 6.7. Amendment of By-Laws. These by-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
ADOPTED: June 11, 1997.
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<PAGE> 1
Exhibit 3.13
MEMORANDUM OF ASSOCIATION
OF
WATER JUG ENTERPRISES LIMITED
1. The name of the Company is Water Jug Enterprises Limited
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members; and
(c) To amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The capital of the Company is:
(a) 100 Class A Shares;
(b) 100 Class B Shares;
(c) 1,000,000 Class C Shares; and
(d) 1,000,000 Class D Shares.
with power to divide the shares in the capital for the time being into several
classes and to attach thereto respectively any preferred, deferred or qualified
rights, privileges or conditions, including restrictions on voting rights and
including redemption and purchase of such shares, subject however, to the
provisions of the Companies Act of Nova Scotia.
The rights, privileges, restrictions and conditions attaching to the Class A,
Class B, Class C and Class D shares as am set out in Schedule A attached hereto.
<PAGE> 2
SCHEDULE "A"
RIGHTS AND RESTRICTIONS ATTACHING TO SHARES
27.1 The rights and restrictions attached to the shares of the Company may be
summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend Liquidation Redemption
Class Entitlement Voting Rights Entitlement Redeemable Retractable Amount
- ----------------------------------------------------------------------------------------
A Participating Voting 3rd No No N/A
B Participating Not-Voting 3rd No No N/A
C Non-Participat Voting 2nd No No N/A
D Participating Non-Voting 1st Yes Yes Set By
(Conditionally) Directors
</TABLE>
27.2 The shares of the Company have the following special rights and
restrictions with respect to receipt of dividends:
(a) in each year at the discretion of the directors, dividends may be
paid on the Class "A" or Class "B" shares out of all profits or
surpluses available for distribution;
(b) if in any year, the company ceases to be a "small business
corporation" as that term is defined in the Income Tax Act (Canada)
so that the holder of the Class "D" shares would otherwise be deemed
to receive an interest benefit under Section 74.4 of that Act, then
at-,the discretion of the directors dividends may be paid on the
Class "D" shares out of all profits or surpluses available for
distribution but such dividends may not exceed 4/5 of the amount
equal to the deemed interest benefit that would otherwise arise
under Section 74.4;
(c) dividends must not be paid on the Class "A" or Class "B" shares if
to do so would reduce the value of the net assets of the Company to
less than the aggregate of the redemption amount of the issued Class
"D" shares;
(d) dividends may be paid on one class of shares entitled to dividends
to the exclusion of any other class of shares entitled to dividends:
and
(e) the holders of the Class "C" shares are not entitled to any payment
of dividends on such shares.
27.3 The shares of the Company have the following special rights and
restrictions with respect to voting rights:
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<PAGE> 3
(a) at all meetings of the members of the Company the holders of the
Class "A" and Class "C" share are entitled to one vote for each such
share held; and
(b) the holders of the Class "B" and Class "D" shares are not entitled
to vote at any meeting of the members of the Company and they are
not entitled to receive notice of or attend any meetings of the
members of the Company.
27.4 In the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or upon distribution of the assets of the
Company among its members for the purpose of winding-up its affairs or upon a
reduction or return of its capital the holders of the following classes of
shares shall be entitled to receive the following amounts in the following order
of priority:
Class of Shares Priority Entitlement
- --------------- -------- -----------
Class "D" 1 Redemption amount only
Class "C" 2 Paid-up capital only
Classes "A" and 3 All remaining profits and
"B" assets of the Company
27.5 The shares of the Company have the following special rights and
restrictions with respect to redemption:
(a) the Class "A", Class "B" and Class "C" shares are not redeemable;
(b) the Class "D" Shares are redeemable;
(c) the company may redeem the whole or any number of the issued
Class "D" shares on payment for each share to be redeemed of the
redemption amount and no more provided however that not less than
21 days notice in writing of such redemption is given by mailing
such notice to the registered holders of the shares to be
redeemed specifying a date and place or places of redemption
unless the holders of the shares to be redeemed waive any notice
required to be given under this paragraph which waiver, whether
given before or after redemption will cure any default in giving
such notice and if notice as required of any redemption be given
by the Company and an amount sufficient to redeem the shares be
deposited with any trust company or chartered bank of Canada as
specified in any notice given, on or before the date fixed for
redemption, the holders thereof will thereafter have no rights
against the Company in respect of such shares except upon the
surrender of certificates for such shares to receive payment for
them out of the monies so deposited;
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<PAGE> 4
(d) notwithstanding anything in these Articles to the contrary, if not
all of the outstanding shares of the class are to be redeemed, the
shares to be redeemed may be selected in such manner as the
directors determine and need not be selected either in proportion to
the number of shares registered in the name of each member or from
every or any particular holder of Class "Do' shares; and
(e) if a part only of the shares of any class represented by any
certificate are to be redeemed then a new certificate representing
the shares which are not to be redeemed shall be issued at the
expense of the Company.
27.6 The shares of the Company have the following special rights and
restrictions with respect to retraction:
(a) the Class "A", Class "B" and Class "C" shares are not retractable;
(b) the Class "D" shares are retractable;
(c) subject to the provisions of the Companies Act , the company
will, upon receiving notice from a member holding Class "D"
shares, redeem the number of Class "D" shares registered in the
name of the members which are specified in the notice by paying
to such member for each Class "D" share to be redeemed the
redemption amount of the share and no more provided however that
not less than twenty-one (21) days notice in writing of such
redemption must be given to the Company by the member seeking to
have the Class "D" shares redeemed, such notice to be delivered
by mailing to the registered office of the Company a notice
specifying the number of Class "D" shares to be redeemed and
surrendering the necessary number of share certificates for
cancellation unless the Company waives any notice required to be
given under this paragraph which waiver, whether given before or
after the redemption, cures any default in giving such notice: and
(d) notwithstanding anything in the Articles to the contrary, any
redemption of shares by the Company upon receipt of a retraction
notice from any member holding Class "D" shares need not be made on
a pro rata basis among every member who holds Class "D" shares.
27.7 The Class "D" shares have the following additional special rights and
restrictions:
(a) the Class "D" shares will only be issued as consideration for the
acquisition of property by the Company in circumstances where the
transferor of such property and the Company have agreed to elect to
effect the transfer of such property pursuant to the provisions of
Section 85 of the Income Tax Act (Canada);
(b) the aggregate redemption a mount of the Class "D" shares issued in
connection with a purchase and sale transaction to which Section 85
applies will be the amount by which:
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<PAGE> 5
(i) the aggregate fair market value of all the property acquired
by the Company in the transaction to which Section 85 applies
and in respect of which the Class "D" shares were issued,
exceeds
(ii) the aggregate fair market value of all the consideration
(other than any Class "D" shares in the Company or a right
to receive such shares) received from the Company by the
transferor of such property, as determined by the directors
of the Company at the time of the issuance of the Class "D"
shares, provided that the directors may, in accordance-
with the terms of any agreement between the Company and the
holders of Class "D" shares, amend from time-to-time their
determination of the aggregate redemption amount of the
Class "D" shares after the time of the issuance of such
shares;
(c) the redemption amount of each Class "D" share issued in connection
with a purchase and sale transaction to which Section 85 applies
will be determined by dividing the aggregate redemption amount for
the class by the number of shares of the class issued in respect of
such transaction; and
(d) Class "D" shares shall only be issued in respect of a purchase and
sale transaction to which Section 85 applies if no other Class "D"
shares are outstanding in respect of any other purchase and sale
transaction to which Section 85 applies.
-5-
<PAGE> 1
Exhibit 3.14
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 2
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 4
25. Shareholder advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 5
<PAGE> 2
-ii-
LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 6
45. Right of executor of sole shareholder 6
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 7
51. Terms of issue of new shares 7
52. New shares may be offered to existing shareholders 7
53. New capital within control of directors 7
54. Reduction of capital 7
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 8
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 8
<PAGE> 3
-iii-
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 9
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 9
63. Securities assignable free from equities 9
64. Securities at discount, premium, with preference 9
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 10
68. Notice of meeting - Waiver of notice 10
69. Notice of two meetings for special resolution 10
70. Accidental omission of notice 10
RECORD DATES
71. Setting record dates - when no record date set 10
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 10
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 11
76. If quorum not present - dissolution or adjournment 11
77. Resolution by show of hands - demand of poll 11
78. Conduct of poll 11
79. Casting vote 11
80. Adjournment of meeting 11
81. Poll on question of adjournment, election of chairman 11
82. Effect of demand of poll on continuance of meeting 11
VOTES OF SHAREHOLDERS
83. Voting generally 11
84. Votes on transmission by death, bankruptcy, etc. 12
85. Votes of joint registered shareholders 12
86. Voting in person, by proxy, by corporate representative 12
87. Proxy requirements generally 12
88. Votes of shareholders of unsound mind 12
89. Depositing proxies before meeting 12
90. Votes by proxy after authority revoked 12
91. Form of proxy 12
92. Votes when call due on shares 12
<PAGE> 4
-iv-
93. Resolution of directors ratified by shareholders 13
94. Resolution in writing without meeting 13
DIRECTORS
95. Number of directors - maximum and minimum 13
96. First directors 13
97. Remuneration of directors 13
98. Directors may act notwithstanding vacancy 13
99. Directors may also be officers 13
100. Vacation of office on bankruptcy, etc. 13
101. Directors' conflicts of interest 13
ELECTION OF DIRECTORS
102. Election of directors at general meeting 14
103. Retiring directors remain in office until succeeded 14
104. Number of directors elected, qualification 14
105. Removal of director 14
106. When directors may be appointed by other directors 14
MANAGING DIRECTOR
107. Authority to appoint managing director 14
108. Resignation and removal of managing director 14
109. Remuneration of managing director 14
110. Powers and duties of managing director 14
CHAIRMAN OF THE BOARD
111. Chairman of the Board 14
PRESIDENT AND VICE-PRESIDENTS
112. President 15
113. Vice-Presidents 15
SECRETARY AND TREASURER
114. Secretary 15
115. Treasurer 15
OFFICERS
116. Other officers 15
117. Same person may hold more than one office 15
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 15
119. Participation at meeting by telephone 15
120. Place of meetings - When notice required 15
121. Summoning of meetings 16
122. Questions decided by majority - casting vote - proxies 16
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123. Chairman of directors' meetings 16
124. Authority of meeting when quorum present 16
125. Committees of directors 16
126. Proceedings of committees of directors 16
127. Effect on meeting of defectively appointed director 16
128. Resolution of directors in writing without meeting 16
129. Remuneration of directors for extra services 16
REGISTERS
130. Registers and branch registers 17
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence
17
POWERS OF DIRECTORS
132. General powers of directors 17
133. Specifically enumerated powers of directors 17
SOLICITORS
134. Solicitors 19
THE SEAL
135. Use of common seal 19
136. Facsimiles of common seal 19
137. Facsimile seal for use outside Nova Scotia 19
DIVIDENDS
138. Declaration of dividends 19
139. Dividends payable from profits, etc. 19
140. Declaration of amount of profits, etc., conclusive 19
141. Interim dividends 19
142. Dividends differentiated by paid-up capital 20
143. Right to set off debts against dividends 20
144. Where lien on dividends 20
145. Dividends on shares of deceased, etc. 20
146. Setting off calls and dividends 20
147. Cash dividend, dividend in kind, stock dividend, etc. 20
148. Power of directors to settle issues re dividends 20
149. Dividends on jointly registered shares 20
150. Satisfaction of dividend 20
ACCOUNTS
151. Directors' duty to keep accounts 20
152. Where books to be kept 21
153. Inspection of books by shareholders 21
154. Reports on accounts to general meeting 21
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AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 21
156. First auditors 21
157. Directors may fill casual vacancy 21
158. Persons qualified for appointment as auditors 21
159. Removal of auditor 21
160. Remuneration 21
161. Duties of auditors 21
NOTICES
162. How notice given 21
163. Notice to shareholder without registered address 21
164. Holders of share warrants not entitled to notice 21
165. Notice to joint holders 22
166. When notice deemed given - proof of notice 22
167. Transferees bound by prior notice 22
168. Notice valid though shareholder deceased 22
169. How notice to be signed 22
170. How time to be counted 22
INDEMNITY
171. Indemnity of directors, officers, etc. 22
172. Individual liability of directors, officers, etc. 22
REMINDERS
173. Reminders to directors of obligations under Act 23
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
WATER JUG ENTERPRISES LIMITED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
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5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
<PAGE> 9
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Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
<PAGE> 10
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23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other rate of interest as the directors may
determine from the day appointed for the payment thereof up to the time of
actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of
<PAGE> 11
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interest as the directors may determine from the time of forfeiture until
payment. The directors may enforce such payment if they think fit, but are
under no obligation to do so.
33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
<PAGE> 12
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40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
<PAGE> 13
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(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
<PAGE> 14
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(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
<PAGE> 15
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60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
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66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination
of shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent
<PAGE> 17
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or representative present at any such meeting shall for the purpose of
this Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
<PAGE> 18
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(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
<PAGE> 19
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[If the proxy is solicited by or behalf of the management of the
Company, insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
<PAGE> 20
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101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply to any contract by or on behalf of the
Company to give to the directors or any of them any security for advances
or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to
<PAGE> 21
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the exclusion of, and in substitution for, all or any of the powers of the
directors in that behalf; and may from time to time revoke, withdraw,
alter or vary all or any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings,
<PAGE> 22
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the notices to be given for such meetings and what meetings may be held
without notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
<PAGE> 23
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appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the
directors who, in addition to the powers and authorities by these
Articles or otherwise expressly conferred upon them, may exercise all
such powers and do all such acts and things as may be exercised or done
by the Company and are not hereby or by statute expressly directed or
required to be exercised or done by the shareholders, but subject
nevertheless to the provisions of any statute, the Memorandum or these
Articles. No modification of the Memorandum or these Articles shall
invalidate any prior act of the directors that would have been valid if
such modification had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
<PAGE> 24
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(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
<PAGE> 25
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(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
<PAGE> 26
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138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to
<PAGE> 27
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whom it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
<PAGE> 28
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160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
<PAGE> 29
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171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy, insolvency or tortious acts of any
person with whom any funds, securities or effects are deposited, or for
any loss occasioned by error of judgment or oversight on the part of such
person, or for any other loss, damage or misfortune whatsoever which
happens in the execution of the duties of such person or in relation
thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
<PAGE> 30
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(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 1
EXHIBIT 3.15
MEMORANDUM OF ASSICIATION
OF WITHEY'S WATER SOFTENING & PURIFICATION LIMITED
1. The name of the Company is Withey's Water Softening & Purification
Limited.
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members; and
(c) To amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The authorized capital of the Company is:
One Thousand (1,000) Class "A" Non-Participating Common voting shares with
a par value of One ($1.00) Dollar each;
One Hundred Thousand (100,000) Class :B: Common Non-Voting shares with
a part value of One ($1.00) Dollar each;
One Hundred Thousand (100,000) Class "D: Common Non-Voting shares with
a par value of One ($0.01) Cent each;
One Hundred Thousand (100,000) Class "E" Preference shares with a par
value of One ($0.01) Cent each;
One Hundred Thousand (100,000) Class "F" Preference shares with a par
value of One ($0.01) Cent each;
<PAGE> 2
One Hundred Thousand (100,00) Class "G" Preference shares with a par value
of One Hundred ($100) Dollars each;
One Hundred thousand (100,000) Class "H" Preference shares with a par
value of One ($0.01) Cent each;
One Hundred Thousand (100,000) Class "I" Preference shares with a par
value of One ($0.01) Cent each; and
One Hundred Thousand (100,000) Class "J" preference shares with a par
value of one ($0.01) Cent each.
The Class A-J shares having attached thereto the special rights and
restrictions set out ion the attached Appendix.
With power to divide the shares in the capital for the time being into several
classes and to attach thereto respectively any preferred, deferred or qualified
rights, privileges or conditions, including restrictions on voting rights and
including redemption and purchase of such shares, subject, however, to the
provisions of the Companies Act of Nova Scotia.
<PAGE> 3
APPENDIX "A"
SHARE CONDITIONS
1. The name of the Company is "WITHEY'S WATER SOFTENING & PURIFICATION
LIMITED".
2. The authorized capital of the Company consists of:
2.1 One Thousand (1,000) Class "A" Non-Participating Common voting
shares with a par value of One ($1.00) Dollar each;
2.2 One Hundred Thousand (100,000) Class "B" Common Non-Voting shares
without par value;
2.3 Ten Thousand (10,000) Class "C" Common Non-Voting shares with a par
value of One ($1.00) Dollar each;
2.4 One Hundred Thousand (100,000) Class "D" Common Non-Voting shares
with a par value of One ($0.01) Cent each;
2.5 One Hundred Thousand (100,000) Class "E" Preference shares with a
par value of One ($0.01) Cent each;
2.6 One Hundred Thousand (100,000) Class "F" Preference shares with a
par value of One ($0.01) Cent each;
2.7 One Hundred Thousand (100,000) Class "G" Preference shares with a
par value of One Hundred ($100) Dollars each;
2.8 One Hundred Thousand (100,000) Class "H" Preference shares with a
par value of One ($0.01) Cent each;
2.9 One Hundred Thousand (100,000) Class "I" Preference shares with a
par value of One ($0.01) Cent each; and
2.10 One Hundred Thousand (100,000) Class "J" Preference shares with a
par value of one ($0.01) Cent each.
<PAGE> 4
3. The Class A-J shares having the conditions attached hereto as Appendix B.
<PAGE> 5
APPENDIX "B"
PART 26
26 - SPECIAL RIGHTS AND RESTRICTIONS
26.1 The Class "A" Non-Participating Common Voting shares shall have attached
thereto the following special rights and restrictions:
26.1.1 The holders of the Class "A" Non-Participating Common Voting
shares must be sent notice of and may attend meetings of the
shareholders of the Company, are entitled to vote at any such
meetings, and are entitled to one vote for each Class "A"
Non-Participating Common Voting share held.
26.1.2 In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Company, the holders of the
Class "A" Non-Participating Common Shares shall be entitled to
receive, out of the assets of the Company (whether from capital
or surplus or both), the sum of ONE ($1.00) DOLLAR per share (or
the amount paid up thereon), but the holders of Class "A"
Non-Participating common shares shall not be entitled to share
any further in the distribution of the property or assets of the
Company.
26.1.3 The directors shall not declare dividends on these Class "A"
Non-Participating Common Voting shares and the holders are not
entitled to any.
26.2 The Class "B" Common Not-Voting shares shall have attached thereto the
following rights and restrictions:
26.2.1 The holders of the Class "B" Common Non-Voting shares are not
entitled to notice of or to vote at any meetings for the election
of directors or at any meeting of the shareholders except as may
be permitted by the laws of British Columbia.
26.2.2 The directors may declare dividends on these Class "B" Common
Non-Voting shares without declaring dividends on shares of any
other class, and may declare dividends on shares of any other
class without declaring dividends on these Class "B" Common
Non-Voting shares.
<PAGE> 6
26.3 The Class "C" Common Non-Voting shares shall have attached thereto the
following special rights and restrictions:
26.3.1 The holders of Class "C" Common Non-Voting shares are not
entitled to notice of or to vote at any meetings for the election
of directors or at any meeting of the shareholders except as may
be provided by the laws of the Province of British Columbia.
26.3.2 The directors may declare dividends on these Class "C" Common
Non-Voting shares without declaring dividends on shares of any
other class, and may declare dividends on shares of any other
class without declaring dividends on these Class "C" Common
Non-Voting shares.
26.4 The Class "D" Common Non-voting shares shall have attached thereto the
following special rights and restrictions:
26.4.1 The holders of Class "D" Common Non-voting shares are not
entitled to notice of or to vote at any meetings for the election
of directors or at any meeting of the shareholders except as may
be provided by the laws of the Province of British Columbia.
26.4.2 The directors may declare dividends on these Class "D" Common
Non-Voting shares without declaring dividends on shares of any
other class, and may declare dividends on shares of any other
class without declaring dividends on these Class "D" Common
Non-Voting shares.
26.5 The Class "E" Preference shares shall have attached thereto the following
special rights and restrictions:
26.5.1 The holders of Class "E" Preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
26.5.2 The holders of the Class "E" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, on-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "E" Preference shares.
26.5.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "E" Preference shares on payment of the
redemption/retraction amount set out below for each share to be
redeemed (herein called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of
<PAGE> 7
such redemption shall be given by mailing such notice to the
registered holders of the shares to be redeemed, specifying the
date and place of redemption; and if an amount sufficient to
redeem the shares is deposited with any trust company or
chartered bank of Canada, as specified in the notice, on or
before the date fixed for redemption, dividends on the Class "E"
Preference shares to be redeemed and the rights of the holders
thereof shall cease after the date so fixed for redemption, who
shall thereafter have no rights against the Company in respect
thereof except, upon the surrender of certificates for such
shares, to receive payment therefor out of the moneys so
deposited.
26.5.4 Subject to the provisions of the Company Act, the Company shall,
upon receiving notice as hereinafter provided from a holder of
Class "E" preference shares, redeem the number of the Class "E"
Preference shares registered in the name of the shareholder which
are specified in the notice by paying to such shareholder for
each Class "E" preference share to be redeemed the Redemption
Amount set out below. Not less than twenty-one (21) days notice
in writing of such redemption shall be given to the Company by
the shareholders seeking such redemption; such notice to be
delivered by mail to the registered office of the Company and to
specify the number of Class "E" Preference shares to be redeemed
and to attach the necessary number of shares certificates for
cancellation. The Company shall issue new certificates for any
shares which are not redeemed but the certificates for which have
been surrendered. The Company may waive any notice so required to
be given, and such waiver, whether given before or after or after
the redemption, shall cure any default in giving such notice.
26.5.5 When issuing any Class "E" Preference Share the directors shall
determine the amount payable by the Company to the holder for the
redemption of such share (the "Redemption Amount"). If any Class
"E" Preference Shares are issued as payment, in whole or in part,
for assets transferred to the Company, including shares of the
Company, the Redemption Amount of such Shares shall be the fair
market value of the assets or the balance of the fair market
value thereof, as the case may be, and the Redemption Amount of
each such share shall be the quotient of such fair market value,
or balance thereof, divided by the number of Class "E" Preference
Shares issued as consideration for such assets or shares. If the
Department of National Revenue, or other authority having
jurisdiction, shall determine that the Redemption Amount is not
the fair market value of the assets or shares or of the balance
of the price for such assets or shares, as the case may be, the
Redemption Amount for such shares as recorded in the proceedings
of the directors shall be increased or decreased so that it shall
be the same as the fair market value of the said assets or shares
or of the balance of the price for such assets or shares, as the
case may be, subject always to a final determination of the fair
market value by a court of competent jurisdiction upon any appeal
of such determination. If any or all of those shares had been
redeemed already, then the shareholder who redeemed them
<PAGE> 8
shall pay to or receive from the Company an amount per share
equaling the decrease or increase in the share price as
determined above.
25.5.6 The directors may declare dividends on these Class "E" Preference
shares without declaring dividends on shares of any other class,
and may declare dividends on shares of any other class without
declaring dividends on these Class "E" Preference shares.
26.6 The Class "F" Preference shares shall have attached thereto the following
special rights and restrictions:
26.6.1 The holders of Class "F" preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
26.6.2 The holders of the Class "F" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, non-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "F" Preference shares.
26.6.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "F" preference shares on payment of the
redemption/retraction amount set out below for each share to be
redeemed (herein called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of such redemption all be
given by mailing such notice to the registered holders of the
shares to be redeemed, specifying the date and place of
redemption; and if an amount sufficient to redeem the shares is
deposited with any trust company or chartered bank of Canada, as
specified in the notice, on or before the date fixed for
redemption, dividends on the Class "F" Preference shares to be
redeemed and the rights of the holders thereof shall cease after
the date so fixed for redemption, who shall thereafter have no
rights against the Company in respect thereof except, upon the
surrender of certificates for such shares, to receive payment
therefor out of the moneys so deposited.
26.6.4 Subject to the provisions of the Company Act, the Company shall,
upon receiving notice as hereinafter provided from a holder of
Class "F" Preference shares, redeem the number of the Class "F"
Preference shares registered in the name of the shareholder which
are specified in the notice by paying to such shareholder for
each Class "F" Preference share to be redeemed the Redemption
Amount set out below. Not less than twenty-one (21) days notice
in writing of such redemption shall be given to the Company by
the shareholder seeking such redemption; such notice to be
delivered by mail to the registered office of the Company and to
specify the number of Class "F" Preference
<PAGE> 9
shares to be redeemed and to attach the necessary number of Class
"F" preference shares to be redeemed and to attach the necessary
number of share certificates for cancellation. The Company shall
issue new certificates for any shares which are not redeemed but
the certificates for which have been surrendered. The Company may
waive any notice so required to be given, and such waiver,
whether given before or after the redemption, shall cure any
default in giving such notice.
26.6.5 When issuing any Class "F" Preference Share the directors shall
determine the amount payable by the Company to the holder for the
redemption of such share (the "Redemption Amount"). If any Class
"F" Preference Shares are issued as payment, in whole or in part,
for assets transferred to the Company, including shares of the
Company, the Redemption Amount of such Shares shall be the fair
market value of the assets or the balance of the fair market
value thereof, as the case may be, and the Redemption Amount of
each such share shall be the quotient of such fair market value,
or balance thereof, divided by the number of Class "F" Preference
Shares issued as consideration for such assets or shares. If the
Department of National Revenue, or other authority having
jurisdiction, shall determine that the Redemption Amount is not
the fair market value of the assets or shares or of the balance
of the price for such assets or shares, as the case may be, the
Redemption Amount for such shares as recorded in the proceedings
of the directors shall be increased or decreased so that it shall
be the same as the fair market value of the said assets or shares
or of the balance of the price for such assets or shares, as the
case may be, subject always to a final determination of the fair
market value by a court of competent jurisdiction upon any appeal
of such determination. If any or all of those shares had been
redeemed already, then the shareholder who redeemed them shall
pay to or receive from the Company an amount per share equaling
the decrease or increase in the share price as determined above.
26.6.6 The directors may declare dividends on these Class "F" Preference
shares without declaring dividends on shares of any other class,
and may declare dividends on shares of any other class without
declaring dividends on these Class "F" Preference Shares.
26.7 The Class "G" Preference shares shall have attached thereto the following
special rights and restrictions:
26.7.1 The holders of Class "G" Preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
<PAGE> 10
26.7.2 The holders of the Class "G" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, non-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "G" Preference shares.
26.7.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "G" Preference shares on payment of ONE
HUNDRED ($100.00) DOLLARS for each share to be redeemed
(hereinafter called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of such redemption shall be
given by mailing such notice to the registered holders of the
shares to be redeemed, specifying the date and place of
redemption; and if an amount sufficient to redeem the shares is
deposited with any trust company or chartered bank of Canada, as
specified in the notice, on or before the date fixed for
redemption, dividends on the Class "G" Preference shares to be
redeemed and the rights of the holders thereof shall cease after
the date so fixed for redemption, and the holders thereof shall
then have no rights against the Company in respect thereof
except, upon the surrender of certificates for such shares, to
receive payment therefor out of the moneys so deposited.
26.7.4 Subject to the provisions of the Company Act, the Company shall,
upon receiving notice as hereinafter provided from a holder of
Class "G" Preference shares, redeem the number of the Class "G"
Preference shares registered in the name of the shareholder which
are specified in the notice by paying to such shareholder for
each Class "G" Preference share to be redeemed the Redemption
Amount. Not less than twenty-one (21) days notice in writing of
such redemption shall be given to the Company by the shareholder
seeking such redemption; such notice to be delivered by mail to
the registered office of the Company and to specify the number of
Class "G" Preference shares to be redeemed and to attach the
necessary number of share certificates for cancellation. The
Company shall issue new certificates for any shares which are not
redeemed but the certificates for which have been surrendered.
The Company may waive any notice so required to be given and such
waiver, whether given before or after the redemption shall cure
any default in giving such notice.
26.8 The Class "H" Preference shares shall have attached thereto the following
special rights and restrictions:
26.8.1 The holders of Class "H" Preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
<PAGE> 11
26.8.2 The holders of the Class "H" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, non-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "H" Preference shares.
26.8.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "H" Preference shares on payment of ONE
HUNDRED ($100.00) DOLLARS for each share to be redeemed
(hereinafter called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of such redemption shall be
given by mailing such notice to the registered holders of the
shares to be redeemed, specifying the date and place of
redemption; and if an amount sufficient to redeem the shares is
deposited with any trust company or chartered bank of Canada, as
specified in the notice, on or before the date fixed for
redemption, dividends on the Class "H" Preference shares to be
redeemed and the rights of the holders thereof shall cease after
the date so fixed for redemption, and the holders thereof shall
then have no rights against the Company in respect thereof
except, upon the surrender of certificates for such shares, to
receive payment therefor out of the moneys so deposited.
26.8.4 Subject to the provisions of the Company Act, the Company shall,
upon receiving notice as hereinafter provided form a holder of
Class "H" Preference shares, redeem the number of the Class "H"
Preference shares registered in the name of the shareholder which
are specified in the notice by paying to such shareholder for
each Class "H" Preference share to be redeemed the Redemption
Amount. Not less than twenty-one (21) days notice in writing of
such redemption shall be given to the Company by the shareholder
seeking such redemption; such notice to be delivered by mail to
the registered office of the Company and to specify the number of
class "H" Preference shares to be redeemed and to attach the
necessary number of share certificates for cancellation. The
Company shall issue new certificates for any shares which are not
redeemed but the certificates for which have been surrendered.
The Company may waive any notice so required to be given and such
waiver, whether given before or after the redemption shall cure
any default in giving such notice.
26.8.5 The directors may declare dividends on these Class "H" Preference
shares without declaring dividends on shares of any other class,
and may declare dividends on shares of any other class without
declaring dividends on these Class "H" Preference Shares.
26.9 The Class "F" Preference shares shall have attached thereto the following
special rights and restrictions:
<PAGE> 12
26.9.1 The holders of Class "I" Preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
26.9.2 The holders of the Class "I" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, non-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "I" Preference shares.
26.9.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "I" Preference shares on payment of ONE
THOUSAND ($1,000.00) DOLLARS for each share to be redeemed
(hereinafter called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of such redemption shall be
given by mailing such notice to the registered holders of the
shares to be redeemed, specifying the date and place of
redemption; and if an amount sufficient to redeem the shares is
deposited with any trust company or chartered bank of Canada, as
specified in the notice, on or before the date fixed for
redemption, dividends on the Class "I" Preference shares to be
redeemed and the rights of the holders thereof shall cease after
the date so fixed for redemption, and the holders thereof shall
then have no rights against the Company in respect thereof
except, upon the surrender of certificates for such shares, to
receive payment therefor out of the moneys so deposited.
26.9.5 The directors may declare dividends on these Class "I" Preference
shares without declaring dividends on shares of any other class,
and may declare dividends on shares of any other class without
declaring dividends on these Class "I" Preference Shares.
26.10 The Class "J" Preference shares shall have attached thereto the following
special rights and restrictions:
26.10.1 The holders of Class "J" Preference shares are not entitled to
notice of or to vote at any meetings for the election of
directors or at any meeting of the shareholders except as may be
provided by the laws of the Province of British Columbia.
26.10.2 The holders of the Class "J" Preference shares may, in each year,
at the discretion of the directors, be paid, out of any profits
or surplus available for dividends, non-cumulative dividends at
such interest rate as the directors decide at the time of issue
of the Class "J" Preference shares.
<PAGE> 13
26.10.3 The Company may, upon giving notice as provided below, redeem all
or any of the Class "J" Preference share son payment of the
redemption/ retraction amount set out below for each share to be
redeemed (herein called the "Redemption Amount"). Not less than
thirty (30) days' notice in writing of such redemption shall be
given by mailing such notice to the registered holders of the
shares to be redeemed, specifying the date and place of
redemption; and if an amount sufficient to redeem the shares is
deposited with any trust company or chartered bank of Canada, as
specified in the notice, on or before the date fixed for
redemption, dividends on the Class "J" Preference shares to be
redeemed and the rights of the holders thereof shall cease after
the date so fixed for redemption, who shall thereafter have no
rights against the Company in respect thereof except, upon the
surrender of certificates for such shares, to receive payment
therefor out of the moneys so deposited.
26.10.4 Subject to the provisions of the Company Act, the Company shall,
upon receiving notice as hereinafter provided form a holder of
Class "J" Preference shares, redeem the number of the Class "J"
Preference shares registered in the name of the shareholder which
are specified in the notice by paying to such shareholder for
each Class "J" Preference share to be redeemed the Redemption
Amount set out below. Not less than twenty-one (21) days notice
in writing of such redemption shall be given to the Company by
the shareholder seeking such redemption; such notice to be
delivered by mail to the registered office of the Company and to
specify the number of Class "J" Preference shares to be redeemed
and t attach the necessary number of share certificates for
cancellation. The Company shall issue new certificates for any
shares which are not redeemed but the certificates for which have
been surrendered. The Company may waive any notice so required to
be given, and such waiver, whether given before or after the
redemption, shall cure any default in giving such notice.
26.10.5 When issuing any Class "J" Preference Share the directors shall
determine the amount payable by the Company to the holder for the
redemption of such share (the "Redemption Amount"). If any Class
"J" Preference Shares are issued as payment, in whole or in part,
for assets transferred to the Company, including shares of the
Company, the Redemption Amount of such Shares shall be the fair
market value of the assets or the balance of the fair market
value thereof, as the case may be, and the Redemption Amount of
each such share shall be the quotient of such fair market value,
or balance thereof, divided by the number of Class "J" Preference
Shares issued as consideration for such assets or shares. If the
Department of National Revenue, or other authority having
jurisdiction, shall determine that the Redemption Amount is not
the fair market value of the assets or shares or of the balance
of the price for such assets or shares, as the case may be, the
Redemption Amount for such shares as recorded in the proceedings
of the directors shall be increased or decreased so that it shall
be the same as the fair market value of the said assets or shares
or
<PAGE> 14
of the balance of the price for such assets or shares, as the
case may be, subject always to a final determination of the fair
market value by a court of competent jurisdiction upon any appeal
of such determination. If any or all of those shares had been
redeemed already, then the shareholder who redeemed them shall
pay to or receive from the Company an amount per share equaling
the decrease or increase in the share price as determined above.
26.10.6 The directors may declare dividends on these Class "J" Preference
shares without declaring dividends on shares of any other class,
and may declare dividends on shares of any other class without
declaring dividends on these Class "J" Preference shares.
26.11 if any voluntary or involuntary liquidation, dissolution or winding up of
the Company happens, the following shall be the priorities of the various
classes of shares to receive what they are entitled to out of the assets
of the Company.
26.11.1 First priority: Shares of Preference Classes "E", "F", "G", "H",
"I" and "J" shall all rank pari passu amongst each other, but
shall rank in priority above all other shares.
26.11.2 Second priority: The Class "A" Common Non-Participating Voting
shares shall rank next in priority behind Preference Classes "E",
"F", "G", "H", "I" and "J", but shall rank in priority above all
other shares.
26.11.3 Third priority: Shares of Common Stock Non-Voting Classes "B",
"C", and "D" shall all rank pari passu amongst each other, but
shall rank in priority behind all other shares.
<PAGE> 1
Exhibit 3.16
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 2
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 4
25. Shareholder advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 5
<PAGE> 2
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LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 6
45. Right of executor of sole shareholder 6
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 7
51. Terms of issue of new shares 7
52. New shares may be offered to existing shareholders 7
53. New capital within control of directors 7
54. Reduction of capital 7
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 8
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 8
<PAGE> 3
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CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 9
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 9
63. Securities assignable free from equities 9
64. Securities at discount, premium, with preference 9
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 10
68. Notice of meeting - Waiver of notice 10
69. Notice of two meetings for special resolution 10
70. Accidental omission of notice 10
RECORD DATES
71. Setting record dates - when no record date set 10
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 10
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 11
76. If quorum not present - dissolution or adjournment 11
77. Resolution by show of hands - demand of poll 11
78. Conduct of poll 11
79. Casting vote 11
80. Adjournment of meeting 11
81. Poll on question of adjournment, election of chairman 11
82. Effect of demand of poll on continuance of meeting 11
VOTES OF SHAREHOLDERS
83. Voting generally 11
84. Votes on transmission by death, bankruptcy, etc. 12
85. Votes of joint registered shareholders 12
86. Voting in person, by proxy, by corporate representative 12
87. Proxy requirements generally 12
88. Votes of shareholders of unsound mind 12
89. Depositing proxies before meeting 12
90. Votes by proxy after authority revoked 12
91. Form of proxy 12
92. Votes when call due on shares 12
<PAGE> 4
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93. Resolution of directors ratified by shareholders 13
94. Resolution in writing without meeting 13
DIRECTORS
95. Number of directors - maximum and minimum 13
96. First directors 13
97. Remuneration of directors 13
98. Directors may act notwithstanding vacancy 13
99. Directors may also be officers 13
100. Vacation of office on bankruptcy, etc. 13
101. Directors' conflicts of interest 13
ELECTION OF DIRECTORS
102. Election of directors at general meeting 14
103. Retiring directors remain in office until succeeded 14
104. Number of directors elected, qualification 14
105. Removal of director 14
106. When directors may be appointed by other directors 14
MANAGING DIRECTOR
107. Authority to appoint managing director 14
108. Resignation and removal of managing director 14
109. Remuneration of managing director 14
110. Powers and duties of managing director 14
CHAIRMAN OF THE BOARD
111. Chairman of the Board 14
PRESIDENT AND VICE-PRESIDENTS
112. President 15
113. Vice-Presidents 15
SECRETARY AND TREASURER
114. Secretary 15
115. Treasurer 15
OFFICERS
116. Other officers 15
117. Same person may hold more than one office 15
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 15
119. Participation at meeting by telephone 15
120. Place of meetings - When notice required 15
121. Summoning of meetings 16
122. Questions decided by majority - casting vote - proxies 16
<PAGE> 5
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123. Chairman of directors' meetings 16
124. Authority of meeting when quorum present 16
125. Committees of directors 16
126. Proceedings of committees of directors 16
127. Effect on meeting of defectively appointed director 16
128. Resolution of directors in writing without meeting 16
129. Remuneration of directors for extra services 16
REGISTERS
130. Registers and branch registers 17
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 17
POWERS OF DIRECTORS
132. General powers of directors 17
133. Specifically enumerated powers of directors 17
SOLICITORS
134. Solicitors 19
THE SEAL
135. Use of common seal 19
136. Facsimiles of common seal 19
137. Facsimile seal for use outside Nova Scotia 19
DIVIDENDS
138. Declaration of dividends 19
139. Dividends payable from profits, etc. 19
140. Declaration of amount of profits, etc., conclusive 19
141. Interim dividends 19
142. Dividends differentiated by paid-up capital 20
143. Right to set off debts against dividends 20
144. Where lien on dividends 20
145. Dividends on shares of deceased, etc. 20
146. Setting off calls and dividends 20
147. Cash dividend, dividend in kind, stock dividend, etc. 20
148. Power of directors to settle issues re dividends 20
149. Dividends on jointly registered shares 20
150. Satisfaction of dividend 20
ACCOUNTS
151. Directors' duty to keep accounts 20
152. Where books to be kept 21
153. Inspection of books by shareholders 21
154. Reports on accounts to general meeting 21
<PAGE> 6
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AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 21
156. First auditors 21
157. Directors may fill casual vacancy 21
158. Persons qualified for appointment as auditors 21
159. Removal of auditor 21
160. Remuneration 21
161. Duties of auditors 21
NOTICES
162. How notice given 21
163. Notice to shareholder without registered address 21
164. Holders of share warrants not entitled to notice 21
165. Notice to joint holders 22
166. When notice deemed given - proof of notice 22
167. Transferees bound by prior notice 22
168. Notice valid though shareholder deceased 22
169. How notice to be signed 22
170. How time to be counted 22
INDEMNITY
171. Indemnity of directors, officers, etc. 22
172. Individual liability of directors, officers, etc. 22
REMINDERS
173. Reminders to directors of obligations under Act 23
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
Withey's Water Softening & Purification Limited
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
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5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
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CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 10
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rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 15
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 19
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
<PAGE> 20
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
<PAGE> 21
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PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
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(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
<PAGE> 23
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REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the
directors who, in addition to the powers and authorities by these
Articles or otherwise expressly conferred upon them, may exercise all
such powers and do all such acts and things as may be exercised or done
by the Company and are not hereby or by statute expressly directed or
required to be exercised or done by the shareholders, but subject
nevertheless to the provisions of any statute, the Memorandum or these
Articles. No modification of the Memorandum or these Articles shall
invalidate any prior act of the directors that would have been valid if
such modification had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 25
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 26
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 27
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
<PAGE> 28
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 29
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 30
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Name(s) of Subscriber(s)
Dated at Halifax, Nova Scotia the day of
, 199 .
Witness to above signature(s):
- ---------------------------------------------
Halifax, Nova Scotia
<PAGE> 1
Exhibit 3.17
MEMORANDUM OF ASSOCIATION
OF AQUA CARE WATER SOFTENING & PURIFICATION INCORPORATED
1. The name of the Company is Aqua Care Water Softening & Purification
Incorporated.
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members; and
(c) To amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The authorized capital of the Company is Ten Thousand (10,000) common
shares with a par value of One ($1.00) Dollar each.
with power to divide the shares in the capital for the time being into
several classes and to attach thereto respectively any preferred, deferred
or qualified rights, privileges or conditions, including restrictions on
voting rights and including redemption and purchase of such shares,
subject, however, to the provisions of the Companies Act of Nova Scotia.
<PAGE> 1
Exhibit 3.18
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 2
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 4
25. Shareholder advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 5
<PAGE> 2
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LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 6
45. Right of executor of sole shareholder 6
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 7
51. Terms of issue of new shares 7
52. New shares may be offered to existing shareholders 7
53. New capital within control of directors 7
54. Reduction of capital 7
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 8
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 8
<PAGE> 3
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CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 9
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 9
63. Securities assignable free from equities 9
64. Securities at discount, premium, with preference 9
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 10
68. Notice of meeting - Waiver of notice 10
69. Notice of two meetings for special resolution 10
70. Accidental omission of notice 10
RECORD DATES
71. Setting record dates - when no record date set 10
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 10
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 11
76. If quorum not present - dissolution or adjournment 11
77. Resolution by show of hands - demand of poll 11
78. Conduct of poll 11
79. Casting vote 11
80. Adjournment of meeting 11
81. Poll on question of adjournment, election of chairman 11
82. Effect of demand of poll on continuance of meeting 11
VOTES OF SHAREHOLDERS
83. Voting generally 11
84. Votes on transmission by death, bankruptcy, etc. 12
85. Votes of joint registered shareholders 12
86. Voting in person, by proxy, by corporate representative 12
87. Proxy requirements generally 12
88. Votes of shareholders of unsound mind 12
89. Depositing proxies before meeting 12
90. Votes by proxy after authority revoked 12
91. Form of proxy 12
92. Votes when call due on shares 12
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93. Resolution of directors ratified by shareholders 13
94. Resolution in writing without meeting 13
DIRECTORS
95. Number of directors - maximum and minimum 13
96. First directors 13
97. Remuneration of directors 13
98. Directors may act notwithstanding vacancy 13
99. Directors may also be officers 13
100. Vacation of office on bankruptcy, etc. 13
101. Directors' conflicts of interest 13
ELECTION OF DIRECTORS
102. Election of directors at general meeting 14
103. Retiring directors remain in office until succeeded 14
104. Number of directors elected, qualification 14
105. Removal of director 14
106. When directors may be appointed by other directors 14
MANAGING DIRECTOR
107. Authority to appoint managing director 14
108. Resignation and removal of managing director 14
109. Remuneration of managing director 14
110. Powers and duties of managing director 14
CHAIRMAN OF THE BOARD
111. Chairman of the Board 14
PRESIDENT AND VICE-PRESIDENTS
112. President 15
113. Vice-Presidents 15
SECRETARY AND TREASURER
114. Secretary 15
115. Treasurer 15
OFFICERS
116. Other officers 15
117. Same person may hold more than one office 15
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 15
119. Participation at meeting by telephone 15
120. Place of meetings - When notice required 15
121. Summoning of meetings 16
122. Questions decided by majority - casting vote - proxies 16
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123. Chairman of directors' meetings 16
124. Authority of meeting when quorum present 16
125. Committees of directors 16
126. Proceedings of committees of directors 16
127. Effect on meeting of defectively appointed director 16
128. Resolution of directors in writing without meeting 16
129. Remuneration of directors for extra services 16
REGISTERS
130. Registers and branch registers 17
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 17
POWERS OF DIRECTORS
132. General powers of directors 17
133. Specifically enumerated powers of directors 17
SOLICITORS
134. Solicitors 19
THE SEAL
135. Use of common seal 19
136. Facsimiles of common seal 19
137. Facsimile seal for use outside Nova Scotia 19
DIVIDENDS
138. Declaration of dividends 19
139. Dividends payable from profits, etc. 19
140. Declaration of amount of profits, etc., conclusive 19
141. Interim dividends 19
142. Dividends differentiated by paid-up capital 20
143. Right to set off debts against dividends 20
144. Where lien on dividends 20
145. Dividends on shares of deceased, etc. 20
146. Setting off calls and dividends 20
147. Cash dividend, dividend in kind, stock dividend, etc. 20
148. Power of directors to settle issues re dividends 20
149. Dividends on jointly registered shares 20
150. Satisfaction of dividend 20
ACCOUNTS
151. Directors' duty to keep accounts 20
152. Where books to be kept 21
153. Inspection of books by shareholders 21
154. Reports on accounts to general meeting 21
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AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 21
156. First auditors 21
157. Directors may fill casual vacancy 21
158. Persons qualified for appointment as auditors 21
159. Removal of auditor 21
160. Remuneration 21
161. Duties of auditors 21
NOTICES
162. How notice given 21
163. Notice to shareholder without registered address 21
164. Holders of share warrants not entitled to notice 21
165. Notice to joint holders 22
166. When notice deemed given - proof of notice 22
167. Transferees bound by prior notice 22
168. Notice valid though shareholder deceased 22
169. How notice to be signed 22
170. How time to be counted 22
INDEMNITY
171. Indemnity of directors, officers, etc. 22
172. Individual liability of directors, officers, etc. 22
REMINDERS
173. Reminders to directors of obligations under Act 23
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ARTICLES OF ASSOCIATION
OF
AQUA CARE WATER SOFTENING & PURIFICATION INCORPORATED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
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5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
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CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 10
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rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 19
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
<PAGE> 20
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
<PAGE> 21
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PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
<PAGE> 22
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(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided
by a majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
<PAGE> 23
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REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 25
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 26
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 27
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
<PAGE> 28
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 29
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 30
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Name(s) of Subscriber(s)
Dated at Halifax, Nova Scotia the day of
, 199 .
Witness to above signature(s):
- ------------------------------
Halifax, Nova Scotia
<PAGE> 1
Exhibit 3.19
MEMORANDUM OF ASSOCIATION
OF HIGH VALLEY WATER LIMITED
1. The name of the Company is High Valley Water Limited.
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members; and
(c) To amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The authorized capital of the Company is:
Ten Million (10,000,000) common shares without nominal or par value.
with power to divide the shares in the capital for the time being into several
classes and to attach thereto respectively any preferred, deferred or qualified
rights, privileges or conditions, including restrictions on voting rights and
including redemption and purchase of such shares, subject, however, to -the
provisions of the Companies Act of Nova Scotia.
<PAGE> 1
Exhibit 3.20
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 2
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 3
25. Shareholder advances on unpaid shares 3
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 4
<PAGE> 2
- ii -
LIEN ON SHARES
34. Lien on shares for debts of shareholder 4
35. Sale of shares not paid up to enforce lien 4
36. Application of proceeds of shares by Company 4
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 5
42. Fee on transfer 5
43. Transfer instrument to remain with Company 5
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 5
45. Right of executor of sole shareholder 5
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 6
51. Terms of issue of new shares 6
52. New shares may be offered to existing shareholders 6
53. New capital within control of directors 6
54. Reduction of capital 6
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 7
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 7
<PAGE> 3
- iii -
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 8
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 8
63. Securities assignable free from equities 8
64. Securities at discount, premium, with preference 8
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 9
68. Notice of meeting - Waiver of notice 9
69. Notice of two meetings for special resolution 9
70. Accidental omission of notice 9
RECORD DATES
71. Setting record dates - when no record date set 9
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 9
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 10
76. If quorum not present - dissolution or adjournment 10
77. Resolution by show of hands - demand of poll 10
78. Conduct of poll 10
79. Casting vote 10
80. Adjournment of meeting 10
81. Poll on question of adjournment, election of chairman 10
82. Effect of demand of poll on continuance of meeting 10
VOTES OF SHAREHOLDERS
83. Voting generally 10
84. Votes on transmission by death, bankruptcy, etc. 11
85. Votes of joint registered shareholders 11
86. Voting in person, by proxy, by corporate representative 11
87. Proxy requirements generally 11
88. Votes of shareholders of unsound mind 11
89. Depositing proxies before meeting 11
90. Votes by proxy after authority revoked 11
91. Form of proxy 11
92. Votes when call due on shares 12
<PAGE> 4
- iv -
93. Resolution of directors ratified by shareholders 12
94. Resolution in writing without meeting 12
DIRECTORS
95. Number of directors - maximum and minimum 12
96. First directors 12
97. Remuneration of directors 12
98. Directors may act notwithstanding vacancy 12
99. Directors may also be officers 12
100. Vacation of office on bankruptcy, etc. 12
101. Directors' conflicts of interest 12
ELECTION OF DIRECTORS
102. Election of directors at general meeting 13
103. Retiring directors remain in office until succeeded 13
104. Number of directors elected, qualification 13
105. Removal of director 13
106. When directors may be appointed by other directors 13
MANAGING DIRECTOR
107. Authority to appoint managing director 13
108. Resignation and removal of managing director 13
109. Remuneration of managing director 13
110. Powers and duties of managing director 13
CHAIRMAN OF THE BOARD
111. Chairman of the Board 13
PRESIDENT AND VICE-PRESIDENTS
112. President 13
113. Vice-Presidents 14
SECRETARY AND TREASURER
114. Secretary 14
115. Treasurer 14
OFFICERS
116. Other officers 14
117. Same person may hold more than one office 14
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 14
119. Participation at meeting by telephone 14
120. Place of meetings - When notice required 14
121. Summoning of meetings 14
122. Questions decided by majority - casting vote - proxies 14
<PAGE> 5
- v -
123. Chairman of directors' meetings 15
124. Authority of meeting when quorum present 15
125. Committees of directors 15
126. Proceedings of committees of directors 15
127. Effect on meeting of defectively appointed director 15
128. Resolution of directors in writing without meeting 15
129. Remuneration of directors for extra services 15
REGISTERS
130. Registers and branch registers 15
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 15
POWERS OF DIRECTORS
132. General powers of directors 16
133. Specifically enumerated powers of directors 16
SOLICITORS
134. Solicitors 17
THE SEAL
135. Use of common seal 17
136. Facsimiles of common seal 17
137. Facsimile seal for use outside Nova Scotia 18
DIVIDENDS
138. Declaration of dividends 18
139. Dividends payable from profits, etc. 18
140. Declaration of amount of profits, etc., conclusive 18
141. Interim dividends 18
142. Dividends differentiated by paid-up capital 18
143. Right to set off debts against dividends 18
144. Where lien on dividends 18
145. Dividends on shares of deceased, etc. 18
146. Setting off calls and dividends 18
147. Cash dividend, dividend in kind, stock dividend, etc. 18
148. Power of directors to settle issues re dividends 18
149. Dividends on jointly registered shares 19
150. Satisfaction of dividend 19
ACCOUNTS
151. Directors' duty to keep accounts 19
152. Where books to be kept 19
153. Inspection of books by shareholders 19
154. Reports on accounts to general meeting 19
<PAGE> 6
- vi -
AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 19
156. First auditors 19
157. Directors may fill casual vacancy 19
158. Persons qualified for appointment as auditors 19
159. Removal of auditor 19
160. Remuneration 20
161. Duties of auditors 20
NOTICES
162. How notice given 20
163. Notice to shareholder without registered address 20
164. Holders of share warrants not entitled to notice 20
165. Notice to joint holders 20
166. When notice deemed given - proof of notice 20
167. Transferees bound by prior notice 20
168. Notice valid though shareholder deceased 20
169. How notice to be signed 20
170. How time to be counted 20
INDEMNITY
171. Indemnity of directors, officers, etc. 20
172. Individual liability of directors, officers, etc. 21
REMINDERS
173. Reminders to directors of obligations under Act 21
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
HIGH VALLEY WATER LIMITED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
- 2 -
5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
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CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 10
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rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 15
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 19
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
PRESIDENT AND VICE-PRESIDENTS
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112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
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121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided
by a majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
REGISTERS
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130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 30
- 24 -
Name(s) of Subscriber(s)
Dated at Halifax, Nova Scotia the day of
, 199 .
Witness to above signature(s):
- ------------------------------
Halifax, Nova Scotia
<PAGE> 1
Exhibit 3.21
SCHEDULE A
MEMORANDUM OF ASSOCIATION
OF
3003969 NOVA SCOTIA LIMITED.
1. The name of the Company is 3003969 Nova Scotia Limited.
2. There are no restrictions the objects and powers of the Company and the
Company shag expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members; and
(c) To amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The capital of the Company is:
(a) 10,000 Class A common shares without par value;
(b) 10,000 Class B common shares without par value; and
(c) 100,000 preferred shares without par value;
with power to divide the shares in the capital for the dm being into several
classes and to attach thereto respectively any preferred, deferred or qualified
rights, privileges or conditions, including Restrictions on voting rights and
including redemption and purchase of such shares, subject, however, to the
provisions of the Companies Act of Nova Scotia.
The rights, privileges, restrictions and conditions attaching to the Class A
common shares, Class B common shares and preferred shares as are set out in
Schedule A attached hereto.
----------------------------------
Registrar of Joint Stock Companies
Dated 17th day of November, 1997
<PAGE> 2
SCHEDULE "A"
SPECIAL RIGHTS AND RESTRICTIONS
PART 26 SPECIAL RIGHTS AND RESTRICTIONS
ATTACHED TO CLASS A COMMON SHARES
26.1. The holders of the Class A Common shares shall be entitled to
receive notice of and to attend and vote at all meetings of the shareholders of
the Company and each Class A Common share shall confer upon the holder thereof
the right to one vote in person or by proxy at all meetings of shareholders of
the Company.
26.2. The Directors may, in their discretion, declare non-cumulative
dividends to any one or more class of shareholders to the exclusion of one or
more of the others. The holders of the Class A Common shares shall be entitled
to such dividends as may be declared upon the Class A Common shares.
26.3. in the event of the liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the Class A Common
shares shall, after the holders of the Preferred shares shall have received an
amount equal to the Redemption Amount thereof together with any dividends
declared thereon and unpaid, be entitled to participate pro rata with the
holders of the Class a Common shares in the distribution of the remainder of the
property and assets of the Company.
PART 28 SPECIAL RIGHTS AND RESTRICTIONS
ATTACHED TO CLASS B COMMON SHARES
28.1. The holders of the Class B Common shares shall be
entitled' to receive notice of and to attend and vote at all meetings of the
shareholders of the Company and each Class B Common share shall confer upon the
holder thereof the right to one vote in person or by proxy at all meetings of
shareholders of the Company.
28.2. The Directors may, in their discretion, declare non-cumulative
dividends to any one or more class of shareholders to the exclusion of one or
more of the others. The holders of the Class B Common shares shall be entitled
to such dividends as may be declared upon the Class B Common shares.
28.3. In the event of the liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the Class B Common
shares shall, after the holders of the Preferred shares shall have received an
amount equal to the Redemption Amount thereof together with any dividends
declared thereon and unpaid, be entitled to participate pro rata with the
holders of the Class A Common shares in the distribution of the remainder of the
property and assets of the Company.
2
<PAGE> 3
SPECIAL RIGHTS AND RESTRICTIONS
ATTACHED TO PREFERRED SHARES
27.1. The holders of the Preferred shares shall not, as such, have
any voting rights for the election of Directors or for any other purpose, nor
shall they be entitled to attend shareholders' meetings or to receive notice of
shareholders' meetings.
27.2. The Directors may, in their discretion, declare non-cumulative
dividends to any one or more class of shareholders to the exclusion of one or
more of the others. The holders of the Preferred shares shall be entitled to
non-cumulative dividends not exceeding the rate of eight per cent (8%) per annum
on the Redemption Amount of the Preferred shares.
27.3. (a) subject to the provisions of the Companies Act, the
Company may, by resolution of the Directors, redeem at any time the whole or
from time to time any part of the then outstanding Preferred shares on payment
for each share of the Redemption Amount thereof as hereinafter defined, together
with any dividends declared thereon and unpaid. In exercising the powers
conferred by this clause, notice shall be given as hereinafter provided, and the
Directors by resolution may discriminate between shareholders of the Preferred
shares and may redeem any part or all of the Preferred shares of one or more
holder or holders without taking similar action with respect to the Preferred
shares of other holders. Not less than fifteen (l5) days' notice in writing of
such redemption shall be given by mailing to the registered holder of the share
or shares to be redeemed specifying the date and place or places of redemption.
If notice of any such redemption be given by the Company in mariner aforesaid
and an amount sufficient to redeem the shares to be redeemed be deposited with
any trust company or chartered bank (as specified in the notice) on or before
the date fixed for redemption, the holders thereof shall thereafter have no
rights against the Company in respect thereof except upon surrender of
certificates for the shares being redeemed to receive payment therefor out of
the moneys so deposited.
(b) The Redemption Amount in respect of the Preferred shares
shall be determined by the Directors of the Company at the time of the issuance
of the shares, and shall be equal to the fair market value of the consideration
received by the Company as consideration for the issuance of the Preferred
shares. The amount determined by the Directors (hereinafter called the
"Determined Value") shall be determined by resolutions of the Directors upon the
issuance of any Preferred shares. On determining the Determined Value the
Directors may act on whatever advice or evidence they in their absolute
discretion deem necessary or advisable.
(c) The Redemption Amount in respect of each Preferred share
shall be determined by dividing the Redemption Amount for all the Preferred
shares by the number of such shares issued. The paid-up capital of each
Preferred share shall be the par value thereof.
(d) Dividends shall not be paid on any other class of shares
of the Company if to do so would reduce the value of the net assets of the
Company to less than the total Redemption Amount of all the Preferred shares
then issued and outstanding.
(e) Notwithstanding the provisions of sub-articles (b) and (c)
hereof, if the Minister of National Revenue, the Minister of Finance for the
Province of Nova Scotia,
3
<PAGE> 4
their authorized representative or any similar authority shall assess or
reassess the Company or its shareholders to income tax or propose such an
assessment or reassessment on the basis of a determination or assumption that
the fair market value of the consideration received in respect of the issuance
of any Preferred share or shares does not equal the Determined Value, the
following adjustments shall be made:
1. for the purposes of the adjustments hereunder the fair market
value of the consideration received shall be deemed to be:
(i) subject to clause (iii), the fair market value of the
consideration as determined by the authority making or
proposing such an assessment or reassessment, provided
that the Directors agree that that determination is
accurate; or
(ii) subject to clause (iii), where the Directors do not
agree that the authority's determination is accurate,
the fair market value of the consideration as determined
by a qualified person whom the Directors shall appoint
to make that determination forthwith following the
making or proposing of such an assessment or
reassessment; or
(iii) where any such assessment or reassessment is the subject
of an appeal to a court of competent jurisdiction, the
fair market value of the consideration. as determined by
that court.
2. If the fair market value determined pursuant to clause 1. is
less than the Determined Value, the following adjustments
shall be made forthwith following such determination to
account for that deficiency:
(i) if at the date of adjustment, the share in respect of
the consideration transferred is issued and outstanding
and still held by the original holder thereof, its
Redemption Amount shall be reduced by an amount equal to
the lesser of the deficiency and the amount by which the
Redemption Amount of the share exceeds its par value and
the Redemption Amount so adjusted shall be deemed
retroactively to the date of issue of the share to have
been its Redemption Amount. If more than one share in
respect of the consideration transferred is issued and
outstanding and still held by the original holder
thereof, the reduction in the Redemption Amount shall be
made pro rata; and
4
<PAGE> 5
(ii) If the reduction made pursuant to, subclause 2.(i) is
less than the total deficiency, the Redemption Amount of
such other Preferred shares held by that original holder
at the date of adjustment as may be selected by him
shall be reduced by an amount equal to such portion of
the deficiency as that original holder may determine and
the Redemption Amount of such share so adjusted shall be
deemed retroactively to the date of issue of that share
to have been its Redemption Amount; and
(iii) If the aggregate reduction made pursuant to subclasses
2.(i) and 2.(ii) is less than the total deficiency, the
original holder shall make a contribution of capital to
the Company equal to the balance of the deficiency.
3. If the fair market value determined pursuant to clause 1. is
greater than the Determined Value, the following adjustments
shall be made forthwith following such determination to
account for that excess:
(i) If at the date of adjustment the share in respect
of the consideration transferred remains issued
and outstanding and held by the original holder
thereof, the Redemption Amount of that share shall
be increased by the amount of the excess and the
Redemption Amount so adjusted shall be deemed
retroactively to the date of issue of the share to
have been its Redemption Amount. If more than one
share in respect of the consideration transferred
is issued and outstanding and still held by the
original holder thereof, the increase in the
Redemption Amount shall be made pro rata; and
(ii) In any other case, the Redemption Amounts of all
other Preferred shares of the same class held by
that original holder at the date of adjustment
shall be increased by an amount equal to the
excess divided by the number of such Preferred
shares and the Redemption Amount of each such
share shall be deemed retroactively to the date of
issue to have been its Redemption Amount; and if
no such shares are held by the original holder at
the date of adjustment the Directors shall issue
to him Preferred shares of the same class having
an aggregate
5
<PAGE> 6
Redemption Amount equal to the amount of the
excess.
27.4. Subject to the provisions of the "Company Act", the Company
shall, upon receiving notice as hereinafter provided from a shareholder holding
Preferred shares, redeem the number of Preferred shares registered in the name
of the shareholder which are specified in the notice by paying to such
shareholder for each Preferred share, to be redeemed the Redemption Amount
thereof as defined in Article 27.3. hereof, together with any dividends declared
thereon and unpaid. Not less than twenty-one (21) days notice in writing-of such
redemption shall be given to the Company by the shareholder seeking to have the
Preferred shares redeemed, such notice to be delivered by mailing to the
registered office of the Company specifying the number of Preferred shares to be
redeemed and surrendering the necessary number of share certificates for
cancellation. The Company may waive any notice required to be given under this
paragraph, and such waiver, whether given before or after the redemption, shall
cure any default in giving such notice.
27.5. In the event of the liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the. Preferred
shares shall be entitled to receive the Redemption Amount thereof together with
an amount equal to any dividends declared and unpaid thereon, before any amount
shall be paid or any property or assets distributed to the holders of the Common
shares and upon payment of the amount so payable to them, the holders of the
Preferred shares shall not be entitled to participate any further in the
distribution of the remainder of the property and assets of the Company.
6
<PAGE> 1
Exhibit 3.22
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 2
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Instalments payable by registered holder 2
10. Joint registration 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 4
25. Shareholder advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 5
<PAGE> 2
- ii -
LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 6
45. Right of executor of sole shareholder 6
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 7
51. Terms of issue of new shares 7
52. New shares may be offered to existing shareholders 7
53. New capital within control of directors 7
54. Reduction of capital 7
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 8
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 8
<PAGE> 3
- iii -
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 9
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 9
63. Securities assignable free from equities 9
64. Securities at discount, premium, with preference 9
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 10
68. Notice of meeting - Waiver of notice 10
69. Notice of two meetings for special resolution 10
70. Accidental omission of notice 10
RECORD DATES
71. Setting record dates - when no record date set 10
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 10
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 11
76. If quorum not present - dissolution or adjournment 11
77. Resolution by show of hands - demand of poll 11
78. Conduct of poll 11
79. Casting vote 11
80. Adjournment of meeting 11
81. Poll on question of adjournment, election of chairman 11
82. Effect of demand of poll on continuance of meeting 11
VOTES OF SHAREHOLDERS
83. Voting generally 11
84. Votes on transmission by death, bankruptcy, etc. 12
85. Votes of joint registered shareholders 12
86. Voting in person, by proxy, by corporate representative 12
87. Proxy requirements generally 12
88. Votes of shareholders of unsound mind 12
89. Depositing proxies before meeting 12
90. Votes by proxy after authority revoked 12
91. Form of proxy 12
92. Votes when call due on shares 12
<PAGE> 4
- iv -
93. Resolution of directors ratified by shareholders 13
94. Resolution in writing without meeting 13
DIRECTORS
95. Number of directors - maximum and minimum 13
96. First directors 13
97. Remuneration of directors 13
98. Directors may act notwithstanding vacancy 13
99. Directors may also be officers 13
100. Vacation of office on bankruptcy, etc. 13
101. Directors' conflicts of interest 13
ELECTION OF DIRECTORS
102. Election of directors at general meeting 14
103. Retiring directors remain in office until succeeded 14
104. Number of directors elected, qualification 14
105. Removal of director 14
106. When directors may be appointed by other directors 14
MANAGING DIRECTOR
107. Authority to appoint managing director 14
108. Resignation and removal of managing director 14
109. Remuneration of managing director 14
110. Powers and duties of managing director 14
CHAIRMAN OF THE BOARD
111. Chairman of the Board 14
PRESIDENT AND VICE-PRESIDENTS
112. President 15
113. Vice-Presidents 15
SECRETARY AND TREASURER
114. Secretary 15
115. Treasurer 15
OFFICERS
116. Other officers 15
117. Same person may hold more than one office 15
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 15
119. Participation at meeting by telephone 15
120. Place of meetings - When notice required 15
121. Summoning of meetings 16
122. Questions decided by majority - casting vote - proxies 16
<PAGE> 5
- v -
123. Chairman of directors' meetings 16
124. Authority of meeting when quorum present 16
125. Committees of directors 16
126. Proceedings of committees of directors 16
127. Effect on meeting of defectively appointed director 16
128. Resolution of directors in writing without meeting 16
129. Remuneration of directors for extra services 16
REGISTERS
130. Registers and branch registers 17
MINUTES
131. Minutes and Minutes books - minutes prima facie evidence 17
POWERS OF DIRECTORS
132. General powers of directors 17
133. Specifically enumerated powers of directors 17
SOLICITORS
134. Solicitors 19
THE SEAL
135. Use of common seal 19
136. Facsimiles of common seal 19
137. Facsimile seal for use outside Nova Scotia 19
DIVIDENDS
138. Declaration of dividends 19
139. Dividends payable from profits, etc. 19
140. Declaration of amount of profits, etc., conclusive 19
141. Interim dividends 19
142. Dividends differentiated by paid-up capital 20
143. Right to set off debts against dividends 20
144. Where lien on dividends 20
145. Dividends on shares of deceased, etc. 20
146. Setting off calls and dividends 20
147. Cash dividend, dividend in kind, stock dividend, etc. 20
148. Power of directors to settle issues re dividends 20
149. Dividends on jointly registered shares 20
150. Satisfaction of dividend 20
ACCOUNTS
151. Directors' duty to keep accounts 20
152. Where books to be kept 21
153. Inspection of books by shareholders 21
154. Reports on accounts to general meeting 21
<PAGE> 6
- vi -
AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 21
156. First auditors 21
157. Directors may fill casual vacancy 21
158. Persons qualified for appointment as auditors 21
159. Removal of auditor 21
160. Remuneration 21
161. Duties of auditors 21
NOTICES
162. How notice given 21
163. Notice to shareholder without registered address 21
164. Holders of share warrants not entitled to notice 21
165. Notice to joint holders 22
166. When notice deemed given - proof of notice 22
167. Transferees bound by prior notice 22
168. Notice valid though shareholder deceased 22
169. How notice to be signed 22
170. How time to be counted 22
INDEMNITY
171. Indemnity of directors, officers, etc. 22
172. Individual liability of directors, officers, etc. 22
REMINDERS
173. Reminders to directors of obligations under Act 23
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
3003969 NOVA SCOTIA LIMITED
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
- 2 -
5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in instalments, every such
instalment shall, when due, be payable to the Company by the person who is
at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and sever-ally liable for the
payment of all instalments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any share
or prescribed security of the Company.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
- 3 -
CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by instalments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or instalment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
instalment is due shall pay interest on such call or instalment at the
rate of 9% per year or such other
<PAGE> 10
- 4 -
rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or instalment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or instalment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or instalment
and such interest and expenses are to be paid. The notice shall also state
that in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or instalment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or instalments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
instalments, interest and expenses owing upon or in respect of such shares
at the time of the forfeiture together with interest thereon at the rate
of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfilment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such mariner as they think fit, but no sale shall be made
until the period for the payment, fulfilment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfilment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________, ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________ 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Wan-ant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Sham Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by- resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
instalments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 15
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as my proxyholder to attend and to vote for me and on my behalf
at the ordinary/special adjournment thereof, or at any meeting of the
Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
<PAGE> 19
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93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than 10.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding did office
or of the fiduciary relations thereby established, provided the director
makes a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply
<PAGE> 20
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to any contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
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PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting. .
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(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
<PAGE> 23
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REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company.
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 25
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 26
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, instalments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 27
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share wan-ant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 29
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 1
Exhibit 3.23
SCHEDULE A
MEMORANDUM OF ASSOCIATION
OF
CANADIAN SPRINGS WATER COMPANY LIMITED
1. The name of the Company is Canadian springs Water Company Limited.
2. There are no restrictions on the objects and powers of the Company and the
Company shall expressly have the following powers:
a. To sell or dispose of its undertaking, or a substantial part
thereof;
b. to distribute any of its property in specie among its members; and
c. to amalgamate with any company or other body of persons.
3. The liability of the members is limited.
4. The capital of the Company is:
d. 10,000 Class A shares; e. 100 Class B shares; f. 100,000 Class C
shares; and g. 1,000 Class D shares.
with power to divide the shares in the capital for the time being into several
classes and to attach thereto respectively any preferred, deferred or qualified
rights, privileges or conditions, including restrictions on voting rights and
including redemption and purchase of such shares, subject, however, to the
provisions of the Companies Act of Nova Scotia.
The rights privileges, restrictions and conditions attaching to the Class A,
Class B, Class C and Class D shares as are set out in Schedule A attached
hereto.
<PAGE> 2
SPECIAL RIGHTS AND RESTRICTIONS
ATTACHING TO SHARES
The Class "A" shares (the "Class "A" shares") shall consist of one hundred
(100) Class "A" shares and shall have attached thereto the following right,
privileges, restrictions and conditions:
1. Dividends
1.01. In each year at the discretion of the directors, dividends may be paid on
the Class "A" shares out of all profits or surpluses available for
distribution;
1.02. Dividends must not be paid on the Class "A" shares if to do so would
reduce the value of the net assets of the Company to less than the
aggregate of the redemption amount of the issued Class "C" and Class "D"
shares;
1.03. Dividends may be paid on one class of shares entitled to dividends to the
exclusion of any other class of shares entitled to dividends;
2. Voting Powers
2.01. The holders of the Class "A" shares are not entitled to vote at any
meeting of the shareholders of the Company and they are not entitled to
receive notice of or attend any meetings of the shareholders of the
Company;
3. Liquidation, Dissolution or Winding-Up
3.01. In the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or upon distribution of the assets of
the Company among its members for the purpose of winding-up its affairs or
upon a reduction or return of its capital the holders of the Class "A"
shares shall be entitled to receive all profits and assets of the Company
remaining after the Class "C" and "D" shares have received their
redemption amount and after the Class "B" shares have received their paid
up capital;
4. Redemption by the Corporation
4.01. The Class "A" shares are not redeemable;
5. Retraction by the Shareholder
5.01. The Class "A" shares are not retractable;
<PAGE> 3
The Class "B" shares (the "Class "B" shares") shall consist of one hundred
(100) Class "B" shares and shall have attached thereto the following
right, privileges, restrictions, and conditions:
1. Dividends
1.01. The holders of the Class "B" shares are not entitled to any payment of
dividends on such shares;
2. Voting Powers
2.01. At all meetings of the shareholders of the Company the holders of the
Class "B" shares are entitled to one vote for each Class B" share held;
3. Liquidation, Dissolution or Winding-Up
3.01. In the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or upon distribution of the assets of
the Company among its members for the purpose of winding-up its affairs or
upon a reduction or return of its capital the holders of the Class "B"
shares shall be entitled to receive their paid up capital after the Class
"C" and "d" shares have received their redemption amount;
4. Redemption by the Corporation
4.01. The Class "B" shares are not redeemable;
5. Retraction by the Shareholder
5.01. The Class "B" shares are not retractable;
The Class "C" shares (the "Class "C" shares") shall consist of one million
(1,000,000) Class "C" shares and shall have attached thereto the following
rights, privileges, restrictions and conditions:
1. Dividends
1.01. If any year, the Company ceases to be a "small business corporation" as
that term is defined in the Income Tax Act (Canada) (the "Act") so that
the holder of the Class "C" shares would otherwise be deemed to receive an
interest benefit under section 74.4 of that Act, then at the discretion of
the directors dividends may be paid on the Class C" shares out of all
profits or surpluses available for distribution but such dividends may not
exceed 4/5 of the amount equal to the deemed interest benefit that would
otherwise arise under section 74.4;
<PAGE> 4
2. Voting Powers
2.01. The holders of the Class "C" shares are not entitled to vote at any
meeting of the shareholders of the Company and they are not entitled to
receive notice of or attend any meetings of the shareholders of the
Company;
3. Liquidation, Dissolution or Winding-Up
3.01. In the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or upon distribution of the assets of
the Company among its members for the purpose of winding-up its affairs or
upon a reduction or return of its capital the holders of the Class "C"
shares shall be entitled to receive their redemption amount before any
amount is distributed to other shareholders;
4. Redemption by the Corporation
4.01. The Class "C" shares are redeemable;
4.02. The Company may redeem the whole or any number of the issued Class "C"
shares on payment for each share to be redeemed of the redemption amount
and no more provided however that not less than 21 days notice in writing
of such redemption is given by mailing such notice to the registered
holders of the shares to be redeemed specifying a date and place or places
of redemption unless the holders of the shares to be redeemed waive any
notice required to be given under this paragraph which waiver, whether
given before or after the redemption, will cure any default in giving such
notice and if notice as required of any redemption be given by the Company
and an amount sufficient to redeem the shares be deposited with any trust
company or chartered bank of Canada as specified in any notice given, on
or before the date fixed for redemption, the holders thereof will
thereafter have no rights against the Company in respect of such shares
except upon the surrender of certificates for such shares to receive
payment for them out of the monies so deposited;
4.03. For greater certainty the Company may redeem Class "C" shares and not
Class "D" shares or may redeem Class "D" shares and not Class "C" shares
and notwithstanding anything in these Articles to the contrary, if not all
of the outstanding shares of any class are to be redeemed, the shares to
be redeemed may be selected either in proportion to the number of shares
registered in the name of each shareholder or from every or any particular
holder of shares of that class;
4.04. If a part only of the shares of any class represented by any certificate
are to be redeemed then a new certificate representing the shares which
are not to be redeemed shall be issued at the expense of the Company;
<PAGE> 5
4.05. No shares of any particular class may be redeemed if to do so would reduce
the value of the net assets of the Company to less than the aggregate of
the redemption amount of all issued shares of all other classes which have
rights on liquidation in priority to the rights of the class of t he
shares to be redeemed;
5. Retraction by the Shareholder
5.01. The Class "C" shares are retractable;
5.02. Subject to the provisions of the Companies Act , the Company will, upon
receiving notice from a shareholder holding Class "C" shares, redeem the
number of Class "C" shares registered in the name of the shareholders
which are specified in the notice by paying to such shareholder for each
Class "C" share to be redeemed the redemption amount of the share and no
more provided however that not less than 21 days notice in writing of such
redemption must be given to the Company by the shareholder seeking to have
the Class "C" shares redeemed, such notice to be delivered by mailing to
the registered office of the Company a notice specifying the number of
Class "C" shares to be redeemed and surrendering the necessary number of
share certificates for cancellation unless the Company waives any notice
required to be given under this paragraph which waiver, whether given
before or after the redemption, cures any default in giving such notice;
and
notwithstanding anything in the Articles to the contrary, any redemption
of shares by the Company upon receipt of a retraction notice from any
member holding Class "C" shares need not be made on a pro rata basis among
every member who holds shares of the class to be redeemed.
6. Additional Special Rights and Restrictions
6.01. The Class "C" shares will only be issued as consideration for the
acquisition of property by the Company in circumstances where the
transferor of such property and the Company have agreed to elect to effect
the transfer of such property pursuant to the provisions of section 85 of
the Income Tax Act (Canada);
6.02. The aggregate redemption amount of the Class "C" shares issued in
connection with a purchase and sale transaction to which section 85
applies will be the amount by which:
(i) the aggregate fair market value of all the property acquired by the
Company in the transaction to which section 85 applies and in
respect of which the Class "C" shares were issued.
exceeds
<PAGE> 6
(ii) the aggregate fair market value of all the consideration (other than
any Class "C" shares in the Company or a right to receive any such
shares) received from the Company by the transferor of such
property.
as determined by the directors of the Company at the time of the issuance
of the Class "C" shares, provided that the directors may, in accordance
with the terms of any agreement between the Company and the holders of
Class "C" shares, amend from time-to-time their determination of the
aggregate redemption amount of the Class "C" shares after the time of the
issuance of such shares;
6.03. The redemption amount of each Class "C" share issued in connection with a
purchase and sale transaction to which section 85 applies will be
determined by dividing the aggregate redemption amount for the class by
the number of shares of the class issued in respect of such transaction;
6.04. Class "C" shares shall only be issued in respect of a purchase and sale
transaction to which section 85 applies if no other Class "C" shares are
outstanding in respect of any other purchase and sale transaction to which
section 85 applies; and
6.05. the paid-up capital of each Class "C" share is its par value.
The Class "D" shares (the "Class "D" shares") shall consist of one million
(1,00,000) Class "D" shares and shall have attached thereto the following
rights, privileges, restrictions and conditions:
1. Dividends
1.01. The holders of the Class "D" shares are not entitled to any payment of
dividends on such shares;
2. Voting Powers
2.01. The holders of the Class "D" shares are not entitled to vote at any
meeting of the shareholders of the Company and they are not entitled to
receive notice of or attend any meetings of the shareholders of the
Company;
3. Liquidation, Dissolution or Winding-Up
3.01. In the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or upon distribution of the assets of
the Company among its members for the purpose of winding-up its affairs
or, upon a reduction or return of its capital the holders of the Class "D"
shares shall be entitled to receive their redemption amount but only after
the Class "C" shares have received their redemption amount.
<PAGE> 7
4. Redemption by the Corporation
4.01. The Class "D" shares are redeemable;
4.02. The Company may redeem the whole or any number of the issued Class "D"
shares on payment for each share to be redeemed of the redemption amount
and no more provided however that not less than 21 days notice in writing
of such redemption is given by mailing such notice to the registered
holders of the shares to be redeemed specifying a date and place or places
of redemption unless the holders of the shares to be redeemed waive any
notice required to be given under this paragraph which waiver, whether
given before or after the redemption, will cure any default in giving such
notice and if notice as required of any redemption be given by the Company
and an amount sufficient to redeem the shares be deposited with any trust
company or chartered bank of Canada as specified in any notice given, on
or before the date fixed for redemption, the holders thereof will
thereafter have no rights against the Company in respect of such shares
except upon the surrender of certificates for such shares to receive
payment for them out of the monies so deposited;
4.03. For greater certainty the Company may redeem Class "C" shares and not
Class "D" shares or may redeem Class "D" shares and not Class "C" shares
and notwithstanding anything in these Articles to the contrary, if not all
of the outstanding shares of any class are to be redeemed, the shares to
be redeemed may be selected in such manner as the directors determine and
need not be selected either in proportion to the number of shares
registered in the name of each shareholder or from every or any particular
holder of shares of that class;
4.04. If a part only of the shares of any class represented by any certificate
are to be redeemed then a new certificate representing the shares which
are not to be redeemed shall be issued at the expense of the Company;
4.05. No shares of any particular class may be redeemed if to do so would reduce
the value of the net assets of the Company to less than the aggregate of
the redemption amount of all issued shares of all other classes which have
rights on liquidation in priority to the rights of the class of the shares
to be redeemed;
5. Retraction by the Shareholder
5.01. The Class "D" shares are retractable;
5.02. Subject to the provisions of the Companies Act, the Company will, upon
receiving notice from a shareholder holding Class "D" shares, redeem the
number of Class "D" shares registered in the name of the shareholders
which are specified in the notice by paying to such shareholder for each
Class "D": share to be redeemed the redemption amount of the share and no
more provided however that not less than
<PAGE> 8
21 days notice in writing of such redemption must be given to the Company
by the shareholder seeking to have the Class "D" shares redeemed, such
notice to be delivered by mailing to the registered office of the Company
a notice specifying the number of Class "D" shares to be redeemed and
surrendering the necessary number of share certificates for cancellation
unless the Company waives any notice required to be given under this
paragraph which waiver, whether given before or after the redemption,
cures any default in giving such notice; and
notwithstanding anything in these Articles to the contrary, any redemption
of shares by the Company upon receipt of a retraction notice from any
member holding Class "D" sharers need not be made on a pro rata basis
among every member who holds shares of the class to be redeemed.
6. Additional Special Rights and Restrictions
6.01. the paid-up capital of each Class "D" share is its par value; and
6.02. The redemption amount of each Class "D" share is $100.00.
<PAGE> 1
Exhibit 3.24
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation Agreement 1
4. Payment of expenses of Incorporation, etc. 1
5. May commence business at once 1
SHARES
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Installments payable by registered holder 2
10. Joint registration of shares 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 2
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 3
21. When calls deemed made 3
22. Notice of call - timing and contents 3
23. Interest on unpaid call 3
24. Resolution making call conclusive evidence 3
25. Shareholder advances on unpaid shares 3
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 4
30. Forfeited share becomes property of Company 4
31. Annulment of forfeiture, etc. 4
32. Liability of shareholder to pay call after forfeiture 4
33. Certificate of forfeiture conclusive evidence 4
<PAGE> 2
-ii-
LIEN ON SHARES
34. Lien on shares for debts of shareholder 4
35. Sale of shares not paid up to enforce lien 4
36. Application of proceeds of shares by Company 4
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 5
TRANSFER OF SHARES
38. How transfer effected 5
39. Form of transfer instrument 5
40. Directors may decline to register transfer 5
41. Delivery of transfer for registration 5
42. Fee on transfer 5
43. Transfer instrument to remain with Company 5
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 5
45. Right of executor of sole shareholder 5
46. Transmission of shares on death, bankruptcy 6
SURRENDER OF SHARES
47. Surrender of shares in compromise 6
SHARE WARRANTS
48. Issue of Share Warrants 6
49. Conditions under which Share Warrants issued 6
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 6
51. Terms of issue of new shares 6
52. New shares may be offered to existing shareholders 6
53. New capital within control of directors 6
54. Reduction of capital 6
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 7
56. Altering capital by special resolution 7
57. Redemption and purchase of shares 7
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 7
<PAGE> 3
-iii-
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 8
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 8
61. Restrictions on separate class and series votes 8
BORROWING POWERS
62. Directors' authority to borrow, give security,
guarantee 8
63. Securities assignable free from equities 8
64. Securities at discount, premium, with preference 8
GENERAL MEETINGS
65. Ordinary general meetings 9
66. Special general meetings - how called 9
67. Contents of requisition 9
68. Notice of meeting - Waiver of notice 9
69. Notice of two meetings for special resolution 9
70. Accidental omission of notice 9
RECORD DATES
71. Setting record dates - when no record date set 9
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 9
73. Quorum prerequisite to holding meeting 10
74. Requirements for quorum 10
75. Chairman of meeting 10
76. If quorum not present - dissolution or adjournment 10
77. Resolution by show of hands - demand of poll 10
78. Conduct of poll 10
79. Casting vote 10
80. Adjournment of meeting 10
81. Poll on question of adjournment, election of chairman 10
82. Effect of demand of poll on continuance of meeting 10
VOTES OF SHAREHOLDERS
83. Voting generally 10
84. Votes on transmission by death, bankruptcy, etc. 11
85. Votes of joint registered shareholders 11
86. Voting in person, by proxy, by corporate
representative 11
87. Proxy requirements generally 11
88. Votes of shareholders of unsound mind 11
89. Depositing proxies before meeting 11
90. Votes by proxy after authority revoked 11
91. Form of proxy 11
92. Votes when call due on shares 12
<PAGE> 4
-iv-
93. Resolution of directors ratified by shareholders 12
94. Resolution in writing without meeting 12
DIRECTORS
95. Number of directors - maximum and minimum 12
96. First directors 12
97. Remuneration of directors 12
98. Directors may act notwithstanding vacancy 12
99. Directors may also be officers 12
100. Vacation of office on bankruptcy, etc. 12
101. Directors' conflicts of interest 12
ELECTION OF DIRECTORS
102. Election of directors at general meeting 13
103. Retiring directors remain in office until succeeded 13
104. Number of directors elected, qualification 13
105. Removal of director 13
106. When directors may be appointed by other directors 13
MANAGING DIRECTOR
107. Authority to appoint managing director 13
108. Resignation and removal of managing director 13
109. Remuneration of managing director 13
110. Powers and duties of managing director 13
CHAIRMAN OF THE BOARD
111. Chairman of the Board 13
PRESIDENT AND VICE-PRESIDENTS
112. President 13
113. Vice-Presidents 14
SECRETARY AND TREASURER
114. Secretary 14
115. Treasurer 14
OFFICERS
116. Other officers 14
117. Same person may hold more than one office 14
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 14
119. Participation at meeting by telephone 14
120. Place of meetings - When notice required 14
121. Summoning of meetings 14
122. Questions decided by majority - casting vote - proxies 14
<PAGE> 5
-v-
123. Chairman of directors' meeting 15
124. Authority of meeting when quorum present 15
125. Committees of directors 15
126. Proceedings of committees of directors 15
127. Effect on meeting of defectively appointed director 15
128. Resolution of directors in writing without meeting 15
129. Remuneration of directors for extra services 15
REGISTERS
130. Registers and branch registers 15
MINUTES
131. Minutes and Minutes books - minutes prima facie
evidence 15
POWERS OF DIRECTORS
132. General powers of directors 16
133. Specifically enumerated powers of directors 16
SOLICITORS
134. Solicitors 17
THE SEAL
135. Use of common seal 17
136. Facsimiles of common seal 17
137. Facsimile seal for use outside Nova Scotia 18
DIVIDENDS
138. Declaration of dividends 18
139. Dividends payable from profits, etc. 18
140. Declaration of amount of profits, etc., conclusive 18
141. Interim dividends 18
142. Dividends differentiated by paid-up capital 18
143. Right to set off debts against dividends 18
144. Where lien on dividends 18
145. Dividends on shares of deceased, etc. 18
146. Setting off calls and dividends 18
147. Cash dividend, dividend in kind, stock dividend, etc. 18
148. Power of directors to settle issues re dividends 18
149. Dividends on jointly registered shares 19
150. Satisfaction of dividend 19
ACCOUNTS
151. Directors' duty to keep accounts 19
152. Where books to be kept 19
153. Inspection of books by shareholders 19
154. Reports on accounts to general meeting 19
<PAGE> 6
-vi-
AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 19
156. First auditors 19
157. Directors may fill casual vacancy 19
158. Persons qualified for appointment as auditors 19
159. Removal of auditor 19
160. Remuneration 20
161. Duties of auditors 20
NOTICES
162. How notice given 20
163. Notice to shareholder without registered address 20
164. Holders of share warrants not entitled to notice 20
165. Notice to joint holders 20
166. When notice deemed given - proof of notice 20
167. Transferees bound by prior notice 20
168. Notice valid though shareholder deceased 20
169. How notice to be signed 20
170. How time to be counted 20
INDEMNITY
171. Indemnity of directors, officers, etc. 20
172. Individual liability of directors, officers, etc. 21
REMINDERS
173. Reminders to directors of obligations under Act 21
<PAGE> 7
ARTICLES OF ASSOCIATION
OF
CANADIAN SPRINGS WATER COMPANY LIMITED
INTERPRETATION
1. In these Articles, unless there is something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires.
2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3. The directors may enter into and carry into effect or adopt and carry into
effect any agreement made by the promoters of the Company on behalf of the
Company and may agree to any modification in the terms of any such
agreement, either before or after its execution
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
<PAGE> 8
-2-
5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares has been
allotted.
SHARES
6. The directors shall control the shares and, subject to the provisions of
these Articles, may allot or otherwise dispose of them to such person, at
such times, on such terms and conditions and, if the shares have a par
value, either at a premium or at par, as they think fit.
7. The directors may pay on behalf of the Company a reasonable commission to
any person in consideration of subscribing or agreeing to subscribe
(whether absolutely or conditionally) for any shares in the Company, or
procuring or agreeing to procure subscriptions (whether absolute or
conditional) for any shares in the Company. Subject to the Act, the
commission may be paid or satisfied in shares of the Company.
8. On the issue of shares the Company may arrange among the holders thereof
differences in the calls to be paid and in the times for their payment.
9. If the whole or part of the allotment price of any shares is, by the
conditions of their allotment, payable in installments, every such
installment shall, when due, be payable to the Company by the person who
is at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not exceeding three
in number.
11. Joint holders of a share shall be jointly and severally liable for the
payment of all installments and calls due in respect of such share. On the
death of one or more joint holders of shares the survivor or survivors of
them shall alone be recognized by the Company as the registered holder or
holders of the shares.
12. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly shall
not, except as ordered by a court of competent jurisdiction or required by
statute, be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the Company shall
be effective unless or until approved by the directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who are in
the employment of the Company or in the employment of an affiliate
of the Company and exclusive of persons who, having been formerly in
the employment of the Company or the employment of an affiliate of
the Company, were, while in that employment, and have continued
after termination of that employment, to own at least one prescribed
security or share of the Company, shall not exceed 50 in number, two
or more persons or companies who are the joint registered owners of
one or more prescribed securities or shares being counted as one
holder; and
(3) the Company shall not invite the public to subscribe for any of its
securities.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities Commission from time to time for the purpose of the
definition of "private company" in the Securities Act (Nova Scotia).
<PAGE> 9
-3-
CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every certificate of
title to shares shall be signed manually by at least one of the Chairman,
President, Secretary, Treasurer, a vice-president, an assistant secretary,
any other officer of the Company or any director of the Company or by or
on behalf of a share registrar, transfer agent or branch transfer agent
appointed by the Company or by any other person whom the directors may
designate. When signatures of more than one person appear on a certificate
all but one may be printed or otherwise mechanically reproduced. All such
certificates when signed as provided in this Article shall be valid and
binding upon the Company. If a certificate contains a printed or
mechanically reproduced signature of a person, the Company may issue the
certificate, notwithstanding that the person has ceased to be a director
or an officer of the Company, and the certificate is as valid as if such
person were a director or an officer at the date of its issue. Any
certificate representing shares of a class publicly traded on any stock
exchange shall be valid and binding on the Company if it complies with the
rules of such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares may be
evidenced by any number of certificates so long as the aggregate of the
shares stipulated in such certificates equals the aggregate registered in
the name of the shareholder.
16. Where shares are registered in the names of two or more persons, the
Company shall not be bound to issue more than one certificate or set of
certificates, and such certificate or set of certificates shall be
delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon its
surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may be
replaced by a new certificate upon proof of such loss or destruction to
the satisfaction of the directors and the furnishing to the Company of
such undertakings of indemnity as the directors deem adequate.
18. The sum of one dollar or such other sum as the directors from time to time
determine shall be paid to the Company for every certificate other than
the first certificate issued to any holder in respect of any share or
shares.
19. The directors may cause one or more branch Registers of shareholders to be
kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect of all
amounts unpaid on the shares held by them respectively and not made
payable at fixed times by the conditions on which such shares were
allotted, and each shareholder shall pay the amount of every call so made
to the person and at the times and places appointed by the directors. A
call may be made payable by installments.
21. A call shall be deemed to have been made at the time when the resolution
of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such notice shall
specify the time and place at which and the person to whom such call shall
be paid.
23. If the sum payable in respect of any call or installment is not paid on or
before the day appointed for the payment thereof, the holder for the time
being of the share in respect of which the call has been made or the
installment is due shall pay interest on such call or installment at the
rate of 9% per year or such other
<PAGE> 10
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rate of interest as the directors may determine from the day appointed for
the payment thereof up to the time of actual payment.
24. At the trial or hearing of any action for the recovery of any amount due
for any call, it shall be sufficient to prove that the name of the
shareholder sued is entered on the Register as the holder or one of the
holders of the share or shares in respect of which such debt accrued, that
the resolution making the call is duly recorded in the minute book and
that such notice of such call was duly given to the shareholder sued in
pursuance of these Articles. It shall not be necessary to prove the
appointment of the directors who made such call or any other matters
whatsoever and the proof of the matters stipulated shall be conclusive
evidence of the debt.
25. The directors may receive from any shareholder willing to advance it all
or any part of the amount due upon shares held by such shareholder beyond
the sums called for; and upon the amount so paid or satisfied in advance
or so much thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance has been made
the Company may pay interest at such rate or permit such participation in
profits upon the amount so paid or satisfied in advance as the shareholder
paying such sum in advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or installment on or before the
day appointed for payment, the directors may at any time thereafter while
the call or installment remains unpaid serve a notice on such shareholder
requiring payment thereof together with any interest that may have accrued
and all expenses that may have been incurred by the Company by reason of
such non-payment.
27. The notice shall name a day (not being less than 14 days after the date of
the notice) and a place or places on and at which such call or installment
and such interest and expenses are to be paid. The notice shall also state
that, in the event of non-payment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was
made or installment is payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any shares
in respect of which such notice has been given may at any time thereafter,
before payment of all calls or installments, interest and expenses due in
respect thereof, be forfeited by a resolution of the directors to that
effect. Such forfeiture shall include all dividends declared in respect of
the forfeited shares and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution shall be
given to the shareholder in whose name it stood immediately prior to the
forfeiture and an entry of the forfeiture shall be made in the Register.
30. Any share so forfeited shall be deemed the property of the Company and the
directors may sell, re-allot or otherwise dispose of it in such manner as
they think fit.
31. The directors may at any time before any share so forfeited has been sold,
re-allotted or otherwise disposed of, annul the forfeiture thereof upon
such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall nevertheless be
liable to pay and shall forthwith pay to the Company all calls,
installments, interest and expenses owing upon or in respect of such
shares at the time of the forfeiture together with interest thereon at the
rate of 9% per year or such other rate of interest as the directors may
determine from the time of forfeiture until payment. The directors may
enforce such payment if they think fit, but are under no obligation to do
so.
<PAGE> 11
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33. A certificate signed by the Secretary stating that a share has been duly.
forfeited on a specified date in pursuance of these Articles and the time
when it was forfeited shall be conclusive evidence of the facts therein
stated as against any person who would have been entitled to the share but
for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares (other
than fully paid-up shares) registered in the name of a shareholder
(whether solely or jointly with others) and upon the proceeds from the
sale thereof for debts, liabilities and other engagements of the
shareholder, solely or jointly with any other person, to or with the
Company, whether or not the period for the payment, fulfillment or
discharge thereof has actually arrived, and such lien shall extend to all
dividends declared in respect of such shares. Unless otherwise agreed, the
registration of a transfer of shares shall operate as a waiver of any lien
of the Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the shares
subject to it in such manner as they think fit, but no sale shall be made
until the period for the payment, fulfillment or discharge of such debts,
liabilities or other engagements has arrived, and until notice in writing
of the intention to sell has been given to such shareholder or the
shareholder's executors or administrators and default has been made by
them in such payment, fulfillment or discharge for seven days after such
notice.
36. The net proceeds of any such sale after the payment of all costs shall be
applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, paid to such shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported exercise
of the powers given by these Articles the directors may cause the
purchaser's name to be entered in the Register in respect of the shares
sold, and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money, and after the
purchaser's name has been entered in the Register in respect of such
shares the validity of the sale shall not be impeached by any person and
the remedy of any person aggrieved by the sale shall be in damages only
and against the Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be signed by
the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the Register in
respect thereof and shall be entitled to receive any dividend declared
thereon before the registration of the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received, _______ hereby sell, assign, and transfer unto
________ ______ shares in the capital of the Company represented by
the within certificate, and do hereby irrevocably constitute and
appoint ____________ attorney to transfer such shares on the books
of the Company with full power of substitution in the premises.
Dated the __ day of _________, 19__
Witness:
40. The directors may, without assigning any reason therefor, decline to
register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
<PAGE> 12
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(2) the transfer of which is restricted by any agreement to which the
Company is a party.
41. Every instrument of transfer shall be left for registration at the Office
of the Company, or at any office of its transfer agent where a Register is
maintained, together with the certificate of the shares to be transferred
and such other evidence as the Company may require to prove title to or
the right to transfer the shares.
42. The directors may require that a fee determined by them be paid before or
after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain in the
custody of the Company. Any instrument of transfer that the directors
decline to register shall, except in case of fraud, be returned to the
person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not being one
of several joint holders) shall be the only persons recognized by the
Company as having any title to the shares registered in the name of such
shareholder. When a share is registered in the names of two or more joint
holders, the survivor or survivors or the executors or administrators of
the deceased survivor, shall be the only persons recognized by the Company
as having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has only one
shareholder (not being one of several joint holders) and that shareholder
dies, the executors or administrators of the deceased shareholder shall be
entitled to register themselves in the Register as the holders of the
shares registered in the name of the deceased shareholder whereupon they
shall have all the rights given by these Articles and by law to
shareholders
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer, upon
producing such evidence of entitlement as the directors require, may be
registered as a shareholder in respect of such shares, or may, without
being registered, transfer such shares subject to the provisions of these
Articles respecting the transfer of shares. The directors shall have the
same right to refuse registration as if the transferee were named in an
ordinary transfer presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of compromise
of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as
a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue warrants
("Share Warrants") stating that the bearer is entitled to the shares
therein specified, and may provide, by coupons or otherwise, for the
payment of future dividends on the shares included in the Share Warrants.
49. The directors may determine and vary the conditions upon which Share
Warrants will be issued and, without limiting the generality of the
foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of one
worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Warrant will be entitled to attend and vote at
general meetings, or
<PAGE> 13
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(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein specified.
Subject to such conditions and to these Articles the bearer of a Share
Warrant shall be a shareholder to the full extent. The bearer of a Share
Warrant shall be subject to the conditions for the time being in force,
whether made before or after the issue of the Share Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms and
conditions and with such rights, privileges, limitations, restrictions and
conditions attached thereto as the Company by resolution of its
shareholders determines or, if no direction is given, as the directors
determine.
52. The Company by resolution of its shareholders may, before the issue of any
new shares, determine that such shares or any of them shall be offered in
the first instance to all the then shareholders or to the holders of any
class or series of shares in proportion to the amount of the capital held
by them, or make any other provisions as to the issue and allotment of
such shares. In default of any such determination or to the extent that it
does not apply, the directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue , or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
installments, transfer and transmission, forfeiture, lien and otherwise.
54. The Company may, by special resolution where required, reduce its share
capital in any way and with and subject to any incident authorized and
consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its shareholders:
(1) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and reconvert
that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any
person, and diminish the amount of its share capital by the amount
of the shares so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares. or any of them, into shares of smaller amount
than is fixed by the Memorandum, so, however, that in the
subdivision the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in
the case of the share from which the reduced share is derived and
the special resolution whereby any share is subdivided may determine
that as between the holders of the shares resulting from such
<PAGE> 14
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subdivision, one or more of such shares shall have some preference
or special advantage as regards dividend, capital, voting or
otherwise, over, or as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par value
provided that, upon any such issue, a declaration executed by the
Secretary must be filed with the Registrar stating the number of
shares issued and the amount received therefor;
(4) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares, other than preferred shares, with nominal or
par value into the same number of shares without any nominal or par
value, and reduce, maintain or increase accordingly its liability on
any of its shares so converted; provided that the power to reduce
its liability on any of its shares so converted may, where it
results in a reduction of capital, only be exercised subject to
confirmation by the court as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or issued,
fully paid-up shares without nominal or par value into the same or a
different number of shares with nominal or par value, and for such
purpose the shares issued without nominal or par value and replaced
by shares with a nominal or par value shall be considered as fully
paid, but their aggregate par value shall not exceed the value of
the net assets of the Company as represented by the shares without
par value issued before the conversion.
57. Subject to the Act and any provisions attached to such shares, the Company
may redeem, purchase or acquire any of its shares and the directors may
determine the manner and the terms for redeeming, purchasing or acquiring
such shares and may provide a sinking fund on such terms as they think fit
for the redemption, purchase or acquisition of shares of any class or
series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year on share
capital issued and paid-up for the purpose of raising funds to defray the
expenses of the construction of any works or buildings or the provision of
any plant which cannot be operated profitably for a lengthy period of
time. Such interest may be paid for such period and may-be charged to
capital as part of the cost of construction of the work or building or of
the provision of the plant. The payment of the interest shall not operate
to reduce the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the payment
during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to any
special rights previously conferred on the holders of existing shares, any
share may be issued with such preferred, deferred or other special rights,
or with such restrictions, whether in regard to dividends, voting, return
of share capital or otherwise, as the Company may from time to time
determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the Act, the
Memorandum, the terms or conditions attaching to such shares or otherwise,
the right to vote separately as a class in respect of any matter then,
except as provided in the Act, the Memorandum, these Articles or such
terms or conditions, all the provisions in these Articles concerning
general meetings (including, without limitation, provisions respecting
notice, quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for the
purpose of such vote.
<PAGE> 15
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61. Unless the rights, privileges, terms or conditions attached to a class or
series of shares provide otherwise, such class or series of shares shall
not have the right to vote separately as a class or series upon an
amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares of such
class or series, or increase any maximum number of authorized shares
of a class or series having rights or privileges equal or superior
to the shares of such class or series;
(2) effect an exchange, reclassification or cancellation of all or part
of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any of
them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or borrowed in
such manner and upon such terms- and conditions in all respects as
they think fit, and in particular by the execution and delivery of
mortgages of the Company's real or personal property, or by the
issue of bonds, debentures or other securities of the Company
secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future, including its
uncalled capital for the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts, and
other evidence of or securities for funds borrowed or to be borrowed
for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free from
any equities between the Company and the person to whom such securities
were issued.
64. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of directors and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called special
general meetings. Ordinary or special general meetings may be held either
within or without the Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time convene a
special general meeting, and the directors, upon the requisition of
shareholders in accordance with the Act shall forthwith proceed to convene
such meeting or meetings to be held at such time and place or times and
places as the directors determine.
<PAGE> 16
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67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the Company.
It may consist of several documents in like form each signed by one or
more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice as may
be required by the Act, of every general meeting, specifying the place,
day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened
by a shorter notice and in any manner they think fit, or notice of the
time, place and purpose of the meeting may be waived by all of the
shareholders.
69. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution
being passed by the requisite majority at the first meeting.
70. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed at any
general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date for the
determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the determination of
shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is given,
or, if no notice is given, the day on which the meeting is
held; and
(b) for any other purpose shall be the day on which the directors
pass the resolution relating to the particular purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring and to transact any other business which under
these Articles ought to be transacted at an ordinary general meeting. 73.
No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall for the purpose of this
Article be deemed to be personally present at such meeting.
74. One person, being a shareholder, proxyholder or representative of a
corporate shareholder, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
<PAGE> 17
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75. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen 15 minutes after the time appointed for holding the meeting, the
President or, failing the President a vice-president shall be entitled to
take the chair. If the Chairman, the President or a vice-president is not
present within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another director as
chairman and if no director is present or if all the directors present
decline to take the chair, then such shareholders shall choose one of
their number to be chairman.
76. If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if it was convened pursuant to a
requisition of shareholders, shall be dissolved; if it was convened in any
other way, it shall stand adjourned to the same day, in the next week, at
the same time and place. If at the adjourned meeting a quorum is not
present within half an hour from the time appointed for the meeting, the
shareholders present shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by a show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded by the
chairman, a shareholder or a proxyholder; and unless a poll is so
demanded, a declaration by the chairman that the resolution has been
carried, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the Company's book of
proceedings shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour or against such
resolution.
78. When a poll is demanded, it shall be taken in such manner and at such time
and place as the chairman directs, and either at once or after an interval
or adjournment or otherwise. The result of the poll shall be the
resolution of the meeting at which the poll was demanded. The demand of a
poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such
determination made in good faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any vote or
votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the meeting
adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting that was adjourned.
81. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll
has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or series
of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every duly
authorized representative of a corporate shareholder, and, if not
prevented from voting by the Act, every proxyholder, shall have one
vote; and
(2) on a poll every shareholder present in person, every duly authorized
representative of a corporate shareholder, and every proxyholder,
shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
<PAGE> 18
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84. Any person entitled to transfer shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may vote at
any general meeting in respect thereof in the same manner as if such
person were the registered holder of such shares so long as the directors
are satisfied at least 48 hours before the time of holding the meeting of
such person's right to transfer such shares.
85. Where there are joint registered holders of any share, any of such holders
may vote such share at any meeting, either personally or by proxy, as if
solely entitled to it. If more than one joint holder is present at any
meeting, personally or by proxy, the one whose name stands first on the
Register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased shareholder in whose
name any share stands shall for the purpose of this Article be deemed
joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder by a representative duly authorized under the Act.
87. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal. Holders of Share Warrants shall not be entitled to vote
by proxy in respect of the shares included in such warrants unless
otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been made by
any court of competent jurisdiction may vote by guardian or other person
in the nature of a guardian appointed by that court, and any such guardian
or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any, under which
it is signed or a notarially certified copy of that power or authority
shall be deposited at the Office of the Company or at such other place as
the directors may direct. The directors may, by resolution, fix a time not
exceeding 48 hours excluding Saturdays and holidays preceding any meeting
or adjourned meeting before which time proxies to be used at that meeting
must be deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall be given
in the notice calling the meeting. The chairman of the meeting shall
determine all questions as to validity of proxies and other instruments of
authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation of the
proxy, or the transfer of the share in respect of which the vote is given,
provided no intimation in writing of the death, revocation Or transfer is
received at the Office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
91. Every form of proxy shall comply with the Act and its regulations and
subject thereto may be in the following form:
I, ___________ of ____________ being a shareholder of ___________ hereby
appoint __________ __________ of _________ (or failing him/her ________ of
________) as proxyholder to attend and to vote for me and on my behalf at
the ordinary/special general meeting of the Company, to be held on the __
day of _____, ___ and at any adjournment thereof, , or at any meeting of
the Company which may be held prior to [insert specified date or event].
[If the proxy is solicited by or behalf of the management of the Company,
insert a statement to that effect.]
Dated this __ day of _____ __.
-------------------
Shareholder
<PAGE> 19
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92. Subject to the Act, no shareholder shall be entitled to be present or to
vote on any question, either personally or by proxy, at any general
meeting or to be reckoned in a quorum while any call is due and payable to
the Company in respect of any shares of such shareholder.
93. Any resolution passed by the directors, notice of which has been given to
the shareholders in the manner in which notices are hereinafter directed
to be given and which is, within one month after it has been passed,
ratified and confirmed in writing by shareholders entitled on a poll to
three-fifths of the votes, shall be as valid and effectual as a resolution
of a general meeting. This Article shall not apply to a resolution for
winding up the Company or to a resolution dealing with any matter that by
statute or these Articles ought to be dealt with by a special resolution
or other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a meeting
and satisfies all of the requirements of the Act respecting meetings of
shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than _________.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as remuneration
for their service such sums, if any, as the Company may by resolution of
its shareholders determine, and such remuneration shall be divided among
them in such proportions and manner as the directors determine. The
directors may also be paid their reasonable travelling, hotel and other
expenses incurred in attending meetings of directors and otherwise in the
execution of their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in their
body, but if their number falls below the minimum permitted, the directors
shall not, except in emergencies or for the purpose of filling vacancies,
act so long as their number is below the minimum.
99. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the Company or
under any company in which the Company is a shareholder or is otherwise
interested.
100. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be, of
unsound mind;
(3) by notice in writing to the Company, resigns the office of director;
or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director from
contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into
or proposed to be entered into by or on behalf of the Company in which any
director is in any way interested, either directly or indirectly, be
avoided, nor shall any director so contracting or being so interested be
liable to account to the Company for any profit realized by any such
contract or arrangement by reason only of such director holding that
office or of the fiduciary relations thereby established, provided the
director makes a declaration or gives a general notice in accordance with
the Act. No
<PAGE> 20
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director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the director
does so vote, such vote shall not be counted. This prohibition may at any
time or times be suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply to any contract by or on behalf of the
Company to give to the directors or any of them any security for advances
or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the directors elected at such meeting. Retiring directors
shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of directors ought
to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring directors
shall continue in office until their successors are elected.
104. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
105. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold office
during such time only as the director so removed would have held office.
106. The directors may appoint any other person as a director so long as the
total number of directors does not at any time exceed the maximum number
permitted. No such appointment except to fill a casual vacancy, shall be
effective unless two-thirds of the directors concur in it. Any casual
vacancy occurring among the directors may be filled by the directors, but
any person so chosen shall retain office only so long as the vacating
director would have retained it if the vacating director had continued as
director.
MANAGING DIRECTOR
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise, and may
remove or dismiss them from office and appoint replacements.
108. Subject to the provisions of any contract between a managing director and
the Company, a managing director shall be subject to the same provisions
as to resignation and removal as the other directors of the Company. A
managing director who for any reason ceases to hold the office of director
shall ipso facto immediately cease to be a managing director.
109. The remuneration of a managing director shall from time to time be fixed
by the directors and may be by way of any or all of salary, commission and
participation in profits.
110. The directors may from time to time entrust to and confer upon a managing
director such of the powers exercisable under these Articles by the
directors as they think fit and may confer such powers for such time, and
to be exercised for such objects and purposes and upon such terms and
conditions, and with such restrictions as they think expedient; and they
may confer such powers either collaterally with, or to the exclusion of,
and in substitution for, all or any of the powers of the directors in that
behalf; and may from time to time revoke, withdraw, alter or vary all or
any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
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PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is to hold
office. The President shall have general supervision of the business of
the Company and shall perform such duties as may be assigned from time to
time by the directors.
113. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the President or the directors and
subject to the directions of the directors, perform the duties of the
President during the absence, illness or incapacity of the President, and
shall also perform such duties as may be assigned by the President or the
directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as may
be assigned by the directors. The directors may also appoint a temporary
substitute for the Secretary who shall, for the purposes of these
Articles, be deemed to be the Secretary.
115. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings and proceedings, as they think fit, and
may determine the quorum necessary for the transaction of business. Until
otherwise determined, one director shall constitute a quorum and may hold
a meeting.
119. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a meeting
of directors or of a committee of directors by means of such telephone or
other communications facilities as permit all persons participating in the
meeting to hear each other, and a director participating in such a meeting
by such means is deemed to be present at that meeting for purposes of
these Articles.
120. Meetings of directors may be held either within or without the Province of
Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of every ordinary
general meeting of the Company without notice;
(2) Notice of every other directors' meeting shall be given as permitted
by these Articles to each director at least 48 hours before the time
fixed for the meeting; and
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(3) A meeting of directors may be held without formal notice if all the
directors are present or if those absent have signified their assent
to such meeting or their consent to the business transacted at such
meeting.
121. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of the
directors to be held at the Office of the Company. The President, the
Chairman or a majority of the directors may at any time, and the
Secretary, upon the request of the President, the Chairman or a majority
of the directors, shall summon a meeting to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and count the
vote of any director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent
director has indicated by telegram, letter or other writing lodged
with the chairman of such meeting the manner in which the absent
director desires to vote on such question or matter and such
question or matter has been specifically mentioned in the notice
calling the meeting as a question or matter to be discussed or
decided thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other director
a proxy authorizing such other director to vote for such first named
director at such meeting, and the chairman of such meeting, after
such proxy has been so lodged, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the
director giving such proxy.
123. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for holding
the meeting, or declines to take the chair, the President, if a director,
shall preside. If the President is not a director, is not present at such
time or declines to take the chair, a vice-president who is also a
director shall preside. If no person described above is present at such
time and willing to take the chair, the directors present shall choose
some one of their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions for the
time being vested in or exercisable by the directors generally.
125. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed shall
in the exercise of the powers so delegated conform to any regulations that
may be imposed on them by the directors.
126. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
127. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and was qualified to be a director.
128. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
129. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
<PAGE> 23
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REGISTERS
130. The directors shall cause to be kept at the Company's Office in accordance
with the provisions of the Act a Register of the shareholders of the
Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors. Branch
registers of the shareholders and of the holders of bonds, debentures and
other securities may be kept elsewhere, either within or without the
Province of Nova Scotia, in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors and
of any committees of directors;
(3) of all orders made by the directors and committees of directors; and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company and
are not hereby or by statute expressly directed or required to be
exercised or done by the shareholders, but subject nevertheless to the
provisions of any statute, the Memorandum or these Articles. No
modification of the Memorandum or these Articles shall invalidate any
prior act of the directors that would have been valid if such modification
had not been made.
133. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the
Company;
(3) purchase or otherwise acquire for the Company any property, rights
or privileges that the Company is authorized to acquire, at such
price and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging
all or any of the property of the Company and its unpaid capital for
the time being, or in such other manner as they think fit;
<PAGE> 24
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(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and
fix their salaries or emoluments and require security in such
instances and to such amounts as they think fit;
(7) accept a surrender of shares from any shareholder insofar as the law
permits and on such terms and conditions as may be agreed;
(8) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide for the remuneration
of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company, and
also compound and allow time for payment or satisfaction of any
debts due and of any claims or demands by or against the Company;
(10) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(11) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(12) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(13) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(14) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(15) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
(16) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(17) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and
such other purposes as the directors may in their absolute
discretion think in the interests of the Company; and invest such
amounts in such investments as they think fit, and deal with and
vary such investments, and dispose of all or any part of them for
the benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
<PAGE> 25
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(18) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(19) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(20) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman, the
President or a managing director, attend meetings of the directors or
shareholders, whether or not the solicitor is a shareholder or a director
of the Company. A solicitor who is also a director may nevertheless charge
for services rendered to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of; any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the Company
without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable and that it will be payable to the
persons registered as the holders of the shares on which it is declared at
the close of business upon a record date. No transfer of such shares
registered after the record date shall pass any right to the dividend so
declared.
139. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
141. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
<PAGE> 26
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142. Subject to the Memorandum, these Articles and the rights and restrictions
attached to any class or series of shares, dividends may be declared and
paid to the shareholders in proportion to the amount of capital paid-up on
the shares (not including any capital paid-up bearing interest) held by
them respectively.
143. The directors may deduct from the dividends payable to any shareholder
amounts due and payable by the shareholder to the Company on account of
calls, installments or otherwise, and may apply the same in or towards
satisfaction of such amounts so due and payable.
144. The directors may retain any dividends on which the Company has a lien,
and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists.
145. The directors may retain the dividends payable upon shares to which a
person is entitled or entitled to transfer upon the death or bankruptcy of
a shareholder or in any way other than by allotment or transfer, until
such person has become registered as the holder of such shares or has duly
transferred such shares.
146. When the directors declare a dividend on a class or series of shares and
also make a call on such shares payable on or before the date on which the
dividend is payable, the directors may retain all or part of the dividend
and set off the amount retained against the call.
147. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or other
securities of the Company or of any other company or any other specific
assets held or to be acquired by the Company or in any one or more of such
ways.
148. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular
without restricting the generality of the foregoing may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon the
footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all parties, and may vest cash or specific
assets in trustees upon such trusts for the persons entitled to the
dividend as may seem expedient to the directors.
149. Any person registered as a joint holder of any share may give effectual
receipts for all dividends and payments on account of dividends in respect
of such share.
150. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through the post to the
registered address of the shareholder entitled, or, when there are joint
holders, to the registered address of that one whose name stands first on
the register for the shares jointly held. Every cheque or wan-ant so
delivered or sent shall be made payable to the order of the person to whom
it is delivered or sent. The mailing or other transmission to a
shareholder at the shareholder's registered address (or, in the case of
joint shareholders at the address of the holder whose name stands first on
the Register) of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after the
deduction of any tax which the Company has properly withheld, shall
discharge the Company's liability for the dividend unless the cheque is
not paid on due presentation. If any cheque for a dividend payable in cash
is not received, the Company shall issue to the shareholder a replacement
cheque for the same amount on such terms as to indemnity and evidence of
non-receipt as the directors may impose. No shareholder may recover by
action or other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the Company
for payment or that otherwise remains unclaimed for 6 years from the date
on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
<PAGE> 27
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152. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
153. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
AUDITORS AND AUDIT
155. Except in respect of a financial year for which the Company is exempt from
audit requirements in the Act, the Company shall at each ordinary general
meeting appoint an auditor or auditors to hold office until the next
ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors shall appoint an auditor or
auditors to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
157. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
158. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the Act and
their report, if any, shall be dealt with by the Company as required by
the Act.
NOTICES
162. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
163. Shareholders having no registered address shall not be entitled to receive
notice.
164. The holder of a share warrant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general meeting
of the Company.
<PAGE> 28
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165. All notices with respect to registered shares to which persons are jointly
entitled may be sufficiently given to all joint holders thereof by notice
given to whichever of such persons is named first in the Register for such
shares.
166. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in writing
signed on behalf of the Company that the notice was so addressed and
mailed or transmitted shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means whatsoever
becomes entitled to any share shall be bound by every notice in respect of
such share that prior to such person's name and address being entered on
the Register was duly served in the manner hereinbefore provided upon the
person from whom such person derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address of any
shareholder pursuant to these Articles, shall, notwithstanding that such
shareholder is then deceased and that the Company has notice thereof, be
deemed to have been served in respect of any registered shares, whether
held by such deceased shareholder solely or jointly with other persons,
until some other person is registered as the holder or joint holder
thereof, and such service shall for all purposes of these Articles be
deemed a sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders of such
shares.
169. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
170. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted
in such number of days or other period.
INDEMNITY
171. Every director or officer, former director or officer, or person who acts
or acted at the Company's request, as a director or officer of the
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, and the
heirs and legal representatives of such person, in the absence of any
dishonesty on the part of such person, shall be indemnified by the Company
against, and it shall be the duty of the directors out of the funds of the
Company to pay, all costs, losses and expenses, including an amount paid
to settle an action or claim or satisfy a judgment, that such director,
officer or person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action
or proceeding to which such person is made a party by reason of being or
having been a director or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders over
all other claims.
172. No director or officer, former director or officer, or person who acts or
acted at the Company's request, as a director or officer of the Company, a
body corporate, partnership or other association of which the Company is
or was a shareholder, partner, member or creditor, in the absence of any
dishonesty on such person's part, shall be liable for the acts, receipts,
neglects or defaults of any other director, officer or such person, or for
joining in any receipt or other act for conformity, or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of the
Company, or through the insufficiency or deficiency of any security in or
upon which any of the funds of the Company are invested, or for any loss
or damage arising from the bankruptcy,
<PAGE> 29
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insolvency or tortious acts of any person with whom any funds, securities
or effects are deposited, or for any loss occasioned by error of judgment
or oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of such
person or in relation thereto.
REMINDERS
173. The directors shall comply with the following provisions of the Act or the
Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a cur-rent register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98).
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53).
(6) Send notice to the Registrar of any increase of capital (Section
55).
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held not later than 15 months after the
preceding general meeting.
(8) Send to the Registrar copies of all special resolutions (Section
88).
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
<PAGE> 1
Exhibit 3.25
No. 2899075
THE COMPANIES ACTS 1985 AND 1989
-------------------------------
COMPANY LIMITED BY SHARES
-------------------------------
ARTICLES OF ASSOCIATION
of
SPARKLING SPRING WATER UK LIMITED(1)
-------------------------------
- ----------
1 Names changed from ??? Limited by Special Resolution of the Shareholders
passed on 27th April 1994.
<PAGE> 2
1 Preliminary
1.1 In these Articles:
"the Act" means the Companies Act 1985 (as amended).
"Table A" means Table A in the Companies (Tables A to F) Regulations
1985 as amended by the Companies (Tables A to F) (Amendment)
Regulations 1985. References to regulations are to regulations in
Table A.
"the Statutes" means the Act and any statutory modification or
re-enactment thereof for the time being in force and every other Act
for the time being in force concerning companies and affecting the
Company.
1.2 Subject as hereinafter provided, the regulations contained in Table A
shall apply to the Company.
1.3 Regulations 38, 73 to 78 inclusive, 87, 101 and 118 shall not apply to
the Company, but the Articles hereinafter contained and the remaining
regulations of Table A, subject to the modifications hereinafter
expressed, shall constitute the regulations of the Company.
2 Shares
(2)2.1 The share capital of the Company is 1,990,000 divided into
(pound)1,990,000 Ordinary Shares of (pound)1 each.
2.2 Subject to the provisions of Articles 2.3 and 2.4 and to any
directions which may be given by the Company in general meeting, the
Directors may unconditionally exercise the power of the Company to
allot relevant securities (within the meaning of section 80(2) of the
- ----------
2 Adopted by Special Resolution of the Shareholders passed on 3rd June
1994.
1
<PAGE> 3
Act) and without prejudice to the generality of the foregoing any
shares unissued at the date of incorporation of the Company and any
shares hereafter created shall be under the control of the Directors,
who may allot, grant options over or otherwise dispose of the same to
such persons (including the Directors themselves) on such terms and at
such times as they may think proper, provided that no shares shall be
issued at a discount.
(2)2.3 The maximum nominal amount of share capital which or in respect of
which the Directors may allot, grant options or subscriptions or
conversion rights, create, deal with or otherwise dispose of in
accordance with this Article shall be (pound)1,990,000 or such other
amount as shall be authorized by the Company in general meeting.
2.4 The authority conferred on the Directors by Articles 2.2 and 2.3 shall
expire on the day preceding the fifth anniversary of the date of
incorporation of the Company.
2.5 The provisions of section 89(1) of the Act shall not apply to the
Company.
(3)2.6 (a) No dividend shall be declared or paid by the Company during the
Security Period (as defined in the Credit Agreement) without
the prior written consent of the Bank (as defined in the Credit
Agreement).
(b) For the purposes of this Article 2.5, "Credit Agreement" means
the credit agreement of even date as the date of adoption of
this Article 2.6 and made between the Company (1) and National
Westminster Bank plc (as the Bank) (2).
3 Lien
3.1 The lien conferred by regulation 8 shall apply to:
- ----------
3 Adopted by Special Resolution of the Shareholders passed on 7th June
1994.
<PAGE> 4
(a) all shares of the Company whether fully paid or not;
(b) to all shares registered in the name of any person indebted or
under liability tot he Company, whether he be the sole
registered holder thereof or one of several joint holders;
and shall be for all indebtedness or other liability to the Company of
any member.
Regulation 8 shall be modified accordingly.
4 Transfer of shares
4.1 The Directors may, in their absolute discretion and without assigning
any reason, decline to register any transfer of any share, whether or
not it is a fully paid share. Regulation 24 shall be modified
accordingly.
5 General meetings
5.1 An annual general meeting and an extraordinary general meeting called
for the passing of a special resolution or an elective resolution or a
resolution appointing a person as a Director shall be called by at
least 21 clear days' notice. All other extraordinary general meetings
shall be called by at least 14 days' notice but a general meeting,
other than one called for the passing of an elective resolution, may
be called by shorter notice if it is so agreed:
(a) in the case of an annual general meeting, by all the members
entitled to attend and vote thereat; and
(b) in the case of any other meeting, by a majority in number of
the members having a right to attend and vote, being a majority
together holding not less than 95 percent
<PAGE> 5
in nominal value of the shares giving that right or such
lesser percentage, not being less than 90 percent, as may be
specified in or pursuant to any elective resolution passed by
the Company.
The notice shall specify the time and place of the meeting, the
general nature of the business to be transacted and the terms of any
resolution to be proposed at it and, in the case of an annual general
meeting, shall specify the meeting as such.
Subject to the provisions of these Articles and to any restrictions
imposed on any shares, the notice shall be given to all members, to
all persons entitled to a share in consequence of the death or
bankruptcy of a member and to the Directors and the auditors.
5.2 The following provisions of this Article apply if the Company has
only a single member:
(a) regulation 40 shall be modified by the insertion at the end of
that regulation of the following proviso: ", provided that if
the company has only a single member, the quorum shall be one
such person."; and
(b) if the single member takes any decision which may be taken by
the Company in general meeting and which has effect as if
agreed by the Company in general meeting, the single member
shall (unless the decision is taken by way of a written
resolution) provide the Company with a written record of that
decision. However, failure to do so shall not affect the
validity of such decision.
5.3 Regulation 37 shall be modified by:
(a) the substitution of the words "seven weeks" for the words
"eight weeks"; and
<PAGE> 6
(b) the deletion of the second sentence thereof and by the addition
at the end of the regulation of the following sentence: "If the
company has only a single member, such member shall be entitled
at any time to call a general meeting."
5.4 Regulation 41 shall be modified by the addition at the end of that
regulation of the following sentence. "If at the adjourned meeting a
quorum is not present within half an hour from the time appointed for
the meeting, the meeting shall be dissolved. Provided that if the
company has only a single member, the preceding provisions of this
regulation as to adjournment shall not apply and, if within half an
hour from the time appointed for the meeting, or if during a meeting
such a quorum ceases to be present, the meeting shall be dissolved
and shall not be adjourned."
5.5 A poll may be demanded at any general meeting by the Chairman or by
any member present in person or by proxy and entitled to vote.
Regulation 46 shall be modified accordingly.
5.6 A resolution in writing in accordance with regulation 53 shall be
deemed to have been duly executed on behalf of a corporation if
signed by one of its directors or its secretary. In the case of a
share held by joint holders the signature of any one of them on
behalf of all such joint holders shall be sufficient for the purposes
of that regulation. The Directors shall cause a record of each
resolution in writing, and of the signatures to it, to be entered in
a book in the same way as minutes of proceedings of a general meeting
of the Company and to be signed by a Director or the secretary of the
Company.
5.7 Before a resolution in writing is executed, the Company, if it is
required by section 381B of the Act to do so:
<PAGE> 7
(a) shall send a copy of the proposed resolution to the auditors;
and
(b) shall ensure that the resolution is not passed unless either it
has received the auditors' notification in the terms of section
381(B)(3)(a) of the Act or the period for giving a notice under
section 381(B)(2) has expired without any notice having been
given to the Company by the auditors in accordance with that
sub-section.
5.8 A proxy shall be entitled to vote on a show of hands and regulation
54 shall be modified accordingly.
6 Directors
6.1 The first Directors shall be appointed in writing by completion of
the statement required to be delivered for registration by section 10
of the Act.
(4)6.2 Unless otherwise determined by ordinary resolution the number of
directors shall not be subject to any maximum but shall not be less
than one. Regulation 64 shall be modified accordingly.
7 Powers and duties of Directors
7.1 Subject to the provisions of the Statutes, a Director may be
interested directly or indirectly in any contract or arrangement or
in any proposed contract or arrangement with the Company or with any
other company in which the Company may be interested and he may hold
and be remunerated in respect of any office or place of profit (other
than the office of auditor of the Company or any subsidiary thereof)
under the Company or any such other company and he or any firm of
which he is a member may actin a professional capacity for
- ----------
4 Adopted by Special Resolution of the Shareholders passed on 27th
April 1994.
<PAGE> 8
the Company or any such other company and be remunerated therefor.
Notwithstanding his interest a Director may vote on any matter in
which he is interested and be included for the purpose of a quorum at
any meeting at which the same is considered and he may retain for his
own benefit all profits and advantages accruing to him. Regulation 94
shall be modified accordingly.
7.2 The Directors may exercise all the powers of the Company contained in
clause 3(ab) of the Memorandum of Association of the Company.
8 Appointment, removal and disqualification of Directors
8.1 Without prejudice to the powers of the Company under section 303 of
the Act to remove a Director by Ordinary Resolution, the holder or
holders for the time being of more than one half of the issued
Ordinary Shares of the Company shall have the power from time to time
and at any time to appoint any person or persons as a Director or
Directors and to remove from office any Director howsoever appointed.
Any such appointment or removal shall be effected by an instrument in
writing signed by the member or members making the same or (in the
case of a member being a corporation) signed on its behalf by one of
its directors or its secretary and shall take effect upon lodgment at
the registered office of the Company.
8.2 The office of a Director shall be vacated if he is removed from
office under Article 8.1. Regulation 81 shall be modified
accordingly.
8.3 Unless and until otherwise determined by the Company by Ordinary
Resolution, either generally or in any particular case, no Director
shall vacate or be required to vacate his office as a Director on or
by reason of his attaining or having attained the age of 70, and
<PAGE> 9
any person proposed to be appointed a Director shall be capable of
being appointed as a Director notwithstanding that he has attained
the age of 70, and no special notice need be given of any resolution
for the appointment as a Director of a person who shall have attained
the age of 70, and it shall not be necessary to give to the members
notice of the age of any Director or person proposed to be appointed
as such.
8.4 Regulation 88 shall be modified by the deletion of the third sentence
thereof.
9 Rotation of Directors
9.1 The Directors shall not be liable to retire by rotation, and
accordingly the second and third sentences of regulation 79 shall be
deleted.
10 Alternate Directors
10.1 Any appointment or removal of an alternate Director made under Table
A shall be delivered at the registered office of the Company. In
regulation 65 the words "approved by resolution of the directors and"
shall be deleted.
10.2 If his appointor is for the time being absent from the United Kingdom
or otherwise not available the signature of an alternate Director to
any resolution in writing of the Directors shall be as effective as
the signature of his appointor. An alternate Director shall be deemed
to be a Director for the purpose (inter alia) of signing instruments
pursuant to Article 12.
10.3 An alternate Director shall be entitled to contract and be interested
in and benefit from contracts or arrangements with the Company and to
be repaid expenses and to be indemnified to the same extent mutatis
mutandis as if he were a Director, but he shall not
<PAGE> 10
be entitled to receive from the Company in respect to his appointment
as alternate Director any remuneration, except only such part (if
any) of the remuneration otherwise payable to his appointor as such
appointor may by notice in writing to the Company from time to time
direct.
10.4 Regulation 66 shall be modified by the deletion of the second
sentence thereof.
11 Proceedings of Directors
11.1 Any Director or member of a committee of the Directors may
participate in a meeting of the Directors or such committee by means
of conference telephone or similar communications equipment whereby
all persons participating in the meeting can hear each other and
participation in a meeting in this manner shall be deemed to
constitute presence in person at such meeting.
11.2 The following sentence shall be inserted after the first sentence of
regulation 72: "Any committee shall have power unless the Directors
direct otherwise to co-opt as a member or members of the committee
any person or persons although not being a Director of the Company."
11.3 For a signed resolution under regulation 93 to be effective it shall
not be necessary for it to be signed by a Director who is prohibited
by the Articles or by law from voting thereon. Regulation 93 shall be
modified accordingly.
12 The seal
12.1 If the Company has a seal, it shall only be used with the authority
of the Directors or a committee of the Directors. The Directors may
determine who shall sign any instrument
<PAGE> 11
to which the seal is affixed and unless otherwise so determined it
shall be signed by a Director and by the secretary or second
Director. The obligation under regulation 6 relating to the sealing
of share certificates shall apply only if the Company has a seal.
12.2 If the Company has a common seal, the Company may also have an
official seal for use abroad under the provisions of the Act, where
and as the Directors shall determine, and the Company may by writing
under the common seal appoint any agents or agent, committees or
committee abroad to be the duly authorized agents of the Company, for
the purpose of affixing and using such official seal, and may impose
such restrictions on the use thereof as may be thought fit. Wherever
in these Articles reference is made to the common seal of the
Company, the reference shall, when and so far as may be applicable,
be deemed to include any such official seal as aforesaid.
13 Notices
13.1 Every Director of the Company and every alternate Director shall be
entitled to receive notices of general meetings (at his usual address
or such other address as he may notify to the Company) in addition to
the persons so entitled under the Statutes. The third sentence of
regulation 112 shall be deleted.
13.2 Any notice required by these Articles to be given by the Company may
be given by any visible form on paper, including telex, facsimile and
electronic mail, and a notice communicated by such forms of immediate
transmission shall be deemed to be given at the time it is
transmitted to the person to whom it is addressed. Regulations 111
and 112 shall be modified accordingly.
<PAGE> 12
13.3 In the first sentence of regulation 112 the words "(or at such other
address, whether within or outside the United Kingdom, as he may
supply to the company for that purpose)" shall be inserted after
"registered address".
13.4 A notice posted to an address outside the United Kingdom shall be
deemed, unless the contrary is proved, to be given at the expiration
of 7 days after the envelope containing it was posted and regulation
115 shall be amended accordingly.
13.5 Regulation 116 shall be modified by the substitution of the words
"the address, if any, whether within or outside the United Kingdom"
for the words "the address, if any, within the United Kingdom" in the
first sentence thereof.
14 Indemnity
14.1 Subject to the provisions of, and so far as may be consistent with,
the Statutes, but without prejudice to any indemnity to which a
Director may be otherwise entitled, every Director, auditor,
secretary or other officer of the Company shall be entitled to be
indemnified by the Company against all costs, charges, losses,
expenses and liabilities as incurred by him in the execution and/or
discharge of his duties and/or the exercise of his powers and/or
otherwise in relation to or in connection with his duties, powers or
office including (without prejudice to the generality of the
foregoing) any liability incurred by him in defending any
proceedings, civil or criminal, which relate to anything done or
omitted or alleged to have been done or omitted by him as an officer
or employee of the Company and in which judgment is given in his
favor (or the proceedings are otherwise disposed of without any
finding or admission of any material breach of duty on his part) or
in which he is acquitted or in connection with any application under
any statute for relief
<PAGE> 13
from liability in respect of any such act or omission in which relief
is granted to him by the Court.
<PAGE> 1
Exhibit 3.26
No. 2899075
THE COMPANIES ACTS 1985 AND 1989
-------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
of
SPARKLING SPRING WATER UK LIMITED
1. The name of the Company is "sparkling Spring Water UK Limited".
2. The registered office of the Company will be situated in England and
Wales.
3. The object of the Company is to carry on business as a general commercial
company. In particular, but without prejudice to the generality of the
foregoing, the Company has the following objects:
(a) (i) To manufacture, buy, sell, improve, treat, preserve, fine
aerate, mineralise, bottle and otherwise deal in spring mineral and
aerated waters and other liquids of every description and to carry
on all or any of the business of manufacturers, bottlers, merchants
and distributors of and dealers in spring mineral and aerated waters
and other liquids of every description.
(ii) To purchase, lease or otherwise acquire bottles, drums and
other containers for water and other liquids and supply the same to
customers.
<PAGE> 2
(iii) To supply maintenance, cleaning and sanitation services.
(b) To purchase, take on lease or in exchange, hire or otherwise acquire
and hold, for any estate or interest, and manage any lands,
buildings, servitudes, easements, rights, privileges, concessions,
machinery, plant, stock-in-trade and any heritable or moveable real
or personal property of any kind.
(c) To purchase or otherwise acquire, dispose of, protect, extend and
renew any patents, registered designs, trade marks, and service
marks (whether registered or not) copyright, design right or any
similar property rights including those subsisting in inventions,
designs, drawings, performances, computer programs, semi-conductor
topographies, confidential information, business names, goodwill and
the style of presentation of goods or services and applications for
protection thereof which may seem to the Company capable of being
used for any of the purposes of the Company, or the acquisition of
which may seem calculated directly or indirectly to benefit the
Company and to use, exercise, develop, receive or grant licenses in
respect of or otherwise turn to account any of the same for any
purpose whatsoever, whether manufacturing or otherwise, which the
Company may think calculated directly or indirectly to achieve these
objects.
(d) To form, promote, subsidize and assist companies, syndicates or
other bodies of all kinds and to issue on commission or otherwise
underwrite, subscribe for and take or guarantee the payment of any
dividend or interest on any shares, stocks, debentures or other
capital or securities or
<PAGE> 3
obligations of any such companies, syndicates or other bodies, and
to pay or provide for brokerage commission and underwriting in
respect of any such issue.
(e) To enter into partnerships or into any arrangement for sharing
profits, union of interests, co-operation or otherwise with any
person or company for the purpose of carrying on business within any
of the objects of the Company.
(f) To carry on any other business which may seem to the Company capable
of being conveniently carried on in connection with the above or
calculated directly or indirectly to enhance the value of or render
profitable any of the Company's property or rights.
(g) To purchase or otherwise acquire and undertake all or any part of
the business, property, liabilities and transactions of any person,
body or company carrying on any business which this Company is
authorized to carry on, or possessed of property, assets or rights
suitable for any of the objects of the Company.
(h) To develop, work, improve, manage, lease, mortgage, charge, pledge,
turn to account or otherwise deal with all or any part of the
property, assets or rights of the Company, to surrender or accept
surrender of any lease or tenancy or rights, and to sell or deal
with the property, assets, business, rights or undertaking of the
Company, or any part thereof, and on such terms and for such
consideration as the Company may think fit, and including for cash
or shares, debentures or securities of any other company.
<PAGE> 4
(i) To build, construct, erect, maintain, alter, replace or remove any
buildings, works, offices, erections, plant, machinery, tools,
equipment or otherwise as may seem desirable for any of the
businesses or in the interests of the Company, and to manufacture,
buy, sell, lease or otherwise acquire and generally deal in any
plant, tools, machinery, goods or things of any description which
may be conveniently dealt with in connection with any of the
Company's objects.
(j) To manage and conduct the affairs of any companies, firms, bodies
and persons carrying on business of any kind whatsoever, and in any
part of the world.
(k) To enter into, carry on and participate in financial transactions
and dealings and operations of all kinds and to take any steps which
may be considered expedient for carrying into effect such
transactions, dealings and operations including, without prejudice
to the generality of the foregoing, borrowing and lending money and
entering into contracts and arrangements of all kinds.
(l) To borrow or raise money in such manner as the company shall think
fit and in particular by the issue (whether at par or at a premium
discount and for such consideration as the Company may think fit) of
bonds, debentures or debenture stock (payable to bearer or
otherwise), mortgages or charges, shares or other securities,
perpetual or otherwise, and, if the Company thinks fit, charged upon
all or any of the Company's property (both present and future) and
undertaking including its uncalled capital and further, if so
<PAGE> 5
thought fit, convertible into any stock or shares or securities of
the Company or any other company, and collaterally or further to
secure any obligations of the Company by a trust deed or other
assurance or pledge.
(m) To guarantee or otherwise support or secure, either with or without
the Company receiving any consideration or advantage and whether by
personal covenant or by mortgaging or charging all or part of the
undertaking, property, assets and rights present and future and
uncalled capital of the Company or by both such methods or by any
other means whatsoever, the liabilities and obligations of and the
payment of any moneys whatsoever (including but not limited to
capital, principal, premiums, interest, dividends, costs and
expenses on any stocks, shares or securities) by any person, firm or
company whatsoever including but not limited to any company which is
for the time being the holding company or a subsidiary (both as
defined by section 736 Companies Act 1985) of the Company or of the
Company's holding company or is controlled by the same person or
persons as control the Company or is otherwise associated with the
Company in its business.
(n) To grant indemnities of every description and to undertake
obligations of every description.
(o) To make, draw, accept, exchange, endorse, negotiate, execute and
issue promissory notes, bills of exchange or other negotiable
instruments or payment orders and to receive money on deposit or
loan.
<PAGE> 6
(p) To pay all or any expenses incurred in connection with the formation
and promotion and incorporation of the Company and to pay commission
to and remunerate any person or company for services rendered in
underwriting or placing, or assisting to underwrite or place, any of
the shares in the Company's capital or any debentures or other
securities of the Company, or in or about the formation or promotion
of the Company or the conduct of its business.
(q) To pay for any property or rights acquired by the Company in such
manner as the Company may think fit, including payment either in
cash or fully or partly paid-up shares with or without preferred or
deferred rights in respect of dividend or repayment of capital or
otherwise, or by any securities which the Company has power to
issue, or partly in one mode and partly in another and generally on
such terms as the Company may determine.
(r) To accept payment for any property or rights sold or otherwise
disposed of or dealt with by the Company in such manner as the
Company may think fit, including payment either in cash, by
installments or otherwise, or in fully or partly paid-up share of
any company or corporation, with or without deferred or preferred
rights in respect of dividend or repayment of capital or otherwise,
or in debentures or mortgage debentures or debenture stock,
mortgages or other securities of any company or corporation, or
partly in one mode and partly in another, and generally on such
terms as the Company may determine.
<PAGE> 7
(s) While the Company remains a private company, and subject to the
provisions of the Companies Act 1985, to:
[ MISSING PAGE TO BE TYPED IN]
(t)
(u)
(v)
(w)
(x) To procure the Company or any branch or representative of it to be
registered or recognized in any country or place abroad or with any
applicable regulatory authority.
(y) To obtain any provisional or other order or Act of Parliament of the
United Kingdom or of the legislature of any other State or
jurisdiction for enabling the Company to carry any of its objects
into effect, or for effecting any modifications to the Company's
constitution, or for any other purpose which may seem expedient, and
to oppose or make representations in connection with any proceeding,
proposal or application which may seem calculated, directly or
indirectly, to prejudice the Company's interests.
(z) To appoint any person or persons, firm or firms, company or
companies to be the attorney or agent of the Company and to act as
agents, managers, secretaries, contractors or in similar capacity.
(aa) To insure the life of any person who may, in the opinion of the
Company, be of value to the Company as having or holding for the
Company
<PAGE> 8
interests, goodwill or influence or other assets and to pay the
premiums on such insurance.
(ab) To establish and maintain or procure the establishment and
maintenance of contributory or non-contributory pension or
superannuation funds of the benefit of the person referred to below,
to grant emoluments, pensions, allowances, donations, gratuities,
loans and bonuses to such persons and to make payments for or
towards insurance on the life or lives of such persons; to
establish, subsidize, subscribe to or otherwise support any
institution, association, society, club, other establishments, or
fund, the support of which may, in the opinion of the Company, be
calculated directly or indirectly to benefit the Company or any such
persons, or may be connected with any place where the Company
carries on business: to institute and maintain any institution,
association, society, club or other establishment of profit-sharing
scheme, share incentive scheme or employees' share scheme calculated
to advance the interests if the Company or to benefit such persons;
to institute and maintain or assist in the institution or
maintenance of any scheme calculated to promote the purchase or
holding of shares of or securities in the Company by the public, any
section thereof or such persons; and, subject to the provisions of
the Act, to lend money or make payments to, or guarantee or give an
indemnity in respect of, or to give any financial or other
assistance to, any such person, or trustees on their behalf or any
other person, for the purposes of, or to facilitate the institution
or maintenance of, any such
<PAGE> 9
schemes; to join, participate in and subsidize or assist any
association of employers or employees or any trade association; and
to subscribe or guarantee money for charitable or benevolent objects
or for any public, general or useful object or for any exhibition;
the said persons are any persons who are or were at any time in the
employment or service of the Company or of any of its businesses or
of any company which was or is for the time being the holding
company or a subsidiary (both as defined by section 736 Companies
Act 1985) of the Company or of the company's holding company or is
otherwise associated with the Company or any of its businesses or
who are or were at any time directors or officers of the Company or
of such other company or business aforesaid, or holding or who hold
or who held any salaried employment or office in the Company or such
other company or business, and the families (including former
spouses) of them or any person who is or was dependent on them.
(ac) To purchase and maintain insurance for the benefit of any persons
who are or were at any time directors, officers or employees of the
Company or any other company which is a subsidiary or subsidiary
undertaking of the Company or in which the Company has any interest,
whether direct or indirect, or who are or were at any time trustees
of any pension fund in which any employee of the Company or of any
other such company or subsidiary undertaking are or have been
interested indemnifying such persons against liability for
negligence, default, breach of duty or breach of trust or any other
liabilities which may be lawfully insured against.
<PAGE> 10
[CANNOT READ COPY - FOLLOWING NEED TO BE INSERTED]
(ad)
(ae)
(af)
It is hereby declared that:
(i)
(ii)
4. The liability of the members is limited.
5. The share capital of the Company is (pound)100 divided into 100 Ordinary
Shares of (pound)1 each.
NOTE: By Ordinary Resolution of the Shareholders passed on 3rd June 1994 the
authorized share capital of the Company was increased from (pound)100
divided into 100 Ordinary Shares of (pound)1 each to (pound)1,990,000
divided into 1,990,000 Shares of (pound)1 each by the creation of
1,989,900 new Ordinary Shares of (pound)1 each.
We, the entity whose name, address and description is subscribed, are desirous
of being formed into a Company in pursuance of this Memorandum of
Association and we agree to take the number of shares in the capital of
the company set opposite our name.
<PAGE> 11
- --------------------------------------------------------------------------------
Number of
Shares taken
NAME, ADDRESS AND DESCRIPTION by Subscriber
OF SUBSCRIBER (in words)
- --------------------------------------------------------------------------------
Norton Rose Limited, One
Blackfriars House,
P.O. Box 570,
19 New Bridge Street,
London EC4V 6DH Paul Edelstyn
(authorized signatory)
- --------------------------------------------------------------------------------
DATED this 7th February 1994
WITNESS to the above Signature:
Matthew Rutter,
Blackfriars House
P.O. Box 570,
19 New Bridge Street,
London EC4V 6DH
Trainee Solicitor
<PAGE> 12
- --------------------------------------------------------------------------------
NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER
- --------------------------------------------------------------------------------
Norton Rose Limited, One
Blackfriars House,
P.O. Box 570,
19 New Bridge Street,
London EC4V 6DH Paul Edelstyn
(authorized signatory)
- --------------------------------------------------------------------------------
DATED this 7th February 1994
WITNESS to the above signature:
Matthew Rutter,
Blackfriars House
P.O. Box 570,
19 New Bridge Street,
London EC4V 6DH
Trainee Solicitor
<PAGE> 13
Annex A
THE COMPANIES ACTS 1985 and 1989
--------------------------
COMPANY LIMITED BY SHARES
--------------------------
SPECIAL RESOLUTION
of
SPARKLING SPRING WATER UK LIMITED
Passed on 7th June 1994
AT an Extraordinary General Meeting of the above-named Company, duly
convened, and held on 7th June 1994, the following Resolution was duly passed as
a Special Resolution:
SPECIAL RESOLUTION
THAT the Articles of Association be amended by the addition of the following new
Article 2.6:
2.6 (a) No dividend shall be declared or paid by the Company during the
Security Period (as defined in the Credit Agreement) without the
prior written consent of the Bank (as defined in the Credit
Agreement).
<PAGE> 14
(b) For the purposes of this Article 2.6, "Credit Agreement" means
the credit agreement of even date as the date of adoption of this
Article 2.6 and made between the Company (1) and National
Westminster Bank plc (as the Bank) (2)".
------------------------------
Chairman
<PAGE> 1
Exhibit 3.27
The Companies Act 1985
------------------------------
Company Limited By Shares
------------------------------
MEMORANDUM OF ASSOCIATION
of
AQUAPORTE (UK) LIMITED
1. The name of the company is "AQUAPORTE (UK) LIMITED"
2. The registered office of the Company will be situated in
England.
3. The objects for which the Company is established are:
(1) To carry on all or any of the following businesses:
Representatives, agents, factors, distributors,
importers, exporters, manufacturers and wholesale and
retail dealers for or on behalf of any individual,
company, firm or other body or as principals in and
about every kind of marketable product, process,
materials and services of whatever description, and for
these purposes to negotiate and handle contracts and
agreements of all kinds, to act as representatives and
agents of and for any individual, company, firm,
association, authority, organization or other body in
any part of the work and for any purpose whatever, to
tender for and to place contracts, investments and other
rights, to act for and to provide all kinds of services,
agencies and consultancies to all or any parties or
prospective parties to any contract or other agreement,
and to carry on business as advertising
<PAGE> 2
and publicity agents, sales promoters, marketing and
market research specialists, direct selling and mail
order specialists, exhibition and display contractors
and promoters, merchandising agents, warehousers,
storers, packers, customs house brokers, shipping and
forwarding agents, clearing agents, wharfingers,
insurance brokers, carriers, hauliers and providers of
all kinds of facilities in connection with or ancillary
to any of the above businesses and all other businesses
at the discretion of the Directors.
(2) To buy, sell, export, manufacture and deal in all kinds
of goods, stores and equipment whether in connection
with any of the above activities or otherwise and to act
as agents for all purposes.
(3) To apply for, purchase or otherwise acquire any patents,
licenses, concessions, privileges and like rights,
conferring a non-exclusive or exclusive or limited right
to use, or any secret or other information as to any
invention which may seem capable of being used for any
of the purposes of the Company, or the acquisition of
which may seem calculated directly or indirectly to
benefit the Company and to use, exercise, develop, grant
licenses in respect of, or otherwise turn to account,
the rights and information so acquired.
(4) To sell, improve, manage, develop, lease, mortgage, let,
charge, dispose of, turn to account, or otherwise deal
with all or any part of the undertaking or property or
rights of the Company, and to sell the undertaking of
the Company, or any part thereof for such consideration
as the Company may think fit, and in particular for
cash, shares, debentures or debenture stock
2
<PAGE> 3
or other obligations, whether fully paid or otherwise,
of any other company.
(5) To carry on the business of commission agents, factors,
general merchants and dealers in every description of
goods, exporters and importers, concessionaires,
wholesale and retail traders, carriers, warehousemen,
designers, advertising contractors or agents, or
trustees, brokers or agents for any company.
(6) To manufacture, refine, repair, purchase, sell, export,
import, deal in or let on hire all kinds of goods,
substances and other articles which may be advantageous
to the Company or which any of the customers or other
companies having dealings with the Company may from time
to time require.
(7) To carry on any other activity and do anything of any
nature which may seem to the Company capable of being
conveniently carried on or done by the Company in
connection with the above, or may seem to the Company
calculated directly or indirectly to benefit the
Company.
(8) To purchase, take on lease or license or in exchange,
apply for, hire, renew or otherwise acquire and hold for
any estate or interest, and to sell, let, license or
otherwise dispose of, in whole or in party, any lands,
buildings, machinery, rights, stock-in-trade, business
concerns, chooses in action, and any other real and
personal property of any kind including all of the
assets of the Company and to perform any services or
render any consideration and to construct, equip, alter
and maintain any buildings, works and
3
<PAGE> 4
machinery necessary or convenient for the Company's
business and in each case for any consideration which
may be thought fit.
(9) To enter into partnership or any other arrangement for
sharing profits or joint adventure or co-operation with
any company carrying on, engaged in or about to carry on
or engage in any business or transaction capable of
being conducted so as directly or indirectly to benefit
the Company, and to subsidize or otherwise assist any
such company.
(10) To invest and deal with moneys of the Company not
immediately required in or upon such investments (other
than shares in the Company) and in such manner as may
from time to time seem expedient.
(11) To lend money to such companies with or without security
and otherwise on such terms as may seem expedient.
(12) To guarantee, grant indemnities in respect of, support
or secure, whether by personal convenant or by
mortgaging or charging all or any part of the
undertaking, property and assets (present and future)
and uncalled capital of the Company or by both such
methods, the performance of the contracts or obligations
and the repayment or payment of the principal and
premium of an interest and dividends on any securities
or obligations of any company whether having objects or
engaged or intending to engage in business similar to
those of the Company or not.
(13) To borrow and raise money and to secure or discharge any
debt or obligation of or binding on the Company in such
manner as may be thought fit an din particular by
mortgages and charges upon the undertaking and all or
any of the property and assets (present and future) and
the uncalled
4
<PAGE> 5
capital of the Company, or by the creation and issue on
such terms as may be thought expedient of securities of
any description.
(14) To draw, make, accept, endorse, discount, execute and
issue promissory notes, bills of exchange, shipping
documents and other negotiable or transferable
instruments, and to buy, sell and deal in foreign
currencies.
(15) To grant pensions, allowances, gratuities and bonuses to
existing or former employees and officers (including
Directors) of the Company or of any company in which the
Company (directly or through other companies) holds
shares or of any predecessor in business of the Company
or of its holding company, or to their dependents or
relations or connections, and to make payments towards
insurance for any such purpose, and to establish or
support trusts, funds or schemes (whether contributory
or non-contributory) for any such purposes or any other
institutions, trusts, funds, schemes, clubs and
conveniences calculated to benefit any such persons.
(16) To promote or assist in promoting any company or
companies in any part of the world and to subscribe for
shares therein or other securities thereof for the
purpose of carrying on any business which the Company is
authorized to carry on or for any other purpose which
may seem directly or indirectly calculated to benefit
the Company.
(17) To amalgamate with any other company in any manner
whatsoever (whether with or without a liquidation of the
Company).
(18) To procure the Company to be registered or recognized in
any country or place in any part of the world.
5
<PAGE> 6
(19) To compensate for loss of office any Directors or other
officers of the Company and to make payments to any
persons whose office, employment or duties may be
terminated by virtue of any transaction in which the
Company is engaged.
(20) To pay out of the funds of the Company the costs,
charges and expenses of any incidental to the formation
and registration of the Company or any company promoted
by the Company, the issue of the capital of the Company
or any such other company, the negotiations between the
promoters preliminary to the formation of the Company,
the acquisition by the Company of any property or assets
and the accomplishment of all or any formalities which
the Company may think necessary or proper in connection
with any of the matters aforesaid.
(21) To insure with any other company against losses,
damages, risks and liabilities of all kinds which may
affect the Company.
(22) To act as directors or managers of, or to appoint
directors or managers of, any subsidiary company or any
other company in which the Company is or may be
interested.
(23) To contribute by donation, subscription, guarantee or
otherwise to any public, general, charitable or other
useful object whatever.
(24) To distribute among the members in specie any property
of the Company, or any proceeds of sale or disposal of
any property of the Company, but so that no distribution
amounting to a reduction of capital be made except with
the sanction (if any) for the time being required by
law.
6
<PAGE> 7
(25) To do all or any of the above things in any part of the
world, and either as principals, agents, trustees,
contractors or otherwise, and either alone or in
conjunction with others, and either by or through
agents, sub-contractors, trustees, subsidiaries or
otherwise.
(26) To do all such other things as are incidental or
conducive to the above objects or any of them.
It is hereby declared that the word "company" in this clause shall
(except where referring to the Company) be deemed to include any
person or partnership or other body of persons, whether incorporated
or not incorporated, and whether domiciled in Great Britain or
elsewhere. The intention is that the objects specified in each
paragraph of this clause shall, except where otherwise expressed, be
in nowise limited or restricted by reference to or inference from
the terms of any other paragraph, form the name of the Company or
from the order in which such objects are stated, but may be carried
out in as full and ample a manner and shall be construed in as wide
a sense as if each of the said paragraphs defined the objects of a
separate and independent company.
4. The liability of the members is limited.
5.* The share capital of the Company is (pound)100, divided into
100 Ordinary shares of (pound)1 each.
- ----------
* Pursuant to an Ordinary Resolution passed on ?th April 1995, the Authorized
Share Capital was increased to (pound)40,000, divided into 40,000 Ordinary
shares of (pound)1 each.
7
<PAGE> 8
WE, the several persons whose names and addresses are
subscribed, are desirous of being formed into a Company in pursuance
of this Memorandum of Association, and we respectively agree to take
the number of shares in the capital of the Company set opposite our
respective names.
- --------------------------------------------------------------------------------
NAMES, ADDRESSES AND NUMBER OF SHARES TAKEN
DESCRIPTIONS OF SUBSCRIBERS BY EACH SUBSCRIBER
- --------------------------------------------------------------------------------
ROBERT JOHN WINDMILL One
Inveresk House
1 Aldwych
London WC2R OHF
Solicitor
BETTY PATRICIA DOREEN BAILEY One
Inveresk House
1 Aldwych
London WC2R OHF
CHARTERED SECRETARY
- --------------------------------------------------------------------------------
Dated this 7th day of December 1988.
Witness to the above Signatures:
JOHN STEIN
Inveresk House
1 Aldwych
London WC2R OHF
SOLICITOR
8
<PAGE> 1
Exhibit 3.28
No. 2331724
The Companies Act 1985
-------------------------------
Company Limited By Shares
-------------------------------
ARTICLES OF ASSOCIATION
of
AQAUPORTE (UK) LIMITED
----------------------------------------------
Incorporated the 29th day of December 1988
----------------------------------------------
McKenna & Co.
Inveresk House
1 Aldwych
London WC2R OHF
<PAGE> 2
The Companies Act 1985
-------------------------------
Company Limited by Shares
-------------------------------
ARTICLES OF ASSOCIATION
of
AQUAPORTE (UK) LIMITED
-----------------------
INTERPRETATION
1. In these Articles:
"The Act" means the Companies Act 1985;
"Table A" means Table A in the Schedule to the Companies (Tables A to F)
regulations 1985 as amended by the Companies (Tables A to F) (Amendment)
Regulations 1985.
2. The Regulations contained in Table A shall apply to the Company except in so
far as they are excluded by or are inconsistent with these Articles.
3. Regulations 8, 24, 41, 59, 64, 65, 73 to 78, 80, 94 and 118 of Table A shall
not apply to the Company.
SHARE CAPITAL
4. Subject to any direction to the contrary which may be given by the Company in
General Meeting, the directors are unconditionally authorized to allot, create
deal with or otherwise dispose of relevant securities (within the meaning of
section 80(2) of the Act) to such persons
1
<PAGE> 3
(including any director) on such terms and at such time or times as they think
fit, provided that no shares shall be issued at a discount.
5. The maximum nominal amount of share capital which the directors may allot or
otherwise dispose of in accordance with Article 4 shall be the nominal amount of
unissued shares at the date of incorporation of the Company or such other amount
as shall be authorized by the Company in General Meeting.
6. The authority conferred on the directors by Articles 4 and 5 shall remain in
force for a period of five years from the date of incorporation of the Company
and thereafter provided this authority is renewed from time to time by the
Company in General Meeting in accordance with Section 80 of the Act.
7. The provisions of Section 89(1) of the Act shall not apply to the Company.
LIEN
8. The Company shall have a first and paramount lien on every share for all
monies (whether presently payable or note) called or payable at a fixed time in
respect of that share, and the Company shall also have a first and paramount
lien on all shares registered in the name of any person (whether solely or
jointly with others) for all monies owing to the Company from him or his estate
either alone or jointly with any other person whether as a member or not and
whether such monies are presently payable or not. The directors may at any time
declare any share to be wholly or partly exempt from the provisions of this
Article. The company's lien on a share shall extend to any amount payable in
respect of it.
TRANSFER OF SHARES
9. The directors may, in their absolute discretion and without giving any reason
therefor, decline to register any transfer of any share whether or not it is a
fully paid share.
2
<PAGE> 4
PROCEEDINGS AT GENERAL MEETINGS
10. If a quorum is not present within half an hour of the time appointed for a
General Meeting, the meeting, if convened on the requisition of members, shall
be dissolved; in any other case it shall stand adjourned to such day and at such
time and place as the director may determine, and if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for the
meeting, the members present shall be a quorum.
11. A poll may be demanded at any General Meeting by any member entitled to vote
thereat. Regulation 46 of Table A shall be modified accordingly.
12. On a show of hands or on a poll votes may be given either personally or by
proxy.
NUMBER OF DIRECTORS
13. Unless otherwise determined by ordinary resolution, the number of directors
shall not be subject to any maximum and the minimum number of directors shall be
one.
DELEGATION OF POWER
14. The following sentence shall be inserted after the first sentence of
Regulation 72 of Table A:
"Any committee of directors shall have the power unless the directors
direct otherwise to appoint as a member or as members of the committee for
any specific purpose any person or persons who are not directors of the
Company."
ALTERNATE DIRECTORS
15. Any director (other than an alternate director) may appoint any person to be
an alternate director and may remove from office an alternate director so
appointed by him.
3
<PAGE> 5
16. When an alternate director is also a director or acts as an alternate
director for more than one director, such alternate director shall have one vote
for every director so represented by him (in addition to his own vote if he is
himself a director) and when so acting shall be considered as two directors of
the purpose of making a quorum if the quorum exceeds two.
"(c) he becomes, in the opinion of all his co-directors, incapable by
reason of mental disorder of discharging his duties as a director; or"
"(e) he is otherwise duly removed from office."
REMUNERATION OF DIRECTORS
23. Regulation 82 of Table A shall be amended by the addition of the
following: "Such remuneration shall be divided between the directors in
such proportion and manner as the directors may unanimously determine or
in default of such determination equally, except that any director holding
office for less than a year or other period for which remuneration is paid
shall rank in such division in proportion to the fraction of such year or
other period during which he has held office. Any director who, at the
request of the directors, performs special services or goes or resides
abroad for any purpose of the Company may receive such extra remuneration
by way of salary, commission or participation in profits, or partly in one
way and partly in another, as the directors may determine."
PROCEEDINGS OF DIRECTORS
24. Regulation 88 of Table A shall be amended by substituting for the
sentence: "It shall not be necessary to give notice of a meeting to a
director who is absent from the United Kingdom".
4
<PAGE> 6
the following sentence:
"Notice of every meeting of directors shall be given to each
director or his alternate director, including directors and
alternate directors who may for the time being be absent from the
United Kingdom and have given the Company their address outside the
United Kingdom".
25. If and so long as the minimum number of directors specified under these
Articles is one, sole director may exercise all the powers conferred on the
directors by these Articles, and shall do so by written resolution under his
hand and, so long as there is such sole director, Regulations 88 to 90 of Table
A shall not apply to the company and Article 23 of these Articles shall have no
effect.
26. Any director (including an alternate director) may participate in a meeting
of the directors or a committee of directors of which he is a member by means of
a conference telephone or similar communicating equipment whereby all persons
participating in the meeting can hear each other and participation in a meeting
in this manner shall be deemed to constitute presence in person at such meeting.
27. Subject to such disclosure as is required by Section 317 of the Act a
director shall be entitled to vote at a meeting of directors or of a committee
of directors on any resolution concerning a matter in which he has, directly or
indirectly, an interest or duty which is material and which conflicts or may
conflict with the interests of the Company.
THE SEAL
28. In accordance with Section 39 of the Act the Company may have an official
seal for use in any territory, district or place elsewhere than in the United
Kingdom.
5
<PAGE> 7
NOTICES
29. Any notice required by these Articles to be given by the Company may be
given by any visible form on paper, including telex, facsimile and electronic
mail, and a notice communicated by such forms of immediate transmission shall be
deemed to be given at the time it is transmitted to the person to whom it is
addressed. Regulations 111, and 112 of Table A shall be amended accordingly.
INDEMNITY
30. Subject to the provisions of the Act but without prejudice to any indemnity
to which a director may otherwise be entitled, every director, secretary,
auditor or other officer of the Company shall be entitled to be indemnified by
the Company against all losses and liabilities sustained or incurred by him in
the execution of his duties or in the exercise of his powers or otherwise in
connection with his office including, but without prejudice to the generality of
the foregoing, any liability incurred by him (a) in defending any proceedings,
whether civil or criminal, in which judgment is given in his favor or in which
he is acquitted or which are otherwise disposed of without any finding or
admission of any material breach of duty on his part, or (b) in connection with
any application in which relief is granted to him by the Court from liability in
respect of any act or omission done or alleged to be done by him as an officer
or employee of the Company.
6
<PAGE> 8
- --------------------------------------------------------------------------------
NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS
- --------------------------------------------------------------------------------
ROBERT JOHN WINDMILL
Inveresk House
1 Aldwych
London WC2R OHF
SOLICITOR
BETTY PATRICIA DOREEN BAILEY
Inveresk House
1 Aldwych
London WC2R OHF
CHARTERED SECRETARY
Dated this 7th day of December, 1988
Witness to the above Signatures:
JOHN STEIN
Inveresk House
1 Aldwych
London WC2R OHF
SOLICITOR
7
<PAGE> 1
Exhibit 3.29
THE COMPANIES ACTS, 1946 TO 1976
----------------------------
COMPANY LIMITED BY SHARES
----------------------------
MEMORANDUM OF ASSOCIATION
of
MARLBOROUGH EMPLOYMENT LIMITED
----------------------------
I. The name of the Company is Marlborough Employment Limited.
II. The Registered Office of the Company will be situate in Scotland.
III. The objects for which the Company is established are:-
1. To carry on business as an employment agency and to promote and
establish contract between employers and employees, partners,
vendors and purchasers of and in all types of business, professional
practice, trade and property whatsoever, and in particular but
without prejudice to the foregoing generality:-
(a) To act as agents for the provision of the services of and the
procuring of temporary or permanent employment for all types
of management or executive staff, professional, commercial,
technical, scientific, engineering, electronic and sales and
distributive staff of all kinds.
(b) To act as agents for the provision of the services of and the
procuring of temporary or permanent employment for shorthand
typists, copy typists, office machine operators, telephonists,
receptionists, clerks, clerkesses, cashiers, bookkeepers, cash
room assistants and other classes of clerical, secretarial and
office staff and to undertake and transact agency work of all
kinds.
(c) To set up and maintain Registers of vacancies in all types of
professional, technical, scientific and secretarial employment
and Registers of all types of
<PAGE> 2
staff with full particulars and to make suitable charges for
all entries in such Registers and to charge commissions or
other fees for successful placings.
(d) To carry on business as manufacturers of and dealers in paper,
stationary and office requisites of all kinds.
(e) To undertake duplicating, copy typing, shorthand typing,
printing, lithography, electro typing, photography,
photographic printing, photo-lithography, photo-copying,
engraving and all other types of transfer and copy work.
(f) To carry out as principals or agents all forms of computer
operations and data processing, the provision of systems
analysis, punch card systems and the renting and application
of computer time, and the provision, renting and operating of
business accounting machine of all types.
(g) To enter into contracts for the provision of scientific,
technical, engineering, secretarial and manual assistance of
all kinds and to be responsible for the administration,
discipline and payment of those providing such assistance.
(h) To carry on the business of promotors, organisers and
conductors of training and instructional courses of all kinds
likely to be required by employers or otherwise in connection
with any businesses either alone or in conjunction with
Government Training Boards, and that either by means of
individual or class tuition, postal tuition or by lectures or
otherwise as may be required.
(i) To carry on business as advertising contractors or agents,
service agents, publicity agents, press agents and press
cutting agents, sales consultants and specialists and business
advertisers.
2. To carry on any other business which may be conveniently carried on
in connection with any of the Company's objects or may be calculated
directly or indirectly to enhance the value of or render profitable
any of the Company's properties, assets, rights or interests.
3. To carry on all or any of the foregoing businesses either on account
of the Company or for others and to buy, sell, manufacture, repair,
alter and exchange, let on hire and deal in all kinds of apparatus,
articles, goods or things which may be required for the purposes of
the businesses carried on by the Company or any of them or which may
be supplied, manufactured, sold or dealt in by persons engaged in
any such businesses or which may seem capable of being profitably
dealt with in connection with any of the said businesses.
4. To acquire and take over all or any part of the property, business
and liabilities of any person or company carrying on any business
which this Company is authorized
- 2 -
<PAGE> 3
to carry on, or possessed of any property suitable for the purpose
of the Company or which may be conveniently joined or carried on in
connection with the business of the Company or calculated directly
or indirectly to enhance the value of, or facilitate the realisation
of, or render profitable any of the Company's property or rights;
and as the consideration for the same to pay cash or to issue
shares, debentures or debenture stock of the Company or partly in
one of such modes and partly in another or others.
5. To acquire by purchase, ???, lease, exchange, hire or otherwise any
heritable or moveable property and any interest therein which the
Company may consider expedient to be held for the purposes of the
Company and to erect, reconstruct, maintain and repair any buildings
thereon and to dispose of by sale, ???, lease, exchange or otherwise
any such property, buildings or interest therein.
6. To invest the capital and other moneys of the Company in the
purchase, or to lend the same upon the security, of shares, stocks,
debentures, debenture stock, bonds, mortgages, obligations and
securities of any kind, issued or guaranteed by any company,
corporation, or undertaking, of whatever nature constituted or
carrying on business in any part of the world, or by any Government,
Sovereign, Ruler, Commissioners, public body or authority -- whether
in the United Kingdom of Great Britain and Northern Ireland or
elsewhere; provided that the moneys of the Company shall neither be
employed in the purchase, nor lent upon the security, of its own
shares or stock.
7. To sell, exchange or otherwise dispose of, deal with, or turn to
account, any of the shares, stocks, and others acquired or agreed to
be acquired, and generally to vary the securities and investments of
the Company from time to time.
8. To receive, borrow or raise money in such manner as may be thought
fit, and for that purpose to issue debentures or debenture stock,
perpetual or redeemable, or to draw, make, accept, endorse,
discount, sell, execute, deposit, and issue banker's drafts,
cheques, bonds of cash credit, bills of exchange, promissory notes
and other like instruments and to secure the repayment of any moneys
borrowed or, raised or owing by the Company by a charge or lien upon
or conveyance of, the whole, or any part of the Company's property
or assets, including its uncalled capital, and to give to lenders
and creditors, or trustees for their behoof, powers of sale and all
or other usual and necessary powers.
9. To lend and advance money or give credit with or without security to
such persons or companies and on such terms as may be thought fit,
and in particular to persons dealing with the Company.
10. To transact or carry on al kinds of agency business.
- 3 -
<PAGE> 4
11. To give any guarantee in relation to the repayment of any
debentures, debenture stock, bonds, obligations, or other
securities, or the payment of any interest or dividends thereon.
12. To guarantee, support or secure, whether by personal covenant or by
mortgaging or charging all or any part of the undertaking, property
and assets )present and future) and uncalled capital of the Company
or by both such methods the performance of the obligations and the
repayment or payment of the principal and premium of and interest on
any securities or obligations of any company which is for the time
being associated with the Company in business or otherwise.
13. To promote any other company for the purpose of acquiring all or any
of the property, and undertaking all or any of the liabilities of,
this Company or of undertaking any business or operations which may
appear likely to assist or benefit this Company, and to place or
guarantee the placing of, underwrite, apply for, accept and hold, or
subscribe, the whole or any part of the capital or securities of any
such company, or to lend money to, or guarantee the performance of
the contracts of, any such company, and to amalgamate with any other
company or companies.
14. To sell or otherwise dispose of the whole or any part of the
undertakings of the Company for such consideration as may be agreed,
and in particular for shares, debentures, debenture stock, or
securities of any company purchasing the same.
15. To lend money upon the security of any real or heritable property of
any description or tenure, or of any interest therein, situated in
any part of the world, or of any moveable property.
16. To act as agents, or brokers, and as trustees, for any person, firm
or company, and to undertake and perform sub-contracts, and also to
not in any of the businesses of the Company through or by means of
agents, brokers, sub-contractors, or others.
17. To remunerate any person, firm or company rendering services to this
Company, either by each payment or by the allotment to him or them
of shares or securities of the Company credited as paid up in full
or in part, or otherwise.
18. To provide for the welfare of persons (including Managing Directors
and Managers) in or formerly in the employment of the Company, and
the wives, widows, families and dependents of such persons by the
grant of pensions, allowances or other payments.
19. To pay all or any expenses incurred in connection with the
formation, promotion, and incorporation of the Company, or to
contract with any person, firm or company to pay the same, and to
pay commissions to brokers and others for underwriting, placing,
selling or guaranteeing the subscriptions of any shares,
- 4 -
<PAGE> 5
debentures, or securities of this Company, or of any company
promoted by this Company.
20. To effect insurance against risk of loss to the Company.
21. To distribute among the members of the Company in kind any property
of the Company, and in particular any shares, debentures, or
securities of other companies, belonging to this Company, or of
which this Company may have the power of disposing.
22. To do all such other things as may be deemed incidental or conducive
to the attainment of the above objects, or any of them.
And it is hereby declared that the word "company" in this Clause, except
where used in reference to this Company, shall be deemed to include any
partnership or other body of persons whether incorporated or not and
whether domiciled in the United Kingdom or elsewhere; that the words
"property" and "assets" shall include heritable or real estate as well as
moveable or personal estate; that words importing the singular number only
shall include the plural number and vice versa; and that objects specified
in each paragraph of this clause shall except where otherwise expressed in
such paragraph, be in no ??? limited by reference to or inference from any
other paragraph.
IV. The liability of the members is limited.
V. The Share Capital of the Company is (pound)50,000 divided into 50,000
Ordinary Shares of (pound)1 each. The shares forming the capital for the
time being of the Company may be divided into such classes and have
attached thereto such respective preferences, rights or privileges and be
subject to such conditions or restrictions as are defined by the Articles
of the Association for the time being of the Company.
WE, the several persons whose names and addresses are subscribed, are desirous
of being formed into a Company in pursuance of this Memorandum of Association,
and we respectively agree to take the number of Shares in the Capital of the
Company set opposite our respective manner.
- --------------------------------------------------------------------------
Names Addresses and Descriptions of Number of Shares taken
Subscribers. by each Subscriber
- --------------------------------------------------------------------------
JOHN DUFFY
IAN J. BLACK
- --------------------------------------------------------------------------
- 5 -
<PAGE> 6
Dated the day of 1978
Name, address and description of witness to the above Signatures:
- 6 -
<PAGE> 1
Exhibit 3.30
THE COMPANIES ACTS, 1948 TO 1976
----------------------
COMPANY LIMITED BY SHARES
---------------
ARTICLES OF ASSOCIATION
OF
MARLBOROUGH EMPLOYMENT LIMITED
1. The regulations contained in Part I of Table "A" appended to the Companies
Act, 1948 shall apply to and shall be the regulations of the Company, save
in so far as they are varied hereby or inconsistent herewith.
MODIFICATION OF TABLE "A" PART I
2. Regulations 24 and 75 of Part I of Table "A" shall not apply to the
Company and the following regulations shall be modified:
Regulation 7, so that the words "Except as required by law, no
person shall be recognized by the Company as holding any share upon
any trust, and "shall be held to be delete and there shall be added
to the end of the said regulation the words "The Company shall,
however, be entitled to register trustees as such in respect of any
shares."
Regulation 11, so that the words "(not being a fully paid share)"
and "(other than fully paid shares)" shall be held to be delete.
Regulation 22, so that the words "and transferee" shall be held to
be delete.
Regulation 28, so that there shall be added immediately after the
word "every" the word "confirmation".
Regulation 33, so that there shall be added to the end thereof the
words "and all expenses that may have been incurred by the Company
by reason of such non-payment."
Regulation 53, so that for the words "three members present in
person" there shall be substituted the words "two members present in
person or by proxy".
<PAGE> 2
Regulation 58, so that the word "two" shall be substituted for the
word "three" where it occurs in paragraph (b) of that regulation.
Regulation /
Regulation 79, so that the words from and including the word
"Provided" to the end of the clause shall be held to be delete.
Regulation 84, sot hat for Clause (2) thereof there shall be
substituted the following clause, namely "(2) A Director shall be
entitled to vote in respect of any contract or arrangement in which
he is interested and, notwithstanding any declaration he has made in
such respect, his vote shall be counted and he shall be counted in
the quorum present at the meeting;" that Clause (4) thereof shall be
held to be delete and that Clause (5) thereof be renumbered as
Clause (4).
Regulation 86, so that the words "and every Director present at any
meeting of Directors or Committee of Directors shall sign his name
in a book to be kept for that purpose" shall be held to be delete.
Regulation 88, so that in Clause (a) thereof the word and figures
"or 195" shall be held to be delete and that there shall be added to
the end of Clause (f) thereof the words "and they pass a resolution
that he has by reason of such absence vacated office."
PRIVATE COMPANY
3. The Company is hereby declared to be a Private Company in the sense of the
Companies Act, 1948.
4. The number of members of the Company (exclusive of persons who are in the
employment of the Company and of persons who, having been formerly in the
employment of the Company, were while in such employment and have
continued after the determination of such employment to be members of the
Company) shall not exceed fifty; provided that for the purposes of this
provision where two or more persons hold one or more shares in the Company
jointly they shall be treated as a single member and no transfer which
would increase such number of members beyond fifty shall be valid and the
Directors shall refuse to recognize or register any transfer which would
so increase such number.
5. No invitation shall be made to the public to subscribe for any shares or
debenture of the Company, and the Company and its Directors, Officials,
Agents, and all others acting or that may act on its behalf, are hereby
prohibited from making any such invitation to the public.
6. The Directors may, in their absolute discretion and without assigning any
reason therefor, decline to register any transfer of any share, whether or
not it is a fully paid share, to a person who is not a member of the
Company.
- 2 -
<PAGE> 3
TRANSFER /
TRANSFER OF SHARES
7. As regards all transfers of shares, the following provisions shall
(subject to the provisions of Article 6 hereof) receive effect and no
member shall be entitled to transfer his shares, or any of them, otherwise
than in accordance with the following provisions:
(a) Any member who desires to sell or transfer any shares shall be bound
to offer the same for sale as hereinafter provided.
(b) The member proposing to transfer any shares (hereinafter called "the
proposing transferor") shall give notice in writing (hereinafter
called "the transfer notice") to the Company that he desires to
transfer the same. Such notice shall specify the number of shares to
be transferred and the price which the proposing transferor
considers to be the fair value thereof and shall constitute the
Company as his agent for the sale of the shares to any member or
members of the Company at the price so fixed or at the fair value to
be fixed as provided in paragraph (e) below. The transfer notice
shall not be revocable except with the sanction of the Directors. On
receipt of the transfer notice, the Company shall within fourteen
days thereof notify all members of the Company of the shares offered
for sale and shall give all members equal facilities for the
purchase thereof.
(c) If the Company shall, within four weeks after being served with such
notice, find a member willing to purchase the shares (hereinafter
called "the purchasing member") and shall give notice thereof to the
proposing transferor, he shall be bound upon payment of the fair
value, to transfer the shares to the purchasing member.
(d) In case there shall be more than one purchasing member, the shares
offered for sale shall be divided among such purchasing members in
the proportion as nearly as possible in which they already hold
shares in the Company, provided however, that no purchasing member
shall be liable to take a greater number of shares than he shall
have offered to purchase, and that any shares which cannot be so
divided without creating fractions shall be apportioned by the
Directors among the purchasing members as they shall think proper.
(e) In case any difference arises between the proposing transferor and a
purchasing member as to the fair value of a share either party may
apply to a Chartered Accountant, to be appointed by the President
for the time being of the Institute of Chartered Accountants in
Scotland, who shall certify in writing the sum which in his opinion
is the fair value, and such certificate shall be final and binding
on the proposing transferor and the purchasing member concerned, and
such sum shall be deemed to be the fair value. Such certificate
shall not affect a sale of shares by the proposing transferor to
another purchasing member, if neither party has applied to a
Chartered Accountant as aforesaid.
- 3 -
<PAGE> 4
(f) /
(f) If within five weeks after the service of the transfer notice on the
Company the proposing transferor shall not receive notice that his
offer to sell is accepted wholly or in part as aforesaid, he may,
subject to paragraph (g) below, within six calendar months of
serving the said notice, sell or dispose of his shares or so many
thereof as shall not have been purchased as aforesaid to any other
person, at the price at which he shall have so offered them or at
any higher price, but not at any less price until he shall have
again offered such shares at such less price and for the same period
as before for sale as aforesaid.
(g) A notice of acceptance of the offer of the proposing transferor to
sell under paragraph (C) above, if sent by post, shall be deemed to
have been received by the proposing transferor if it is proved that
the letter containing the acceptance was properly addressed and put
into the post office.
(h) In the event of the death, bankruptcy or resignation of any Director
of the Company, or in the event of any Director ceasing for any
reason to be a Director of the Company, the remaining Directors
shall be entitled, on giving notice in writing accordingly at any
time within a period of six months after such event to such Director
or the legal personal representatives or trustee in bankruptcy of
such Director, as the case may be, to require him or them to sell,
as at the date of receipt of such notice, the whole shares in the
capital of the company held by him or them at such date all to the
same effect as if he or they had served a transfer notice at such
date of receipt on the Directors in terms of paragraph (b) of this
Regulation in respect of all such last mentioned shares provided
however that the price to be paid for such shares shall be a price
equivalent to the net asset value thereof as determined by the
auditors for the time being of the Company.
CAPITAL AND SHARES
8. The Share Capital of the Company is #50,000 divided into 50,000 Ordinary
Shares of #1 each.
9. The Shares in the original capital of the Company shall be under the
control of the Directors who may allot and issue the same to such persons
on such terms and conditions and at such time as the Directors think fit,
provided that no shares shall be issued at a discount except as provided
by Section 57 of the Companies Act, 1948.
ALTERATIONS OF CAPITAL /
ALTERATION OF CAPITAL
10. Subject as mentioned below, new shares created on any increase of capital
may, without the sanction of the holders of any class of shares, be issued
as Ordinary Shares ranking pari passu with the existing Ordinary Shares of
the Company or with any such preferred, deferred or other special rights,
whether in respect of dividend, return of capital, voting or
- 4 -
<PAGE> 5
otherwise, as may from time to time be determined either by Ordinary
Resolution of the Company in General Meeting or by resolution of the
Directors passed in pursuance of authority so to do delegated to them by
Ordinary Resolution of the Company in General Meeting, and subject to the
provisions of the Act the Company may issue Preference Shares, which are
redeemable, or at the option of the Company are liable to be redeemed, on
such terms and in such manner as the Company before the issue thereof may
by Special Resolution determine.
11. Unless otherwise determined by the General Meeting increasing the capital,
all new shares shall be offered to the members in proportion as nearly as
may be to the number of such shares held by them except in cases where an
issue is made in respect of the purchase of any heritable or moveable
property and where such shares are issued as fully or partly paid in whole
or part payment therefor, and such offer shall be made by notice
specifying the number of shares offered and limiting a time within which
the offer, if not accepted, will be deemed to be declined, and after the
expiration of such time, or on receipt of an intimation from the person to
whom the offer is made that he declines to accept the shares offered, the
Directors may, subject to these Articles, dispose of the same in such
manner as they may think most beneficial to the Company. The Directors may
likewise so dispose of any new shares which (by reason of the ratio the
new shares bear to shares held by persons entitled to an offer of new
Shares) cannot, in the opinion of the Directors, be conveniently offered
under this Article.
GENERAL MEETINGS
12. A resolution in writing signed by or on behalf of all the members for the
time being entitled to vote shall be as effective for all purposes as a
Resolution duly passed at a General Meeting of the Company duly convened
and held, and may consist of several documents in the like form each
signed by or on behalf of one or more members.
DIRECTORS
13. Unless otherwise determined by a General Meeting, the number of Directors
shall be not less than two. The first Directors shall be appointed by the
subscribers of the Memorandum of Association.
14. The remuneration of the Directors (other than the Managing Directors, if
any,) shall be divided amongst them as they shall determine, or failing
agreement, equally.
15. /
15. If any Director shall be called upon to perform extra or executive or
special services of any kind for whatever period or periods, or to travel
or to go or reside abroad for any business or purposes of the Company, he
shall be entitled to receive such sum as the Directors may think fit for
expenses of living, and also such remuneration as the Directors may think
fit, either as fixed sum or as a percentage of profits or otherwise, and
such remuneration may, as the Directors shall determine, be either in
addition to or in
- 5 -
<PAGE> 6
substitution for his share in the remuneration of the Directors otherwise
provided and the same shall be charged as part of the ordinary working
expenses.
16. A Director shall not require a share qualification but nevertheless shall
be entitled to attend and speak at any General Meeting of, and at any
separate meeting of the holders of any class of shares in, the Company.
PROCEEDINGS OF DIRECTORS
17. A resolution executed in accordance with Regulation 106 of the said Part I
of Table "A" appended to the Companies Act, 1949, may be in the form of
separate documents each signed by one or more Directors.
NOTICES
18. If a member has no registered address in the United Kingdom and has not
supplied to the Company an address within the United Kingdom for the
giving of notices to him, a notice addressed to him at his last known
address in the United Kingdom shall be deemed to be duly given to him on
the day on which it is posted.
WINDING UP
19. If any distribution is proposed to be made under Regulation 135 of the
said Part I of Table "A" appended to the Companies Act, 1948, otherwise
than in accordance with the existing rights of the members, every member
shall have the same right of dissent and other ancillary rights, as if
such resolution therefor were a Special Resolution passed pursuant to
Section 287 of the Companies Act, 1948.
- --------------------------------------------------------------------------------
Names, Addresses and Descriptions of Subscribers
- --------------------------------------------------------------------------------
JOHN DUFFY
IAN J. BLACK
- --------------------------------------------------------------------------------
Dated this ________ day of ___________, 19__.
Name, address and description of witness to the above signature.
- 6 -
<PAGE> 7
THE COMPANIES ACT 1985
SPECIAL RESOLUTION
(Pursuant to Companies Act 1985 S.378(2))
of
MARLBOROUGH EMPLOYMENT LIMITED
COMPANY NUMBER
66241
PASSED
5th July 1996
-----------------------
At an EXTRAORDINARY GENERAL MEETING of the members of the said company, after
due notice specifying the intention to propose the following Resolution as a
SPECIAL RESOLUTION had been given, held at GLASGOW in the Region of Strathclyde
on the 5th day of July, 1996 the following SPECIAL RESOLUTION was duly passed.
"That paragraph 111(i) of the Memorandum and Articles of Association be deleted
and replaced with the following:
To carry on the business of holding, management and investment company and to
improve, develop, hold as an investment and undertake the management of any
property, real or personal, or any interest therein as owners, trustees, agents
or otherwise and generally to acquire, hold, deal in, dispose of or turn in
account any lands, buildings, estates, plant and equipment, commodities,
options, shares, stocks, debentures, bonds, loans, annuities and investments and
securities of any description, businesses, policies of insurance, patents and
licenses and other such property or rights for or on behalf of any company,
whether subsidiary or not; to promote sports drinks and associated products
within the group; to provide accounting, company secretarial and general office
services and to act as brokers of and agents for and distributors of goods and
services of all kinds, to tender for and to place contracts and investments on
behalf of any person, firm or company, to co-ordinate and administer the
policies and trading activities of any companies with which the company may be
associated, and generally to act as financiers, concessionaires, factors,
capitalists and underwriters and to guarantee and secure to act as financiers,
concessionaires, factors, capitalists and underwriters and to guarantee and
secure the payment of money or performance or fulfillment of contracts and
obligations by any company, firm or person and to advance money and lend assets
of any description, with or without security, and on such terms and in such
manner as may from time to time seem expedient".
-----------------------------------
Company Secretary
<PAGE> 1
Exhibit 3.31
THE COMPANIES ACT 1985
PRIVATE COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION OF
OFFICE OASIS LIMITED
1. The name of the Company is
"OFFICE OASIS LIMITED"
2. The Registered Office of the Company will be situate in Scotland.
3. The objects for which the Company is established are:
(A) To create, establish and maintain an organization for the provision and
supply of water cooling systems and cooled water to commercial and industrial
premises including offices, public houses, shops, factories and workplaces of
all kinds; to provide maintenance, service and repair insurance plans,
contracts, agreements, and other schemes in relation thereto; to maintain,
service, repair, install, fit, adapt, purchase, buy, sell, import, export,
market, distribute, supply, act as agents for and dealers in such water cooling
systems, equipment, devices, appliances, accessories, components and spare parts
of all and every description; to act as refrigeration, air conditioning,
ventilation, heating and lighting engineers and contractors, electrical,
electronic, mechanical and general engineers' and contractors, plumbers,
joiners, glaziers, electricians, gas filters, ____ and transport contractors;
builders and building contractors, builders supply merchants and to provide
services of all kinds which may be required (directly or indirectly) in
connection with any of the foregoing; to manufacture, buy, sell maintain, repair
and deal in equipment, plant, vehicles, machinery, tools, articles and things of
all kinds capable of being used for the purpose of the above-mentioned
businesses, or any of them, or likely to be required by customers of or persons
having dealings with the Company.
<PAGE> 2
(B) To carry on any other trade or business whatsoever which can, in the opinion
of the Board of Directors, be advantageously carried on by the Company or
calculated directly or indirectly to enhance any of the businesses of the
Company.
(C) To purchase, take on lease or in exchange, hire or by any other means
acquire and hold for any estate or interest any property, lands, buildings,
easements, rights, privileges, concessions, patents, parent rights, licenses,
secret processes, machinery, equipment, plant, stock-in-trade and any real or
personal property of any kind considered necessary, expedient or convenient in
connection with the Company's business.
(D) To borrow or raise or secure the payment of money in any manner the Company
shall think appropriate for the purpose of or in connection with the Company's
business, and for the purposes of or in connection with the borrowing or raising
of money by the Company to become a member of any building society.
(E) To mortgage and charge the undertaking and all or any of the real and
personal property and assets, present or future, and all or any of the uncalled
capital for the time being of the Company, and to issue at par or at a premium
or discount, and for such consideration and with and subject to such rights,
powers, privileges and conditions as may be thought fit, debentures or debenture
stock, either permanent or redeemable or repayable, and collaterally or further
to secure any securities of the Company by a trust deed or other assurance.
To issue and deposit any securities which the Company has power to issue by way
of mortgage to secure any sum less than the nominal amount of such securities,
and also by way of security for the performance of any contract or obligations
of the Company or of its customers or other persons or corporations having
dealings with the Company, or in whose businesses or undertakings the Company is
interested, whether directly or indirectly.
(F) To guarantee the payment of any monies and the performance of any contracts,
liabilities, duties, obligations or engagements of any company, society,
association, body, firm or person, including without prejudice to the foregoing
generality any company which is for the tie being the Company's holding or
subsidiary company as defined by Section 736 of the Companies Act 1985 or any
re-enactment thereof or a subsidiary of such holding company, or otherwise
associated with the Company in business and whether or not this Company receives
directly or indirectly any benefit, consideration or advantage therefrom, and to
secure the said payment, performance, obligations and others in such manner of
way as the Company may think fit by granting any Mortgage, Charge, Floating
Charge, Standard Security, Assignation, Pledge, Lien or other security upon the
whole or any part of the Company's undertaking, property, revenue, or assets
(whether present or future) including uncalled capital with powers of sale and
other usual and necessary powers.
(G) To receive money or loan or deposit upon such terms as the Company may
approve and to guarantee the obligations and contracts of any person or
corporation.
(H) To draw, make, accept, endorse, negotiate, discount and execute promissory
notes, bills of exchange and other negotiable or transferable instruments.
<PAGE> 3
(I) To invest and deal with the monies of the Company not immediately required
for the purposes of its business in or upon such investments, and in such manner
as may from time to time be determined necessary.
(J) To apply for, purchase or otherwise acquire and protect, prolong, renew and
hold, use, develop, sell, license or otherwise dispose of or deal with patents,
copyrights, designs, trade marks, brevets d'invention and concessions and the
like and any interest therein.
(K) To pay for any property or rights acquired by the Company, either in cash or
fully or partly paid-up shares, with or without preferred or deferred or special
rights or restrictions in respect of dividend, repayment of capital, voting or
otherwise, or by any securities which the Company has power to issue, or partly
in one mode and partly in another, and generally on such terms as the Company
may determine.
(L) To accept payment for any property or rights sold or otherwise disposed of
or dealt with by the Company, either in cash or by installments or otherwise, or
in fully or partly paid-up shares of any company or corporation, with or without
preferred or deferred or special rights or restrictions in respect of dividend,
repayment or capital, voting or otherwise, or in debentures or mortgage
debentures or debenture stock, mortgages or other securities of any company or
corporation, or partly in one mode and partly in another, and generally on such
terms as the Company may determine, and to hold, dispose of or otherwise deal
with any shares, stock or securities so acquired.
(M) To form, promote, finance or assist any other company whether for the
purpose of acquiring all or any of the undertaking, property and assets of the
Company or for any other purpose for which the Company may consider to be
expedient.
(N) to establish and maintain or procure the establishment and maintenance of
any non-contributory or contributory pension or superannuation funds for the
benefit of, and to give or procure the giving of donations, gratuities,
pensions, allowances or emoluments to any persons who are or were at any time in
the employment or service of the Company, or of any company which is for the
time being the Company's Holding or Subsidiary company as defined by Section 736
of the Companies Act 1985, or otherwise associated with the Company in business
or who are or were at any time Directors or officers of the Company or of any
such other company as aforesaid and the wives, widows, families and dependents
of any such persons, and also to establish and subsidize or subscribe to any
institutions, associations, clubs or funds calculated to be for the benefit of
or to advance the interests and well-being of the Company or of any such other
company as aforesaid, or of any such persons aforesaid, and to make payments for
or towards the insurance of any such persons as aforesaid, and to subscribe or
guarantee money for charitable or benevolent objects or for any exhibition or
for any public, general or useful objects and to do any of the matters aforesaid
either alone or in conjunction with any such other company as aforesaid.
(O) To enter into a partnership or arrangement for profits, union of interests,
reciprocal concession, co-operation with any company, firm or person carrying
proposing to carry on any business within the objects of indirectly to benefit
this Company, and to acquire and sell, deal with
<PAGE> 4
or dispose of any shares, stock of security or other interests in any such
company, and to guarantee contracts or liabilities of, subsidize or otherwise
assist such company.
(P) To purchaser or otherwise acquire and undertake all part of the business,
property, assets, liabilities, transactions of any person, firm, or company
carrying on business which this Company is authorized to carry on.
(Q) To sell, improve, manage, develop, turn to ___ exchange, let on rent,
royalty, share of profits or otherwise grant licenses, easements and other
rights in or over, and other manner deal with or dispose of the undertaking and
any of the property and assets for the time being of the ___ for such
consideration as the Company may think fit.
(R) To acquire, purchase, take over and undertake part of the business,
property, assets and liabilities of transactions of any firm, person or company
carrying on business which this Company is authorized to carry on and can be
carried on in conjunction therewith or is capable of conducted so as directly or
indirectly to benefit the Company to advance its interests generally.
(S) To distribute among the members in specie any property the Company or any
proceeds of sale or disposal of any property of the Company but so that no
distribution amounting to reduction of capital may be made except with the
sanction of any) for the time being required by law.
(T) To do all such other things as are incident or ___ to the above objects or
any of them.
And it is hereby declared that in the construction of this ___- the word
'company' except where used in reference to the ____ shall be deemed to include
any person or partnership or ____ body of persons, whether incorporated or not
incorporated, whether domiciled in Great Britain or elsewhere, and ___ objects
specified in the different paragraphs of this ___ shall, except where otherwise
expressed therein, by in ___ limited by reference to any other paragraph or the
name of the Company, but may be carried out in as full and ample a manner as
shall be construed in as wide a sense as if each of the paragraphs defined the
objects as a separate, distinct, independent company.
4. The liability of the members is limited.
5. The share capital of the Company is (pound)100 into 100 shares of (pound)1
each.
WE, the Subscribers to this Memorandum of Association, are desirous of being
formed into a Company pursuant to this Memorandum, and we respectively agree to
take the number of shares in the capital of the Company as set out opposite our
respective names.
<PAGE> 5
NAMES, ADDRESSES NUMBER OF SHARES
AND DESCRIPTIONS Taken by each
OF SUBSCRIBERS Subscriber
Stephen Mabbott 1
142 Queen Street
Glasgow, G1 3Bu
Company Registration Agent
Lesley Mabbott 1
142, Queen street
Glasgow, G1 3BU
Secretary
- -----------------------------------------------------------------------------
DATED the 10 Aug 1989
Witness to the above Signatures:
Caryl Jones
142, Queen Street
Glasgow, G1 3BU
Secretary
<PAGE> 6
CERTIFICATE OF INCORPORATION
ON CHANGE OF NAME
Company Number
119721
I hereby certify that
OFFICE OASIS LIMITED
having a special resolution changes its name, is not incorporated under the name
of
WATER AT WORK LIMITED
Signed in Edinburgh
4 DECEMBER 1989
Registration of Companies
C28
<PAGE> 1
Exhibit 3.32
THE COMPANIES ACT 1985
PRIVATE COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION OF
OFFICE OASIS LIMITED
PRELIMINARY
1. (a) The Regulations contained in Table A in the Schedule to the Companies
(Tables A to F) Regulations 1985 as amended by the Companies (Tables A to F)
(Amendment) Regulations 1985 (such Table being hereinafter called "Table A")
shall apply to the Company save in so far as they are excluded or varied hereby
and such Regulations (save as so excluded or varied) and the Articles
hereinafter contained shall be the regulations of the Company.
(b) In these Articles the expression "the Act" means the Companies Act
1985, but so that any reference in these Articles to any provision of the Act
shall be deemed to include a reference to any statutory modification or
re-enactment of that provision for the time being in force.
2. The Company is a private company and therefore no invitation or offer shall
be made to the public (whether for cash or otherwise) to subscribe for any
shares in or debentures of the Company, nor shall the Company allot or agree to
allot (whether for cash or otherwise) any shares in or debentures of the Company
with a view to all or any of these shares or debentures being offered for sale
to the public.
SHARES
3. (a) The shares shall be under the control of the Directors and the
Directors may allot, grant options over, or otherwise dispose of or deal with
any unissued shares and relevant securities (as defined by Section 80(2) of the
Act) to such persons and generally on such terms and in such manner as they
think fit.
(b) NEED BETTER COPY TO TYPE UP TO ITEM NO. 5.
(c)
(d)
<PAGE> 2
LIEN
4.
TRANSFER OF SHARES
5.
APPOINTMENT OF DIRECTORS
6. Unless and until the Company, in General Meeting, shall otherwise determine
there shall be no maximum number of Directors and the minimum number of
Directors shall be one if and so long as there is a sole Director he may
exercise all the powers and authorities vested in the Directors. Accordingly
Clause 64 in Table A shall not therefore apply to the Company.
7. The Directors shall not be required to retire by rotation and Clauses 73 to
80 (inclusive) in Table A shall not therefore apply to the Company.
8. A Director shall not be required to hold any share qualification but shall
nevertheless be entitled to receive notice of and to attend at all General
Meetings of the Company and at all separate General Meetings of the holders of
any class of shares in the capital of the Company.
9. The Company shall not be subject to Section 293 of the Act. Any person may be
appointed or elected as a Director, whatever may be his age, and no Director
shall be required to vacate his office by reason of his attaining or having
attained the age of seventy years or any other age.
DISQUALIFICATION OF DIRECTORS
10. The office of a Director shall be vacated if: -
(a) he ceases to be a Director by virtue of any provision of the Act or he
becomes prohibited by law form being a Director, or
(b) he becomes bankrupt or makes any arrangement or composition with his
creditors, or
(c) he is a person of unsound mind, or
(d) he resigns his office by notice to the Company, or
(e) he shall, for more than six consecutive months, have been absent
without permission of the Directors from meetings of Directors held during that
period and the Directors so resolve that his office be vacated.
POWER AND DUTIES OF A DIRECTOR
11. A Director may vote in respect of any contract or proposed contract or
arrangement in which he is interested, whether directly or indirectly, or upon
any matter arising therefrom and he
2
<PAGE> 3
may be counted in the quorum present at any meeting at which any such contract,
arrangement or matter is proposed or considered, and if he shall so vote, his
vote shall be so counted.
GENERAL MEETINGS
12. (a) A notice convening a General Meeting shall not be required to specify
the general nature of the business to be transacted unless that business is
deemed to be special business and therefore Clause 38 of Table A shall be
modified accordingly.
(b) All business that is or is to be transacted at an Extraordinary
General Meeting or an Annual General Meeting shall be deemed special with the
exception of declaring a dividend, the consideration of the accounts, the
Reports of the Directors an Auditors and the appointment of and the fixing of
the remuneration of the Auditors.
(c) Every notice convening a General Meeting shall comply with the
provisions of Section 372(3) of the Act as to giving information to Members in
regard to their right to appoint proxies and notices of and other communications
relating to any General Meeting which any Member is entitled to receive shall be
sent to the Directors and to the Auditors for the time being of the Company.
(d) The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and, unless so fixed, shall when one
Director only is in office be one, and shall when more than one Director is in
office be two.
(e) If a quorum is not present within half an hour from the time appointed
for a General Meeting shall stand adjourned to the same day in the next week at
the same time and place or to such other day and at such other time and place as
the Directors may determine, and if at the adjourned General Meeting a quorum is
not present within half an hour from the time appointed therefore such adjourned
General Meeting shall be dissolved.
ALTERNATE DIRECTOR
13. Any Director may, by notice in writing signed by him and deposited at the
Registered Office of the Company, appoint an alternate Director to act on his
behalf. Such alternate Director must be either a Director of the Company, or a
person approved by resolution of all the Directors for the time being of the
Company . Every alternate Director shall, during the period of his appointment,
be entitled to notice of Meetings of Directors and in the absence of the
Director appointing him to attend and vote thereat as a Director but his
appointment shall immediately cease and determine if and when the Director
appointing him ceases to hold office as a Director.
A Director who is also an Alternate Director shall be entitled, in addition to
his own vote, to a separate vote on behalf of the Director whom he is
representing.
BORROWING POWERS
14. The Directors may exercise all the powers of the Company to borrow money
without limit as to amount and upon such terms and in such manner as they
consider appropriate and subject to
3
<PAGE> 4
Section 80 of the Act to grant any mortgage, charge or standard security over
its undertaking, property and uncalled capital or any part thereof and to issue
debentures, debenture stock and other securities whether outright or as security
for any debt, liability or obligations of the Company or of any third party.
INDEMNITY
15. Subject to the provisions of the Act and in addition to such indemnity as is
contained in Clause 118 of Table A, every Director, officer or official of the
Company shall be indemnified out of the funds of the Company against all costs,
charges, losses, expenses and liabilities incurred by him in the execution and
discharge of his duties or in relation thereto.
4
<PAGE> 5
- --------------------------------------------------------------------------------
Names and Addresses of Subscribers
- --------------------------------------------------------------------------------
Stephen Mabbott
142, Queen Street
Glasgow, G1 3BU
Company Registration Agent
Lesley Mabbott
142, Queen Street
Glasgow, G1 3BU
Secretary
- --------------------------------------------------------------------------------
Dated the 10 AUG 1989
Witness to the above Signatures: -
Caryl Jones
142, Queen Street
Glasgow, G1 3BU
Secretary
5
<PAGE> 1
Exhibit 3.33
THE COMPANIES ACTS 1985 TO 1989
PRIVATE COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
of
NATURAL WATER LIMITED
1. The name of the Company is NATURAL WATER LIMITED
2. The Company's registered office is to be situated in Scotland
3. The objects for which the Company is established are:
(A) To carry on in Scotland and elsewhere all or any of the businesses of a
mineral water production company in all its branches; to act as
extractors, producers, purifiers, bottlers, packers, importers, exporters,
wholesalers, retailers, merchants, brokers, suppliers, distributors,
distributors, agents for and dealers in mineral water of all and every
description; to deal in water purification and bottling equipment and
machinery and all components, spare parts, supplies and requisites of all
kinds capable of being used, either directly or indirectly, in connection
with the foregoing and act as water purification and treatment
specialists, consultants, engineers and contractors, pump and hydraulic
engineers, mechanical, electrical and general engineers and contractors
and to provide services of all kinds which may be required, directly or
indirectly, in connection with the foregoing; to act as general merchants
and traders and to undertake, perform and carry out all kinds of
commercial, trading and financial operations and to buy, sell and deal in
articles and things of all kinds necessary or useful for the purposes of
the aforementioned businesses, or any of them, or which may seem capable
of being profitably dealt with in connection with any of such businesses
or likely to be required by customers of or persons having dealings with
the Company.
(B) To carry on any other trade or business which may seem to the Company
capable of being conveniently carried on in connection with the objects
specified in Sub-Clause (A) hereof or calculated directly or indirectly to
enhance the value of or render profitable any of the property or rights of
the Company.
(C) To purchase, take on lease or in exchange, hire or otherwise acquire and
hold for any estate or interest any lands, buildings, easements, rights,
privileges, concessions, patents, patent rights, licenses, secret
processes, machinery, plant, stock-in trade and any real or personal
property of any kind necessary or convenient for the purposes of or in
connection with the Company's business or any branch or department
thereof.
1
<PAGE> 2
(D) To borrower or raise or secure the payment of money in such manner as the
Company shall think fit for the purpose of or in connection with the
Company's business, and for the purposes of or in connection with the
borrowing or raising of money by the Company to become a member of any
building society.
(E) For the purposes of or in connection with the business of the Company to
mortgage and charge the undertaking and all or any of the real and
personal property and assets, present and future, and all or any of the
uncalled capital for the time being of the Company, and to issue at par or
at a premium or discount and for such consideration and with and subject
to such rights, powers, privileges and conditions as may be thought fit,
debentures or debenture stock, either permanent or redeemable or
repayable, and collaterally or further to secure any securities of the
Company by a trust deed or other assurance. To issue and deposit any
securities which the Company has power to issue by way of mortgage to
secure any sum less than the nominal amount of such securities and also by
way of security for the performance of any contracts or obligations of the
Company or of its customers or other persons or corporations having
dealings with the Company, or in whose businesses or undertakings the
Company is interested, whether directly or indirectly.
(F) To give indemnity for, or the guarantee, support or secure the performance
of all or any of the obligations of any person or company whether by
personal covenant or by mortgage, charge or lien on the whole or any part
of the undertaking, property and assets of the Company both present and
future including its uncalled capital or by all or any of such methods;
and in particular, but without limiting the generality of the foregoing,
to give indemnity for, or to guarantee, support or secure whether by
personal covenant or by any such mortgage, charge, or lien, or by all or
any of such methods, the performance of all or any of the obligations
(including the repayment or payment or the principal and premium of and
interest on, any securities) of any company which is for the time being
the Company's Holding or Subsidiary company as defined by Section 736 of
the Companies Act 1985 or otherwise associated with the Company in
business.
(G) To receive money on deposit or loan upon such terms as the Company may
approve and to guarantee the obligations and contracts of any person or
corporation.
(H) To apply for, purchase or otherwise acquire and hold, use, develop, sell,
license or otherwise dispose of or deal with patents, copyrights, designs,
trade marks, brevets d'invention and concessions and the like and any
interest therein.
(I) To draw, make, accept, endorse, negotiate, discount and execute promissory
notes, bills of exchange and other negotiate instruments.
(J) To invest and deal with the monies of the Company not immediately required
for the purposes of its business or securities in or upon such
investments, and in such manner as may from time to time be determined.
2
<PAGE> 3
(K) To form, promote, finance or assist any other company whether for the
purpose of acquiring all or any of the undertaking, property and assets of
the company or for any other purpose which may be considered expedient.
(L) To sell, improve, manage, develop, turn to account, exchange, let on rent,
grant royalty, share of profits or otherwise, grant licenses, easements
and other rights in or over and in any other manner deal with or dispose
of the undertakings and all or any of the property and assets for the time
being of the Company for such consideration as the Company may think fit.
(M) To subscribe for, purchase or otherwise acquire and hold shares, stock,
debentures or other securities of any other company.
(N) To establish and maintain or procure the establishment and maintenance of
any noncontributory or contributory pension or superannuation or funds for
the benefit of, and to give or procure the giving of donations,
gratuities, pensions, allowances or emoluments to any persons who are or
were at any time in the employment or service of the Company, or of any
company which is for the time being the Company's Holding or Subsidiary
Company as defined by Section 736 of the Companies Act 1985, or otherwise
associated with the Company in business or who are or were at any time
Directors or officers of the Company or of any such other company as
aforesaid, and the wives, widows, families and dependents of any such
persons, and also to establish and subsidize or subscribe to any
institutions, associations, clubs or funds calculated to be for the
benefit of or to advance the interests and well-being of the Company or
any such other company as aforesaid, or of any such persons as aforesaid,
and to make payments for or towards the insurance of any such persons as
aforesaid, and to subscribe or guarantee money for charitable or
benevolent objects or for any exhibition or for any public, general or
useful objects and to do any of the matters aforesaid either alone or in
conjunction with any such other company as aforesaid.
(O) To pay for any property or rights acquired by the Company, either in cash
or fully or partly paid-up shares, with or without preferred or deferred
or special rights or restrictions in respect of dividend, repayment of
capital, voting or otherwise, or by any securities which the Company has
power to issue, or partly in one mode and partly in another, and generally
on such terms as the Company may determine.
(P) To accept payment for any property or rights sold or otherwise disposed of
or dealt with by the Company either in cash, by installments or otherwise,
or in fully or partly paid-up shares of any company or corporation, with
or without deferred or preferred or special rights or restrictions in
respect of dividend, repayment of capital, voting or otherwise, or in
debentures or mortgage debentures or debenture stock, mortgages or other
securities of any company or corporation or partly in one made and partly
in another, and generally on such terms as the Company may determine, and
to hold, dispose of or otherwise deal with any shares, stock or securities
so acquired.
3
<PAGE> 4
(Q) To enter into any partnership or arrangement for sharing profits, union of
interests, reciprocal concession or co-operation with any company, firm or
person carrying on or proposing to carry on any business within the
objects of this Company or which is capable of being carried on so as
directly or indirectly to benefit this Company, and to acquire and hold,
sell, deal with or dispose of any shares, stock or securities of or other
interests in any such company, and to guarantee the contracts or
liabilities of, subsidize or otherwise assist, any such company.
(R) To acquire, purchase, take over and undertake part or all of the business,
property, assets and liabilities and transactions of any firm, person or
company carrying on any business which this Company is authorized to carry
on or which can be carried on in conjunction therewith or is capable of
being conducted so as directly or indirectly to benefit the Company or to
advance its interests generally.
(S) To distribute among the members in specie any property of the Company or
any proceeds of sale or disposal of any property of the Company but so
that no distribution amounting to a reduction of capital be made except
with the sanction (if any) for the time being required by law.
(T) Subject to and in accordance with a due compliance with the provisions of
Sections 155 to 158 (inclusive) of the Act (if and so far as such
provisions shall be applicable) to give, whether directly or indirectly,
any kind of financial assistance (as defined in Section 152(1) (a) of the
Act for any such purpose as is specified in Section 151(1) and/or Section
151(2) of the Act.
(U) To do all or any of the above things in any part of the world either alone
or in conjunction with others and either as principals, agents,
contractors, trustees or otherwise and either by or through agents,
contractors, trustees or otherwise.
And it is hereby declared that, save as otherwise expressly provided, each
of the paragraphs of this Clause shall be regarded as specifying separate
and independent objects and accordingly shall not be in anywise limited by
reference to or inference from any other paragraph or the name of the
Company and the provisions of each such paragraph shall, save as
aforesaid, be carried out in as full and ample a manner and construed in
as wide a sense as if each of the paragraphs defined the objects of a
separate and distinct company.
4. The liability of the members is limited.
5. The share capital of the Company is(pound)100 divided into 100 shares
of(pound)1 each.
WE, the several persons whose names and addresses are subscribed, are desirous
of being formed into a Company in pursuance of this Memorandum of Association,
and we respectively agree to take the number of shares in the capital of the
Company set opposite our respective names.
- --------------------------------------------------------------------------------
Names, Addresses and Descriptions of Subscribers Number of Shares taken
of Subscribers
- --------------------------------------------------------------------------------
4
<PAGE> 5
STEPHEN MABBOTT
82 MITCHELL STREET
GLASGOW
G1 3NA
Company Registration Agent
PETER JOHN TRAINER
88a GEORGE STREET
EDINBURGH
EH2 3DF
Company Registration Agent
- --------------------------------------------------------------------------------
DATED the 11-2-1994
Witness to the above Signatures:
JOANNE FAIRGRIEVE
88a GEORGE STREET
EDINBURGH
EH2 3DF
Company Registration Agent
5
<PAGE> 6
NATURAL WATER LIMITED
(Incorporated in Scotland No. 149165)
At an Extraordinary General Meeting of NATURAL WATER LIMITED held at Pacific
House, 70 Wellington Street, Glasgow G2 6SB on 26th July 1994 the following
resolution was duly passed as a Special Resolution:
SPECIAL RESOLUTION
THAT:-
(1) "the authorized share capital of the Company be and is hereby increased
from (pound)100 to (pound)25,100 divided into 100 Ordinary Shares of
(pound)1 each and 25,000 Redeemable Non-Voting Preference Shares of
(pound)1 each ("the Preference Shares") by the creation of an additional
25,000 Preference Shares of (pound)1 each all having the rights and
privileges and being subject to the restrictions contained in the Articles
of Association of the Company adopted by paragraph (2) below.
(2) "the regulations contained in the document submitted to this Meeting and
for the purposes of identification signed by the Chairman thereof as
relative to this paragraph of this Resolution be and are hereby approved
and adopted as the new Articles of Association of the Company in
substitution for and to the exclusion of the existing Articles of
Association of the Company."
-------------------------------------
Director
<PAGE> 1
Exhibit 3.34
This document contains a print of the New Article of Association of Natural
Water Limited as adopted by Special Resolution passed on 26th July 1994.
------------------------------
Director
THE COMPANIES ACTS 1985 AND 1989
P R I V A T E C O M P A N Y L I M I T E D B Y S H A R E S
COMPANY NUMBER 149165
- --------------------------------------------------------------------------------
NEW
ARTICLES OF ASSOCIATION
OF
NATURAL WATER LIMITED
(Incorporated 21 February, 1994)
- --------------------------------------------------------------------------------
McGRIGOR DONALD
Pacific House
70 Wellington Street
Glasgow G2 6SB
<PAGE> 2
THE COMPANIES ACTS 1985 AND 1989
P R I V A T E C O M P A N Y L I M I T E D B Y S H A R E S
NEW
ARTICLES OF ASSOCIATION
OF
NATURAL WATER LIMITED
(Adopted by Special Resolution passed on 26th July 1994)
- --------------------------------------------------------------------------------
PRELIMINARY
1. The Regulations contained in Table A in the Schedule to the Companies
(Tables A to F Regulations 1985 as amended by the Companies (Tables A to
F) (Amendment) Regulations 1985 ("Table A") so far as not excluded or
modified by the following Articles shall apply to the Company.
2. Regulations 5, 8, 24, 33, 64, 73 to 75 inclusive, 80, 94, 95 and 118 of
Table A shall not apply to the Company and the following Regulations
thereof shall be modified.
Regulation 6 by the deletion of the words "sealed with the seal" and the
substitution of the words "executed in terms of section 36B of the Act";
Regulation 32 by the deletion of paragraph (a) and the consequential
re-lettering of the subsequent paragraphs and the addition to the original
paragraph (b) of the words "but so that any such consolidation and/or
division shall not result in any member becoming entitled to fractions of
a share";
Regulation 32 by the deletion of paragraph (a) and the consequential
re-lettering of the subsequent paragraphs and the addition to the original
paragraph (b) of the words "but so that any such consolidation and/or
division shall not result in any member becoming entitled to fractions of
a share;
<PAGE> 3
Regulation 40 by the addition at the end of the second sentence of the
words "provided that if the Company shall have duly one member, one member
present in person or by proxy shall be a quorum";
Regulation 46 by the deletion of paragraphs (a) to (d) inclusive and the
substitution of the words "by the chairman or by any person present
entitled to vote upon the business to be transacted;";
Regulation 50 by the addition of the word "not" between the words "shall"
and "be";
Regulation 54 by the addition of the words "or by proxy" between the words
"vote," and "shall" and the words "fully paid" between the words "every"
and "share";
Regulation 66 by the addition of the words "(subject to his giving the
Company an address within the United Kingdom at which notice may be served
upon him)" between the words "shall" and "be";
Regulation 67 by the deletion of the words from "but" until the end;
Regulation 72 by the addition of the words "Any committee shall have
power, unless the Directors direct otherwise, to co-opt as a member or
members of the committee for any specific purpose any person, or persons,
not being a Director of the company." At the end;
Regulation 76 by the deletion of the words "other than a director retiring
by rotation", "or reappointed" and "or reappointment" each time they
appear;
Regulation 77 by the deletion that the words "(other than a director
retiring by rotation at the meeting)", "or reappointment" and "or
reappointed" each time they appear;
Regulation 78 by the deletion of the words "and may also determine the
rotation in which any additional directors are to retire";
Regulation 79 by the deletion of the second and third sentences;
Regulation 82 by the addition of the words "by way of directors' fees"
between the words "remuneration" and "as";
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<PAGE> 4
Regulation 84 by the addition of the words "Unless the contrary shall be
provided in the terms of his appointment" at the beginning of the third
sentence and the deletion of the fourth sentence;
Regulation 85(c) by the addition of the words ", subject to the terms of
any contract of employment between the Company and the Director," between
the words "shall and "not"; and
Regulation 88 by the addition of the word "not" between the words "shall"
and "have" in the fifth sentence; and
Regulation 115 by the deletion of the number "48" and the substitution of
the number "24".
Unless otherwise required by the context of the Articles, words or
expressions which are defined in Table A shall have the same meaning in
the Articles.
Unless otherwise required by the context of the Articles, words importing
the singular only shall include the plural and vice versa; words importing
any gender shall include the other genders; and words importing natural
persons shall include corporations and vice versa.
SHARE CAPITAL
2.1 The share capital of the Company as at the date of adoption of these
Articles is #25,110 divided into 100 Ordinary Shares of #1 each ("the
Ordinary Shares") and 25,000 Redeemable Non-Voting Preference Shares of #1
each ("the Preference Shares").
The rights attaching to the Ordinary Shares and the Preference Shares
respectively shall be as follows:
(A) AS REGARDS INCOME
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<PAGE> 5
(i) The distributable profits of the company in respect of any
financial year (insofar as they are sufficient) shall be
applied first in paying to the holders of the Preference
Shares a fixed noncumulative preferential net cash dividend
(hereinafter called "the Preference Dividend") at the rate
(calculated on the nominal amount paid up thereon) of eight
per centum per annum of the nominal value of each of the
Preference Shares held by them. Such Preference Dividend shall
accrue from day to day with effect from the date of issue and
shall be paid annually on 31st April ("the due date") in
respect of the financial year to 31st January preceding, the
first Preference dividend to be paid on 31st April, 1995 in
respect of the financial year to 31st January, 1995. The
Preference Dividend shall (notwithstanding any other
provisions of these Articles and in particular notwithstanding
that there has not been a recommendation of the Directors or
resolution in General Meeting) immediately on the due date
become a debt due by the Company and shall forthwith be paid
to the holders of the Preference Shares unless the company has
insufficient profits available for distribution and is thereby
prohibited from paying dividends by the Act in which
circumstances, such profits available for distribution as at
the due date will be distributed among the holders of the
Preference Shares pro rata and thereafter the entitlement of
the holders of the Preference Shares to any further dividend
will lapse.
(ii) The Ordinary Shares shall confer on the holders thereof the
right, in respect of any financial period of the Company, to
participate in any surplus profits of the Company available
for distribution and resolved to be distributed as shall
remain after paying the Preference Dividend.
(B) CAPITAL
On a return of assets on liquidation or otherwise, the assets of the
Company remaining after the payment of its liabilities shall be
applied first in paying to the holders of the Preference Shares the
amount paid up or credited as paid up on such shares together with
any sums due under paragraph (a)(i) above and accruals of the
Preference Dividend calculated down to the date of return of capital
and payable irrespective of whether such Preference Dividend has
been declared or earned or not, and subject thereto, the balance of
such assets shall be distributed
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<PAGE> 6
amongst the holders of the Ordinary Shares ratably according to the
amount paid up or credited as paid up on such shares.
(C) AS TO VOTING
(i) The holders of Preference Shares shall be entitled to receive
notice of all General Meetings of the Company but shall not be
entitled to attend or vote at any General Meeting of the
Company.
(ii) The holders of the Ordinary Shares shall be entitled to
receive notice of and to attend and vote at any General
Meeting of the Company.
(D) AS REGARDS REDEMPTION
The following provisions shall have effect with regard to the
redemption of the Preference Shares:
(i) Subject to the provisions of the Act, by notice in writing
("the Redemption Notice") the Company shall redeem all but not
less than all the Preference Shares held by any holder of
Preference Shares on 31st December 1996.
(ii) Any Redemption Notice shall specify the particular shares to
be redeemed, the date of redemption and the place in the
United Kingdom at which the certificates for such shares are
to be presented for redemption whereupon each of the holders
of the shares concerned shall be bound to deliver to the
Company at such place the certificates for such of the shares
concerned as are held by him in order that the same may be
canceled. Upon such delivery, the Company shall pay to such
holder the amount due to him in respect of such redemption.
(iii) There shall be paid on each of the Preference Shares redeemed
the sum of #1 per share together with a sum equal to any
arrears or accruals of the Preference Dividend calculated on a
daily basis down tot he date of redemption whether such
dividends have been declared or earned or not and the
Preference Dividend shall cease to accrue from that date
unless
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<PAGE> 7
upon delivery up of the certificate for such shares payment of
the redemption monies shall be refused.
(iv) If the Company shall be unable, in compliance with the
provisions of the Act, to redeem all or any of the Preference
Shares in accordance with the provisions of this Article on
the date specified in this Article then the Company shall
redeem such shares as soon after such date or dates as the
Company shall be able to comply with the provisions of the
Act; and for so long as any Preference Shares remain
unredeemed after their due date for redemption because of the
Company's inability to comply with the provisions of the Act
as aforesaid the Company shall not pay any dividend or make
any distribution to the holders of Ordinary Shares.
(v) Upon each occasion where redemption is to be made amongst more
than one holder of Preference Shares, redemption shall be made
amongst the holders of the Preference Shares pro rata
according to the number of shares held by such holders at the
date of redemption.
ALLOTMENT OF SHARES
4.1 The Directors are generally and unconditionally authorized to allot
relevant securities (within the meaning of Section 80(2) of the Act) on
such terms and at such time or times as they may in their discretion think
fit; provided that:
(a) the maximum nominal amount of relevant securities to be allotted in
pursuance of such authority shall be the aggregate nominal amount of
the unissued shares in the capital of the Company from time to time
while this authority is in favor; and
(b) this authority shall expire, unless sooner revoked or altered by the
Company in general meeting, on the expiry of the period of five
years from the date of the passing of the resolution by virtue of
which this Article was adopted as part of the Articles provided that
the company may before such expiry make an offer or agreement which
would or might require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in pursuance
of such offer or agreement as if the power conferred hereby had not
expired.
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<PAGE> 8
4.2 Section 89(1) of the Act shall not apply to any allotment of shares in the
Company:
INCREASE IN CAPITAL
5. The Company may by Special Resolution increase its share capital by new
shares of such amount as the resolution prescribes.
6. The Company shall be entitled, but shall not be bound, to recognize in
such manner and to such extent as it may think fit any trusts in respect
of any of the shares of the Company.. Notwithstanding any such
recognition, the Company shall not be bound to see to the execution,
administration or observance of any trust (whether express, implied or
constructive) in respect of any shares of the Company and shall be
entitled to recognize and give effect to the acts and deeds of the holders
of such shares as if they were the absolute owners thereof. For the
purpose of this Article, "trust" includes any right in respect of any
shares of the Company other than an absolute right thereto in the holder
thereof for the time being or such other rights in case of transmission
thereof as are mentioned in Table A.
LIEN
7. The Company shall have a first and paramount lien on every share for all
moneys (whether presently payable or not) called or payable at a fixed
time in respect of that share, ad the Company shall also have a first and
paramount lien on all shares registered in the name of any person (whether
solely or jointly with others) for all moneys owing to the Company from
him or his estate either alone or jointly with any other person whether as
a member or not and whether such moneys are presently payable or not. The
Directors may at any time declare any share to be wholly or partly exempt
from the provisions of this Article. The Company's lien on a share shall
extend to all dividends and other payments or distributions payable or
distributable thereon or in respect thereof.
8.1 Except with the consent in writing of all the members of the Company, any
Shares in the capital of the Company which are from time to time unissued
shall, before issue, be offered by the Directors in the first instance to
all members of the Company holding shares of the same class at the date of
the offer and thereafter to members then holding shares of every other
class and that in each case in proportion as nearly may be tot he
aggregate amounts paid up or credited as paid up on the shares of the
class or classes held by such
-7-
<PAGE> 9
members respectively. Every such offer shall be in writing, shall be on
identical terms for each holder, shall state the number of the shares to
be issued, the terms of issue, and shall be subject to the following
conditions, which shall be incorporated in such offer:
(a) that any acceptance thereof (which may be as regards all or ______
of the shares offered) shall be in writing and be delivered to the
office within a period of 14 days from the date of __________ of the
said offer;
(b) that in the event of the aggregate number of shares accepted ______
exceeding the number of shares included in such offer, the _____
holders accepting shall be entitled to receive, and bounds ____
accept, an allocation of either the number of shares accepted
________ by them respectively or a proportionate number of the
________ offered according to the proportion which the number of
__________ paid Ordinary Shares held by the accepting holder bears
________ aggregate number of fully paid Ordinary Shares held by
_________ accepting holders at the date of the offer, whichever ____
less; and
(c) that any holders to whom such offer shall have been made ________
whose requirements shall not have been fully met by such _______
allocation shall further be entitled to receive, and bound ______
accept, an allocation among them of any surplus shares _______
proportion, as nearly as may be, to the number of shares ______
accepted by them respectively in excess of the number of to which
they may respectively be entitled on the first allocation thereof as
aforesaid.
The regulations regarding the service of notices contained in
_____________ shall apply to any offers made by the Directors in the terms
of _________ Article.
8.2 If any such offer shall not be accepted in full, the Directors _______
within three months after the date of such offer dispose of any ________
ordinary shares comprised therein and no accepted as aforesaid _______
such person or persons as they may think fit but only at the ________
price upon the same terms as to payment, if any, as were specified in such
offer.
TRANSFER OF SHARES
-8-
<PAGE> 10
9. The Directors may, in their absolute discretion and without assigning any
reason therefor, decline to register a transfer of any share whether or
not it is a fully paid share.
NUMBER OF DIRECTORS
10. Unless otherwise determined by Ordinary Resolution the number of Directors
(other than alternate Directors) shall not be less than one and shall not
be subject to any maximum. In the event of there being a sole Director the
Articles shall be construed accordingly.
POWERS OF DIRECTORS
11. The Directors may exercise the voting power conferred by the shares in any
other company held or owned by the Company in such manner as they think
fit, including the exercise thereof in favor of any resolution appointing
them or any of their number directors or officers of such other company or
voting or providing for the payment of remuneration to the directors or
officers of such other company.
PROCEEDINGS OF DIRECTORS
12. A Director may as a Director vote and be counted as one of a quorum upon a
motion in respect of any contract, matter or arrangement which he shall
make with the Company or in which he shall be in any way interested
provided that he shall first have disclosed the nature of his interest to
the Directors.
13. Any Director (including an alternate Director) or member of a committee of
the Directors, may participate i a meeting of the Directors, or such
committee, by means of a conference telephone or similar communicating
equipment whereby all persons participating in the meeting can hear each
other and participation in a meeting in this manner shall be deemed to
constitute presence in person at such meeting.
INDEMNITY
14. Subject to the provisions of the Act every Director or other officer of
the Company shall be entitled to be indemnified by the Company against all
costs, charges, losses, expenses and liabilities which he may sustain or
incur:
-9-
<PAGE> 11
(a) in defending any proceedings, whether civil or criminal, in which
decree is given in his favor or in which he is acquitted or which
are otherwise disposed of without any finding or admission of any
material breach of duty of his part, or
(b) in connection with any application under Section 144(3) or (4) or
Section 727 of the Act in which relief is granted to him by the
court from liability in respect of any act or omission done or
alleged to be done by him as an officer or employee of the Company.
-10-
<PAGE> 1
Exhibit 4
- --------------------------------------------------------------------------------
SPARKLING SPRING WATER GROUP LIMITED,
as Issuer,
the SUBSIDIARY GUARANTORS named herein,
and
BANKERS TRUST COMPANY,
as Trustee
-----------------
INDENTURE
Dated as of November 19, 1997
-----------------
$100,000,000
11 1/2% Senior Subordinated Notes due 2007
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1)..................................................................7.10
(a)(2)..................................................................7.10
(a)(3)............................................................... N.A.
(a)(4)..................................................................N.A.
(a)(5)............................................................7.10; 7.11
(b)........................................................7.08; 7.10; 11.02
(c).....................................................................N.A.
311(a).....................................................................7.11
(b).....................................................................7.11
(c).....................................................................N.A.
312(a).....................................................................2.05
(b)....................................................................11.03
(c)....................................................................11.03
313(a).................................................................... 7.06
(b)(1)................................................................. 7.06
(b)(2)..................................................................7.06
(c)..............................................................7.06; 11.02
(d).....................................................................7.06
314(a)........................................................4.06; 4.08; 11.02
(b).....................................................................N.A.
(c)(1).......................................................... 7.02; 11.04
(c)(2).......................................................... 7.02; 11.04
(c)(3)................................................................. N.A.
(d).................................................................... N.A.
(e)....................................................................11.05
(f).................................................................... N.A.
315(a)................................................................. 7.01(b)
(b)............................................................. 7.05; 11.02
(c)................................................................. 7.01(a)
(d)........................................................... 6.05; 7.01(c)
(e).................................................................... 6.11
316(a)(last sentence)..................................................... 2.09
(a)(1)(A).............................................................. 6.05
(a)(1)(B).............................................................. 6.04
(a)(2)................................................................. N.A.
(b).................................................................... 6.07
(c).................................................................... 9.04
317(a)(1)..................................................................6.08
(a)(2)................................................................. 6.09
(b).................................................................... 2.04
318(a)....................................................................11.01
(c)................................................................... 11.01
- ----------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE...............................1
SECTION 1.01. Definitions..........................................1
SECTION 1.02. Incorporation by Reference of TIA...................22
SECTION 1.03. Rules of Construction...............................22
ARTICLE TWO THE NOTES........................................................23
SECTION 2.01. Form and Dating.....................................23
SECTION 2.02. Execution and Authentication; ......................
SECTION 2.03. Registrar and Paying Agent..........................25
SECTION 2.04. Paying Agent To Hold Assets in Trust................26
SECTION 2.05. Holder Lists........................................26
SECTION 2.06. Transfer and Exchange...............................26
SECTION 2.07. Replacement Notes...................................27
SECTION 2.08. Outstanding Notes...................................27
SECTION 2.09. Treasury Notes......................................28
SECTION 2.10. Temporary Notes.....................................28
SECTION 2.11. Cancellation........................................28
SECTION 2.12. Defaulted Interest..................................28
SECTION 2.13. CUSIP Number........................................29
SECTION 2.14. Deposit of Monies...................................29
SECTION 2.15. Restrictive Legends.................................30
SECTION 2.16. Book-Entry Provisions for Global Security...........30
SECTION 2.17. Special Transfer Provisions.........................31
SECTION 2.18. Liquidated Damages Under ...........................
ARTICLE THREE REDEMPTION.....................................................34
SECTION 3.01. Notices to Trustee..................................34
SECTION 3.02. Selection of Notes To Be Redeemed...................34
SECTION 3.03. Optional Redemption.................................35
SECTION 3.04. Notice of Redemption................................35
SECTION 3.05. Effect of Notice of Redemption......................36
SECTION 3.06. Deposit of Redemption Price.........................37
SECTION 3.07. Notes Redeemed in Part..............................37
ARTICLE FOUR COVENANTS.......................................................37
SECTION 4.01. Payment of Notes....................................37
SECTION 4.02. Maintenance of Office or Agency.....................38
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<PAGE> 4
SECTION 4.03. Corporate Existence.................................38
SECTION 4.04. Payment of Taxes and Other Claims...................38
SECTION 4.05. Maintenance of Properties and Insurance.............38
SECTION 4.06. Compliance Certificate; Notice of Default...........39
SECTION 4.07. Compliance with Laws................................40
SECTION 4.08. Reports to Holders..................................40
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.............41
SECTION 4.10. Limitation on Restricted Payments...................41
SECTION 4.11. Limitation on Transactions with Affiliates..........43
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.44
SECTION 4.13. Limitation on Dividend and Other ...................
SECTION 4.14. Change of Control...................................45
SECTION 4.15. Limitation on Asset Sales...........................47
SECTION 4.16. Limitation on Preferred Stock of Subsidiaries.......50
SECTION 4.17. Limitation on Liens.................................50
SECTION 4.18. Conduct of Business.................................51
SECTION 4.19. Additional Subsidiary Guarantees....................51
SECTION 4.20. Prohibition on Incurrence ..........................
SECTION 4.21. Payment of Additional Amounts.......................52
ARTICLE FIVE SUCCESSOR CORPORATION...........................................54
SECTION 5.01. Merger, Consolidation and Sale of Assets............54
SECTION 5.02. Successor Corporation Substituted...................55
ARTICLE SIX REMEDIES.........................................................56
SECTION 6.01. Events of Default ..................................56
SECTION 6.02. Acceleration........................................57
SECTION 6.03. Other Remedies......................................58
SECTION 6.04. Waiver of Past Defaults.............................59
SECTION 6.05. Control by Majority.................................59
SECTION 6.06. Limitation on Suits.................................59
SECTION 6.07. Right of Holders To Receive Payment.................60
SECTION 6.08. Collection Suit by Trustee..........................60
SECTION 6.09. Trustee May File Proofs of Claim....................60
SECTION 6.10. Priorities..........................................61
SECTION 6.11. Undertaking for Costs...............................61
SECTION 6.12. Restoration of Rights and Remedies..................61
ARTICLE SEVEN TRUSTEE.......................................................62
SECTION 7.01. Duties of Trustee...................................62
SECTION 7.02. Rights of Trustee...................................63
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<PAGE> 5
SECTION 7.03. Individual Rights of Trustee........................64
SECTION 7.04. Trustee's Disclaimer................................64
SECTION 7.05. Notice of Default...................................64
SECTION 7.06. Reports by Trustee to Holders.......................65
SECTION 7.07. Compensation and Indemnity..........................65
SECTION 7.08. Replacement of Trustee..............................66
SECTION 7.09. Successor Trustee by Merger, Etc....................67
SECTION 7.10. Eligibility; Disqualification.......................67
SECTION 7.11. Preferential Collection of .........................
Claims Against the Company..........................68
ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE.............................68
SECTION 8.01. Termination of Company's Obligations................68
SECTION 8.02. Application of Trust Money..........................70
SECTION 8.03. Repayment to the Company............................71
SECTION 8.04. Reinstatement.......................................71
SECTION 8.05. Acknowledgment of Discharge by Trustee..............71
ARTICLE NINE MODIFICATION OF THE INDENTURE...................................72
SECTION 9.01. Without Consent of Holders..........................72
SECTION 9.02. With Consent of Holders.............................72
SECTION 9.03. Compliance with TIA.................................73
SECTION 9.04. Revocation and Effect of Consents...................73
SECTION 9.05. Notation on or Exchange of Notes....................73
SECTION 9.06. Trustee To Sign Amendments, Etc.....................74
SECTION 9.07. Trustee To Sign Consents............................74
ARTICLE TEN SUBORDINATION....................................................74
SECTION 10.01. Notes Subordinated to Senior Indebtedness..........74
SECTION 10.02. Suspension of Payment When.........................
SECTION 10.03. Notes Subordinated to Prior Payment of All.........
SECTION 10.04. Holders To Be Subrogated to Rights ................
SECTION 10.05. Obligations of the Company Unconditional...........78
SECTION 10.06. Trustee Entitled to Assume Payments................
SECTION 10.07. Application by Trustee.............................
SECTION 10.08. No Waiver of Subordination Provisions..............79
SECTION 10.09. Holders Authorize Trustee To.......................
SECTION 10.10. Right of Trustee to Hold Senior Indebtedness.......80
SECTION 10.11. This Article Ten Not To ...........................
SECTION 10.12. No Fiduciary Duty of Trustee to ...................
ARTICLE ELEVEN MISCELLANEOUS.................................................81
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<PAGE> 6
SECTION 11.01. TIA Controls.......................................81
SECTION 11.02. Notices............................................82
SECTION 11.03. Communications by Holders with Other Holders.......83
SECTION 11.04. Certificate and Opinion ...........................
SECTION 11.05. Statements Required in Certificate or Opinion......83
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar..........83
SECTION 11.07. Legal Holidays.....................................84
SECTION 11.08. Governing Law......................................84
SECTION 11.09. No Adverse Interpretation of Other Agreements......84
SECTION 11.10. No Personal Liability..............................84
SECTION 11.11. Successors.........................................84
SECTION 11.12. Duplicate Originals................................85
SECTION 11.13. Severability.......................................85
SECTION 11.14 Agent for Service; Submission to Jurisdiction;.....
ARTICLE TWELVE GUARANTEE OF NOTES............................................86
SECTION 12.01. Unconditional Guarantee............................86
SECTION 12.02. Limitations on Guarantees..........................87
SECTION 12.03. Execution and Delivery of Guarantee................87
SECTION 12.04. Release of a Subsidiary Guarantor..................88
SECTION 12.05. Waiver of Subrogation..............................89
SECTION 12.06. No Set-Off.........................................89
SECTION 12.07. Obligations Absolute...............................89
SECTION 12.08. Obligations Continuing.............................90
SECTION 12.09. Obligations Not Reduced............................90
SECTION 12.10. Obligations Reinstated.............................90
SECTION 12.11. Obligations Not Affected...........................90
SECTION 12.12. Waiver.............................................92
SECTION 12.13. No Obligation To Take .............................
SECTION 12.14. Dealing with the Company and Others................92
SECTION 12.15. Default and Enforcement............................93
SECTION 12.16. Amendment, Etc.....................................93
SECTION 12.17. Acknowledgment.....................................93
SECTION 12.18. Costs and Expenses.................................93
SECTION 12.19. No Merger or Waiver; Cumulative Remedies...........93
SECTION 12.20. Survival of Obligations............................94
SECTION 12.21. Guarantee in Addition to Other Obligations.........94
SECTION 12.22. Severability.......................................94
SECTION 12.23. Successors and Assigns.............................94
ARTICLE THIRTEEN SUBORDINATION OF GUARANTEE..................................95
iv
<PAGE> 7
SECTION 13.01. Obligations of Guarantors Subordinated ............
SECTION 13.02. Suspension of Guarantee Obligations When...........
SECTION 13.03. Guarantee Obligations Subordinated to Prior........
SECTION 13.04. Holders of Guarantee Obligations To................
SECTION 13.05. Obligations of the Subsidiary .....................
SECTION 13.06. Trustee Entitled To Assume Payments................
SECTION 13.07. Application by Trustee of Assets Deposited.........
SECTION 13.08. No Waiver of Subordination Provisions.............100
SECTION 13.09. Holders Authorize Trustee To Effectuate...........
SECTION 13.10. Right of Trustee to Hold .........................
SECTION 13.11. No Suspension of Remedies.........................101
SECTION 13.12. No Fiduciary Duty of Trustee to
Holders of Guarantor Senior Indebtness............102
SIGNATURES..................................................................103
EXHIBIT A Form of Initial Note.............................................A-1
EXHIBIT B Form of Exchange Note............................................B-1
EXHIBIT C Form of Legend for Global Note...................................C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors...................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection
with Transfers Pursuant To Regulation S..........................E-1
EXHIBIT F Form of Guarantee................................................F-1
v
<PAGE> 8
INDENTURE, dated as of November 19, 1997, among Sparkling Spring Water
Group Limited, a corporation organized under the laws of Nova Scotia (the
"Company"), each of the Subsidiary Guarantors named herein, as guarantors, and
Bankers Trust Company, a New York banking corporation, as Trustee (the
"Trustee").
The Company has duly authorized the creation of an issue of 11 1/2% Senior
Subordinated Notes due 2007 (the "Initial Notes") and an issue of 11 1/2% Senior
Subordinated Notes due 2007 to be issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement (the "Exchange Notes", and
together with the Initial Notes, the "Notes"). All things necessary to make the
Notes, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid and binding obligations of the Company and to
make this Indenture a valid and binding agreement of the Company, have been
done.
Each party hereto agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" of a Person means Indebtedness of another Person or
any of its Subsidiaries existing at the time such other Person becomes a
Subsidiary of the referent Person or at the time it merges or consolidates with
the referent Person or any of the referent Person's Subsidiaries or is assumed
by the referent Person or any Subsidiary of the referent Person in connection
with the acquisition of assets from such other Person and in each case not
incurred by such other Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of the referent Person or
such acquisition, merger or consolidation.
"Additional Interest" shall have the meaning set forth in the Registration
Rights Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise (and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing); provided, however, that beneficial ownership of 10% or more of the
voting securities of a Person shall be
1
<PAGE> 9
deemed to constitute control.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or any Subsidiary of the Company, or
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any Person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (including any Sale and Leaseback Transaction) to any Person
other than the Company or a Wholly Owned Subsidiary of the Company of (a) any
Capital Stock of any Subsidiary of the Company; or (b) any other property or
assets of the Company or any Subsidiary of the Company other than in the
ordinary course of business; provided, however, that Asset Sale shall not
include (i) any transaction or series of related transactions for which the
Company or its Subsidiaries receive aggregate consideration of less than $2.0
million in any twelve-month period, (ii) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of the
Company as permitted under Section 5.01 or any disposition that constitutes a
Change of Control, and (iii) the sale, lease, conveyance, disposition or other
transfer by the Company or any Subsidiary of assets or property to one or more
Wholly Owned Subsidiaries in connection with Investments permitted under Section
4.10.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state or
foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
"Board of Directors" means, as to any Person, the board of directors (or
equivalent body under applicable law) of such Person or any duly authorized
committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
2
<PAGE> 10
"Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in the city of New York or the Corporate Trust
Office of the Trustee are required or authorized by law or other governmental
action to be closed.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or the Canadian
Government or issued by any agency thereof and backed by the full faith and
credit of the United States or Canada, in each case maturing within one year
from the date of acquisition thereof; (ii) marketable direct obligations issued
by any state of the United States of America or province of Canada or any
political subdivision of any such state or province or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
Canada or any province thereof or any U.S. branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"Change of Control" means (i) any sale, lease, exchange, transfer or other
disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any Person or group of related Persons for purposes of Section 13(d) of
the Exchange Act (a "Group"), together with any Affiliates thereof (whether or
not otherwise in compliance with the provisions of this Indenture); (ii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or
3
<PAGE> 11
dissolution of the Company (whether or not otherwise in compliance with the
provisions of this Indenture); (iii) any Person or Group other than the
Permitted Holders or a Group controlled by the Permitted Holders shall become
the owner, directly or indirectly, beneficially or of record, of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding Capital Stock of the Company; or (iv) the replacement
of a majority of the Board of Directors of the Company from the directors who
constituted the Board of Directors of the Company on the Issue Date, and such
replacement shall not have been approved by a vote of at least a majority of the
Board of Directors of the Company then still in office who either were members
of such Board of Directors on the Issue Date or whose election as a member of
such Board of Directors was previously so approved.
"Change of Control Offer" has the meaning provided in Section 4.14.
"Change of Control Payment Date" has the meaning provided in Section 4.14.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means such successor and
also includes for the purposes of any provision contained herein and required by
the TIA any other obligor on the Notes.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business), (B) Consolidated Interest Expense and
(C) Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the
4
<PAGE> 12
foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act as in effect on the Issue Date) (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount
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of all dividend payments on any series of Preferred Stock of such Person (other
than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be
paid or accrued during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without limitation, (a)
any amortization of debt discount, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP, minus amortization or write off of deferred
financing costs.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided, however, that there shall be excluded therefrom (a) gains (and losses)
on an after tax effected basis from asset sales or abandonments or reserves
relating thereto, (b) items classified as extraordinary or nonrecurring gains or
losses on an after tax effected basis, (c) the net income or loss of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Subsidiary of the referent Person, (d) the net income
(but not loss) of any Subsidiary of the referent Person for such period to the
extent that the declaration of dividends or similar distributions by that
Subsidiary to the referent Person or any Subsidiary thereof of that income is
restricted, directly or indirectly, by operation of the terms of its charter or
constituent documents or any agreement, instrument, judgment, decree, law,
order, statute, rule, governmental regulation or for any other reason
whatsoever, (e) the net income or loss of any other Person, other than a
Subsidiary of the referent Person, except to the extent (in the case of net
income) of cash dividends or distributions paid to the referent Person, or to a
Wholly Owned Subsidiary of the referent Person, by such other Person, (f) any
restoration to income of any contingency reserve of an extraordinary,
nonrecurring or unusual nature, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date, (g) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued), and (h) in the
case of a successor to the referent Person by consolidation or merger or as a
transferee of the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets.
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"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Income of such Person
and its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charge which requires an accrual of or
a reserve for cash charges for any future period).
"consolidation" means, with respect to any Person, the consolidation of the
accounts of the Subsidiaries of such Person with those of such Person, all in
accordance with GAAP; provided, however, that "consolidation" will not include
consolidation of the accounts of any Subsidiary of such Person with the accounts
of such Person. The term "consolidated" has a correlative meaning to the
foregoing.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at Four
Albany Street, New York, New York 10006, Attention: Corporate Market Services.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
"Credit Agreement" means any credit agreement or facility entered into on
or after the Issue Date between the Company and/or any Subsidiary of the Company
and one or more financial institutions that provides borrowing availability to
the Company and its Subsidiaries on a senior secured basis, as any such
agreement or facility may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided, however, that such increase in borrowings is permitted by
Section 4.12) or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
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<PAGE> 15
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Defeasance Payment" means any distribution from any defeasance trust
described under Section 8.01.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means (i) Indebtedness under or in respect
of the Credit Agreement and (ii) any other Indebtedness constituting Senior
Indebtedness or Guarantor Senior Indebtedness which, at the time of
determination, has an aggregate principal amount of at least $5.0 million and is
specifically designated in the instrument evidencing such Senior Indebtedness or
Guarantor Senior Indebtedness as "Designated Senior Indebtedness" by the Company
or the applicable Subsidiary Guarantor, as the case may be.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the preamble to this
Indenture.
"Exchange Offer" has the meaning provided in the Registration Rights
Agreement.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Except as otherwise
specified in this Indenture, fair market value shall be determined by the Board
of Directors of the Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the Company.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or
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<PAGE> 16
in such other statements by such other entity as may be approved by a
significant segment of the accounting profession of the United States, which are
in effect on the Issue Date.
"Global Note" has the meaning provided in Section 2.01.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); provided,
however, that the term "guarantee" shall not include (A) endorsements for
collection or deposit in the ordinary course of business and (B) guarantees
(other than guarantees of Indebtedness) by the Company in respect of assisting
one or more Subsidiaries in the ordinary course of their respective businesses,
including without limitation guarantees of trade obligations and operating
leases, on ordinary business terms. The term "guarantee" used as a verb has a
corresponding meaning.
"Guarantee" means the guarantee of the obligations under this Indenture and
the Notes by each of the Subsidiary Guarantors as set forth in Article Twelve.
"Guarantor Senior Indebtedness" means, with respect to any Subsidiary
Guarantor, the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of such
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Guarantees. Without limiting the
generality of the foregoing, "Guarantor Senior Indebtedness" shall also include
the principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, to the extent such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (x) all monetary obligations of every nature of a Subsidiary Guarantor under
the Credit Agreement, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit, fees,
expenses and indemnities, (y) all Interest Swap Obligations and (z) all
obligations under Currency Agreements, in each case whether outstanding on the
Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior
Indebtedness"
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<PAGE> 17
shall not include (i) any Indebtedness of a Subsidiary Guarantor to a Subsidiary
of such Subsidiary Guarantor or any Affiliate of such Subsidiary Guarantor or
any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on
behalf of, any shareholder, director, officer or employee of the Company or any
Subsidiary of the Company (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by a Subsidiary Guarantor, (vi) Indebtedness
incurred in violation of Section 4.12, (vii) Indebtedness which, when incurred
and without respect to any election under Section 1111(b) of Title 11, United
States Code is without recourse to a Subsidiary Guarantor and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of a Subsidiary Guarantor.
"Holder" means any holder of Notes.
"IAI Global Note" means, a permanent global note in registered form
representing the aggregate principal amount of Notes sold to Institutional
Accredited Investors.
"incur" has the meaning set forth in Section 4.12.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all Obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 60 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on
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<PAGE> 18
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Notes" means the Company's 11 1/2% Senior Subordinated Notes due
2007 issued on the Issue Date.
"Initial Purchasers" means BT Alex. Brown Incorporated and NatWest Capital
Markets Limited.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" means, when used with respect to any Note, the amount of all
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Additional Interest pursuant to the
Registration Rights Agreement.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect loan
or other
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<PAGE> 19
extension of credit (including, without limitation, a guarantee) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any
Person. "Investment" shall exclude extensions of trade credit by the Company and
its Subsidiaries on commercially reasonable terms in accordance with normal
trade practices of the Company or such Subsidiary, as the case may be. For the
purposes of Section 4.10, the amount of any Investment shall be the original
cost of such Investment plus the cost of all additional Investments by the
Company or any of its Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or writeoffs with respect to such
Investment, reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Subsidiary of the Company such that, after giving effect to
any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such Subsidiary,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Common Stock of such
former Subsidiary not sold or disposed of.
"Issue Date" means November 19, 1997.
"Legal Defeasance" has the meaning set forth in Section 8.01.
"Legal Holiday" has the meaning provided in Section 11.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Management Agreement" means the Management Agreement, dated December 16,
1993, as amended on October 22, 1997, among the Company, C.F. Capital
Corporation, G. John Krediet and Stephen L. Larson.
"Maturity Date" means November 15, 2007.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Subsidiaries from such Asset
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<PAGE> 20
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrangements, (c)repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale and (d)
appropriate amounts to be provided by the Company or any Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Net Proceeds Offer" has the meaning set forth in Section 4.15.
"Net Proceeds Offer Amount" has the meaning set forth in Section 4.15.
"Net Proceeds Offer Payment Date" has the meaning set forth in Section
4.15.
"Net Proceeds Offer Trigger Date" has the meaning set forth in Section
4.15.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.
"Notes" means, collectively, the Initial Notes, the Private Exchange Notes,
if any, and the Unrestricted Notes, treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms of this
Indenture, that are issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board of
Directors, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity and with respect to the Trustee or any agent of the Trustee, a
Trust Officer.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by the Chairman, Vice Chairman, Chief Executive Officer, the President or
any Vice President and the Chief Financial Officer, Controller or any Treasurer
or Assistant Secretary of such Person that shall comply with applicable
provisions of this Indenture.
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<PAGE> 21
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
11.04 and 11.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Holders" means: (i) G. John Krediet, Stephen L. Larson, Stewart
E. Allen, any trust solely for the benefit of G. John Krediet, Stephen L. Larson
or Stewart E. Allen or any of their respective immediate family members, and any
partnership all the partnership interests in which are, or holding company all
the Capital Stock of which is, beneficially owned by any of the foregoing
(including, without limitation, Gaspar Limited); provided that with respect to
(a) any such partnership or holding company, G. John Krediet, Stephen L. Larson
or Stewart E. Allen, as applicable, shall at all times have the exclusive power
to direct, directly or indirectly, the voting of the Capital Stock of the
Company held by such partnership or holding company and (b) any such trust, G.
John Krediet, Stephen L. Larson or Stewart E. Allen or their immediate family
members shall at all times either have the exclusive power to direct, directly
or indirectly, the voting of the Capital Stock of the Company held by such trust
or be the sole beneficiaries of such trust; and (ii) Clairvest Group Inc.
("Clairvest").
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes, this Indenture and the Guarantees;
(ii) Indebtedness of the Company or any of its Subsidiaries incurred
pursuant to the Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed $30.0 million in the aggregate reduced by any required
permanent repayments pursuant to the provisions set forth in Section 4.15 (which
are accompanied by a corresponding permanent commitment reduction) thereunder
(it being recognized that a reduction in a borrowing base in and of itself shall
not be deemed a required permanent repayment);
(iii) Interest Swap Obligations of the Company covering Indebtedness
of the Company or any of its Subsidiaries; provided, however, that such Interest
Swap Obligations are entered into to protect the Company and its Subsidiaries
from fluctuations in interest rates on Indebtedness incurred in accordance with
this Indenture to the extent the notional principal amount of such Interest Swap
Obligation does not exceed the principal amount of the Indebtedness to which
such Interest Swap Obligation relates;
(iv) Indebtedness under Currency Agreements; provided, however, that
in the case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its Subsidiaries
outstanding other than as a result of fluctuations in foreign currency exchange
rates or by reason of fees, indemnities and
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<PAGE> 22
compensation payable thereunder;
(v) Indebtedness of a Subsidiary to the Company or to a Wholly Owned
Subsidiary of the Company for so long as such Indebtedness is held by the
Company or a Wholly Owned Subsidiary of the Company, in each case subject to no
Liens held by any Person other than the Company or a Wholly Owned Subsidiary of
the Company; provided, however, that if as of any date any Person other than the
Company or a Wholly Owned Subsidiary of the Company owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be
deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by
the issuer of such Indebtedness;
(vi) Indebtedness of the Company to a Wholly Owned Subsidiary of the
Company for so long as such Indebtedness is held by a Wholly Owned Subsidiary of
the Company, in each case subject to no Lien; provided, however, that (a) any
Indebtedness of the Company to any Wholly Owned Subsidiary of the Company is
unsecured and subordinated, pursuant to a written agreement, to the Company's
obligations under this Indenture and the Notes and (b) if as of any date any
Person other than a Wholly Owned Subsidiary of the Company owns or holds any
such Indebtedness or a Lien in respect of such Indebtedness, such date shall be
deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by
the Company;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
extinguished within two business days of incurrence;
(viii) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(ix) Indebtedness existing on the date hereof;
(x) Refinancing Indebtedness;
(xi) Indebtedness permitted by clause (viii) of the definition of
"Permitted Investments"; and
(xii) additional Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount not to exceed $10.0 million at any
one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the
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<PAGE> 23
Company in any Person that is or will become immediately after such Investment a
Wholly-Owned Subsidiary of the Company or that will merge or consolidate into
the Company or a Wholly-Owned Subsidiary of the Company; (ii) Investments in the
Company by any Subsidiary of the Company; provided, however, that any
Indebtedness evidencing such Investment by a Subsidiary is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and this Indenture; (iii) Investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of the Company
and its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $500,000 at any one time outstanding; (v) Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
the Company's or its Subsidiaries' businesses and otherwise in compliance with
this Indenture; (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (vii) Investments
made by the Company or its Subsidiaries as a result of non-cash consideration
received in connection with an Asset Sale made in compliance with Section 4.16;
and (viii) additional Investments in an amount outstanding at any one time not
to exceed $2.5 million.
"Permitted Liens" means the following types of Liens:
(i) Liens in favor of the Trustee in its capacity as trustee for the
Holders;
(ii) Liens securing Indebtedness outstanding under the Credit
Agreement;
(iii) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Subsidiaries shall have set aside
on its books such reserves as may be required pursuant to GAAP;
(iv) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;
(v) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in connection
therewith, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
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(vi) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceedings may be initiated
shall not have expired;
(vii) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(viii) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, however, that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(ix) Liens to secure Purchase Money Indebtedness of the Company or any
Subsidiary not to exceed $5.0 million in the aggregate at any one time
outstanding; provided, however, that (A) the related Purchase Money Indebtedness
is permitted to be incurred in accordance with Section 4.12, (B) the related
Purchase Money Indebtedness shall not exceed the cost of such property or assets
and shall not be secured by any property or assets of the Company or any
Subsidiary of the Company other than the property and assets so acquired and (C)
the Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
(x) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(xi) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(xii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the Company
or any of its Subsidiaries, including rights of offset and set-off;
(xiii) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
(xiv) Liens securing Indebtedness under Currency Agreements; and
(xv) Liens securing Acquired Indebtedness incurred in accordance with
Section 4.12; provided, however, that (A) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Subsidiary of the
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Company and were not granted in connection with, or in anticipation of, the
incurrence of such Acquired Indebtedness by the Company or a Subsidiary of the
Company and (B) such Liens do not extend to or cover any property or assets of
the Company or of any of its Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Subsidiary of the Company and are no
more favorable to the lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or a
Subsidiary of the Company.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the principal
amount of such Indebtedness plus the premium, if any, on such Indebtedness.
"Private Exchange Notes" shall have the meaning provided in the
Registration Rights Agreement.
"Private Placement Legend" means the legend set forth on the Initial Notes
in the form set forth in the first two paragraphs contained on Exhibit A.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of this Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act.
"Property" means, with respect to any Person, any interests of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock, partnership
interests and other equity or ownership interests in any other Person.
"Public Equity Offering" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement filed with the
Commission in accordance with the Securities Act, or a comparable filing under
the laws of any province of Canada, in either case yielding gross proceeds to
the Company of at least $35 million.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of which
are used
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to finance the cost (including the cost of construction) of property or assets
acquired in the normal course of business by the Person incurring such
Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A.
"Receivables" means any right of payment from or on behalf of any obligor,
whether constituting an account, chattel paper, instrument, general intangible
or otherwise, arising from the financing by the Company or any Subsidiary of the
Company of merchandise or services, and monies due thereunder, security in the
merchandise and services financed thereby, records related thereto, and the
right to payment of any interest or finance charges and other obligations with
respect thereto, proceeds from claims on insurance policies related thereto, any
other proceeds related thereto, and any other related rights.
"Record Date" means the Record Dates specified in the Notes.
"Redemption Date" means, when used with respect to any Note to be redeemed,
the date fixed for such redemption pursuant to this Indenture and the Notes.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption, including principal and premium,
if any, pursuant to this Indenture and the Notes.
"Reference Date" has the meaning set forth in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Subsidiary of the Company of Indebtedness incurred in accordance with Section
4.12 (provided that Refinancing Indebtedness shall not include Indebtedness
described in clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (x), (xi) or
(xii) of the definition of Permitted Indebtedness), in each case that does not
(1) result in an increase in the aggregate principal amount of Indebtedness of
such Person as of the date of such proposed Refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the Company
or such Subsidiary, as the case may be, in connection with such Refinancing),
except to the extent that any such increase in Indebtedness is otherwise
permitted by this Indenture or (2) create Indebtedness with (A) a Weighted
Average
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Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being Refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being Refinanced; provided, however, that (x)
if such Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes or the
Guarantees, then such Refinancing Indebtedness shall be subordinate to the Notes
or the Guarantees, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the Issue Date among the Company, the Subsidiary Guarantors and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" means a permanent global note in registered form
representing the aggregate principal amount of Notes sold in reliance on
Regulation S under the Securities Act.
"Replacement Assets" shall have the meaning set forth in Section 4.15.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided,
however, that if, and for so long as, any Designated Senior Indebtedness lacks
such a representative, then the Representative for such Designated Senior
Indebtedness shall at all times constitute the holders of a majority in
outstanding principal amount of such Designated Senior Indebtedness in respect
of any Designated Senior Indebtedness.
"Restricted Payment" shall have the meaning set forth in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of the Company of any property, whether
owned by the Company or any Subsidiary of the Company at the Issue Date or later
acquired, which has been or is to be sold or transferred by
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the Company or such Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
Property.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Indebtedness" means, the principal of, premium, if any, and
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Company under the Credit Agreement,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (i) any Indebtedness of the Company to a Subsidiary of the Company
or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) Indebtedness incurred in violation of Section 4.12, (vii)
Indebtedness which, when incurred and without respect to any election under
Section 1111 (b) of Title 11, United States Code is without recourse to the
Company and (viii) any Indebtedness which is, by its express terms, subordinated
in right of payment to any other Indebtedness of the Company.
"Shareholder Agreement" means the Shareholder Agreement, dated as of
October 22, 1997, among the Company, Sparkling Spring Water Limited ("SSWL"),
Clairvest, Gaspar Limited, C. Sean Day, Stephen L. Larson, Kevin Newman, Mark
Stitzer, Lucy Stitzer and Stewart E. Allen.
"Significant Subsidiary" shall have the meaning set forth in Rule 1-02(w)
of Regulation S-X under the Securities Act.
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"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantor" means (a) each of the Company's Subsidiaries as of
the Issue Date and (b) each of the Company's Subsidiaries that in the future
executes a supplemental indenture in which such Subsidiary agrees to be bound by
the terms of this Indenture as a Subsidiary Guarantor; provided, however, that
any Person constituting a Subsidiary Guarantor as described above shall cease to
constitute a Subsidiary Guarantor when its Guarantee is released in accordance
with the terms of this Indenture.
"Surviving Entity" shall have the meaning set forth in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means any officer in the Corporate Trust Office of the
Trustee, including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary, or any other officer of the
Trustee who customarily performs functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"U.S. Government Obligations" means direct obligations of, and obligations
guaranteed by, the United States of America for the payment of which the full
faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend in the form set forth in Exhibit
A.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal
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amount of such Indebtedness into (b) the sum of the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking, fund, serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and
the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities normally entitled to vote in the
election of directors are owned by such Person or any Wholly Owned Subsidiary of
such Person.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in, and made a part of, this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP on any date of determination;
(3) "or" is not exclusive;
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(4) words in the singular include the plural, and words in the plural
include the singular;
(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(6) any reference to a statute, law or regulation means that statute, law
or regulation as amended and in effect from time to time and includes any
successor statute, law or regulation; provided, however, that any reference to
the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the relevant
case.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication relating
thereto shall be substantially in the form of Exhibit A hereto. The Exchange
Notes, the notation thereon relating to the Guarantees and the Trustee's
certificate of authentication relating thereto shall be substantially in the
form of Exhibit B hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or depository rule or usage. The Company
and the Trustee shall approve the form of the Notes and any notation, legend or
endorsement on them. Each Note shall be dated the date of its issuance and shall
show the date of its authentication. Each Note shall have an executed Guarantee
endorsed thereon substantially in the form of Exhibit F hereto.
The terms and provisions contained in the Notes and the Guarantees annexed
hereto as Exhibits A and F, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Subsidiary Guarantors, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A, Notes offered and sold to
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) and Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global Notes in registered form, substantially in the form set forth in Exhibit
A (the "Global Note"), deposited with the Trustee, as custodian for the
Depository, duly executed by the Company (and having an executed Guarantee
endorsed thereon) and authenticated by the Trustee as hereinafter provided and
shall bear the legend set forth in Exhibit C. The aggregate
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principal amount of the Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Notes issued in exchange for interests in a Global Note pursuant to Section
2.16 may be issued and Notes offered and sold in reliance on any other exemption
from registration under the Securities Act other than as described in the
preceding paragraph shall be issued in the form of permanent certificated Notes
in registered form in substantially the form set forth in Exhibit A (the
"Physical Notes").
All Notes offered and sold in reliance on Regulation S shall remain in the
form of a Global Note until the consummation of the Exchange Offer pursuant to
the Registration Rights Agreement; provided, however, that all of the time
periods specified in the Registration Rights Agreement to be complied with by
the Company and the Subsidiary Guarantors have been so complied with.
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary of the Company,
shall sign, or one Officer shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in the
aggregate principal amount of $100,000,000, (ii) Private Exchange Notes from
time to time for issue only in exchange for a like principal amount of Initial
Notes and (iii) Unrestricted Notes from time to time only (A) in exchange for a
like principal amount of Initial Notes or (B) in an aggregate principal amount
of not more than the excess of $100,000,000 over the sum of the aggregate
principal amount of (x) Initial Notes then outstanding, (y) Private Exchange
Notes then outstanding and (z) Unrestricted Notes issued in accordance with
(iii)(A) above, in each case upon a written order of the Company in the form of
an Officer's Certificate of the Company. Each such written order shall specify
the amount of Notes to be authenticated and the date on which the Notes are to
be
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authenticated, whether the Notes are to be Initial Notes, Private Exchange Notes
or Unrestricted Notes and whether the Notes are to be issued as Physical Notes
or Global Notes or such other information as the Trustee may reasonably request.
The aggregate principal amount of Notes outstanding at any time may not exceed
$100,000,000, except as provided in Sections 2.07 and 2.08.
Notwithstanding the foregoing, all Notes issued under this Indenture shall
vote and consent together on all matters (as to which any of such Notes may vote
or consent) as one class and no series of Notes will have the right to vote or
consent as a separate class on any matter.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company or with any Affiliate of the Company.
The Notes shall be issuable in fully registered form only, without coupons,
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be located in
the Borough of Manhattan in the City of New York, State of New York) where (a)
Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may have
one or more co-Registrars and one or more additional paying agents reasonably
acceptable to the Trustee. The term "Paying Agent" includes any additional
Paying Agent. The Company may act as its own Paying Agent, except that for the
purposes of payments on the Notes pursuant to Sections 4.14 and 4.15, neither
the Company nor any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which agreement shall incorporate the provisions
of the TIA and implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee of the name and address of any such
Agent. If the Company shall fail to maintain a Registrar or Paying Agent the
Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has
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resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent or any other agent may resign upon 30 days' notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that such Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and the Company and the Paying Agent shall notify the Trustee of any Default by
the Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish or cause the Registrar to
furnish to the Trustee within five (5) Business Days after each Record Date and
at such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee, and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to the
Registrar or a co-Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes or other
authorized denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Notes presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Company, the
Trustee and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Notes and the Subsidiary Guarantors shall execute Guarantees thereon at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the
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Company may require payment of a sum sufficient to cover any transfer tax, fee
or similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Section 2.10, 3.04, 4.14, 4.15 or 9.05, in which event the
Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interests in such Global
Notes may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note and
the Subsidiary Guarantors shall execute a Guarantee thereon if the Trustee's
requirements are met. If required by the Trustee or the Company, such Holder
must provide an indemnity bond or other indemnity of reasonable tenor,
sufficient in the reasonable judgment of the Company, the Subsidiary Guarantors
and the Trustee, to protect the Company, the Subsidiary Guarantors, the Trustee
or any Agent from any loss which any of them may suffer if a Note is replaced.
Every replacement Note shall constitute an additional obligation of the Company
and the Subsidiary Guarantors.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a bona fide
purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note
and replacement thereof pursuant to Section 2.07.
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If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes shall be
deemed not to be outstanding and interest on them shall cease to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Company shall notify the Trustee, in writing, when
either it or, to its knowledge, any of its Affiliates repurchases or otherwise
acquires Notes, of the aggregate principal amount of such Notes so repurchased
or otherwise acquired and such other information as the Trustee may reasonably
request and the Trustee shall be entitled to rely thereon.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon receipt of a written order
of the Company in the form of an Officer's Certificate. The Officer's
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company consider appropriate for temporary Notes and so indicate in the
Officer's Certificate. Without unreasonable delay, the Company shall prepare,
the Trustee shall authenticate and the Subsidiary Guarantors shall execute
Guarantees on, upon receipt of a written order of the Company pursuant to
Section 2.02, definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the
direction of the Trustee, the Registrar or the Paying Agent, and no one else,
shall cancel and, at the written direction of the Company, shall dispose, in its
customary manner, of all Notes surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new Notes to
replace Notes that they have paid or delivered to the Trustee for cancellation.
If the Company shall acquire any of the Notes, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness
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represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Company will pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Notes. The Company shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest, to the Persons who are Holders on a subsequent special
record date, which special record date shall be the fifteenth day next preceding
the date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. The Company shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment (a "Default Interest
Payment Date"), and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect
of such defaulted interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted interest as provided in this Section; provided, however, that
in no event shall the Company deposit monies proposed to be paid in respect of
defaulted interest later than 11:00 a.m. New York City time of the proposed
Default Interest Payment Date. At least 15 days before the subsequent special
record date, the Company shall mail (or cause to be mailed) to each Holder, as
of a recent date selected by the Company, with a copy to the Trustee, a notice
that states the subsequent special record date, the payment date and the amount
of defaulted interest, and interest payable on such defaulted interest, if any,
to be paid. Notwithstanding the foregoing, any interest which is paid prior to
the expiration of the 30-day period set forth in Section 6.01(i) shall be paid
to Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid. Notwithstanding the foregoing, the Company may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and, if so, the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the
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correctness or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds
Offer Payment Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted Security
shall bear the Private Placement Legend on the face thereof until after the
second anniversary of the later of the Issue Date and the last date on which the
Company or any Affiliate of the Company was the owner of such Note (or any
predecessor security) (or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder) (or such
longer period of time as may be required under the Securities Act or applicable
state securities laws in the opinion of counsel for the Company, unless
otherwise agreed by the Company and the Holder thereof).
Each Global Note shall also bear the legend as set forth in Exhibit C.
SECTION 2.16. Book-Entry Provisions for Global Security.
(a) The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository and (iii) bear the legend as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Notes, and the Depository may be treated by the Company, the Trustee and any
Agent of the Company or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any Agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or
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impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(b) Transfers of a Global Note shall be limited to transfers in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures of the Depository
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (i) the Depository notifies the Company that it is unwilling
or unable to continue as Depository for the Global Notes and a successor
depositary is not appointed by the Company within 90 days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Company shall execute,
the Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to beneficial
owners pursuant to paragraph (b) of this Section 2.16, such Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, the Subsidiary Guarantors shall execute Guarantees on and the Trustee
shall authenticate and deliver, to each beneficial owner identified by the
Depository in exchange for its beneficial interest in the Global Note, an equal
aggregate principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of
this Section 2.16 shall, except as otherwise provided by paragraphs (a)(i)(x)
and (d) of Section 2.17, bear the Private Placement Legend.
(f) The Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
Persons. The following provisions shall apply with respect to the registration
of any proposed transfer of a
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Note constituting a Restricted Security to any Institutional Accredited Investor
which is not a QIB or to any Non- U.S. Person:
(i) the Registrar shall register the transfer of any Note constituting
a Restricted Security, whether or not such Note bears the Private Placement
Legend, if (x) the requested transfer is after the second anniversary of the
Issue Date (provided, however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion thereof, at
any time on or prior to the second anniversary of the Issue Date) or (y) (1) in
the case of a transfer to an Institutional Accredited Investor which is not a
QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit D hereto or (2) in
the case of a transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Registrar a certificate substantially in the form of Exhibit E
hereto; and
(ii) if the proposed transferee is an Agent Member and the Notes to be
transferred consist of Physical Notes which after transfer are to be evidenced
by an interest in the IAI Global Note or Regulation S Global Note, as the case
may be, upon receipt by the Registrar of (x) written instructions given in
accordance with the Depository's and the Registrar's procedures and (y) the
appropriate certificate, if any, required by clause (y) of paragraph (i) above,
the Registrar shall register the transfer and reflect on its books and records
the date and an increase in the principal amount of the IAI Global Note or
Regulation S Global Note, as to case may be, in an amount equal to the principal
amount of Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred; and (iii) if the proposed transferor is an Agent
Member seeking to transfer an interest in a Global Note, upon receipt by the
Registrar of (x) written instructions given in accordance with the Depository's
and the Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, the Registrar shall register the
transfer and reflect on its books and records the date and (A) a decrease in the
principal amount of the Global Note from which such interests are to be
transferred in an amount equal to the principal amount of the Notes to be
transferred and (B) an increase in the principal amount of the IAI Global Note
or the Regulation S Global Note, as the case may be, in an amount equal to the
principal amount of the Notes to be transferred.
(b) Transfers to QIBs. The following provisions shall apply with respect to
the registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Restricted
Security if such transfer is being made by a proposed transferor who has checked
the box provided for on the form of Note stating, or has otherwise advised the
Company
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and the Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the Company
and the Registrar in writing, that it is purchasing the Note for its own account
or an account with respect to which it exercises sole investment discretion and
that it and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as it
has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in a Global Note, upon receipt by the Registrar of
written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and records the
date and an increase in the principal amount of such Global Note in an amount
equal to the principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in the IAI Global Note or the Regulation S Global Note,
upon receipt by the Registrar of written instructions given in accordance with
the Depository's and the Registrar's procedures, the Registrar shall register
the transfer and reflect on its books and records the date and (A) a decrease in
the principal amount of the IAI Global Note or the Regulation S Global Note, as
the case may be, in an amount equal to the principal amount of the Notes to be
transferred and (B) an increase in the principal amount of the Global Note in an
amount equal to the principal amount of the Notes to be transferred.
(c) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provisions of this Indenture, a Global Note may not be transferred as
a whole except by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(d) Private Placement Legend. Upon the transfer, exchange or replacement of
Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend, the Registrar
shall deliver only Notes that bear the Private Placement Legend unless (i) the
requested transfer is after the second anniversary of the Issue Date (provided,
however, that neither the Company nor any Affiliate of the Company has held any
beneficial interest in such Note, or portion thereof, at any time prior to or on
the second anniversary of the Issue Date), or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
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(e) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.16 or this Section 2.17. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(f) Transfers of Notes Held by Affiliates. Any certificate (i) evidencing a
Note that has been transferred to an Affiliate of the Company within two years
after the Issue Date, as evidenced by a notation on the Assignment Form for such
transfer or in the representation letter delivered in respect thereof or (ii)
evidencing a Note that has been acquired from an Affiliate (other than by an
Affiliate) in a transaction or a chain of transactions not involving any public
offering, shall, until two years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, in each case, bear the
Private Placement Legend, unless otherwise agreed by the Company (with written
notice thereof to the Trustee).
SECTION 2.18. Liquidated Damages Under
Registration Rights Agreement.
Under certain circumstances, the Company shall be obligated to pay certain
liquidated damages to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph (5) of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01 45
days before the Redemption Date (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced
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in a writing signed on behalf of the Trustee), together with an Officer's
Certificate stating that such redemption shall comply with the conditions
contained herein and in the Notes. Any such notice may be canceled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.
SECTION 3.02. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed (subject to DTC procedures) or, if such
Notes are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; provided, further, however, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days before
the Redemption Date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the Redemption Date, interest
will cease to accrue on Notes or portions thereof called for redemption as long
as the Company has deposited with the Paying Agent funds in satisfaction of the
applicable Redemption Price.
SECTION 3.03. Optional Redemption.
(a) The Notes will be redeemable at the Company's option, in whole at any
time or in part from time to time, on and after November 15, 2002, upon not less
than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on November 15 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
Year Percentage
---- ----------
2002 . . . . . . . . . . . . . . . . . . . . . 105.750%
2003 . . . . . . . . . . . . . . . . . . . . . 103.833%
2004 . . . . . . . . . . . . . . . . . . . . . 101.917%
2005 and thereafter. . . . . . . . . . . . . . 100.000%
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(b) Notwithstanding the foregoing, at any time, or from time to time, on or
prior to November 15, 2000, the Company may, at its option, redeem up to $30.0
million aggregate principal amount of the Notes originally issued with the net
cash proceeds of one or more Public Equity Offerings by the Company at a
redemption price equal to 111.50% of the principal amount thereof, plus accrued
interest to the date of redemption, provided that at least $70.0 million in
aggregate principal amount of the Notes originally issued remains outstanding
immediately following such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first class
mail to each Holder of Notes to be redeemed at its registered address, with a
copy to the Trustee and any Paying Agent. At the Company's request, the Trustee
shall give the notice of redemption in the Company's name and at the Company's
expense. The Company shall provide such notices of redemption to the Trustee at
least five days before the intended mailing date.
Each notice of redemption shall identify (including the CUSIP number) the
Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any, to be
paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption is
being made;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption payment,
interest on Notes or applicable portions thereof called for redemption ceases to
accrue on and after the Redemption Date, and the only remaining right of the
Holders of such Notes is to receive payment of the Redemption Price plus accrued
interest as of the Redemption Date, if any, upon surrender to the Paying Agent
of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the principal
amount of such
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Note to be redeemed and that, after the Redemption Date, and upon surrender of
such Note, a new Note or Notes in the aggregate principal amount equal to the
unredeemed portion thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the identification of
the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Notes to be outstanding after such partial redemption.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04, such
notice of redemption shall be irrevocable and Notes called for redemption become
due and payable on the Redemption Date and at the Redemption Price plus accrued
interest as of such date, if any. Upon surrender to the Trustee or Paying Agent,
such Notes called for redemption shall be paid at the Redemption Price plus
accrued interest thereon to the Redemption Date, but installments of interest,
the maturity of which is on or prior to the Redemption Date, shall be payable to
Holders of record at the close of business on the relevant record dates referred
to in the Notes. Interest shall accrue on or after the Redemption Date and shall
be payable only if the Company defaults in payment of the Redemption Price.
SECTION 3.06. Deposit of Redemption Price.
On or before the Redemption Date and in accordance with Section 2.14, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price plus accrued interest, if any, of all Notes to be redeemed
on that date. The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose, except with
respect to monies owed as obligations to the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
SECTION 3.07. Notes Redeemed in Part.
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Upon surrender of a Note that is to be redeemed in part, the Trustee shall
authenticate for the Holder a new Note or Notes equal in principal amount to the
unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Company shall pay the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided in the Notes and in this
Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries in accordance with the respective
organizational documents of each such Subsidiary and the material rights
(charter and statutory) and franchises of the Company and each such Subsidiary;
provided, however, that the Company shall not be required to preserve, with
respect to itself, any material right or franchise
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and, with respect to any of its Subsidiaries, any such existence, material right
or franchise, if the Board of Directors of the Company shall determine in good
faith that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not, and will not be, adverse in any material respect to the
Holders.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all material lawful claims
for labor, materials and supplies that, if unpaid, might by law become a Lien
upon the property of the Company or any of its Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
negotiations or proceedings properly instituted and diligently conducted for
which adequate reserves, to the extent required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its Subsidiaries to,
maintain all properties used or useful in the conduct of its business in good
working order and condition (subject to ordinary wear and tear) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto and actively conduct and carry on its business; provided,
however, that nothing in this Section 4.05 shall prevent the Company or any of
the Subsidiaries of the Company from discontinuing the operation and maintenance
of any of its properties, if such discontinuance is (i) in the ordinary course
of business pursuant to customary business terms or (ii) in the good faith
judgment of the respective Boards of Directors or other governing body of the
Company or Subsidiary, as the case may be, desirable in the conduct of their
respective businesses and is not disadvantageous in any material respect to the
Holders.
(b) The Company shall provide or cause to be provided, for itself and each
of the Subsidiaries of the Company, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, are adequate and appropriate for the conduct of the
business of the Company and its Subsidiaries in a prudent manner, with reputable
insurers.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120 days after the end
of each of
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the Company's fiscal years, an Officer's Certificate (provided, however, that
one of the signatories to each such Officer's Certificate shall be the Company's
principal executive officer, principal financial officer or principal accounting
officer), as to such Officers' knowledge, without independent investigation, of
the Company's compliance with all conditions and covenants under this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and in the event any Default of the Company's exists, such Officers
shall specify the nature of such Default. Each such Officer's Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year-end.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Company's independent certified public accountants (who shall be a
firm of established national reputation) stating (A) that their audit
examination has included a review of the terms of this Indenture and the form of
the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; provided, however, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) (i) If any Default or Event of Default has occurred and is continuing
or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section 11.02, by registered or
certified mail or by facsimile transmission followed by hard copy by registered
or certified mail an Officer's Certificate specifying such event, notice or
other action within 10 days of its becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, Canada, the United Kingdom and
each other country in which they conduct business, all states, provinces, and
municipalities and other political subdivisions of the foregoing, and any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as could not singly or in the aggregate reasonably be
expected to have a material adverse effect on the financial condition or results
of operations of the Company and its Subsidiaries taken as a whole.
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SECTION 4.08. Reports to Holders.
The Company will file with the Commission all information, documents and
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is then subject to such filing
requirements. The Company will file with the Trustee, within 15 days after it
files them with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company files with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Regardless of whether the Company is required to furnish such
reports to its stockholders pursuant to the Exchange Act, the Company will cause
its consolidated financial statements, comparable to that which would have been
required to appear in annual or quarterly reports, to be delivered to the
Trustee and the Holders. The Company will also make such reports available to
prospective purchasers of the Notes or the Exchange Notes, as applicable,
securities analysts and broker-dealers upon their request. In addition, for so
long as any of the Notes remain outstanding the Company will make available to
any prospective purchaser of the Notes or beneficial owner of the Notes in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act, until such time as the Company has either exchanged
the Notes for securities identical in all material respects which have been
registered under the Securities Act or until such time as the holders thereof
have disposed of such Notes pursuant to an effective registration statement
filed by the Company. The Company will also comply with the other provisions of
TIA ss. 314(a).
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its Subsidiaries
to, directly or indirectly:
(a) declare or pay any dividend or make any distribution (other than
dividends
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or distributions made to the Company or any Wholly-Owned Subsidiary of the
Company and other than any dividend or distribution payable solely in
Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock;
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase
or acquire shares of any class of such Capital Stock (other than the
exchange of such Capital Stock or any warrants, rights or options to
acquire shares of any class of Capital Stock of the Company for Qualified
Capital Stock of the Company);
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company or a Subsidiary Guarantor that is subordinate
or junior in right of payment to the Notes or such Subsidiary Guarantor's
Guarantee; or
(d) make any Investment (other than Permitted Investments)
(each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an Event of
Default shall have occurred and be continuing, or (ii) the Company is not able
to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12, or (iii) the aggregate amount of
all Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of the Company) shall
exceed the sum of:
(v) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Company earned during the period beginning on the first day of the fiscal
quarter including the Issue Date and ending on the last day of the fiscal
quarter ending at least 30 days prior to the date the Restricted Payment
occurs (the "Reference Date") (treating such period as a single accounting
period); plus
(w) 100% of the aggregate net cash proceeds received by the Company
from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the
Reference Date of Qualified Capital Stock of the Company, including
treasury stock; plus
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(x) without duplication of any amounts included in clause (iii) (w)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock
(excluding, in the case of clauses (iii) (w) and (x), any net cash proceeds
from a Public Equity Offering to the extent used to redeem the Notes and
any net cash proceeds received by the Company from the sale of Qualified
Capital Stock of the Company or equity contribution which has been
financed, directly or indirectly, using funds (1) borrowed from the Company
or any of its Subsidiaries, unless and until and to the extent such
borrowing is repaid or (2) contributed, extended, guaranteed or advanced by
the Company or by any of its Subsidiaries); plus
(y) to the extent that any Investment made after the Issue Date has
been treated as a Restricted Payment and such Investment is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Investment (less the cost of
disposition, if any) (but only to the extent not included in clause
(iii)(v) above), and (B) the initial amount of such Investment.
Notwithstanding the foregoing, the provisions set forth above shall not
prohibit:
(1) the payment of any dividend or consummation of irrevocable
redemption within 60 days after the date of declaration of such dividend or
giving of irrevocable redemption notice if the dividend or redemption would
have been permitted on the date of declaration or giving of irrevocable
redemption notice;
(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of the Company,
either (i) solely in exchange for shares of Qualified Capital Stock of the
Company or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of
shares of Qualified Capital Stock of the Company;
(3) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes either (i) solely in
exchange for shares of Qualified Capital Stock of the Company, or (ii)
through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of the Company) of (A) shares of
Qualified Capital Stock of the Company or (B) Refinancing Indebtedness;
(4) if no Default or Event of Default shall have occurred and be
continuing, payments by the Company to repurchase Capital Stock or other
securities of the Company from shareholders of the Company (other than
Permitted Holders) in an aggregate amount not to exceed $500,000 in any
calendar year and $2,500,000 in the aggregate; and
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(5) during the period ending 60 days after the Issue Date, the
application of the proceeds of the offering of the Notes (in the manner
contemplated in the section of that certain offering memorandum with
respect to the Notes dated November 14, 1997 titled "Use of Proceeds") in
connection with the exchange by certain shareholders of SSWL of their
shares of Common Stock of SSWL for an equivalent number of shares of Common
Stock of the Company or a combination of shares of Common Stock of the
Company and the right to receive cash in an amount not to exceed
$15,000,000 in the aggregate.
In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, amounts expended pursuant to clauses (1), (2) (ii), and (3) (ii) (A)
shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officer's Certificate stating that such Restricted
Payment complies with this Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each an "Affiliate
Transaction"), other than (x) Affiliate Transactions permitted under paragraph
(b) of this Section 4.11 and (y) Affiliate Transactions on terms that are no
less favorable than those that might reasonably have been obtained or are
obtainable in a comparable transaction at such time on an arm's-length basis
from a Person that is not an Affiliate of the Company or such Subsidiary. All
Affiliate Transactions (and each series of related Affiliate Transactions which
are similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $1.0 million shall be evidenced
by an Officer's Certificate certifying that such transaction complies with the
foregoing provisions. If the Company or any Subsidiary of the Company enters
into an Affiliate Transaction (or a series of related Affiliate Transactions
which are similar or part of a common plan) involving aggregate payments or
other property with a fair market value in excess of $10.0 million, the Company
or such Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Subsidiary, as the
case may be, from a financial point of view, from an Independent Financial
Advisor and file the same with the Trustee.
(b) The restrictions set forth in paragraph (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees,
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consultants or agents of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors or senior
management; (ii) transactions exclusively between or among the Company and any
of its Wholly Owned Subsidiaries or exclusively between or among such Wholly
Owned Subsidiaries, provided such transactions are not otherwise prohibited by
this Indenture; (iii) any agreement as in effect as of the Issue Date
(including, without limitation, the Management Agreement and the Shareholder
Agreement) or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) or in any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; and (iv) Restricted Payments permitted
by this Indenture.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
The Company will not, and will not cause or permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, "incur"), any Indebtedness (including,
without limitation, Acquired Indebtedness) other than Permitted Indebtedness.
Notwithstanding the foregoing, if no Default or Event of Default shall have
occurred and be continuing at the time of or as a consequence of the incurrence
of any such Indebtedness, (x) the Company may incur Senior Indebtedness
(including, without limitation, Acquired Indebtedness) if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.25
to 1.0 if such incurrence occurs on or prior to December 31, 1999 and 2.50 to
1.0 if such incurrence occurs thereafter and (y) the Company may otherwise incur
Indebtedness (which does not constitute Senior Indebtedness) if on the date of
the incurrence of such Indebtedness, after giving effect to the incurrence
thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater
than 2.0 to 1.0 if such incurrence occurs on or prior to December 31, 1999 and
2.25 to 1.0 if such incurrence occurs thereafter.
Prior to any incurrence of Indebtedness pursuant to the last sentence of
the preceding paragraph (other than Permitted Indebtedness), the Company shall
deliver to the Trustee an Officer's Certificate setting forth the calculations
by which such incurrence was determined to be permitted.
SECTION 4.13. Limitation on Dividend and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not cause or permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
of the Company to (a) pay dividends or make any other
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distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Company or any other
Subsidiary of the Company; or (c) transfer any of its property or assets to the
Company or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Indenture; (3) the Credit Agreement; (4) non-assignment provisions of any
contract or any lease governing a leasehold interest of any Subsidiary of the
Company; (5) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (6) agreements existing on the Issue Date to the extent and in the
manner such agreements are in effect on the Issue Date; or (7) an agreement
governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or
incurred pursuant to an agreement referred to in clause (2), (3), (5) or (6)
above; provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to the
Company or to the Holders in any material respect as determined by the Board of
Directors of the Company in its reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (2), (3), (5) or (6), respectively.
SECTION 4.14. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder will have the
right to require that the Company purchase all or a portion of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer"), at
a purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase.
(b) Prior to the mailing of the notice referred to below, but in any event
within 30 days following any Change of Control, the Company covenants to (i)
repay in full all indebtedness, and terminate all commitments, under the Credit
Agreement and all other Senior Indebtedness the terms of which require repayment
upon a Change of Control or offer to repay in full all indebtedness, and
terminate all commitments, under the Credit Agreement and all other such Senior
Indebtedness and to repay the Indebtedness owed to each lender which has
accepted such offer or (ii) obtain the requisite consents under the Credit
Agreement and all other Senior Indebtedness to permit the repurchase of the
Notes as provided below. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase Notes
pursuant to the provisions described below. The Company's failure to comply with
the second preceding sentence shall be governed by Section 6.01(iii) and not
Section 6.01(iv).
(c) Within 30 days following the date upon which a Change of Control
occurs, the Company shall send, by first class mail, a notice to each Holder at
such Holder's last registered address, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control
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Offer. The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall state:
(i) that the Change of Control Offer is being made pursuant to this
Section 4.14, that all Notes tendered and not withdrawn will be accepted for
payment and that the Change of Control Offer shall remain open for a period of
20 Business Days or such longer period as may be required by law;
(ii) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 45 days
from the date such notice is mailed, other than as may be required by law) (the
"Change of Control Payment Date");
(iii) that any Note not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date;
(v) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day prior to the Change of Control
Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Notes
the Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided, however, that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral multiples
thereof; and
(viii) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent in accordance with Section
2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to the Trustee
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Notes so accepted together with an Officer's Certificate stating the Notes or
portions thereof being purchased by the Company. Upon receipt by the Paying
Agent of the monies specified in clause (ii) above and a copy of the Officer's
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. For purposes of this Section 4.14,
the Trustee shall act as the Paying Agent.
Neither the Board of Directors of the Company nor the Trustee may waive the
provisions of this Section 4.14 relating to the Company's obligation to make a
Change of Control Offer.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.14, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the provisions of this Section 4.14 by virtue thereof.
SECTION 4.15. Limitation on Asset Sales.
(a) The Company will not, and will not cause or permit any of its
Subsidiaries to, consummate an Asset Sale unless:
(i) the Company or the applicable Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of (as determined in good
faith by the Company's Board of Directors);
(ii) at least 75% of the consideration received by the Company or the
Subsidiary, as the case may be, from such Asset Sale shall be in the form of
cash or Cash Equivalents and is received at the time of such disposition; and
(iii) upon the consummation of an Asset Sale, the Company shall apply,
or cause such Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 360 days of receipt thereof either (A) to prepay any Senior
Indebtedness or Guarantor Senior Indebtedness and, in the case of any Senior
Indebtedness or Guarantor Senior Indebtedness under any revolving credit
facility, effect a permanent reduction in the commitment available under such
revolving credit facility, (B) to make an investment in properties and assets
that replace the properties and assets that were the subject of such Asset Sale
or in properties and assets that will be used in the business of the Company and
its Subsidiaries as existing on the Issue Date or in businesses reasonably
related thereto (as determined in good faith by the Company's Board of
Directors)
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("Replacement Assets"), or (C) a combination of prepayment and investment
permitted by the foregoing clauses (iii) (A) and (iii) (B). Pending final
application, the Company or the applicable Subsidiary may temporarily reduce
Indebtedness under any revolving credit facility or invest in cash or Cash
Equivalents. On the 361st day after an Asset Sale or such earlier date, if any,
as the Board of Directors of the Company or of such Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii) (A), (iii) (B) and (iii) (C) of the next preceding sentence (each, a "Net
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
the Company or such Subsidiary has failed to apply on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (iii) (A), (iii) (B) and
(iii) (C) of the next preceding sentence (each, a "Net Proceeds Offer Amount")
shall be applied by the Company or such Subsidiary to make an offer to purchase
(the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not
less than 30 nor more than 45 days following the applicable Net Proceeds Offer
Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal
to the Net Proceeds Offer Amount at a price equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest thereon,
if any, to the date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any Subsidiary of the Company,
as the case may be, in connection with any Asset Sale is converted into or sold
or otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this Section 4.15. The Company or any such
Subsidiary of the Company, as the case may be, may defer the Net Proceeds Offer
until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in
excess of $5.0 million resulting from one or more Asset Sales (at which time,
the entire unutilized Net Proceeds Offer Amount, and not just the amount in
excess of $5.0 million, shall be applied as required pursuant to this
paragraph).
(b) Notwithstanding the immediately preceding paragraph, the Company and
its Subsidiaries will be permitted to consummate an Asset Sale without complying
with such paragraph to the extent (i) at least 75% of the consideration for such
Asset Sale constitutes Replacement Assets and/or Cash Equivalents and (ii) such
Asset Sale is for fair market value; provided, however, that any consideration
not constituting Replacement Assets received by the Company or any of its
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the preceding paragraph.
(c) Subject to the deferral of the Net Proceeds Offer contained in clause
(a)(iii) above, each notice of a Net Proceeds Offer pursuant to this Section
4.15 shall be mailed or caused to be mailed, by first class mail, by the Company
not more than 25 days after the Net Proceeds Offer Trigger Date to all Holders
at their last registered addresses, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Net Proceeds Offer and shall state the following
terms:
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(i) that the Net Proceeds Offer is being made pursuant to this Section
4.15, that all Notes tendered will be accepted for payment; provided, however,
that if the aggregate principal amount of Notes tendered in a Net Proceeds Offer
plus accrued interest at the expiration of such offer exceeds the aggregate
amount of the Net Proceeds Offer, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000 or
multiples thereof shall be purchased) and that the Net Proceeds Offer shall
remain open for a period of 20 Business Days or such longer period as may be
required by law;
(ii) the purchase price (including the amount of accrued interest) and
the Net Proceeds Offer Payment Date (which shall be not less than 30 nor more
than 45 days following the applicable Net Proceeds Offer Trigger Date and which
shall be at least five Business Days after the Trustee receives notice thereof
from the Company);
(iii) that any Note not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Offer Payment Date;
(v) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the Net Proceeds Offer Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is withdrawing
its election to have such Note purchased; and
(vii) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided, however, that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral multiples
thereof;
On or before the Net Proceeds Offer Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(i) above,
(ii) deposit with the Paying Agent in accordance
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with Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus
accrued interest, if any, of all Notes to be purchased and (iii) deliver to the
Trustee Notes so accepted together with an Officer's Certificate stating the
Notes or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price plus accrued interest, if any. For purposes of this Section
4.15, the Trustee shall act as the Paying Agent. The Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Upon the payment of the purchase
price for the Notes accepted for purchase, the Trustee shall return the Notes
purchased to the Company for cancellation. Any monies remaining after the
purchase of Notes pursuant to a Net Proceeds Offer shall be returned within
three Business Days by the Trustee to the Company except with respect to monies
owed as obligations to the Trustee pursuant to Article Seven. For purposes of
this Section 4.15, the Trustee shall act as the Paying Agent.
To the extent the amount of Notes tendered pursuant to any Net Proceeds
Offer is less than the amount of Net Cash Proceeds subject to such Net Proceeds
Offer, the Company may use any remaining portion of such Net Cash Proceeds not
required to fund the repurchase of tendered Notes for general corporate purposes
and such Net Proceeds Offer Amount shall be reset to zero.
(d) The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Section 4.15,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under Section 4.15 by
virtue thereof.
SECTION 4.16. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the Company or to a Wholly Owned Subsidiary of the Company)
or permit any Person (other than the Company or a Wholly Owned Subsidiary of the
Company) to own any Preferred Stock of any Subsidiary of the Company.
SECTION 4.17. Limitation on Liens.
The Company will not, and will not cause or permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or permit or suffer to exist
any Liens of any kind against or upon any property or assets of the Company or
any of its Subsidiaries whether owned on the Issue Date or acquired after the
Issue Date, or any proceeds therefrom, or assign or otherwise convey any right
to receive income or profits therefrom unless (i) in the case of Liens securing
Indebtedness
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that is expressly subordinate or junior in right of payment to the Notes or any
Guarantee, the Notes and such Guarantee, as the case may be, are secured by a
Lien on such property, assets or proceeds that is senior in priority to such
Liens and (ii) in all other cases, the Notes and the Guarantees are equally and
ratably secured, except for (A) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing Senior Indebtedness; (C) Liens securing the Notes and the Guarantees;
(D) Liens of the Company or a Wholly Owned Subsidiary of the Company on assets
of any Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness
which is incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens (1) are no
less favorable to the Holders and are not more favorable to the lienholders with
respect to such Liens than the Liens in respect of the Indebtedness being
Refinanced and (2) do not extend to or cover any property or assets of the
Company or any of its Subsidiaries not securing the Indebtedness so Refinanced
(other than property or assets subject to Liens under clause (B) above); and (F)
Permitted Liens.
SECTION 4.18. Conduct of Business.
The Company will not, and will not cause or permit any of its Subsidiaries
to, engage in any businesses other than the businesses in which the Company is
engaged on the Issue Date and any businesses reasonably related thereto (as
determined in good faith by the Company's Board of Directors).
SECTION 4.19. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries transfers or causes to be
transferred, in one transaction or a series of related transactions, any
property to any Subsidiary that is not a Subsidiary Guarantor, or if the Company
or any of its Subsidiaries shall organize, acquire or otherwise invest in
another Subsidiary, then such transferee or acquired or other Subsidiary shall
(a) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
this Indenture on the terms set forth in this Indenture and (b) deliver to the
Trustee an opinion of counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Subsidiary. After the
execution and delivery of such supplemental indenture, such Subsidiary shall be
a Subsidiary Guarantor for all purposes of this Indenture.
SECTION 4.20. Prohibition on Incurrence
of Senior Subordinated Debt.
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The Company will not incur or suffer to exist Indebtedness that by its
terms is senior in right of payment to the Notes and subordinate in right of
payment to any other Indebtedness of the Company. No Subsidiary Guarantor shall
incur or suffer to exist Indebtedness that by its terms is senior in right of
payment to the Guarantees and subordinate in right of payment to any other
Indebtedness of such Subsidiary Guarantor.
SECTION 4.21. Payment of Additional Amounts.
All payments by the Company in respect of the Notes or any Subsidiary
Guarantor in respect of its Guarantee shall be made free and clear of and
without withholding or deduction for or on account of any present or future
taxes, duties, assessments or other governmental charges of whatever nature,
including penalties, interest and any other liabilities related thereto
("Taxes"), imposed or levied by or on behalf of Canada or any relevant
jurisdiction or any political subdivision or authority thereof or therein having
power to tax. If the Company or any Subsidiary Guarantor is required to make any
withholding or deduction for or on account of any Taxes from any payment made
under or with respect to the Notes or the Guarantees, the Company or such
Subsidiary Guarantor, as the case may be, will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each Holder (including Additional Amounts) after such withholding or deduction
will not be less than the amount the Holder would have received had such Taxes
not been withheld or deducted; provided, that no Additional Amounts will be
payable to a Holder (an "Excluded Holder") (i) with which the Company does not
deal at arm's length (within the meaning of the Income Tax Act (Canada)) at the
time of making such payment, (ii) which is subject to such Taxes by reason of
its being connected with the jurisdiction imposing such tax or authority thereof
otherwise than by the mere holding of the Notes or the receipt of payments
thereunder, (iii) which presents any Note for payment of principal more than 60
days after the later of (x) the date on which payment first became due and (y)
if the full amount payable has not been received by the Trustee on or prior to
such due date, the date on which, the full amount payable having been so
received, notice to that effect shall have been given to the Holders by the
Trustee, except to the extent that the Holder would have been entitled to such
Additional Amounts on presenting such Note for payment on the last day of the
applicable 60-day period, (iv) which failed to duly and timely comply with a
timely request of the Company to provide information, documents or other
evidence concerning the Holder's nationality, residence, entitlement to treaty
benefits, identity or connection with the jurisdiction imposing such tax, if and
to the extent that due and timely compliance with such request would have
reduced or eliminated any Taxes as to which Additional Amounts would have
otherwise been payable to such Holder but for this clause (iv), (v) on account
of any estate, inheritance, gift, sale, transfer, personal property or other
similar Tax, (vi) which is a fiduciary, a partnership or not the beneficial
owner of any payment on a Note, if and to the extent that any beneficiary or
settlor of such fiduciary, any partner in such partnership or the beneficial
owner of such payment (as the case may be) would not have been entitled to
receive Additional Amounts with respect to such payment if such beneficiary,
settlor, partner or beneficial owner had been the
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Holder of such Note or (vii) any combination of the foregoing numbered clauses
of this proviso.
The Company and each Subsidiary Guarantor will also (i) make such
withholding or deduction as required by applicable law and (ii) remit the full
amount deducted or withheld to the relevant authority in accordance with
applicable law. The Company or any Subsidiary Guarantor, as the case may be,
will furnish to the Trustee, within 60 days after the date the payment of any
Taxes is due pursuant to applicable law, copies of tax receipts evidencing that
such payment has been made by the Company or such Subsidiary Guarantor, in such
form as provided in the normal course by the taxing authority imposing such
Taxes and as is reasonably available to the Company or such Subsidiary
Guarantor. The Trustee shall make such evidence available to the Holders of
Notes upon request.
The Company and each Subsidiary Guarantor, jointly and severally, will
indemnify and hold harmless each Holder of Notes that are outstanding on the
date that withholding or deduction was required pursuant to applicable law
(other than an Excluded Holder) and upon written notice reimburse each such
Holder for the amount of (i) any taxes so levied or imposed and paid by such
Holder as a result of payments made under or with respect to the Notes or the
Guarantees, (ii) any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto and (iii) any taxes imposed with
respect to any reimbursement under clause (i) or (ii) above.
Whenever in this Indenture there is mentioned, in any context, (a) the
payment of principal (and premium, if any), (b) purchase prices in connection
with a repurchase of Notes, (c) interest or (d) any other amount payable on or
with respect to any of the Notes, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for in this Section 4.21
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof. The foregoing obligations shall survive any
termination of this Indenture or the defeasance of any obligations pursuant to
this Indenture.
The Company may redeem, at its option, all, but not less than all, the
Notes at a redemption price equal to 100% of the principal amount so redeemed,
plus accrued and unpaid interest, if any, thereon to the date of redemption if
the Company (a) determines and certifies to the Trustee immediately prior to the
giving of the notice of redemption that (i) it has or will become obligated to
pay any Additional Amounts in respect of the Notes as a result of any change in
or amendment to the laws (or any regulations or rulings promulgated thereunder)
of Canada or any relevant jurisdiction or any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in any official
position regarding the application or interpretation of such laws, regulations
or rulings (including a holding by a court of competent jurisdiction) which
change, amendment, application or interpretation is announced or becomes
effective on or after the Issue Date, (ii) such obligation cannot be avoided by
the Company taking reasonable measures available to it, (iii) such obligation
did not arise, directly or indirectly, from any transaction, action
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or omission by the Company (whether or not such transaction, action or omission
is otherwise permitted under the terms of this Indenture) and (b) provides the
Trustee with a written legal opinion of independent legal counsel to the Company
to the effect that the Company has become obligated to pay Additional Amounts as
a result of a change, amendment, official application or interpretation
described above and that the Company can not avoid payment of such Additional
Amounts by taking reasonable measures available to it. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address.
The Company will pay any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise in any jurisdiction from the execution, delivery or registration of the
Notes or the Guarantees or any other document or instrument referred to in this
Indenture or the Notes.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
(a) The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and its Subsidiaries) unless: (i) either (1)
the Company shall be the surviving or continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
and of the Company's Subsidiaries substantially as an entirety (the "Surviving
Entity") (x) shall be a corporation organized and validly existing under the
laws of the United States or any State thereof or the District of Columbia or
the federal laws of Canada or any province thereof and (y) shall expressly
assume as primary obligor, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, the due and
punctual payment of the principal of, and premium, if any, and interest on all
of the Notes and the performance of every covenant of the Notes, this Indenture
and the Registration Rights Agreement on the part of the Company to be performed
or observed, as the case may be; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i) (2) (y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or
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greater than the Consolidated Net Worth of the Company immediately prior to such
transaction and (2) shall be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12; (iii)
immediately before and immediately after giving effect to such transaction and
the assumption contemplated by clause (i) (2) (y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred and any Lien granted in connection with or in
respect of the transaction), no Default or Event of Default shall have occurred
or be continuing; and (iv) the Company or the Surviving Entity, as the case may
be, shall have delivered to the Trustee an officer's certificate and an opinion
of counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.
(b) For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
(c) Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of Section 4.15) will not, and the Company will not cause or permit any
Subsidiary Guarantor to, consolidate with or merge with or into any Person other
than the Company or another Subsidiary Guarantor that is a Wholly Owned
Subsidiary unless: (a) the entity formed by or surviving any such consolidation
or merger (if other than the Subsidiary Guarantor) or to which such sale, lease,
conveyance or other disposition shall have been made is a corporation organized
and existing under the laws of the United States or any state thereof or the
District of Columbia or the federal laws of Canada or any province thereof; (b)
such entity assumes by execution of a supplemental indenture all of the
obligations of the Subsidiary Guarantor under its Guarantee; (c) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and (d) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (ii) of paragraph (a) of this
Section 5.01. Any merger or consolidation of a Subsidiary Guarantor with and
into the Company (with the Company being the surviving entity) or another
Subsidiary Guarantor that is a Wholly Owned Subsidiary need only comply with
clause (iv) of paragraph (a) of this Section 5.01.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of
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the assets of the Company in accordance with Section 5.01, in which the Company
is not the continuing corporation, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such successor had been named as the Company
herein.
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" means any of the following events:
(i) the failure to pay interest (including any Additional Interest, if any)
on any Notes when the same becomes due and payable and the default continues for
a period of 30 days (whether or not such payment is prohibited by Article Ten of
this Indenture);
(ii) the failure to pay the principal on any Notes when such principal
becomes due and payable, at maturity, upon acceleration, upon redemption or
otherwise (including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not
such payment is prohibited by Article Ten of this Indenture);
(iii) a default in the observance or performance of any other covenant or
agreement contained in this Indenture which default continues for a period of 30
days after the Company receives written notice specifying the default (and
demanding that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes (except in the case
of a default with respect to Section 5.01, which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
(iv) the failure to pay at final maturity (giving effect to any applicable
grace periods and any extensions thereof) the principal amount of any
Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness if the
aggregate principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
final maturity or which has been accelerated, aggregates $10.0 million or more
at any time;
(v) one or more judgments in an aggregate amount in excess of $10.0 million
shall have been rendered against the Company or any of its Subsidiaries and such
judgments remain undischarged, unpaid or unstayed for a period of 60 days after
such judgment or judgments
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become final and non-appealable;
(vi) the Company or any of its Significant Subsidiaries pursuant to or
under or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding;
(b) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(d) makes a general assignment for the benefit of its creditors; or
(e) shall generally not pay its debts when such debts become due or
shall admit in writing its inability to pay its debts generally;
(vii) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company or any Significant Subsidiary of
the Company in an involuntary case or proceeding,
(b) appoints a Custodian of the Company or any Significant Subsidiary
of the Company for all or substantially all of its Properties, or
(c) orders the liquidation of the Company or any Significant
Subsidiary of the Company, and in each case the order or decree remains unstayed
and in effect for 60 consecutive days; or
(viii) any of the Guarantees cease to be in full force and effect or any of
the Guarantees are declared to be null and void or invalid and unenforceable or
any of the Subsidiary Guarantors denies or disaffirms its liability under its
Guarantees (other than by reason of release of a Subsidiary Guarantor in
accordance with the terms of this Indenture).
SECTION 6.02. Acceleration.
(a) Upon the happening of an Event of Default specified in Section 6.01
(other than an Event of Default specified in clause (vi) or (vii) of Section
6.01) the Trustee may, or the holders of at least 25% in principal amount of
outstanding Notes may, declare the principal of and
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accrued interest on all the Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Event of Default and that
it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i)
shall become immediately due and payable or (ii) if there are any amounts
outstanding under the Credit Agreement, shall become due and payable upon the
first to occur of an acceleration under the Credit Agreement, or five business
days after receipt by the Company and the Representative under the Credit
Agreement of such Acceleration Notice, unless all Events of Default specified in
such Acceleration Notice (other than any Event of Default in respect of
non-payment of principal) shall have been cured or waived. In the event of a
declaration because an Event of Default set forth in Section 6.01(iv) has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if the missed payments in respect of such Indebtedness
have been paid or if the holders of the Indebtedness that is subject to
acceleration have rescinded their declaration of acceleration and the Trustee
has received written notice of such Indebtedness having been repaid in full, in
each case within 60 days thereof and if (i) the annulment of such acceleration
would not conflict with any judgment or decree of a court of competent
jurisdiction, (ii) all existing Events of Default, except non-payment of
principal or interest which have become due solely because of the acceleration,
have been cured or waived and (iii) the Company has delivered an Officer's
Certificate to the Trustee to the effect of clauses (i) and (ii) above. If an
Event of Default of the type described in clause (vi) or (vii) of Section 6.01
occurs and is continuing, then all unpaid principal of, and premium, if any, and
accrued and unpaid interest on all of the outstanding Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
(b) At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Company and the Trustee may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clause (vi) or (vii) of Section 6.01, the Trustee shall have received an
Officer's Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available
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remedy by proceeding at law or in equity to collect the payment of the
principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes may be
enforced by the Trustee even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Prior to the declaration of acceleration of the Notes, the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
by notice to the Trustee may, on behalf of the Holders of all the Notes, waive
any existing Default or Event of Default and its consequences under this
Indenture, except a Default or Event of Default specified in Section 6.01(i) or
(ii) or in respect of any provision hereof which cannot be modified or amended
without the consent of the Holder so affected pursuant to Section 9.02. When a
Default or Event of Default is so waived, it shall be deemed cured and shall
cease to exist. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of
the TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded
from this Indenture and the Notes, as permitted by the TIA.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of the Notes may not enforce this
Indenture or the Notes except as provided in this Article Six and under the TIA.
The Holders of not less than a majority in aggregate principal amount of the
outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided, however, that the Trustee
may refuse to follow any direction (a) that conflicts with any rule of law or
this Indenture, (b) that the Trustee determines may be unduly prejudicial to the
rights of another Holder, or (c) that may expose the Trustee to personal
liability for which reasonable indemnity provided to the Trustee against such
liability shall be inadequate; provided, further, however, that the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent with
such direction or this Indenture. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
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No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture or the Notes or any remedy hereunder, unless the
Holders of at least 25% in aggregate principal amount of the outstanding Notes
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
Trustee has failed to institute such proceeding within 25 days after receipt of
such notice, request and offer of indemnity and the Trustee, within such 25-day
period, has not received directions inconsistent with such written request by
Holders of not less than a majority in aggregate principal amount of the
outstanding Notes.
The foregoing limitations shall not apply to a suit instituted by a Holder
of a Note for the enforcement of the payment of the principal of, premium, if
any, or interest on, such Note on or after the respective due dates expressed or
provided for in such Note.
A Holder may not use this Indenture to prejudice the rights of any other
Holders or to obtain priority or preference over such other Holders.
SECTION 6.07. Right of Holders To Receive Payment.
Notwithstanding any other provision in this Indenture, the right of any
Holder of a Note to receive payment of the principal of, premium, if any, and
interest on such Note, on or after the respective due dates expressed or
provided for in such Note, or to bring suit for the enforcement of any such
payment on or after the respective due dates, is absolute and unconditional and
shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in clause (i) or (ii) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, or any other obligor on the
Notes for the whole amount of the principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum provided for by the
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents,
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counsel, accountants and experts) and the Holders allowed in any judicial
proceedings relative to the Company or Subsidiaries (or any other obligor upon
the Notes), their creditors or their property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.07. The Company's payment obligations under this Section
6.09 shall be secured in accordance with the provisions of Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six it shall pay
out such money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for interest accrued on the Notes, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for interest;
Third: to Holders for the principal amounts (including any premium) owing
under the Notes, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for the principal (including any
premium); and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court may in its discretion require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or
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defenses made by the party litigant. This Section 6.11 does not apply to any
suit by the Trustee, any suit by a Holder pursuant to Section 6.07, or a suit by
a Holder or Holders of more than 10% in aggregate principal amount of the
outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture or any Note and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee may
exercise such of the rights and powers vested in it by this Indenture and shall
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture and no duties, covenants or obligations of the Trustee
shall be implied in this Indenture.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own
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willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
(g) The Trustee may refuse to perform any duty or exercise any right or
power hereunder unless (i) it is provided adequate funds to enable it to do so
and (ii) it receives indemnity reasonably satisfactory to it against any loss,
liability, fee or expense.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not and
shall not be required to investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel of its selection and may require an Officer's Certificate or an Opinion
of Counsel, or both, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or
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omits to take in good faith in reliance on such Officer's Certificate or Opinion
of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action that it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled, upon reasonable notice to the Company, to examine the books,
records, and premises of the Company, personally or by agent or attorney and to
consult with the officers and representatives of the Company, including the
Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
may be incurred by it in compliance with such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in respect
of the performance of its powers and duties hereunder.
(h) Delivery of reports, information and documents to the Trustee under
Section 4.08 is for informational purposes only and the Trustee's receipt of the
foregoing shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company, any of their
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or
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adequacy of this Indenture or the Notes, and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture or any document entered into
or issued in connection with the issuance and sale of the Notes or any statement
in the Notes other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it is
known to a Trust Officer, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Note, including an accelerated payment, a
Default in payment on the Change of Control Payment Date pursuant to a Change of
Control Offer or on the Net Proceeds Offer Payment Date pursuant to a Net
Proceeds Offer and a Default in compliance with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of
the proviso to Section 315(b) of the TIA and such proviso to Section 315(b) of
the TIA is hereby expressly excluded from this Indenture and the Notes, as
permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after May 15 of each year beginning with 1997, the Trustee
shall, to the extent that any of the events described in TIA Section 313(a)
occurred within the previous twelve months, but not otherwise, mail to each
Holder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be mailed
to the Company and filed with the Commission and each stock exchange, if any, on
which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become listed on
any stock exchange and the Trustee shall comply with TIA Section 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such compensation
for its services as has been agreed to in writing signed by the Company and the
Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket disbursements, advances or
expenses incurred or made by it in connection with the performance of its duties
under this Indenture. Such expenses shall include the reasonable fees and
expenses of
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the Trustee's agents, counsel, accountants and experts.
The Company shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders, Affiliates and directors and
officers for, and hold them each harmless against, any and all loss, liability,
damage, claim or expense (including reasonable fees and expenses of counsel),
including taxes (other than taxes based on the income of the Trustee) incurred
by any of them except for such actions to the extent caused by any negligence,
bad faith or willful misconduct on their part, arising out of or in connection
with the acceptance or administration of this trust including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity, provided, however,
that failure to so notify the Company shall not release the Company of its
obligations hereunder unless and to the extent such failure results in the
forfeiture by the Company of substantial rights and defenses. At the Trustee's
sole discretion, the Company shall defend the claim and the Trustee shall
cooperate and may participate in the defense; provided, however, that any
settlement of a claim shall be approved in writing by the Trustee, such approval
not to be unreasonably withheld. Alternatively, the Trustee may at its option
have separate counsel of its own choosing and the Company shall pay the
reasonable fees and expenses of such counsel.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or premium, if any, or interest on particular
Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vi) or (vii) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law. The provisions of this Section 7.07
shall survive the termination of this Indenture or the resignation or removal of
the Trustee.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in writing
at least 30 days in advance of such resignation; provided, however, that no such
resignation shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 7.08. The Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee and appoint a
successor Trustee with the Company's consent, by so notifying the Company and
the Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
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(2) the Trustee is adjudged bankrupt or insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall notify each Holder of such event
and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided in Section 7.07, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail notice of such successor Trustee's
appointment to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided, however, that such
corporation shall be otherwise qualified and eligible under this Article Seven.
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SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirement of
TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a Trustee
that is a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition,
and have a Corporate Trust Office in the City of New York. In addition, if the
Trustee is a corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA Section 310(a)(2). The Trustee shall comply with TIA Section 310(b);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company,
as obligor of the Notes.
SECTION 7.11. Preferential Collection of
Claims Against the Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
The provisions of TIA Section 311 shall apply to the Company, as obligor of the
Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of Company's Obligations.
This Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in this Indenture) as to all outstanding Notes
when (i) either (a) all Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust) have been delivered to the Trustee for cancellation or (b) all
Notes not theretofore delivered to the Trustee for cancellation have become due
and payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the Notes to
the date of deposit together with
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irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under this Indenture by the Company;
and (iii) the Company has delivered to the Trustee an Officer's Certificate and
an Opinion of Counsel stating that all conditions precedent under this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with.
The Company may, at its option and at any time, elect to have its
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, except
for (i) the rights of Holders to receive payments in respect of the principal
of, premium, if any, and interest on the Notes when such payments are due, (ii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith including, but not limited to, those contained in Section
7.07 and (iv) the Legal Defeasance provisions of this Section 8.01. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company and the Subsidiary Guarantors released with respect to covenants
contained in Sections 4.10 through 4.20 and Article Five ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the Notes. In the event of
Covenant Defeasance, those events described under Section 6.01 (except those
events described in Section 6.01(i),(ii),(vi) and (vii)) will no longer
constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders cash in United States dollars, non-callable U.S.
Government Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the Notes
on the stated date for payment thereof or on the applicable Redemption Date, as
the case may be;
(ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (A)(w) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (x) since the date
of this Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders will not recognize income, gain or loss
for federal income
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tax purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred and (B) an
opinion of counsel in Canada reasonably acceptable to the Trustee confirming
that the Holders will not recognize income, gain or loss for Canadian federal
income tax purposes as a result of such Legal Defeasance and will be subject to
Canadian federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(iii) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred and (B) an opinion of counsel in Canada reasonably acceptable
to the Trustee confirming that the Holders will not recognize income, gain or
loss for Canadian federal income tax purposes as a result of such Covenant
Defeasance and will be subject to Canadian federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default under Section
6.01(vi) or (vii) are concerned, at any time in the period ending on the 91st
day after the date of deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes concurrently with such incurrence);
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(vi) the Company shall have delivered to the Trustee an Officer's
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others;
(vii) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with;
(viii) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (A) the trust funds will not be subject to any rights
of holders of Indebtedness of the
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Company other than the Notes and (B) after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and
(ix) certain other customary conditions precedent are satisfied.
SECTION 8.02. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to Section 8.01, and shall
apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.03. Repayment to the Company.
Subject to Section 8.01, the Trustee and the Paying Agent shall promptly
pay to the Company upon request any excess U.S. Legal Tender or U.S. Government
Obligations held by them at any time and thereupon shall be relieved from all
liability with respect to such money. The Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal
or interest that remains unclaimed for one year; provided, however, that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holders entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person.
SECTION 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.01 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the
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Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01; provided, however, that if the Company has made any payment
of interest on or principal of any Notes because of the reinstatement of their
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.
SECTION 8.05. Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company and (iii) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified in Section 8.01;
provided the legal counsel delivering such Opinion of Counsel may rely as to
matters of fact on one or more Officer's Certificates of the Company.
ARTICLE NINE
MODIFICATION OF THE INDENTURE
SECTION 9.01. Without Consent of Holders.
Notwithstanding Section 9.02, the Company, the Subsidiary Guarantors and
the Trustee may amend, waive or supplement this Indenture without notice to or
consent of any Holder: (a) to cure any ambiguity, defect or inconsistency; (b)
to comply with Section 5.01 of this Indenture; (c) to provide for uncertificated
Notes in addition to certificated Notes; (d) to comply with any requirements of
the Commission in order to effect or maintain the qualification of this
Indenture under the TIA; or (e) to make any change that would provide any
additional benefit or rights to the Holders or that does not adversely affect
the rights of any Holder in any material respect. Notwithstanding the foregoing,
the Trustee and the Company may not make any change that adversely affects the
rights of any Holder under this Indenture without the consent of such Holder. In
formulating its opinion on such matters, the Trustee will be entitled to rely on
such evidence as it deems appropriate, including, without limitation, solely on
an Opinion of Counsel; provided, however, that in delivering such Opinion of
Counsel, such counsel may rely as to matters of fact, on a certificate or
certificates of officers of the Company.
SECTION 9.02. With Consent of Holders.
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All other modifications, waivers and amendments of this Indenture may be
made with the consent of the Holders of a majority in principal amount of the
then outstanding Notes, except that, without the consent of each Holder of the
Notes affected thereby, no amendment or waiver may: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes; (iii) reduce the principal of or
change or have the effect of changing the fixed maturity of any Notes, or change
the date on which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor; (iv) make any Notes payable
in money other than that stated in the Notes; (v) make any change in provisions
of this Indenture protecting the right of each Holder to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; (vi) amend,
change or modify in any material respect the obligation of the Company to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; (vii) modify or change any provision of this Indenture affecting the
subordination or ranking of the Notes or any Guarantee in a manner which
adversely affects the Holders; (viii) modify or amend the obligation of the
Company to pay Additional Amounts; or (ix) release any Subsidiary Guarantor from
any of its obligations under its Guarantee or this Indenture other than in
accordance with the terms of this Indenture.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective (as provided in Section 9.04), the Company shall mail to the Holders
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect; provided, however, that this Section 9.03
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is
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not made on any Note. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Note or portion of
such Note by notice to the Trustee or the Company received before the date on
which the Trustee receives an Officer's Certificate certifying that the Holders
of the requisite principal amount of Notes have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver. An amendment,
supplement or waiver becomes effective upon receipt by the Trustee of such
Officer's Certificate and evidence of consent by the Holders of the requisite
percentage in principal amount of outstanding Notes.
The Company may, but shall not be obligated to, fix a Record Date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of outstanding Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determine, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided, however, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. In executing such supplement or waiver the Trustee shall be entitled
to receive indemnity reasonably satisfactory to it, and shall be fully protected
in relying upon an Opinion of Counsel and an Officer's Certificate of the
Company, stating that no event of default shall occur as a result of such
amendment, supplement or waiver and that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture; provided the legal counsel delivering such Opinion
of Counsel may rely as to matters of fact on one or more Officer's Certificates
of the Company. Such Opinion of
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Counsel shall not be an expense of the Trustee.
SECTION 9.07. Trustee To Sign Consents.
The Trustee shall at the request of the Company execute a consent or
approval of any merger, consolidation or sale of assets pursuant to Article Five
if and to the extent such consent or approval is required by applicable law;
provided, however, that the Trustee may, but shall not be obligated to, execute
any such consent or approval which affects the Trustee's own rights, duties or
immunities under this Indenture. In executing such approval or consent the
Trustee will receive indemnity reasonably satisfactory to it, and shall be fully
protected in relying upon an Opinion of Counsel and an Officer's Certificate of
the Company, stating that no event of default shall occur as a result of such
consent or approval, that no Holder consent is required with respect to such
merger, consolidation or sale of assets and that the execution of any consent or
approval authorized pursuant to this Article Nine is authorized or permitted by
this Indenture; provided, the legal counsel delivering such Opinion of Counsel
may rely as to matters of fact on one or more Officer's Certificates of the
Company. Such Opinion of Counsel shall not be an expense of the Trustee.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of the Notes, by its
acceptance thereof, likewise covenants and agrees, that all Notes shall be
issued subject to the provisions of this Article Ten; and each Person holding
any Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all Obligations on the Notes by
the Company shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
or Cash Equivalents of all Obligations on Senior Indebtedness, including,
without limitation, the Company's obligations under the Credit Agreement; that
the subordination is for the benefit of, and shall be enforceable directly by,
the holders of Senior Indebtedness, and that each holder of Senior Indebtedness
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired Senior Indebtedness in reliance upon the
covenants and provisions contained in this Indenture and the Notes.
SECTION 10.02. Suspension of Payment When
Senior Indebtedness is in Default.
(a) No direct or indirect payment by or on behalf of the Company of
principal of,
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premium, if any, or interest on, the Notes whether pursuant to the terms of the
Notes or upon acceleration or otherwise shall be made if, at the time of such
payment, there exists a default in the payment of all or any portion of
principal of, premium, if any, or interest on, any Designated Senior
Indebtedness (and the Trustee has received written notice thereof), and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Senior Indebtedness. In
addition, if any other event of default occurs and is continuing with respect to
any Designated Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing such Designated Senior Indebtedness,
permitting the holders of such Designated Senior Indebtedness then outstanding
to accelerate the maturity thereof and if the Representative for the respective
issue of Designated Senior Indebtedness gives notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all events of default
have been cured or waived or have ceased to exist or the Trustee receives notice
thereof from the Representative for the respective issue of Designated Senior
Indebtedness terminating the Blockage Period (as defined below), during the 179
days after the delivery of such Default Notice (the "Blockage Period"), neither
the Company nor any other Person on its behalf shall (x) make any payment of any
kind or character with respect to any Obligations on the Notes or (y) acquire
any of the Notes for cash or property or otherwise. Notwithstanding anything
herein to the contrary, in no event will a Blockage Period extend beyond 179
days from the date the payment on the Notes was due and only one such Blockage
Period may be commenced within any 360 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any Blockage
Period with respect to the Designated Senior Indebtedness shall be, or be made,
the basis for commencement of a second Blockage Period by the Representative of
such Designated Senior Indebtedness whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days (it being acknowledged that
any subsequent action, or any breach of any financial covenants for a period
commencing after the date of commencement of such Blockage Period that, in
either case, would give rise to an event of default pursuant to any provisions
under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
10.02(a), such payment shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amount of Senior Indebtedness held by
such holders) or their respective Representatives upon written instruction of
the Company or a court of competent jurisdiction. The Trustee shall be entitled
to rely on written information regarding amounts then due and owing on the
Senior Indebtedness, if any, received from the Company and only amounts included
in the information provided to the Trustee shall be paid to the holders of
Senior Indebtedness.
Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of
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Notes to take any action to accelerate the maturity of the Notes pursuant to
Section 6.02 or to pursue any rights or remedies hereunder; provided that all
Senior Indebtedness thereafter due or declared to be due shall first be paid in
full in cash or Cash Equivalents before the Holders are entitled to receive any
payment of any kind or character with respect to Obligations on the Notes.
SECTION 10.03. Notes Subordinated to Prior Payment of All
Indebtedness on Dissolution,
Liquidation or Reorganization of Company.
(a) Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary, all Obligations
due or to become due upon all Senior Indebtedness shall first be paid in full in
cash or Cash Equivalents, or such payment duly provided for to the satisfaction
of the holders of Senior Indebtedness, before any payment or distribution of any
kind or character is made on account of any Obligations on the Notes, or for the
acquisition of any of the Notes for cash or property or otherwise. Upon any such
dissolution, winding-up, liquidation, reorganization, receivership or similar
proceeding, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Notes or the Trustee under this Indenture would be entitled, except for the
provisions hereof, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture upon
written notice of a court of competent jurisdiction if received by them,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders) or
their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the payment
of Senior Indebtedness remaining unpaid until all such Senior Indebtedness has
been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment has not occurred.
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(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by this Section 10.03(c), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amount of Senior Indebtedness held by such holders)
or their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the payment
of Senior Indebtedness remaining unpaid until all such Senior Indebtedness has
been paid in full in cash or Cash Equivalents, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
(d) The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of its
assets, to another corporation upon the terms and conditions provided in Article
Five hereof and as long as permitted under the terms of the Senior Indebtedness
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
SECTION 10.04. Holders To Be Subrogated to Rights
of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the Holders by
virtue of this Article Ten which otherwise would have been made to the Holders
shall, as between the Company and the Holders of the Notes, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Article Ten are and are intended solely
for the purpose of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
SECTION 10.05. Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest
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on the Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Ten of the holders of Senior Indebtedness in respect of cash, property or Notes
of the Company received upon the exercise of any such remedy. Upon any payment
or distribution of assets or securities of the Company referred to in this
Article Ten, the Trustee, subject to the provisions of Sections 7.01 and 7.02,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which any liquidation, dissolution,
winding-up or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee or agent or other Person
making any payment or distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten. Nothing in this Article Ten shall apply to the claims of, or payments to,
the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
or itself to be a holder of any Senior Indebtedness (or a trustee on behalf of,
or other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Ten, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 10.06. Trustee Entitled to Assume Payments
Not Prohibited in Absence of Notice.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article Ten.
Regardless of anything to the contrary contained in this Article Ten or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until a Trust Officer shall have
received notice in writing from the Company,
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or from a holder of Senior Indebtedness or a Representative therefor, together
with proof satisfactory to the Trustee of such holding of Senior Indebtedness or
of the authority of such Representative, and, prior to the receipt of any such
written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge to the contrary) that no such facts exist.
SECTION 10.07. Application by Trustee
of Assets Deposited with It.
U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be
for the sole benefit of the Holders of the Notes and, to the extent allocated
for the payment of Notes, shall not be subject to the subordination provisions
of this Article Ten. Otherwise, any deposit of assets or securities by or on
behalf of the Company with the Trustee or any Paying Agent (whether or not in
trust) for the payment of principal of or interest on any Notes shall be subject
to the provisions of this Article Ten; provided, however, that if prior to the
second Business Day preceding the date on which by the terms of this Indenture
any such assets may become distributable for any purpose (including, without
limitation, the payment of either principal of or interest on any Note) the
Trustee or such Paying Agent shall not have received with respect to such assets
the notice provided for in Section 10.06, then the Trustee or such Paying Agent
shall have full power and authority to receive such assets and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary received by it on or after such date. The foregoing shall
not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of
the Company is acting as Paying Agent. Nothing contained in this Section 10.07
shall limit the right of the holders of Senior Indebtedness to recover payments
as contemplated by this Article Ten.
SECTION 10.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act by any such holder, or by any non-compliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
(b) Without limiting the generality of subsection (a) of this Section
10.08, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Notes, without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Ten or the
obligations hereunder of the Holders of the Notes to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner, place,
terms or time of payment of, or
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renew or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any Person liable in any manner for
the collection or payment of Senior Indebtedness; and (4) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 10.09. Holders Authorize Trustee To
Effectuate Subordination of Notes.
Each Holder of the Notes by such Holder's acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effect the subordination provisions contained in
this Article Ten, and appoints the Trustee such Holder's attorney-in-fact for
such purpose, including, in the event of any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors or
marshaling of assets of the Company tending towards liquidation or
reorganization of the business and assets of the Company, the immediate filing
of a claim for the unpaid balance of such Holder's Notes in the form required in
said proceedings and cause said claim to be approved. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such claim or claims,
then any of the holders of the Senior Indebtedness or their Representative is
hereby authorized to file an appropriate claim for and on behalf of the Holders
of said Notes. Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Indebtedness or their Representative to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 10.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee and any agent of the Company or the Trustee shall be entitled
to all the rights set forth in this Article Ten with respect to any Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness.
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Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution may be made and the notice may
be given to their Representative, if any.
SECTION 10.11. This Article Ten Not To
Prevent Events of Default.
The failure to make a payment on account of principal of or interest on the
Notes by reason of any provision of this Article Ten will not be construed as
preventing the occurrence of an Event of Default.
Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Article Six or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article Ten of
the holders, from time to time, of Senior Indebtedness.
SECTION 10.12. No Fiduciary Duty of Trustee to
Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness, and it undertakes to perform or observe such of its
covenants and obligations as are specifically set forth in this Article Ten, and
no implied covenants or obligations with respect to the Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
liable to any such holders (other than for its willful misconduct or gross
negligence) if it shall pay over or deliver to the Holders of Notes or the
Company or any other Person money or assets in compliance with the terms of this
Indenture. Nothing in this Section 10.12 shall affect the obligation of any
Person other than the Trustee to hold such payment for the benefit of, and to
pay such payment over to, the holders of Senior Indebtedness or their
Representative.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; provided, however, that this Section 11.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are
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required by the TIA to be so qualified.
SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telex, by telecopier or overnight courier guaranteeing next-day delivery or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Subsidiary Guarantor:
SPARKLING SPRING WATER GROUP LIMITED
19 Fielding Avenue
Dartmouth, Nova Scotia, Canada B3B-1C9
Telecopier Number: (902) 468-2751
Attn: Stephen L. Larson
if to the Trustee:
BANKERS TRUST COMPANY
Corporate Trust and Agency Services
Four Albany Street
New York, New York 10006
Telecopier Number: (212) 250-6961
Attention: Corporate Market Services
Each of the Company and the Trustee by written notice to the other may
designate additional or different addresses for notices to such Person. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if hand delivered; when receipt
is acknowledged, if faxed; and five (5) calendar days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Holder shall be mailed by first
class mail, certified or registered return receipt requested, or by overnight
courier guaranteeing next-day delivery to its address as it appears on the
registration books of the Registrar. Any notice or communication shall be mailed
to any Person as described in TIA Section 313(c), to the extent required by the
TIA.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner
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provided above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA
Section 312(c).
SECTION 11.04. Certificate and Opinion
as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officer's Certificate, in form and substance satisfactory to the
Trustee, stating that, in the opinion of the signers, all conditions precedent
to be performed by the Company, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent to be performed by the Company, if any, provided for
in this Indenture relating to the proposed action have been complied with (which
counsel, as to factual matters, may rely on an Officer's Certificate).
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture, other than the Officer's Certificate
required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such Person,
such condition or covenant has been complied with.
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SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment is a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or at such place of payment are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Personal Liability.
No director, officer, employee or stockholder, as such, of the Company or
any Subsidiary Guarantor, as such, shall have any liability for any obligations
of the Company or any Subsidiary Guarantor under the Notes, this Indenture, the
Guarantees or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
SECTION 11.11. Successors.
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All agreements of the Company in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together shall represent the same
agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or in the Notes
shall be held invalid, illegal or unenforceable, in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.
SECTION 11.14 Agent for Service; Submission to Jurisdiction;
Waiver of Immunities.
By the execution and delivery of this Indenture, each of the Company and
the Subsidiary Guarantors (i) acknowledges that it has, by separate written
instrument, designated and appointed CT Corporation System (the "Agent") (and
any successor entity) as its authorized agent upon which process may be served
in any suit or proceeding arising out of or relating to this Indenture or any
Note or Guarantee that may be instituted in any federal or state court in the
Borough of Manhattan, The City of New York, State of New York and acknowledges
that the Agent has accepted such designation, (ii) submits to the jurisdiction
of any such court in any such suit or proceeding and (iii) agrees that service
of process upon the Agent and written notice of said service to the Company and
the Subsidiary Guarantors in accordance with this Section 11.14 shall be deemed
in every respect effective service of process upon the Company and the
Subsidiary Guarantors in any such suit or proceeding. The Company and the
Subsidiary Guarantors further agree to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of the Agent in full
force and effect so long as any of the Notes shall be outstanding; provided,
however, that the Company and the Subsidiary Guarantors may (and to the extent
the Agent ceases to be able to be served on the basis contemplated herein,
shall), by written notice to the Trustee and the holders of the Notes in
accordance with this Section 11.14 designate such additional or alternative
agent for service of process under this Section 11.14 that (i) maintains an
office located in the Borough of Manhattan, The City of New York, State of New
York and (ii) is a corporate service company which acts as agent for service of
process for other persons in the ordinary course of its business. Such written
notice shall identify the name of such agent for service of process and the
address of
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the office of such agent for service of process in the Borough of Manhattan, The
City of New York, State of New York.
To the extent that the Company or any Subsidiary Guarantor has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service of motion, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents.
ARTICLE TWELVE
GUARANTEE OF NOTES
SECTION 12.01. Unconditional Guarantee.
Subject to the provisions of this Article Twelve, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally and irrevocably guarantees, on a
senior subordinated basis (such guarantee to be referred to herein as a
"Guarantee") to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Company or any other Subsidiary Guarantor hereunder or thereunder, that: (a) the
principal of, premium, if any, and interest on the Notes (and any Additional
Interest payable thereon) shall be duly and punctually paid in full when due,
whether at maturity, upon redemption at the option of Holders pursuant to the
provisions of the Notes relating thereto, by acceleration or otherwise, and
interest on the overdue principal and (to the extent permitted by law) interest,
if any, on the Notes and all other obligations of the Company or the Subsidiary
Guarantors to the Holders or the Trustee hereunder or thereunder (including
amounts due the Trustee under Section 7.07) and all other obligations shall be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, the same shall be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders under this Indenture or under the Notes, for whatever
reason, each Subsidiary Guarantor shall be obligated to pay, or to perform or
cause the performance of, the same immediately. An Event of Default under this
Indenture or the Notes shall constitute an event of default under this
Guarantee, and shall entitle the Holders of Notes to accelerate the obligations
of the Subsidiary Guarantors hereunder in the same manner and to the same extent
as the obligations of the Company.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be
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unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, any release of any other Subsidiary Guarantor, the recovery
of any judgment against the Company, any action to enforce the same, whether or
not a Guarantee is affixed to any particular Note, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each of the Subsidiary Guarantors hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and this
Guarantee. This Guarantee is a guarantee of payment and not of collection. If
any Holder or the Trustee is required by any court or otherwise to return to the
Company or to any Subsidiary Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or such Subsidiary
Guarantor, any amount paid by the Company or such Subsidiary Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Subsidiary Guarantor further
agrees that, as between it, on the one hand, and the Holders of Notes and the
Trustee, on the other hand, (a) subject to this Article Twelve, the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any acceleration of such obligations
as provided in Article Six hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantors for
the purpose of this Guarantee.
No stockholder, officer, director, employee or incorporator, past, present
or future, of any Subsidiary Guarantor, as such, shall have any personal
liability under this Guarantee by reason of his, her or its status as such
stockholder, officer, director, employee or incorporator.
Each Subsidiary Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in an amount pro rata, based on the net assets of each Subsidiary
Guarantor, determined in accordance with GAAP.
SECTION 12.02. Limitations on Guarantees.
The obligations of each Subsidiary Guarantor under its Guarantee will be
limited to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of such Subsidiary Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee or pursuant to its contribution obligations under this Indenture,
will result in the obligations of such Subsidiary Guarantor under its Guarantee
not constituting a
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fraudulent conveyance or fraudulent transfer under any laws of the United
States, any state of the United States, the District of Columbia, Canada or any
province or territory of Canada.
SECTION 12.03. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 12.01, each
Subsidiary Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form of Exhibit F hereto, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee shall be executed on
behalf of each Subsidiary Guarantor by either manual or facsimile signature of
two Officers of each Subsidiary Guarantor, each of whom, in each case, shall
have been duly authorized to so execute by all requisite corporate action. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Note.
Each of the Subsidiary Guarantors hereby agrees that its Guarantee set
forth in Section 12.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.
If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed or at any time
thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of any Guarantee set forth in this
Indenture on behalf of each Subsidiary Guarantor.
SECTION 12.04. Release of a Subsidiary Guarantor.
(a) If no Default exists or would exist under this Indenture, upon the sale
or disposition of all of the Capital Stock of a Subsidiary Guarantor by the
Company or a Subsidiary of the Company in a transaction constituting an Asset
Sale the Net Cash Proceeds of which are applied in accordance with Section 4.15,
or upon the consolidation or merger of a Subsidiary Guarantor with or into any
Person in compliance with Article Five (in each case, other than to the Company
or an Affiliate of the Company), or if any Subsidiary Guarantor is dissolved or
liquidated in accordance with this Indenture, such Subsidiary Guarantor and each
Subsidiary of such Subsidiary Guarantor that is also a Subsidiary Guarantor
shall be deemed released from all obligations under this Article Twelve without
any further action required on the part of the Trustee or any Holder; provided,
however, that each such Subsidiary Guarantor is sold or disposed of in
accordance with this Indenture. Any Subsidiary Guarantor not so released or the
entity surviving such Subsidiary Guarantor, as applicable, shall remain or be
liable under its Guarantee as provided in this Article Twelve.
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(b) The Trustee shall deliver an appropriate instrument evidencing the
release of a Subsidiary Guarantor upon receipt of a request by the Company or
such Subsidiary Guarantor accompanied by an Officer's Certificate and an Opinion
of Counsel certifying as to the compliance with this Section 12.04, provided the
legal counsel delivering such Opinion of Counsel may rely as to matters of fact
on one or more Officer's Certificates.
The Trustee shall execute any documents reasonably requested by the Company
or a Subsidiary Guarantor in order to evidence the release of such Subsidiary
Guarantor from its obligations under its Guarantee endorsed on the Notes and
under this Article Twelve.
Except as set forth in Articles Four and Five and this Section 12.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Guarantor.
SECTION 12.05. Waiver of Subrogation.
Until this Indenture is discharged and all of the Notes are discharged and
paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees not
to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under this Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Company, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Company, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Subsidiary Guarantor in violation of
the preceding sentence and any amounts owing to the Trustee or the Holders of
Notes under the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Subsidiary Guarantor for the benefit of, and held in trust for the benefit
of, the Trustee or the Holders and shall forthwith be paid to the Trustee for
the benefit of itself or such Holders to be credited and applied to the
obligations in favor of the Trustee or the Holders, as the case may be, whether
matured or unmatured, in accordance with the terms of this Indenture. Each
Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 12.05 is knowingly made in contemplation of
such benefits.
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SECTION 12.06. No Set-Off.
Each payment to be made by a Subsidiary Guarantor hereunder in respect of
the Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
SECTION 12.07. Obligations Absolute.
The obligations of each Subsidiary Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by each Subsidiary Guarantor hereunder which may not be recoverable from
such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable from
such Subsidiary Guarantor as a primary obligor and principal debtor in respect
thereof.
SECTION 12.08. Obligations Continuing.
The obligations of each Subsidiary Guarantor hereunder shall be continuing
and shall remain in full force and effect until all the obligations have
been paid and satisfied in full. Each Subsidiary Guarantor agrees with the
Trustee that it will from time to time deliver to the Trustee suitable
acknowledgments of this continued liability hereunder and under any other
instrument or instruments in such form as counsel to the Trustee may advise and
as will prevent any action brought against it in respect of any default
hereunder being barred by any statute of limitations now or hereafter in force
and, in the event of the failure of a Subsidiary Guarantor so to do, it hereby
irrevocably appoints the Trustee the attorney and agent of such Subsidiary
Guarantor to make, execute and deliver such written acknowledgment or
acknowledgments or other instruments as may from time to time become necessary
or advisable, in the judgment of the Trustee on the advice of counsel, to fully
maintain and keep in force the liability of such Subsidiary Guarantor hereunder.
SECTION 12.09. Obligations Not Reduced.
The obligations of each Subsidiary Guarantor hereunder shall not be
satisfied, reduced or discharged solely by the payment of such principal,
premium, if any, interest, fees and other monies or amounts as may at any time
prior to discharge of this Indenture pursuant to Article 8 be or become owing or
payable under or by virtue of or otherwise in connection with the Notes or this
Indenture.
SECTION 12.10. Obligations Reinstated.
The obligations of each Subsidiary Guarantor hereunder shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
which would otherwise have
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reduced the obligations of any Subsidiary Guarantor hereunder (whether such
payment shall have been made by or on behalf of the Company or by or on behalf
of a Subsidiary Guarantor) is rescinded or reclaimed from any of the Holders
upon the insolvency, bankruptcy, liquidation or reorganization of the Company or
any Subsidiary Guarantor or otherwise, all as though such payment had not been
made. If demand for, or acceleration of the time for, payment by the Company is
stayed upon the insolvency, bankruptcy, liquidation or reorganization of the
Company, all such Indebtedness otherwise subject to demand for payment or
acceleration shall nonetheless be payable by each Subsidiary Guarantor as
provided herein.
SECTION 12.11. Obligations Not Affected.
The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by any Subsidiary Guarantor
or any of the Holders) which, but for this provision, might constitute a whole
or partial defense to a claim against any Subsidiary Guarantor hereunder or
might operate to release or otherwise exonerate any Subsidiary Guarantor from
any of its obligations hereunder or otherwise affect such obligations, whether
occasioned by default of any of the Holders or otherwise, including, without
limitation:
(a) any limitation of status or power, disability, incapacity or other
circumstance relating to the Company or any other person, including any
insolvency, bankruptcy, liquidation, reorganization, readjustment, composition,
dissolution, winding up or other proceeding involving or affecting the Company
or any other person;
(b) any irregularity, defect, unenforceability or invalidity in respect of
any indebtedness or other obligation of the Company or any other person under
this Indenture, the Notes or any other document or instrument;
(c) any failure of the Company, whether or not without fault on its part,
to perform or comply with any of the provisions of this Indenture or the Notes,
or to give notice thereof to a Subsidiary Guarantor;
(d) the taking or enforcing or exercising or the refusal or neglect to take
or enforce or exercise any right or remedy from or against the Company or any
other Person or their respective assets or the release or discharge of any such
right or remedy;
(e) the granting of time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any other
Person;
(f) any change in the time, manner or place of payment of, or in any other
term of, any of the Notes, or any other amendment, variation, supplement,
replacement or waiver of, or
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any consent to departure from, any of the Notes or this Indenture, including,
without limitation, any increase or decrease in the principal amount of or
premium, if any, or interest on any of the Notes;
(g) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Company or a Subsidiary
Guarantor;
(h) any merger or amalgamation of the Company or a Subsidiary Guarantor
with any Person or Persons;
(i) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect, any of the
Obligations or the obligations of a Subsidiary Guarantor under its Guarantee;
and
(j) any other circumstance, including release of the Subsidiary Guarantor
pursuant to Section 12.04 (other than by complete, irrevocable payment) that
might otherwise constitute a legal or equitable discharge or defense of the
Company under this Indenture or the Notes or of a Subsidiary Guarantor in
respect of its Guarantee hereunder.
SECTION 12.12. Waiver.
Without in any way limiting the provisions of Section 12.01 hereof, each
Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of any
liability of any Subsidiary Guarantor hereunder, notice or proof of reliance by
the Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Company, protest, notice of
dishonor or non-payment of any of the Obligations, or other notice or
formalities to the Company or any Subsidiary Guarantor of any kind whatsoever.
SECTION 12.13. No Obligation To Take
Action Against the Company.
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against the Company or any other Person or any
Property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Subsidiary Guarantors of their
liabilities and obligations under their Guarantees or under this Indenture.
SECTION 12.14. Dealing with the Company and Others.
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in
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part the obligations and liabilities of any Subsidiary Guarantor hereunder and
without the consent of or notice to any Subsidiary Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions, waivers,
releases, discharges and other indulgences to the Company or any other Person;
(b) take or abstain from taking security or collateral from the Company or
from perfecting security or collateral of the Company;
(c) release, discharge, compromise, realize, enforce or otherwise deal with
or do any act or thing in respect of (with or without consideration) any and all
collateral, mortgages or other security given by the Company or any third party
with respect to the obligations or matters contemplated by this Indenture or the
Notes;
(d) accept compromises or arrangements from the Company;
(e) apply all monies at any time received from the Company or from any
security upon such part of the Obligations as the Holders may see fit or change
any such application in whole or in part from time to time as the Holders may
see fit; and
(f) otherwise deal with, or waive or modify their right to deal with, the
Company and all other Persons and any security as the Holders or the Trustee may
see fit.
SECTION 12.15. Default and Enforcement.
If any Subsidiary Guarantor fails to pay in accordance with Section 12.01
hereof, the Trustee may proceed in its name as trustee hereunder in the
enforcement of the Guarantee of any such Subsidiary Guarantor and such
Subsidiary Guarantor's obligations thereunder and hereunder by any remedy
provided by law, whether by legal proceedings or otherwise, and to recover from
such Subsidiary Guarantor the obligations.
SECTION 12.16. Amendment, Etc.
No amendment, modification or waiver of any provision of this Indenture
relating to any Subsidiary Guarantor or consent to any departure by any
Subsidiary Guarantor or any other Person from any such provision will in any
event be effective unless it is signed by such Subsidiary Guarantor and the
Trustee.
SECTION 12.17. Acknowledgment.
Each Subsidiary Guarantor hereby acknowledges communication of the terms of
this Indenture and the Notes and consents to and approves of the same.
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SECTION 12.18. Costs and Expenses.
Each Subsidiary Guarantor shall pay on demand by the Trustee any and all
costs, fees and expenses (including, without limitation, legal fees on a
solicitor and client basis) incurred by the Trustee, its agents, advisors and
counsel or any of the Holders in enforcing any of their rights under any
Guarantee.
SECTION 12.19. No Merger or Waiver; Cumulative Remedies.
No Guarantee shall operate by way of merger of any of the obligations of a
Subsidiary Guarantor under any other agreement, including, without limitation,
this Indenture. No failure to exercise and no delay in exercising, on the part
of the Trustee or the Holders, any right, remedy, power or privilege hereunder
or under this Indenture or the Notes, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder or under this Indenture or the Notes preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges in the Guarantee and under this
Indenture, the Notes and any other document or instrument between a Subsidiary
Guarantor and/or the Company and the Trustee are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
SECTION 12.20. Survival of Obligations.
Without prejudice to the survival of any of the other obligations of each
Subsidiary Guarantor hereunder, the obligations of each Subsidiary Guarantor
under Section 12.01 shall survive the payment in full of the Obligations and
shall be enforceable against such Subsidiary Guarantor without regard to and
without giving effect to any defense, right of offset or counterclaim available
to or which may be asserted by the Company or any Subsidiary Guarantor.
SECTION 12.21. Guarantee in Addition to Other Obligations.
The obligations of each Subsidiary Guarantor under its Guarantee and this
Indenture are in addition to and not in substitution for any other obligations
to the Trustee or to any of the Holders in relation to this Indenture or the
Notes and any guarantees or security at any time held by or for the benefit of
any of them.
SECTION 12.22. Severability.
Any provision of this Article Twelve which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction unless its removal
would substantially defeat the basic intent, spirit and
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purpose of this Indenture and this Article Twelve.
SECTION 12.23. Successors and Assigns.
Each Guarantee shall be binding upon and inure to the benefit of each
Subsidiary Guarantor and the Trustee and the other Holders and their respective
successors and permitted assigns, except that no Subsidiary Guarantor may assign
any of its obligations hereunder or thereunder.
ARTICLE THIRTEEN
SUBORDINATION OF GUARANTEE
SECTION 13.01. Obligations of Guarantors Subordinated
to Guarantor Senior Indebtedness.
Anything herein to the contrary notwithstanding, each of the Subsidiary
Guarantors, for itself and its successors, and each Holder, by his or her
acceptance of Guarantees, agrees that the payment of all Obligations owing to
the Holders in respect of its Guarantee (collectively, as to any Subsidiary
Guarantor, its "Guarantee Obligations") is subordinated, to the extent and in
the manner provided in this Article Thirteen, to the prior payment in full in
cash or Cash Equivalents, or such payment duly provided for to the satisfaction
of the holders of Guarantor Senior Indebtedness, of all Obligations on Guarantor
Senior Indebtedness of such Subsidiary Guarantor, including without limitation,
the Subsidiary Guarantors' obligations under the Credit Agreement.
This Article Thirteen shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Guarantor Senior Indebtedness, and
such provisions are made for the benefit of the holders of Guarantor Senior
Indebtedness and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
SECTION 13.02. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness is in Default.
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal or interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Designated Senior
Indebtedness of a Subsidiary Guarantor or guaranteed by a Subsidiary Guarantor
(which Designated Senior Indebtedness or guarantee, as the case may be,
constitutes Guarantor Senior Indebtedness of such Subsidiary Guarantor), no
payment of any kind or character shall be made by or on behalf of the Company or
any other Person on its or their behalf with respect to any Obligations on the
Notes or to acquire any of the Notes for cash or property
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or otherwise. In addition, if any other event of default occurs and is
continuing with respect to any Guarantor Senior Indebtedness, as such event of
default is defined in the instrument creating or evidencing such Guarantor
Senior Indebtedness, permitting the holders of such Guarantor Senior
Indebtedness then outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Guarantor Senior Indebtedness gives a
Default Notice, then, unless and until all events of default have been cured or
waived or have ceased to exist or the Trustee receives notice from the
Representative for the respective issue of Guarantor Senior Indebtedness
terminating the Blockage Period, during the Blockage Period, neither the Company
nor any other Person on its behalf shall (x) make any payment of any kind or
character with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 179 days from the
date the payment on the Notes was due and only one such Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Blockage Period with
respect to the Guarantor Senior Indebtedness shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such Guarantor
Senior Indebtedness whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period, that in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
13.02(a), such payment shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Guarantor Senior Indebtedness (pro
rata to such holders on the basis of the respective amount of Guarantor Senior
Indebtedness held by such holders) or their respective Representatives upon
written request of the Company or a court of competent jurisdiction. The Trustee
shall be entitled to rely on written information regarding amounts then due and
owing on the Guarantor Senior Indebtedness, if any, received from the Company
and only amounts included in the information provided to the Trustee shall be
paid to the holders of Guarantor Senior Indebtedness.
Nothing contained in this Article Thirteen shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Guarantor Senior Indebtedness thereafter due or
declared to be due shall first be paid in full in cash or Cash Equivalents
before the Holders are entitled to receive any payment of any kind or character
with respect to Obligations on the Notes.
SECTION 13.03. Guarantee Obligations Subordinated to Prior
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Payment of All Guarantor Senior Indebtedness
on Dissolution, Liquidation or Reorganization
of Such Subsidiary Guarantor.
Upon any payment or distribution of assets of any Subsidiary Guarantor of
any kind or character, whether in cash, property or securities to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors or marshaling of assets of such Subsidiary Guarantor,
whether voluntary or involuntary, or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding relating to any Subsidiary
Guarantor or its property, whether voluntary or involuntary, but excluding any
liquidation or dissolution of a Subsidiary Guarantor into the Company or into
another Subsidiary Guarantor:
(a) the holders of all Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall first be entitled to receive payments in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Guarantor Senior Indebtedness, of all amounts payable under Guarantor
Senior Indebtedness before the Holders will be entitled to receive any payment
or distribution of any kind or character on account of the Guarantee of such
Subsidiary Guarantor, and until all Obligations with respect to the Guarantor
Senior Indebtedness are paid in full in cash or Cash Equivalents, or such
payment duly provided for to the satisfaction of the holders of Guarantor Senior
Indebtedness, any distribution to which the Holders would be entitled shall be
made to the holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor;
(b) any payment or distribution of assets of such Subsidiary Guarantor of
any kind or character, whether in cash, property or securities, to which the
Holders or the Trustee on behalf of the Holders would be entitled except for the
provisions of this Article Thirteen shall be paid by the liquidating trustee or
agent or other Person making such a payment or distribution, directly to the
holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor or their
representatives, ratably according to the respective amounts of such Guarantor
Senior Indebtedness remaining unpaid held or represented by each, until all such
Guarantor Senior Indebtedness remaining unpaid shall have been paid in full in
cash or Cash Equivalents, or such payment duly provided for to the satisfaction
of the holders of Guarantor Senior Indebtedness, after giving effect to any
concurrent payment or distribution to the holders of such Guarantor Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of such Subsidiary Guarantor of any kind or character,
whether such payment shall be in cash, property or securities, and such
Subsidiary Guarantor shall have made payment to the Trustee or directly to the
Holders or any Paying Agent in respect of payment of the Guarantees before all
Guarantor Senior Indebtedness of such Subsidiary Guarantor is paid in full in
cash or Cash Equivalents, or such payment duly provided for to the satisfaction
of the holders of Guarantor Senior Indebtedness, such payment or distribution
(subject to the provisions of Sections 13.06 and 13.07) shall be received,
segregated from other funds, and held in trust by the
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Trustee or such Holder or Paying Agent for the benefit of, and shall immediately
be paid over by the Trustee (if the notice required by Section 13.06 has been
received by the Trustee) or by the Holder to, the holders of such Guarantor
Senior Indebtedness or their representatives, ratably according to the
respective amounts of such Guarantor Senior Indebtedness held or represented by
each, until all such Guarantor Senior Indebtedness remaining unpaid shall have
been paid in full in cash or Cash Equivalents, or such payment duly provided for
to the satisfaction of the holders of Guarantor Senior Indebtedness, after
giving effect to any concurrent payment or distribution to the holders of
Guarantor Senior Indebtedness.
Each Subsidiary Guarantor shall give prompt notice to the Trustee prior to
any dissolution, winding-up, total or partial liquidation or total or
reorganization (including, without limitation, in bankruptcy, insolvency, or
receivership proceedings or upon any assignment for the benefit of creditors or
any other marshaling of such Subsidiary Guarantor's assets and liabilities).
SECTION 13.04. Holders of Guarantee Obligations To
Be Subrogated to Rights of Holders
of Guarantor Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Guarantor Senior
Indebtedness, of all Guarantor Senior Indebtedness, the Holders of Guarantee
Obligations of a Subsidiary Guarantor shall be subrogated to the rights of the
holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor to receive
payments or distributions of assets of such Subsidiary Guarantor applicable to
such Guarantor Senior Indebtedness until all amounts owing on or in respect of
the Guarantee Obligations shall be paid in full in cash or Cash Equivalents, and
for the purpose of such subrogation no payments or distributions to the holders
of such Guarantor Senior Indebtedness by or on behalf of such Subsidiary
Guarantor, or by or on behalf of the Holders by virtue of this Article Thirteen,
which otherwise would have been made to the Holders shall, as between such
Subsidiary Guarantor and the Holders, be deemed to be payment by such Subsidiary
Guarantor to or on account of such Guarantor Senior Indebtedness, it being
understood that the provisions of this Article Thirteen are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of such Guarantor Senior Indebtedness, on the other
hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Thirteen shall have been
applied, pursuant to the provisions of this Article Thirteen, to the payment of
all amounts payable under such Guarantor Senior Indebtedness, then the Holders
shall be entitled to receive from the holders of such Guarantor Senior
Indebtedness any such payments or distributions received by such holders of such
Guarantor Senior Indebtedness in excess of the amount sufficient to pay all
amounts payable under or in respect of such Guarantor Senior Indebtedness in
full in cash or Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Guarantor Senior
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Indebtedness.
Each Holder by purchasing or accepting a Note waives any and all notice of
the creation, modification, renewal, extension or accrual of any Guarantor
Senior Indebtedness of the Subsidiary Guarantors and notice of or proof of
reliance by any holder or owner of Guarantor Senior Indebtedness of the
Subsidiary Guarantors upon this Article Thirteen and the Guarantor Senior
Indebtedness of the Subsidiary Guarantors shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Article Thirteen, and
all dealings between the Subsidiary Guarantors and the holders and owners of the
Guarantor Senior Indebtedness of the Subsidiary Guarantors shall be deemed to
have been consummated in reliance upon this Article Thirteen.
SECTION 13.05. Obligations of the Subsidiary
Guarantors Unconditional.
Nothing contained in this Article Thirteen or elsewhere in this Indenture
or in the Guarantees is intended to or shall impair, as between the Subsidiary
Guarantors and the Holders, the obligation of the Subsidiary Guarantors, which
is absolute and unconditional, to pay to the Holders all amounts due and payable
under the Guarantees as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Subsidiary Guarantors other than the
holders of the Guarantor Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Thirteen, of the holders of Guarantor Senior
Indebtedness in respect of cash, property or securities of the Subsidiary
Guarantors received upon the exercise of any such remedy. Upon any payment or
distribution of assets of any Subsidiary Guarantor referred to in this Article
Thirteen, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and
the Holders shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which any liquidation, dissolution, winding-up or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee or agent or other Person making any
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Guarantor Senior Indebtedness and other
Indebtedness of any Subsidiary Guarantor, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen. Nothing in this Article Thirteen shall
apply to the claims of, or payments to, the Trustee under or pursuant to Section
7.07. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any
Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that any evidence is
required with
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respect to the right of any Person as a holder of Guarantor Senior Indebtedness
to participate in any payment or distribution pursuant to this Article Thirteen,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Thirteen, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 13.06. Trustee Entitled To Assume Payments
Not Prohibited in Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or any Paying Agent shall have received
notice thereof from the Company or any Subsidiary Guarantor or from one or more
holders of Guarantor Senior Indebtedness or from any Representative therefor
and, prior to the receipt of any such notice, the Trustee, subject to the
provisions of Sections 7.01 and 7.02, shall be entitled in all respects
conclusively to assume that no such fact exists.
SECTION 13.07. Application by Trustee of Assets Deposited with It.
U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be
for the sole benefit of Holders of the Notes and, to the extent allocated for
the payment of Notes, shall not be subject to the subordination provisions of
this Article Thirteen. Otherwise, any deposit of assets or securities by or on
behalf of a Subsidiary Guarantor with the Trustee or any Paying Agent (whether
or not in trust) for payment of the Guarantees shall be subject to the
provisions of this Article Thirteen; provided, however, that if prior to the
second Business Day preceding the date on which by the terms of this Indenture
any such assets may become distributable for any purpose (including, without
limitation, the payment of either principal of or interest on any Note) the
Trustee or such Paying Agent shall not have received with respect to such assets
the notice provided for in Section 13.06, then the Trustee or such Paying Agent
shall have full power and authority to receive such assets and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary received by it on or after such date. The foregoing shall
not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of
the Company is acting as Paying Agent. Nothing contained in this Section 13.07
shall limit the right of the holders of Guarantor Senior Indebtedness to recover
payments as contemplated by this Article Thirteen.
SECTION 13.08. No Waiver of Subordination Provisions.
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(a) No right of any present or future holder of any Guarantor Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Subsidiary Guarantor or by any act or failure to act, by any such holder, or
by any non-compliance by any Subsidiary Guarantor with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
13.08, the holders of Guarantor Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the Holders of
the Notes, without incurring responsibility to the Holders of the Notes and
without impairing or releasing the subordination provided in this Article
Thirteen or the obligations hereunder of the Holders of the Notes to the holders
of Guarantor Senior Indebtedness, do any one or more of the following: (1)
change the manner, place, terms or time of payment of, or renew or alter,
Guarantor Senior Indebtedness or any instrument evidencing the same or any
agreement under which Guarantor Senior Indebtedness is outstanding; (2) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Guarantor Senior Indebtedness; (3) release any Person liable
in any manner for the collection or payment of Guarantor Senior Indebtedness;
and (4) exercise or refrain from exercising any rights against the Subsidiary
Guarantors and any other Person.
SECTION 13.09. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.
Each Holder of the Guarantee Obligations by its acceptance thereof
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effect the subordination provisions
contained in this Article Thirteen, and appoints the Trustee its
attorney-in-fact for such purpose, including, in the event of any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets of any Subsidiary Guarantor tending towards liquidation
or reorganization of the business and assets of any Subsidiary Guarantor, the
immediate filing of a claim for the unpaid balance under its or his Guarantee
Obligations in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then any of the holders of the Guarantor
Senior Indebtedness or their Representative is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Guarantee
Obligations. Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Guarantor Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any holder of Guarantee
Obligations any plan of reorganization, arrangement, adjustment or composition
affecting the Guarantee Obligations or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Guarantor Senior Indebtedness or their
Representative to vote in respect of the claim of any holder of Guarantee
Obligations in any such proceeding.
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SECTION 13.10. Right of Trustee to Hold
Guarantor Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article Thirteen in respect of any Guarantor Senior Indebtedness at any time
held by it to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
SECTION 13.11. No Suspension of Remedies.
The failure to make a payment in respect of the Guarantees by reason of any
provision of this Article Thirteen shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.01.
Nothing contained in this Article Thirteen shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Six or to pursue any rights or remedies hereunder
or under applicable law, subject to the rights, if any, under this Article
Thirteen of the holders, from time to time, of Guarantor Senior Indebtedness.
SECTION 13.12. No Fiduciary Duty of Trustee to
Holders of Guarantor Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Guarantor Senior Indebtedness, and it undertakes to perform or observe such of
its covenants and obligations as are specifically set forth in this Article
Thirteen, and no implied covenants or obligations with respect to the Guarantor
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be liable to any such holders (other than for its willful
misconduct or gross negligence) if it shall pay over or deliver to the holders
of Guarantee Obligations or the Guarantors or any other Person, money or assets
in compliance with the terms of this Indenture. Nothing in this Section 13.12
shall affect the obligation of any Person other than the Trustee to hold such
payment for the benefit of, and to pay such payment over to, the holders of
Guarantor Senior Indebtedness or their Representative.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SPARKLING SPRING WATER GROUP LIMITED
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Vice Chairman
SPARKLING SPRING WATER LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Vice Chairman
SPRING WATER, INC.,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER JUG ENTERPRISES LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 114
WITHEY'S WATER SOFTENING & PURIFICATION
LIMITED, as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
AQUA CARE WATER SOFTENING & PURIFICATION
LTD., as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
HIGH VALLEY WATER LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
3003969 NOVA SCOTIA LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CANADIAN SPRINGS WATER COMPANY LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
SPARKLING SPRING WATER UK LIMITED,
as a Subsidiary Guarantor
<PAGE> 115
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
AQUAPORTE (UK) LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CRYSTAL SPRING ACQUISITION, INC.,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 116
MOUNTAIN FRESH ACQUISITION CORP.,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
MARLBOROUGH EMPLOYMENT LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER AT WORK LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
NATURAL WATER LIMITED,
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 117
CULLYSPRING WATER CO., INC.
as a Subsidiary Guarantor
By: /s/ Stephen L. Larson
----------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
BANKERS TRUST COMPANY
as Trustee
By: /s/ Jason Krasilovsky
-----------------------------
Name: Jason Krasilovsky
Title: Assistant Treasurer
<PAGE> 118
EXHIBIT A
FORM OF INITIAL NOTE
[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501 (a) (1), (2), (3), OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE OF THIS SECURITY AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY, RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER
OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.]
A-A
<PAGE> 119
A-B
<PAGE> 120
[THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]
THIS SECURITY HAS NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER THE
SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA. THIS SECURITY
IS NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR
INDIRECTLY, IN CANADA OR TO ANY RESIDENT THEREOF IN VIOLATION OF THE SECURITIES
LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
A-C
<PAGE> 121
CUSIP No.:______________
SPARKLING SPRING WATER GROUP LIMITED
11 1/2% SENIOR SUBORDINATED NOTE DUE 2007
No. _________ $__________
SPARKLING SPRING WATER GROUP LIMITED, a Nova Scotia, Canada corporation
(the "Company," which term includes any successor entities), for value received
promises to pay to _________ or registered assigns the principal sum of
__________ Dollars on November 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing May 15, 1998.
Record Dates: May 1 and November 1.
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
SPARKLING SPRING WATER GROUP LIMITED
By:
------------------------------------
Name:__________________________________
Title:_________________________________
By:
------------------------------------
Name:__________________________________
Title:_________________________________
Dated: __________, 1997
A-D
<PAGE> 122
A-E
<PAGE> 123
Certificate of Authentication
This is one of the 11 1/2% Senior Subordinated Notes due 2007, referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY, as Trustee
By:
Authorized Signatory
Date of Authentication:__________, 1997
A-F
<PAGE> 124
(REVERSE OF SECURITY)
11 1/2% Senior Subordinated Note due 2007
Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Indenture, dated as of November 19, 1997
(the "Indenture"), and as amended from time to time, by and among Sparkling
Spring Water Group Limited, a Nova Scotia, Canada corporation (the "Company"),
the Subsidiary Guarantors named therein and Bankers Trust Company, as trustee
(the "Trustee").
1. Interest. The Company promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from November 19, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing May 15, 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after such Record Date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Company shall pay
principal and premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and premium, if
any, and interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under the Indenture. This
Note is one of a duly authorized issue of Notes of the Company designated as its
11 1/2% Senior Subordinated Notes due 2007 issued on the Issue Date (the
"Initial Notes"), limited (except as otherwise provided in the Indenture) in
aggregate principal amount to $100,000,000 which may be issued under the
Indenture. The Notes include the Initial Notes, the Private Exchange Notes
A-G
<PAGE> 125
and the Unrestricted Notes, as defined below, issued in exchange for the Initial
Notes pursuant to the Registration Rights Agreement. The Initial Notes, the
Private Exchange Notes and the Unrestricted Notes are treated as a single class
of securities under the Indenture. The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of such terms. The Notes
are general unsecured obligations of the Company. Payment on each Note is
guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant
to Article 12 of the Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time in accordance with its terms.
5. Redemption. (a) The Notes are redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after November
15, 2002, upon not less than 30 nor more than 60 days' notice, at the following
Redemption Prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on November 15 of the years
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption:
Year Percentage
---- ----------
2002.......................................... 105.570%
2003.......................................... 103.833%
2004.......................................... 101.917%
2005.......................................... 100.000%
(b) Notwithstanding the foregoing, at any time, or from time to
time, on or prior to November 15, 2000, the Company may, at its option, redeem
up to $30.0 million aggregate principal amount of the Notes originally issued
with the net cash proceeds of one or more Public Equity Offerings by the Company
at a redemption price equal to 111.50% of the principal amount thereof, plus
accrued interest to the date of redemption, provided that at least $70.0 million
in aggregate principal amount of the Notes originally issued remains outstanding
immediately following such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
(c) In addition, as set forth in the Indenture, and subject to the
conditions contained in the Indenture, the Notes are redeemable by the Company
in the event of certain changes in or amendments to the laws (or regulations or
rulings promulgated thereunder) of Canada or any relevant jurisdiction or any
political subdivision or taxing authority thereof or therein affecting taxation,
or certain changes in any official position regarding the interpretation or
application of such laws, regulations or rulings.
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6. Notice of Redemption. Notice of redemption will be mailed at
least 30 but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such Redemption Date, then, unless the Company defaults
in the payment of such Redemption Price plus accrued interest, if any, the Notes
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Section 4.14 of the Indenture provides that
upon a Change of Control each Holder will have the right, subject to certain
conditions set forth in the Indenture, to require the Company to purchase all or
a portion of such Holder's Notes at a price equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of repurchase.
Section 4.15 of the Indenture provides that, after certain Asset Sales, and
subject to further limitations contained therein, the Company will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
8. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company, the Subsidiary Guarantors and the Initial
Purchasers, the Company and the Subsidiary Guarantors will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 11 1/2% Senior
Subordinated Notes due 2007 (the "Unrestricted Notes"), which will be registered
under the Securities Act, in like principal amount and having terms identical in
all material respects as the Initial Notes. The Holders of the Initial Notes
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and (except Notes issued as payment of Interest) in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as required by law or as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Notes or portions thereof selected for redemption except for the
unredeemed portion of any Note being redeemed in part.
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the
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Company. After that, all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, their obligation to pay the principal of and interest on the
Notes but without affecting the rights of the Holders to receive such amounts
from such deposits).
13. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, comply with any requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA or comply with Section
5.01 of the Indenture or make any other change that does not adversely affect
the rights of any Holder of a Note in any material respect.
14. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain indebtedness, make certain Investments, create or incur liens, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting the Company's Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Company to merge or consolidate with any other Person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the Company's and its Subsidiaries' assets or adopt a plan
of liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Company must annually report to the Trustee on compliance with such limitations.
15. Subordination. The Notes are subordinated in right of payment,
in the manner and to the extent set forth in the Indenture, to the prior payment
in full in cash or Cash Equivalents of all Obligations on Senior Indebtedness of
the Company, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. Each Holder by its acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on its behalf, to take such action as may be necessary or appropriate
to effectuate the subordination provided for in the Indenture and appoints the
Trustee its attorney-in-fact for such purposes.
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16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
17. Defaults and Remedies. Except as set forth in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in principal amount of Notes then outstanding may declare all the
Notes to be due and payable in the manner, at the time and with the effect
provided in the Indenture. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest when due, for any reason or a Default in compliance with Article Five
of the Indenture) if it determines that withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No partner, director, officer,
employee or stockholder, as such, of the Company or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Notes, the Indenture, the Guarantees or the
Registration Rights Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.
20. Guarantees. This Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Subsidiary Guarantors, the
Trustee and the Holders.
21. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto and the Holders agree
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to this Note.
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in
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<PAGE> 129
the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note. Requests may be made to: SPARKLING SPRING WATER GROUP LIMITED, 19 Fielding
Avenue, Dartmouth, Nova Scotia, Canada B3B-1C9.
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<PAGE> 130
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- --------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- --------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:
-------------------- ------------------------------------
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever.
Signature
Guarantee:
----------------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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<PAGE> 131
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) ____________ the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
[Check One]
(1) _____ to the Company or a subsidiary thereof; or
(2) _____ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) _____ to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act
of 1933, as amended) that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter can be obtained
from the Trustee); or
(4) _____ outside the United States to a "foreign purchaser" in
compliance with Rule 904 of Regulation S under the
Securities Act of 1933, as amended; or
(5) _____ pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933, as amended;
or
(6) _____ pursuant to an effective registration statement under
the Securities Act of 1933, as amended; or
(7) _____ pursuant to another available exemption from the
registration statement requirements of the Securities
Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate,):
|_| The transferee is an Affiliate of the Company.
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<PAGE> 133
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4), and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated:____________ Signed:
------------------------------------------
(Sign exactly as name appears on the other
side of this Note)
Signature Guarantee:
- ----------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:______________
----------------------------------------------
NOTICE: To be executed by an executive officer
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: $____________
Date:__________________ Your
Signature:
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Trustee in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934,
as amended.
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EXHIBIT B
FORM OF EXCHANGE NOTE
CUSIP No.: ______________
SPARKLING SPRING WATER GROUP LIMITED
11 1/2% SENIOR SUBORDINATED NOTE DUE 2007
No. _________ $__________
SPARKLING SPRING WATER GROUP LIMITED, a Nova Scotia, Canada corporation
(the "Company," which term includes any successor entities), for value received
promises to pay to _________ or registered assigns the principal sum of
__________ Dollars on November 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing May 15, 1998.
Record Dates: May 1 and November 1.
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
SPARKLING SPRING WATER GROUP LIMITED
By:
---------------------------------
Name:_______________________________
Title:______________________________
By:
---------------------------------
Name:_______________________________
Title:______________________________
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<PAGE> 136
Dated: _________, 1997
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<PAGE> 137
Certificate of Authentication
This is one of the 11 1/2% Senior Subordinated Notes due 2007, referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY, as Trustee
By:
Authorized Signatory
Date of Authentication: _____, 1997
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<PAGE> 138
(REVERSE OF SECURITY)
11 1/2% Senior Subordinated Note due 2007
Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Indenture, dated as of November 19, 1997
(the "Indenture"), and as amended from time to time, by and among Sparkling
Spring Water Group Limited, a Nova Scotia, Canada corporation (the "Company"),
the Subsidiary Guarantors named therein and Bankers Trust Company, as trustee
(the "Trustee").
1. Interest. The Company promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from November 19, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing May 15, 1998.
Interest will be computed on the basis of a 360-day year of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after such Record Date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Company shall pay
principal and premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and premium, if
any, and interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under the Indenture. This
Note is one of a duly authorized issue of Notes of the Company designated as its
11 1/2% Senior Subordinated Notes due 2007 (the "Unrestricted Notes"), limited
(except as otherwise provided in the Indenture) in aggregate principal amount to
$100,000,000 which may be issued under the Indenture. The Notes include the 11
1/2% Senior Subordinated Notes Due 2007 issued on the Issue Date (the "Initial
Notes"), the Private Exchange Notes and the Unrestricted Notes, issued in
exchange for the Initial Notes pursuant to the Registration Rights Agreement.
The Initial Notes,
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<PAGE> 139
the Private Exchange Notes and the Unrestricted Notes are treated as a single
class of securities under the Indenture. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of such terms. The Notes
are general unsecured obligations of the Company. Payment on each Note is
guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant
to Article 12 of the Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time in accordance with its terms.
5. Redemption. (a) The Notes are redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after November
15, 2002, upon not less than 30 nor more than 60 days' notice, at the following
Redemption Prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on November 15 of the years
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption:
Year Percentage
---- ----------
2002............................................ 105.750%
2003............................................ 103.833%
2004............................................ 101.917%
2005............................................ 100.000%
(b) Notwithstanding the foregoing, at any time, or from time to
time, on or prior to November 15, 2000, the Company may, at its option, redeem
up to $30.0 million aggregate principal amount of the Notes originally issued
with the net cash proceeds of one or more Public Equity Offerings by the Company
at a redemption price equal to 111.50% of the principal amount thereof, plus
accrued interest to the date of redemption, provided that at least $70.0 million
in aggregate principal amount of the Notes originally issued remains outstanding
immediately following such redemption. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 60 days after the consummation of any such
Public Equity Offering.
(c) In addition, as set forth in the Indenture, and subject to the
conditions contained in the Indenture, the Notes are redeemable by the Company
in the event of certain changes in or amendments to the laws (or regulations or
rulings promulgated thereunder) of Canada or any relevant jurisdiction or any
political subdivision or taxing authority thereof or therein affecting taxation,
or certain changes in any official position regarding the interpretation or
application of such laws, regulations or rulings.
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 but not
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more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such Redemption Date, then, unless the Company defaults
in the payment of such Redemption Price plus accrued interest, if any, the Notes
called for redemption will cease to bear interest from and after such Redemption
Date and the only right of the Holders of such Notes will be to receive payment
of the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Section 4.14 of the Indenture provides that
upon a Change of Control each Holder will have the right, subject to certain
conditions set forth in the Indenture, to require the Company to purchase such
Holder's Notes at a price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase. Section 4.15 of the
Indenture provides that, after certain Asset Sales, and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
8. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and (except Notes issued as payment of Interest) in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as required by law or as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Notes or portions thereof selected for redemption except for the
unredeemed portion of any Note being redeemed in part.
9. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but including, under certain
circumstances, their obligation to pay the principal of and interest on the
Notes but without affecting the rights of the Holders to receive such amounts
from such deposits).
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12. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, comply with any requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA or comply with Section
5.01 of the Indenture or make any other change that does not adversely affect
the rights of any Holder of a Note in any material respect.
13. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain indebtedness, make certain Investments, create or incur liens, enter
into transactions with Affiliates, create dividend or other payment restrictions
affecting the Company's Subsidiaries, issue Preferred Stock of its Subsidiaries,
and on the ability of the Company to merge or consolidate with any other Person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the Company's and its Subsidiaries' assets or adopt a plan
of liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Company must annually report to the Trustee on compliance with such limitations.
14. Subordination. The Notes are subordinated in right of payment,
in the manner and to the extent set forth in the Indenture, to the prior payment
in full in cash or Cash Equivalents of all Obligations on Senior Indebtedness of
the Company, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed or guaranteed. Each Holder by its acceptance hereof
agrees to be bound by such provisions and authorizes and expressly directs the
Trustee, on its behalf, to take such action as may be necessary or appropriate
to effectuate the subordination provided for in the Indenture and appoints the
Trustee its attorney-in-fact for such purposes.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. Defaults and Remedies. Except as set forth in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in principal amount of Notes then outstanding may declare all the
Notes to be due and payable in the manner, at the time and with the effect
provided in the Indenture. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in
B-G
<PAGE> 142
aggregate principal amount of the Notes then outstanding to direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest when due, for any reason or a Default in
compliance with Article Five of the Indenture) if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No partner, director, officer,
employee or stockholder, as such, of the Company or any Subsidiary Guarantor, as
such, shall have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Notes, the Indenture, the Guarantees or the
Registration Rights Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.
19. Guarantees. This Note will be entitled to the benefits of
certain Guarantees, if any, made for the benefit of the Holders. Reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and obligations thereunder of the Subsidiary
Guarantors, the Trustee and the Holders.
20. Authentication. This Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto and the Holders agree
to submit to the jurisdiction of the courts of the State of New York in any
action or proceeding arising out of or relating to this Note.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
B-H
<PAGE> 143
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note. Requests may be made to: SPARKLING SPRING WATER GROUP LIMITED, 19 Fielding
Avenue, Dartmouth, Nova Scotia, Canada B3B-1C9.
B-I
<PAGE> 144
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- --------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- --------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:
----------------- ------------------------------------
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever.
Signature
Guarantee:
----------------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-J
<PAGE> 145
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) __________ the undersigned confirms that it has not utilized
any general solicitation or general advertising in connection with the transfer:
[Check One]
(8) _____ to the Company or a subsidiary thereof; or
(9) _____ pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
(10) _____ to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933, as amended) that has
furnished to the Trustee a signed letter
containing certain representations and agreements
(the form of which letter can be obtained from the
Trustee); or
(11) _____ outside the United States to a "foreign purchaser"
in compliance with Rule 904 of Regulation S under
the Securities Act of 1933, as amended; or
(12) _____ pursuant to the exemption from registration
provided by Rule 144 under the Securities Act of
1933, as amended; or
(13) _____ pursuant to an effective registration statement
under the Securities Act of 1933, as amended; or
(14) _____ pursuant to another available exemption from the
registration statement requirements of the
Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate,):
|_| The transferee is an Affiliate of the Company.
B-K
<PAGE> 146
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4), and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated:____________ Signed:
--------------------------------------------------
(Sign exactly as name appears on the other side of
this Note)
Signature Guarantee:
- --------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:______________
----------------------------------------------
NOTICE: To be executed by an executive officer
B-L
<PAGE> 147
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: $____________
Date:__________________ Your
Signature:
-----------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Trustee in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934,
as amended.
B-M
<PAGE> 148
EXHIBIT C
FORM OF LEGEND FOR GLOBAL NOTE
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note) in substantially the following form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT THEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PARTY, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE.
C-A
<PAGE> 149
EXHIBIT D
Form of Certificate To Be
Delivered in Connection with
Transfers To Non-QIB Accredited Investors
BT ALEX, BROWN INCORPORATED
NATWEST CAPITAL MARKETS LIMITED
Initial Purchasers in connection
with the Offering memorandum
Referred to below
Ladies and Gentlemen:
In connection with our proposed purchase of 11 1/2% Senior
Subordinated Notes due 2007 (the "Notes") of Sparkling Spring Water Group
Limited, a corporation incorporated under the laws of the province of Nova
Scotia, Canada (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated November 14, 1997, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated in the section
entitled "Transfer Restrictions" of such Offering Memorandum.
2. We understand that any subsequent transfer of Notes is subject to
certain restrictions and conditions set forth in the Indenture relating to the
Notes (the "Indenture") (as described in the Offering Memorandum) and the
undersigned agrees to be bound by such restrictions and conditions, and agrees
not, to resell, pledge or otherwise transfer the Notes except in compliance with
the Securities Act of 1933, as amended (the "Securities Act"), and all
applicable state securities laws.
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act or pursuant to any state securities laws,
and that the Notes may not be offered or sold with the United States or to, or
for the account or benefit of, U.S. persons except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Notes, we will do
so only (i) to Sparkling Spring or any subsidiary thereof, (ii) inside the
United States in accordance with Rule 144A promulgated under the Securities Act
to a "qualified institutional buyer" (as defined in Rule 144A promulgated under
the Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as
defined in the Indenture) a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Notes (the form of
which letter can be obtained from the Trustee), (iv) outside the United States
in accordance with Rule 904 of Regulation S promulgated under the
D-A
<PAGE> 150
Securities Act to non-U.S. persons, (v) pursuant to the exemption from
registration provided by Rule 144 promulgated under the Securities Act (if
available), or (vi) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchase any of
the Notes from us a notice advising such purchaser that any resale of the Notes
are restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we will
be required to furnish to the Trustee and the Company such certification,
written legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act)
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the Notes,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be, for an indefinite
period of time.
6. We are acquiring the Notes purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
7. We have no intention of transferring any Notes to a resident of
Canada and (i) we acknowledge that transfer of Notes to residents of Canada may
be restricted under certain circumstances and (ii) we agree to comply with any
applicable Canadian provincial securities laws in respect of any transfer of
Notes to a resident of Canada.
You, the Company, the Trustee and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereto to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------------
Name:
Title:
D-B
<PAGE> 151
EXHIBIT E
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
[ ]
[ ]
[ ]
Re: Sparkling Spring Water Group Limited
(the "Company") 11 1/2% Senior
Subordinated Notes due 2007
(the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of [$ ] aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the
E-1
<PAGE> 152
Notes.
You, the Company, the Trustee and others are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------
Authorized Signature
E-2
<PAGE> 153
EXHIBIT F
FORM OF GUARANTY
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of this
Note the cash payments in United States dollars of principal of, premium, if
any, and interest on this Note (and including Additional Interest payable
thereon) in the amounts and at the times when due and interest on the overdue
principal, premium, if any, and interest, if any, of this Note, if lawful, and
the payment or performance of all other obligations of the Company under the
Indenture or the Notes, to the Holder of this Note and the Trustee, all in
accordance with and subject to the terms and limitations of this Note, Article
Twelve of the Indenture and this Guaranty. This Guaranty will become effective
in accordance with Article Twelve of the Indenture and its terms shall be
evidenced therein. The validity and enforceability of any Guaranty shall not be
affected by the fact that it is not affixed to any particular Note.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture dated as of November 19, 1997, among
SPARKLING SPRING WATER GROUP LIMITED, a Nova Scotia corporation, as issuer (the
"Company"), each of the Subsidiary Guarantors named therein and Bankers Trust
Company, as trustee (the "Trustee"), as amended or supplemented (the
"Indenture").
The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to this Guaranty and the Indenture are expressly set forth
in Article Twelve of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guaranty and all of the other provisions of the
Indenture to which this Guaranty relates.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. The undersigned Subsidiary Guarantor hereby agrees to submit
to the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Guaranty.
[The obligations of the undersigned to the Holders of Notes and to
the Trustee pursuant to this Guaranty and the Indenture do not extend to any
obligations which would be prohibited under [English/Scots] law.]
This Guaranty is subject to release upon the terms set forth in the
Indenture.
F-1
<PAGE> 154
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its
Guaranty to be duly executed.
Date:________________________________
[NAME OF SUBSIDIARY GUARANTOR],
as a Subsidiary Guarantor
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
F-2
<PAGE> 155
F-3
<PAGE> 1
EXHIBIT 5.1
[ROBINSON & COLE LLP LETTERHEAD]
December ___, 1997
Spring Water, Inc.
Crystal Spring Acquisition, Inc.
Mountain Fresh Acquisition Corp.
Cullyspring Water Co., Inc.
Sparkling Spring Water Group Limited
Sparkling Spring Water Limited
Water Jug Enterprises Limited
Withey's Water Softening & Purification Ltd.
Aqua Care Water Softening & Purification Inc.
High Valley Water Limited
3003969 Nova Scotia Limited
Canadian Springs Water Company Limited
Sparkling Spring Water (UK) Limited
Aquaporte (UK) Limited
Marlborough Employment Limited
Water at Work Limited
Natural Water Limited
One Landmark Square
Stamford, Connecticut 06901
Ladies and Gentlemen:
We refer to the offer of Sparkling Spring Water Group Limited (the
"Issuer") and Spring Water, Inc., Crystal Spring Acquisition, Inc., Mountain
Fresh Acquisition Corp., Cullyspring Water Co., Inc., Sparkling Spring Water
Limited, Water Jug Enterprises Limited, Withey's Water Softening &
Purification, Ltd., Aqua Care Water Softening & Purification Inc., High Valley
Water Limited, 3003969 Nova Scotia Limited, Canadian Springs Water Company
Limited, Sparkling Spring Water (UK) Limited, Aquaporte (UK) Limited,
Marlborough Employment Limited, Water at Work Limited and Natural Water Limited
(the "Guarantors") to exchange $1,000, aggregate principal amount of 11-1/2%
Senior Subordinated Notes due 2007 of the Issuer (the "Exchange Notes")
(together with the related guarantees of the Guarantors), for each $1,000
aggregate principal of the outstanding unregistered 11-1/2% Senior Subordinated
Notes due 2007 of the Issuer (together with the related guarantees of the
Guarantors), which Exchange Notes (and the related guarantees of the
Guarantors) are the subject of the Registration Statement on Form F-4, to
which this opinion is an Exhibit, filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act") (the "Registration Statement").
In connection herewith, we have examined the Registration Statement,
the Indenture, dated as of November 19, 1997 among the Issuer, the Guarantors
and Bankers Trust Company as trustee the ("Indenture"), and the Exchange Notes
(and the related guarantees of the Guarantors included therewith) (the
Indenture, the Exchange Notes and the related guarantees of the Exchange Notes
of the Guarantors are collectively referred to herein as the "Documents"),
together with such corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.
On the basis of the foregoing examination, we advise you that,
upon the (i) Registration Statement becoming effective under the Act, and (ii)
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, in our opinion the guarantee of the Exchange Notes by each Guarantor
will have been duly authorized and will constitute a valid and binding
obligation of such Guarantor, subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether such principles are
considered in a proceeding in equity or at action at law).
<PAGE> 2
The foregoing opinion is limited to the laws of the State of New York
and the General Corporation Law of the State of Delaware.
The foregoing opinions are subject to the qualification that the
enforceability of certain rights, remedies and waivers provided in the Documents
may be unavailable or limited by certain laws and judicial decisions. In respect
of such qualification, however, we are of the opinion that such laws and
judicial decisions do not, subject to the other exceptions and limitations
contained in this letter, make the remedies generally afforded by the Documents
inadequate to permit enforcement of the indebtedness arising thereunder. We note
that the provisions of any Document that permit any person thereunder to take
action or make determinations, or to benefit from indemnities and similar
undertakings of the Issuer or any Guarantor, may be subject to a requirement
that such action be taken or such determinations be made, and that any action or
inaction by such person which may give rise to a request for payment under such
an undertaking be taken or not taken, on a reasonable basis and in good faith.
We consent to the filing of this opinion with the Commission as an
Exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the Prospectus included therein. Our opinion is
rendered solely for your information in connection with the foregoing, and may
not be relied upon by any other person or for any other purpose without our
prior written consent. In giving this opinion, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Act or the Rules and Regulations of the Commission.
Very truly yours,
ROBINSON & COLE LLP
By: /s/ Richard A. Krantz
-------------------------------
Richard A. Krantz
<PAGE> 1
EXHIBIT 5.2
[LANE POWELL SPEARS LUBERSKY LLP LETTERHEAD]
December ___, 1997
Cullyspring Water Co., Inc.
One Landmark Square
Stamford, Connecticut 06901
Ladies and Gentlemen:
We refer to the offer of Sparkling Spring Water Group Limited (the
"Issuer") and Cullyspring Water Co., Inc. (the "Guarantor") to exchange $1,000,
aggregate principal amount of 11-1/2% Senior Subordinated Notes due 2007 of the
Issuer (the "Exchange Notes") (together with the related guarantee of the
Guarantor), for each $1,000 aggregate principal of the outstanding unregistered
11-1/2% Senior Subordinated Notes due 2007 of the Issuer (together with the
related guarantee of the Guarantor), which Exchange Notes (and the related
guarantee of the Guarantor) are the subject of the Registration Statement on
Form F-4, to which this opinion is an Exhibit, filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act") (the "Registration Statement").
In connection herewith, we have examined the Indenture, dated as of
November 19, 1997 among the Issuer, the Guarantor and Bankers Trust Company as
trustee the ("Indenture"), and the Exchange Notes (and the related guarantee of
the Guarantor included therewith) (the Indenture, the Exchange Notes and the
related guarantee of the Exchange Notes of the Guarantor are collectively
referred to herein as the "Documents"), together with such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. We have
not participated in the preparation of the Registration Statement, and express
no opinion as to the quality of the disclosures contained therein, or to the
compliance by the Issuer and the Guarantor with any federal or state securities
laws.
On the basis of the foregoing examination, we advise you that, upon the
(i) Registration Statement becoming effective under the Act, and (ii)
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, in our opinion the guarantee of the Exchange Notes by the Guarantor
will have been duly authorized by the Guarantor.
<PAGE> 2
The foregoing opinion is limited to the laws of the State of
Washington.
We consent to the filing of this opinion with the Commission as an
Exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the Prospectus included therein. Our opinion is
rendered solely for your information in connection with the foregoing, and may
not be relied upon by any other person or for any other purpose without our
prior written consent. In giving this opinion, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Act or the Rules and Regulations of the Commission.
Very truly yours,
/s/ LANE POWELL SPEARS LUBERSKY LLP
<PAGE> 1
EXHIBIT 5.3
[STEWART McKELVEY STIRLING SCALES LETTERHEAD]
December ___, 1997
Sparkling Spring Water Group Limited
Sparkling Spring Water Limited
Water Jug Enterprises Limited
Withey's Water Softening & Purification Ltd.
Aqua Care Water Softening & Purification Inc.
High Valley Water Limited
3003969 Nova Scotia Limited
Canadian Springs Water Company Limited
One Landmark Square
Stamford, Connecticut 06901
Ladies and Gentlemen:
We refer to the offer of Sparkling Spring Water Group Limited (the
"Issuer") and Sparkling Spring Water Limited, Water Jug Enterprises Limited,
Withey's Water Softening & Purification Ltd., Aqua Care Water Softening &
Purification Inc., High Valley Water Limited, 3003969 Nova Scotia Limited and
Canadian Springs Water Company Limited (the "Guarantors") to exchange $1,000,
aggregate principal amount of 11 1/2% Senior Subordinated Notes due 2007 of the
Issuer (the "Exchange Notes") (together with the related guarantees of the
Guarantors), for each $1,000 aggregate principal of the outstanding unregistered
11 1/2% Senior Subordinated Notes due 2007 of the Issuer (together with the
related guarantees of the Guarantors), which Exchange Notes (and the related
guarantees of the Guarantors) are the subject of the Registration Statement on
Form F-4, to which this opinion is an Exhibit, filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act") (the "Registration Statement").
In connection herewith, we have examined the Registration Statement, the
Indenture, dated as of November 19, 1997 among the Issuer, the Guarantors and
Bankers Trust Company as trustee the ("Indenture"), and the Exchange Notes (and
the related guarantees of the Guarantors included therewith) (the Indenture, the
Exchange Notes and the related guarantees of the Exchange Notes of the
Guarantors are collectively referred to herein as the "Documents"), together
with such corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.
<PAGE> 2
On the basis of the foregoing examination, we advise you that, upon the
(i) Registration Statement becoming effective under the Act, and (ii)
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, in our opinion:
(1) Each of the Issuer and the Guarantors is duly organized, validly
existing and in good standing of the province of Nova Scotia and has
all requisite corporate power and authority to own, lease and
operate its properties and conduct its businesses described in the
Registration Statement;
(2) The Issuer has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Exchange
Notes and the Exchange Notes have been duly and validly authorized,
executed and delivered by the Issuer;
(3) Each of the Guarantors has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Exchange Notes and the Exchange Notes have been duly and validly
authorized, executed and delivered by each of the Guarantors.
The foregoing opinion is limited to the laws of the Province of Nova
Scotia and the federal laws of Canada applicable in the Province of Nova Scotia.
The foregoing opinions are subject to the qualification that the
enforceability of the Exchange Notes is governed by New York law and we offer no
opinion in this regard.
We consent to the filing of this opinion with the Commission as an Exhibit
to the Registration Statement and to the use of our name under the caption
"Legal Matters" in the Prospectus included therein. Our opinion is rendered
solely for your information in connection with the foregoing, and may not be
relied upon by any other person or for any other purpose without our prior
written consent. In giving this opinion, we do not thereby admit that we are
within the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission.
Very truly yours,
By: /s/ STEWART McKELVEY STIRLING
SCALES
<PAGE> 1
Exhibit 5.4
[Letterhead of Norton Rose]
December 1997
Sparkling Spring Water UK Limited and
Aquaporte (UK) Limited
One Landmark Square
Stamford
Connecticut 06901
USA
Dear Sirs,
Sparkling Spring Water UK Limited and Aquaporte (UK) Limited
("English Guarantors")
1. We have been asked to provide an opinion on behalf of the English
Guarantors in connection with the execution of guarantees given by the
English Guarantors contained in an indenture dated 19 November 1997
(the "Indenture") between Sparkling Spring Water Group Limited (the
"Parent"), Spring Water Incorporated, the English Guarantors and the
other Guarantors named therein and the Trustee named therein relating
to Parent's US $100,000,000 11.5% Senior Subordinated Notes due 2007
(the "Notes").
2. We understand that the Notes are to be exchanged for 11.5% Senior
Subordinated Notes due 2007 of the Parent (the "Exchange Notes")
(together with the related guarantees of the English Guarantors as
contained in the Indenture) such Exchange Notes being the subject of
the Registration Statement on Form F-4 to which this opinion is an
Exhibit, filed with the Securities and Exchange Commission under the
United States Securities Act of 1933.
3. Our opinion relates solely to English law as applied by the English
courts at the date of this opinion. We express no opinion as to the
effect or enforceability of the Indenture, which is expressed to be
governed by New York law. We do not assume any obligation to advise you
(or any person authorized to rely upon this opinion) of any subsequent
change in English law which might affect the contents of this opinion.
4. For the purposes of giving this opinion:
<PAGE> 2
(a) we have examined and relied upon the following documents:
(i) faxed executed copy of the Indenture (including the
form of Note, Exchange Note and Guarantee);
(ii) microfiches dated 10th November 1997 of the public
files of the English Guarantors at the Companies
Registration Office in England and Wales;
(iii) certificates of good standing dated 10th November
1997 provided by the Registrar of Companies in
England and Wales in respect of the English
Guarantors;
(iv) executed Board resolutions passed by each of the
English Guarantors in connection with the entry into
(inter alia) of the Indenture;
(v) faxed signed copy of a Directors certificate dated
______________confirming (inter alia) the
authenticity of the Board resolutions in respect of
the English Guarantors; and
(b) we have assumed:
(i) the truth and accuracy of all representations and
statements as to factual matters contained in the
Indenture referred to in paragraph 4(a)(i) above;
(ii) that the Indenture constitutes valid and legally
binding obligations of the English Guarantors under
the laws of the State of New York (by which it is
expressed to be governed);
(iii) the completeness and accuracy in all respects of the
public files relating to the English Guarantors
referred to in paragraph 4(a)(ii) above;
(iv) the genuineness of all signatures on all documents,
the completeness and authenticity of all documents
submitted to us as original and the conformity to the
original of all copies submitted to us; and
(c) We express no view and have made no independent investigation
of whether the Indenture is for the commercial benefit of the
English Guarantors or any of them. Nor have we reviewed the
terms of the Indenture.
<PAGE> 3
5. On the basis of the foregoing, and subject to our further comments
below, we are of the opinion that:
(a) each of the English Guarantors has the corporate power under
its Memorandum and Articles of Association to execute, deliver
and perform its obligations under the Indenture;
(b) the execution and delivery of and the performance of each of
the English Guarantor's obligations under the Indenture have
been duly authorized by all necessary corporate action on the
part of the English Guarantors.
6. This opinion is addressed to you personally and it may not be relied
upon by anyone else without our prior written consent. This opinion may
not be filed with any governmental agency or authority other than the
Securities and Exchange Commission or quoted in any public document
other than as an exhibit to the Registration Statement in Form F-4
filed with the Securities and Exchange Commission under the United
States Securities Act of 1933 (as amended) without, in any such case,
our prior written consent or except as required by applicable law. We
consent to the use of our name under the caption "Legal Matters" in the
Prospectus included in the Registration Statement.
7. This opinion is strictly limited to the matters stated herein and is
not to be read as extending by implication to any other matter in
connection wit the Indenture. Appropriate legal advice should be taken
at the time of enforcement of the Indenture.
8. This opinion is given on condition that it is governed by and shall be
construed in accordance with English Law and on condition that any
action arising out of it is subject to the exclusive jurisdiction of
the court of competent jurisdiction in England.
Yours faithfully,
/s/ Norton Rose
<PAGE> 1
Exhibit 5.5
[Letterhead of Dundas & Wilson]
Malborough Employment Limited
Water at Work Limited
Natural Water Limited
(the "Scottish Guarantors")
December 1997
Our Ref. SJP
Your Ref.
Dear Sirs,
Marlborough Employment Limited, Water at Work Limited and Natural Water Limited
1. We have been asked to provide an opinion on behalf of the Scottish
Guarantors in connection with the execution of guarantees given by the
Scottish Guarantors contained in an indenture dated 19 November 1997
(the "Indenture") between Sparkling Spring Water Group Limited (the
"Parent"), Spring Water Incorporated, the Scottish Guarantors and the
other Guarantors named therein and the Trustee named therein relating
to Parent's US $100,000,000 11.5% Senior Subordinated Notes due 2007
(the "Notes").
2. We understand that the Notes are to be exchanged for 11.5% Senior
Subordinated Notes due 2007 of the Parent (the "Exchange Notes")
(together with the related guarantees of the Scottish Guarantors as
contained in the Indenture) such Exchange Notes being the subject of
the Registration Statement on Form F-4 to which this opinion is an
Exhibit, filed with the Securities and Exchange Commission under the
United States Securities Act of 1933.
3. Our opinion relates solely to Scots law as applied by the Scottish
courts at the date of this opinion. We express no opinion as to the
effect or enforceability of the Indenture, which is expressed to be
governed by New York law. We do not assume any obligation to advise you
(or any person authorized to rely upon this opinion) of any subsequent
change in Scots law which might affect the contents of this opinion.
4. For the purposes of giving this opinion:
<PAGE> 2
(a) we have examined and relied upon the following documents:
(i) faxed executed copy of the Indenture (including the
form of Note, Exchange Note and Guarantee);
(ii) microfiches dated 13th November 1997 of the public
files of the Scottish Guarantors at the Companies
Registration Office in Scotland;
(iii) certificates of good standing dated 10th November
1997 provided by the Registrar of Companies in
Scotland and Wales in respect of the Scottish
Guarantors;
(iv) executed Board resolutions passed by each of the
Scottish Guarantors in connection with the entry into
of the Indenture; and
(v) faxed signed copy of a Directors certificate dated
______________ confirming; (inter alia) the
authenticity of the Board resolutions in respect of
the Scottish Guarantors; and
(b) we have assumed:
(i) the truth and accuracy of all representations and
statements as to factual matters contained in the
Indenture referred to in paragraph 4(a)(i) above;
(ii) that the Indenture constitutes valid and legally
binding obligations of the Scottish Guarantors under
the laws of the State of New York (by which it is
expressed to be governed);
(iii) the completeness and accuracy in all respects of the
public files relating to the Scottish Guarantors
referred to in paragraph 4(a)(ii) above;
(iv) the genuineness of all signatures on all documents,
the completeness and authenticity of all documents
submitted to us as original and the conformity to the
original of all copies submitted to us;
(c) We express no view and have made no independent investigation
of whether the Indenture is for the commercial benefit of the
Scottish Guarantors or any of them nor have we reviewed the
terms of the Indenture.
<PAGE> 3
5. On the basis of the foregoing, and subject to our further comments
below, we are of the opinion that:
(a) each of the Scottish Guarantors has the corporate power under
its Memorandum and Articles of Association to execute, deliver
and perform its obligations under the Indenture;
(b) the execution and delivery of and the performance of each of
the Scottish Guarantor's obligations under the Indenture have
been duly authorized by all necessary corporate action on the
part of the Scottish Guarantors.
6. This opinion is addressed to you personally and it may not be relied
upon by anyone else without our prior written consent. This opinion may
not be filed with any governmental agency or authority other than the
Securities and Exchange Commission or quoted in any public document
other than as an exhibit to the Registration Statement in Form F-4
filed with the Securities and Exchange Commission under the United
States Securities Act of 1933 (as amended) without, in any such case,
our prior written consent or except as required by applicable law. We
consent to the use of our name under the caption "Legal Matters" in the
Prospectus included in the Registration Statement.
7. This opinion is strictly limited to the matters stated herein and is
not to be read as extending by implication to any other matter in
connection wit the Indenture. Appropriate legal advice should be taken
at the time of enforcement of the Indenture.
8. This opinion is given on condition that it is governed by and shall be
construed in accordance with Scots Law and on condition that any action
arising out of it is subject to the exclusive jurisdiction of the court
of competent jurisdiction in Scotland.
Yours faithfully,
/s/ Dundas & Wilson
<PAGE> 1
Exhibit 10.1
SPARKLING SPRING WATER GROUP LIMITED
$100,000,000
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
November 14, 1997
BT Alex. Brown Incorporated
NatWest Capital Markets Limited
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Sparkling Spring Water Group Limited, a corporation organized under
the laws of the Province of Nova Scotia, Canada (the "Issuer" or the "Company"),
and each of the Guarantors (as defined) hereby confirm their agreement with you
(the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuer proposes to issue and sell to the Initial Purchasers
$100,000,000 aggregate principal amount of the Issuer's 11 1/2% Senior
Subordinated Notes due 2007 (the "Notes"). The Notes will be guaranteed
(collectively, the "Guarantees") on a senior subordinated basis by each of the
Issuer's subsidiaries listed on the signature pages hereof (collectively, and
together with any subsidiary that in the future executes a supplemental
indenture pursuant to which such subsidiary agrees to guarantee the Notes, the
"Guarantors"). The Notes and the Guarantees are collectively referred to herein
as the "Securities." The Securities are to be issued under an indenture (the
"Indenture") dated the Closing Date (as defined below) by and among the Issuer,
the Guarantors and Bankers Trust Company, as trustee (the "Trustee").
The Securities will be offered and sold to you without being
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
on exemptions therefrom and pursuant to exemptions from the prospectus and
registration requirements of the Securities Act (Nova Scotia).
In connection with the sale of the Securities, the Issuer has
prepared a preliminary offering memorandum dated October 30, 1997 (the
"Preliminary Memorandum") and a final offering memorandum dated November 14,
1997 (the "Final
<PAGE> 2
Memorandum," the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "Memorandum") setting forth or including a description of
the terms of the Securities, the terms of the offering of the Securities, a
description of the Issuer and the Guarantors and any material developments
relating to the Issuer and the Guarantors occurring after the date of the most
recent historical financial statements included therein.
The Issuer understands that the Initial Purchasers propose to make
an offering of the Securities on the terms and in the manner set forth in the
Final Memorandum and Section 8 hereof as soon as the Initial Purchasers deem
advisable after this Purchase Agreement (this "Agreement") has been executed and
delivered, to certain persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers" or "QIBs") as defined in Rule 144A under the Act, as such
rule may be amended from time to time ("Rule 144A"), in transactions under Rule
144A, to a limited number of other institutional "accredited investors"
("Accredited Investors") as defined in Rule 501(a)(1), (2), (3) and (7) under
Regulation D under the Act ("Regulation D") in private sales exempt from
registration under the Act, and outside the United States to certain persons in
reliance on Regulation S under the Act ("Regulation S").
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Issuer and the
Guarantors have agreed, among other things, to file a registration statement
(the "Registration Statement") with the Securities and Exchange Commission (the
"Commission") registering the Exchange Notes (as defined in the Registration
Rights Agreement) under the Act. This Agreement, the Notes, the Exchange Notes,
the Private Exchange Notes (as defined in the Registration Rights Agreement),
the Guarantees, the Indenture and the Registration Rights Agreement are
hereinafter referred to collectively as the "Operative Documents."
2. Representations and Warranties of the Issuer and the Guarantors.
The Issuer and each of the Guarantors, jointly and severally, represents and
warrants to and agrees with each of the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor
the Final Memorandum nor any amendment or supplement thereto as of the
date thereof and at all times subsequent thereto up to the Closing Date
(as defined in Section 3 below) contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material
fact necessary to make the statements
2
<PAGE> 3
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information relating to any of the Initial
Purchasers furnished to the Issuer in writing by the Initial Purchasers
expressly for use in the Preliminary Memorandum, the Final Memorandum or
any amendment or supplement thereto. The Preliminary Memorandum, the Final
Memorandum and each amendment or supplement thereto complies or will
comply in all material respects with the Act.
(b) As of the Closing Date, the Issuer will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum;
all of the outstanding shares of capital stock of the Issuer and each of
the Guarantors have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable and were
not issued in violation of any preemptive or similar rights; except as set
forth in the Final Memorandum, all of the outstanding shares of capital
stock of the Guarantors will be owned, directly or indirectly, by the
Issuer, free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability (other than those imposed by the Act and
the securities or "Blue Sky" laws of certain jurisdictions) or voting;
except as set forth in the Final Memorandum, there are no (i) options,
warrants or other rights to purchase, (ii) agreements or other obligations
to issue or (iii) other rights to convert any obligation into, or exchange
any securities for, shares of capital stock of or ownership interests in
the Issuer or any of the Guarantors outstanding. Except for the Issuer's
direct and indirect interests in the Guarantors, the Issuer does not own,
directly or indirectly, any shares of capital stock or any other equity or
long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity other than as described in the
Final Memorandum.
(c) Each of the Issuer and the Guarantors is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all requisite corporate or other power and authority
to own its properties and conduct its business as now conducted and as
described in the Final Memorandum; each of the Issuer and the Guarantors
is duly qualified to do business as a foreign or extra-provincial
corporation and is in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse
effect on the general affairs, management, business,
3
<PAGE> 4
condition (financial or otherwise), prospects or results of operations of
the Issuer and each of its subsidiaries (each, a "Subsidiary" and
collectively, the "Subsidiaries"), taken as a whole (any such event, a
"Material Adverse Effect").
(d) Each of the Issuer and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Operative Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby, including,
without limitation, the power and authority to issue, sell and deliver the
Securities as contemplated by this Agreement. The Notes, when issued, will
be in the form contemplated by the Indenture. The Notes, the Exchange
Notes and the Private Exchange Notes have each been duly and validly
authorized by the Issuer and, when executed by the Issuer and
authenticated by the Trustee in accordance with the provisions of the
Indenture and, in the case of the Notes, when delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement,
will have been duly executed, issued and delivered and will constitute
valid and legally binding obligations of the Issuer (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
the due authorization and delivery of the Notes by the Trustee in
accordance with the Indenture), entitled to the benefits of the Indenture,
and enforceable against the Issuer in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(e) The Guarantees have been duly and validly authorized by each
Guarantor, and when executed and delivered by such Guarantors, will
constitute the valid and legally binding obligations of such Guarantors,
entitled to the benefits of the Indenture, enforceable against each of
them in accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(f) Each of the Issuer and the Guarantors has all
4
<PAGE> 5
requisite corporate power and authority to execute, deliver and perform
its obligations under the Indenture. The Indenture meets the requirements
for qualification under the Trust Indenture Act of 1939, as amended (the
"TIA"). The Indenture has been duly and validly authorized by each of the
Issuer and the Guarantors and, when executed and delivered in accordance
with its terms (assuming the due authorization, execution and delivery by
the Trustee), will have been duly executed and delivered and will
constitute a valid and legally binding agreement of each of the Issuer and
the Guarantors, enforceable against each of them in accordance with its
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in
equity or at law).
(g) Each of the Issuer and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement. The Registration
Rights Agreement has been duly and validly authorized by each of the
Issuer and the Guarantors and, when executed and delivered by each of the
Issuer and the Guarantors (assuming due authorization, execution and
delivery by the Initial Purchasers), will have been duly executed and
delivered and will constitute a valid and legally binding agreement of
each of the Issuer and the Guarantors, enforceable against each of them in
accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and (B) any rights to
indemnity or contribution thereunder may be limited by U.S. or Canadian
federal, state or provincial securities laws.
(h) Each of the Issuer and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the consummation by the Issuer and
the Guarantors of the transactions contemplated hereby have been duly and
validly authorized by each of the Issuer and the Guarantors. This
Agreement has been duly executed and
5
<PAGE> 6
delivered by each of the Issuer and the Guarantors and constitutes a valid
and legally binding agreement of each of the Issuer and the Guarantors,
enforceable against each of them in accordance with its terms, except that
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought (regardless of whether such enforcement
is considered in a proceeding in equity or at law).
(i) No consent, waiver, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any
court or governmental agency or body, or third party is required for the
performance of this Agreement or any other Operative Document by the
Issuer and the Guarantors or the consummation by them of the other
transactions contemplated hereby or thereby, except such (i) as have been
obtained or made, (ii) as may be required under state securities or "Blue
Sky" laws in connection with the purchase and resale of the Securities by
the Initial Purchasers, and (iii) as may be required in connection with
the registration of the Securities, Exchange Notes and Private Exchange
Notes, as the case may be, pursuant to the Registration Rights Agreement
and the qualification of the Indenture under the TIA and (iv) the failure
of which to obtain could not have, individually or in the aggregate, a
Material Adverse Effect. Neither the Issuer nor any of the Guarantors is
(i) in violation of its constating documents, certificate of incorporation
or bylaws (or similar organization documents), (ii) in breach or violation
of any statute, judgment, decree, order, rule or regulation applicable to
any of them or any of their respective properties or assets, or (iii) in
breach of or in default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which
any of them is a party or to which their respective properties or assets
are subject (collectively, "Contracts"), except in the case of clauses
(ii) and (iii) above for any such breaches, defaults, violations or events
which would not, individually or in the aggregate, have a Material Adverse
Effect. Neither the Issuer nor any Guarantor has received any notice or
claim of any default or event, condition or omission which with notice or
lapse of time or both would result in a default under any of their
respective Contracts, including those referred to in the Final Memorandum,
or any
6
<PAGE> 7
Operative Document to which it is a party or has knowledge of any breach
of any of such Contracts by the other party or parties thereto, except
such defaults or breaches which would not, individually or in the
aggregate, have a Material Adverse Effect.
(j) The execution, delivery and performance by the Issuer and the
Guarantors of each of the Operative Documents (to the extent a party
thereto) and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the
Securities to the Initial Purchasers), and the fulfillment of the terms
hereof and thereof, will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice or passage of
time or both would constitute a default under) or violation of or cause an
acceleration of any obligation under, or result in the imposition or
creation of (or the obligation to create or impose) a lien on any property
or assets of the Issuer or any Guarantor with respect to (i) the terms or
provisions of any Contract; (ii) the constating documents, certificate of
incorporation or bylaws (or similar organizational documents) of the
Issuer or any of the Guarantors; or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws and assuming the accuracy
of the representations and warranties of the Initial Purchasers in Section
8 hereof) any statute, judgment, decree, order, rule or regulation of any
court or governmental agency or body applicable to the Issuer, the
Guarantors or any of their respective properties or assets.
(k) Each of the Operative Documents conforms in all material
respects to the description thereof in the Final Memorandum.
(l) The consolidated financial statements of the Issuer and the
related notes thereto included in the Final Memorandum present fairly the
consolidated financial position, results of operations and cash flows of
the Issuer at the dates and for the periods to which they relate and have
been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis, except as otherwise
stated therein, and comply in all material respects with the applicable
accounting requirements of the Act and the rules and regulations
thereunder. The financial statements of Canadian Springs Water Company
Ltd. ("CS"), Cullyspring Water Co., Inc. ("Cullyspring"), D&D and Company,
Inc. ("D&D") and Marlborough Employment Limited and Subsidiaries
("Marlborough"), including, in each case, the related notes thereto,
included in the Final Memorandum (i) presently fairly the financial
position, results of operations and
7
<PAGE> 8
cash flows of CS, Cullyspring, D&D and Marlborough, respectively, at the
dates and for the periods to which they relate, (ii)(except Marlborough)
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis, except as otherwise
stated therein, and (iii) comply in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder. The Final Memorandum contains all financial statements and
other financial information required under the Act, including, without
limitation, under Rules 3-01, 3-05, 3-10 and 11-02 of Regulation S-X. The
summary and selected financial and statistical data included in the Final
Memorandum present fairly the information shown therein and have been
prepared and compiled on a basis consistent with the audited financial
statements included therein, except as otherwise stated therein, and
comply in all material respects with the applicable accounting
requirements of the Act and the rules and regulations thereunder. Each of
Ernst & Young and Kidsons Impey is an independent public accounting firm
as required by the Act and the rules and regulations thereunder.
(m) (i) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the
Final Memorandum (A) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (B) have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and (C) have been properly
computed on the bases described therein, and (ii) the assumptions used in
the preparation of the pro forma financial statements and other pro forma
financial information included in the Final Memorandum are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(n) There is not pending or, to the best knowledge of the Issuer and
each of the Guarantors, threatened any action, suit, proceeding, inquiry
or investigation to which the Issuer or any of the Guarantors is a party,
or to which any of their respective properties or assets are subject,
before or brought by any court, arbitrator or governmental agency or body,
which, if determined adversely to the Issuer or any such Guarantor, would,
individually or in the aggregate, have a Material Adverse Effect, or which
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold hereunder or
the anticipated application of the proceeds therefrom or the consummation
of the other transactions
8
<PAGE> 9
contemplated by the Operative Documents.
(o) Each of the Issuer and the Guarantors owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights and know-how necessary to conduct the businesses
now or proposed to be operated by it as described in the Final Memorandum,
and neither the Issuer nor any of the Guarantors has received any notice
of infringement of or conflict with (or knows of any such infringement of
or conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if
such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.
(p) Each of the Issuer and the Guarantors possesses all licenses,
permits, certificates, consents, orders, approvals, exemptions and other
authorizations from, and has made all declarations and filings with, all
federal, provincial, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals presently
required or necessary to own or lease, as the case may be, and to operate
its properties and to carry on its business as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Issuer and the Guarantors has fulfilled and performed
all of its material obligations with respect to such Permits and no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or which could result in any other
material impairment of the rights of the holder of any such Permit, except
where such revocation, termination or impairment would not, individually
or in the aggregate, have a Material Adverse Effect; and neither the
Issuer nor any Guarantor has received any notice of any proceeding
relating to revocation or modification of any such Permit, except where
such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect.
(q) Since the respective dates as of which information is given in
the Final Memorandum, except as described therein, there has been no
material adverse change or any fact or event known to the Issuer or any of
the Guarantors which could reasonably be expected to result in a material
adverse change, in the general affairs, management, business, condition
(financial or otherwise), prospects or results of operations of the Issuer
and the Subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, or any loss of, or
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damage to, properties (whether or not insured) which could reasonably be
expected to affect materially and adversely the general affairs,
management, business, condition (financial or otherwise), prospects or
results of operations of the Issuer and the Subsidiaries taken as a whole.
Since the date of the latest balance sheet of the Issuer presented in the
Final Memorandum, except as expressly disclosed in the Final Memorandum,
neither the Issuer nor any of the Guarantors has (i) incurred or
undertaken any liabilities or obligations, direct or contingent, that are
material to the Issuer and the Subsidiaries taken as a whole other than in
the ordinary course of business consistent with past practice, (ii)
entered into any transaction or contract not in the ordinary course of
business and consistent with past practice, (iii) declared or paid any
dividend or made any distribution on any shares of its capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital stock or (iv) effected any
change in the capital stock or long-term indebtedness of the Issuer or any
of the Guarantors.
(r) Each of the Issuer and the Guarantors has filed all necessary
federal, provincial, state and foreign income, franchise and other tax
returns, except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and has
paid all taxes shown as due thereon; and other than tax deficiencies which
the Issuer or any of the Guarantors is contesting in good faith and for
which the Issuer or such Guarantor has provided adequate reserves in
accordance with United States generally accepted accounting principles,
there is no tax deficiency that has been asserted against the Issuer or
any Guarantor that would, individually or in the aggregate, have a
Material Adverse Effect.
(s) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Issuer believes
to be reliable and accurate.
(t) Neither the Issuer nor any of the Guarantors nor any agent
acting on their behalf has taken or will take any action that might cause
this Agreement or the sale of the Securities to violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System, in each case
as in effect, or as the same may hereafter be in effect, on the Closing
Date.
(u) Each of the Issuer and the Guarantors has good title to all
personal property described in the Final Memorandum as being owned by it,
good and marketable title to all real property described in the Final
Memorandum as
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<PAGE> 11
being owned by it and good and valid title to a leasehold estate in the
real and personal property described in the Final Memorandum as being
leased by it, in each case, free and clear of all liens, charges,
encumbrances or restrictions except as described in the Final Memorandum
or to the extent the failure to have such title or the existence of such
liens, charges, encumbrances or restrictions would not, individually or in
the aggregate, have a Material Adverse Effect. All leases, contracts and
agreements to which the Issuer or any Guarantor is a party or by which the
Issuer or such Guarantor is bound are valid and enforceable against the
Issuer or such Guarantor (as the case may be), to the knowledge of the
Issuer are valid and enforceable against the other party or parties
thereto and are in full force and effect with only such exceptions as
would not, individually or in the aggregate, have a Material Adverse
Effect.
(v) There are no legal or governmental proceedings involving or
affecting the Issuer, any of the Guarantors or any of their respective
properties or assets which would be required to be described in a
prospectus contained in a registration statement on Form S-1 pursuant to
the Act that are not described in the Final Memorandum, nor are there any
material contracts or other documents which would be required to be
described in a prospectus contained in a registration statement on Form
S-1 pursuant to the Act that are not described in the Final Memorandum.
(w) Except as described in the Final Memorandum or as would not,
individually or in the aggregate, have a Material Adverse Effect, (A) each
of the Issuer and the Guarantors is in compliance with and not subject to
liability under applicable Environmental Laws, (B) each of the Issuer and
the Guarantors has made all filings and provided all notices required
under applicable Environmental Laws and possesses and is in compliance
with all Permits required under applicable Environmental Laws, and each
such filing, notice and Permit is in full force and effect, (C) there is
no civil, criminal or administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter or
request for information pending or, to the knowledge of the Issuer or any
of the Guarantors, threatened against the Issuer or any Guarantor under
any Environmental Law, (D) no lien, charge, encumbrance or restriction has
been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by the Issuer
or any Guarantor, (E) neither the Issuer nor any Guarantor has received
notice that it has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or any comparable state or
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foreign law and (F) no property or facility of the Issuer or any Guarantor
is (i) listed or proposed for listing on the National Priorities List
under CERCLA or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, provincial, state, local and
foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, relating
to pollution or protection of public or employee health and safety or the
environment, including, without limitation, laws relating to (i)
emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), (ii)
the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and aboveground storage tanks, and related piping, and
emissions, discharges, releases or threatened releases therefrom.
For purposes of this Agreement, "Hazardous Materials" means any
substance, chemical, compound, product, solid, gas, liquid, waste,
byproduct, pollutant, contaminant or material which is defined, classified
or regulated as "hazardous" or "toxic" pursuant to Environmental Laws and
includes, without limitation, asbestos, polychlorinated biphenyls and
petroleum (including crude oil or any fraction thereof).
(x) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Issuer or the Guarantors which is pending or, to
the knowledge of the Issuer or any of the Guarantors, threatened.
(y) Each of the Issuer and the Guarantors carries insurance in such
amounts and covering such risks as is adequate for the conduct its
business and the value of its properties.
(z) Neither the Issuer nor any Guarantor has any liability for any
prohibited transaction within the meaning of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or funding
deficiency within the meaning of Section 302 of ERISA or any complete or
partial withdrawal liability under Title IV of ERISA with respect to any
pension, profit sharing or other plan which is subject to ERISA to which
the Issuer or any Guarantor
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<PAGE> 13
makes or ever has made a contribution and in which any employee of the
Issuer or any Guarantor is or has ever been a participant. With respect to
such plans, each of the Issuer and the Guarantors is in compliance in all
material respects with all applicable provisions of ERISA.
(aa) Each of the Issuer and the Guarantors (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(bb) None of the Issuer or any Guarantor is or will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
(cc) No holder of securities of the Issuer or any Guarantor (other
than the Registrable Notes (as defined in the Registration Rights
Agreement)) will be entitled to have such securities registered under the
registration statements required to be filed by the Issuer pursuant to the
Registration Rights Agreement.
(dd) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Issuer and the Guarantors will exceed
the sum of its stated liabilities and identified contingent liabilities
(after giving effect, in the case of each of the Guarantors, to the
limitations contained in each Guarantee); neither the Issuer nor any of
the Guarantors is, or will be after giving effect to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, (a) left with unreasonably small capital
with which to carry on its business as it is proposed to be conducted, (b)
unable to pay its debts (contingent or otherwise) as they mature or (c)
otherwise insolvent.
(ee) Neither the Issuer nor any of the Guarantors nor any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D) has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of any "security" (as
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<PAGE> 14
defined in the Act) which is or could be integrated with the sale of the
Securities in a manner that would require the registration under the Act
of the Securities,(ii) engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D) in
connection with the offering of the Securities or in any manner involving
a public offering within the meaning of Section 4(2) of the Act or (iii)
sold pursuant to a transaction or series of transactions involving a
purchase and sale or a repurchase and resale of Securities in the course
of or incidental to a "distribution" (as defined in the Securities Act
(Nova Scotia)).
(ff) Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the
Initial Purchasers in the manner contemplated by this Agreement to
register any of the Securities under the Act or to qualify the Indenture
under the TIA.
(gg) No securities of the Issuer are of the same class (within the
meaning of Rule 144A under the Act) as the Securities and listed on a
national securities exchange registered under Section 6 of the Exchange
Act, or quoted in a U.S. automated inter-dealer quotation system.
(hh) Neither the Issuer nor any Guarantor has taken, nor will take,
directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation
of the price of the Securities.
(ii) Neither the Issuer nor any Guarantor, nor any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D) or any
person acting on any of their behalf (other than the Initial Purchasers as
to which the Issuer and the Guarantors make no representation) has engaged
in any directed selling efforts (as that term is defined in Regulation S)
with respect to the Securities; the Issuer and its Affiliates and any
person acting on any of their behalf (other than the Initial Purchasers as
to which the Issuer and the Guarantors make no representation) have
complied with the offering restrictions requirement of Regulation S.
(jj) Neither the Issuer nor any Guarantor or any of their respective
affiliates does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075, Florida
Statutes 1985, as amended, and all regulations promulgated thereunder.
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3. Purchase, Sale and Delivery of the Securities. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuer and the
Guarantors agree to issue and sell to the Initial Purchasers, and each of the
Initial Purchasers agrees, acting severally and not jointly, to purchase the
Notes (including the related Guarantees), at 97.225% of their principal amount,
in the respective principal amounts set forth opposite their names on Schedule I
hereto.
One or more certificates in definitive form for the Securities that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Issuer at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Issuer to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers of
the purchase price therefor by wire transfer of immediately available funds
payable to such account or accounts as the Issuer shall specify prior to the
Closing Date, or by such means as the parties hereto shall agree prior to the
Closing Date. Such delivery of and payment for the Securities shall be made at
the offices of Winston & Strawn, 200 Park Avenue, New York, New York, at 10:00
A.M., New York time, on November 19, 1997, or at such other place, time or date
as the Initial Purchasers and the Issuer may agree upon, such time and date of
delivery against payment being herein referred to as the "Closing Date." The
Issuer will make such certificate or certificates for the Securities available
for checking and packaging by the Initial Purchasers at the offices of BT Alex.
Brown Incorporated in New York, New York or such other place as BT Alex. Brown
Incorporated may designate, at least 24 hours prior to the Closing Date. The
Issuer agrees to pay any transfer taxes payable in connection with the initial
delivery to the Initial Purchasers of the Securities.
4. Offering by the Initial Purchasers. The Initial Purchasers,
directly or through affiliates, propose to make an offering of the Securities at
the price and upon the terms set forth in the Final Memorandum as soon as
practicable after this Agreement is entered into and as in the sole judgment of
the Initial Purchasers is advisable.
5. Covenants of the Issuer and the Guarantors. The Issuer and each
of the Guarantors covenant and agree with each of the Initial Purchasers that:
(a) The Issuer will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers and
counsel to the Initial Purchasers shall not previously have been advised
and furnished a copy for a reasonable period of time prior to the proposed
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<PAGE> 16
amendment or supplement and as to which the Initial Purchasers shall not
have given their consent, which consent shall not be unreasonably
withheld. The Issuer will promptly, upon the reasonable request of the
Initial Purchasers or counsel for the Initial Purchasers, make any
amendments or supplements to the Preliminary Memorandum or the Final
Memorandum that may be necessary or advisable in connection with the
resale of the Securities by the Initial Purchasers.
(b) The Issuer and the Guarantors will cooperate with the Initial
Purchasers in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchasers may designate and will continue
such qualification in effect for as long as may be necessary to complete
the resale of the Securities by the Initial Purchasers; provided, however,
that in connection therewith, the Issuer and the Guarantors shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject the Issuer or
any Guarantor to any tax in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchasers of the Notes or the Private Exchange Notes, any
event occurs or information becomes known as a result of which the Final
Memorandum as then amended or supplemented would include an untrue
statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum in order
to comply with applicable law, the Issuer will promptly notify the Initial
Purchasers thereof and will prepare, at the Issuer's expense, an amendment
or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Issuer will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Issuer will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For so long as any Securities remain outstanding,
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the Issuer will furnish to the Initial Purchasers copies of all reports
and other communications (financial or otherwise) furnished by the Issuer
to the Trustee or the holders of the Securities and, as soon as available,
copies of any reports or financial statements furnished to or filed by the
Issuer with the Commission or any national securities exchange on which
any class of securities of the Issuer may be listed.
(g) Prior to the Closing Date, the Issuer will furnish to the
Initial Purchasers, as soon as they have been prepared by or are available
to the Issuer, a copy of any unaudited interim consolidated financial
statements of the Issuer for any period subsequent to the period covered
by its most recent financial statements appearing in the Final Memorandum.
(h) None of the Issuer, the Guarantors or any of their respective
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) that could
be integrated with the sale of the Securities in a manner that would
require the registration under the Act of the Securities.
(i) None of the Issuer or any Guarantor will engage in any form of
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offering of the Securities or in any
manner involving a public offering within the meaning of Section 4(2) of
the Act.
(j) For so long as any of the Securities remain outstanding, the
Issuer will make available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Issuer is then
subject to Section 13 or 15(d) of the Exchange Act and is in compliance
therewith.
(k) Each of the Issuer and the Guarantors will use its best efforts
to (i) permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. (the "NASD") relating to trading
in the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL Market") and (ii) permit the Securities to be eligible
for clearance and settlement through The Depository Trust Company.
(l) In connection with any Securities offered and sold in an
offshore transaction (as defined in Regulation S), the Issuer will not
register any transfer of such Securities not
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made in accordance with the provisions of Regulation S and, except in
accordance with the provisions of Regulation S, if applicable, the Issuer
and the Guarantors will not issue any such Securities in the form of
definitive securities.
6. Expenses. The Issuer agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to: (i) the printing, word processing or other production of documents
with respect to such transactions, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendments or
supplements thereto, and any "Blue Sky" memoranda, (ii) all arrangements
relating to the delivery to the Initial Purchasers of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Issuer, (iv) the preparation
(including printing), issuance and delivery to the Initial Purchasers of any
certificates evidencing the Securities, (v) the qualification of the Securities
under state securities and "Blue Sky" laws, including filing fees and reasonable
fees and disbursements of counsel for the Initial Purchasers relating thereto,
and other filing or similar fees payable to government agencies in connection
with the issuance and sale of the Notes, (vi) expenses incurred in connection
with any meetings with prospective investors in the Securities, (vii) the fees
and expenses of the Trustee, including fees and expenses of its counsel, and
(viii) all expenses and listing fees incurred in connection with the application
for quotation of the Securities on the PORTAL Market and (ix) any fees charged
by investment rating agencies for the rating of the Securities. If the issuance
and sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth in Section 7
hereof is not satisfied, because this Agreement is terminated pursuant to
Section 11 hereof or because of any failure, refusal or inability on the part of
the Issuer or any Guarantor to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder (other than solely
by reason of a default by the Initial Purchasers of their obligations hereunder
after all conditions hereunder have been satisfied in accordance herewith), the
Issuer will promptly reimburse the Initial Purchasers upon demand for all
out-of-pocket expenses (including fees, disbursements and charges of Winston &
Strawn and Stikeman, Elliott, counsel for the Initial Purchasers) that shall
have been incurred by the Initial Purchasers in connection with the proposed
purchase and sale of the Securities.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the
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<PAGE> 19
satisfaction or waiver of the following conditions on or prior to the Closing
Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Robinson & Cole LLP, United States counsel for the Issuer
and the Guarantors, in form and substance satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers, substantially to the
following effect (with customary qualifications and assumptions
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers):
(i) Each of the Issuer and the Guarantors is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Final Memorandum.
(ii) Based solely on a review of the stock ledger and the
records of proceedings of the Board of Directors and shareholders of
the Issuer, the Issuer has the authorized capitalization as set
forth in the Final Memorandum; all of the outstanding shares of
capital stock of the Issuer and each of the Guarantors have been
duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar
rights; all of the outstanding shares of capital stock of each of
the Guarantors are owned of record, directly or indirectly, by the
Issuer, and, to the knowledge of such counsel, are free and clear of
all liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the
securities or "Blue Sky" laws of certain jurisdictions) or voting.
(iii) To the knowledge of such counsel, except as set forth in
the Final Memorandum, (A) no options, warrants or other rights to
purchase from the Issuer or any Guarantor shares of capital stock or
ownership interests in the Issuer or any Guarantor are outstanding,
(B) no agreements or other obligations of the Issuer or any
Guarantor to issue, or other rights to cause the Issuer or any
Guarantor to convert any obligation into, or exchange any securities
for, shares of capital stock or ownership interests in the Issuer or
any Guarantor are outstanding and, (C) no holder of securities of
the Issuer or any Guarantor (other than the Registrable Notes) is
entitled to have such securities registered under a registration
statement filed by the Issuer and the Guarantors pursuant to the
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Registration Rights Agreement.
(iv) The Issuer has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture; each of the Guarantors has all requisite corporate power
and authority to execute, deliver and perform its obligations under
the Indenture and such Guarantor's Guarantee; the Indenture is in
sufficient form for qualification under the TIA; the Indenture has
been duly and validly authorized, executed and delivered by each of
the Issuer and the Guarantors, and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes the valid
and legally binding agreement of each of the Issuer and the
Guarantors, enforceable against each of them in accordance with its
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
(v) The Notes are in the form contemplated by the Indenture.
The Notes have each been duly and validly authorized, executed and
delivered by the Issuer and, when paid for by the Initial Purchasers
in accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee and due authentication and delivery of the Notes by the
Trustee in accordance with the Indenture), will constitute the valid
and legally binding obligations of the Issuer, entitled to the
benefits of the Indenture, and enforceable against the Issuer in
accordance with their terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(vi) The Guarantees are in the form contemplated by the
Indenture. The Guarantees have been duly and validly authorized,
executed and delivered by each Guarantor and (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee
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and due authentication and delivery of the Notes by the Trustee in
accordance with the Indenture) constitute the valid and legally
binding obligations of each Guarantor, entitled to the benefits of
the Indenture, enforceable against each of them in accordance with
their terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
(vii) The Exchange Notes and the Private Exchange Notes and
the Guarantees to be endorsed on them have been duly and validly
authorized by the Issuer and each of the Guarantors, as the case may
be, and when the Exchange Notes and the Private Exchange Notes have
been duly executed and delivered by the Issuer and the Guarantees to
be endorsed on them have been duly executed and delivered by the
Guarantors, each in accordance with the terms of the Registration
Rights Agreement and the Indenture (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Exchange Notes and the Private
Exchange Notes by the Trustee in accordance with the Indenture),
will constitute the valid and legally binding obligations of the
Issuer and the Guarantors, respectively, entitled to the benefits of
the Indenture, and enforceable against the Issuer and the
Guarantors, respectively, in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(viii) Each of the Issuer and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been duly and validly authorized,
executed and delivered by the Issuer and the Guarantors, and
(assuming due authorization, execution and delivery thereof by the
Initial Purchasers) constitutes the valid and legally binding
agreement of
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the Issuer and the Guarantors, enforceable against each of them in
accordance with its terms, except that (A) the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether
such enforcement is considered in a proceeding in equity or at law)
and (B) any rights to indemnity or contribution thereunder may be
limited by U.S. or Canadian federal, state or provincial securities
laws.
(ix) Each of the Issuer and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby; this Agreement and the consummation by the
Issuer and the Guarantors of the transactions contemplated hereby
have been duly and validly authorized by the Issuer and the
Guarantors, respectively. This Agreement has been duly executed and
delivered by each of the Issuer and the Guarantors and constitutes a
valid and legally binding agreement of each of the Issuer and the
Guarantors, enforceable against each of them in accordance with its
terms, except that enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(x) The statements made in the Final Memorandum under the
captions "Description of the Notes" and "Exchange Offer;
Registration Rights," insofar as they purport to constitute
summaries of certain terms of documents referred to therein,
constitute accurate summaries of the terms of such documents in all
material respects.
(xi) The statements made in the Final Memorandum under the
caption "Certain Income Tax Considerations," to the extent that they
constitute summaries of matters of United States law or regulation
or legal conclusions, have been reviewed by such counsel and fairly
summarize the matters described therein in all material respects.
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(xii) Each of the Operative Documents conforms in all material
respects to the descriptions thereof contained in the Final
Memorandum.
(xiii) To the knowledge of such counsel, no legal or
governmental proceedings are pending or threatened to which the
Issuer or any of the Guarantors is a party, or to which any of their
respective properties or assets are subject, which would be required
under the Act to be described in a registration statement on Form
S-1 or in a prospectus contained therein and are not described in
the Final Memorandum, or which seek to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions contemplated by the Operative Documents.
(xiv) To the knowledge of such counsel, neither the Issuer nor
any of the Guarantors is in violation of its certificate of
incorporation or bylaws (or similar organizational documents).
(xv) The execution, delivery and performance by the Issuer and
each of the Guarantors of the Operative Documents (to the extent a
party thereto), the consummation of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and
sale of the Securities to the Initial Purchasers) and the
fulfillment of the terms hereof and thereof will not conflict with
or constitute or result in a breach or a default under (or an event
which with notice or passage of time or both would constitute a
default under) or violation of or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a lien on any property or assets of
the Issuer or any Guarantor with respect to (i) any of the terms or
provisions of any Contract identified to such counsel as material to
the Issuer and the Subsidiaries taken as a whole,(ii) the
certificate of incorporation or bylaws (or similar organizational
documents) of the Issuer or any Guarantor, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws
and assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof) any statute, rule or
regulation or, to such counsel's knowledge, any judgment, decree or
order, applicable to the Issuer or any of the Guarantors or any of
their respective properties or assets.
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(xvi) To the knowledge of such counsel, each of the Issuer and
the Guarantors has obtained all Permits necessary to conduct the
businesses now or proposed to be conducted by it as described in the
Final Memorandum, the lack of which would, individually or in the
aggregate, have a Material Adverse Effect; each of the Issuer and
the Guarantors has fulfilled and performed all of its obligations
with respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of
the rights of the Issuer or any such Guarantor as holder of any such
Permit, except for any such revocation or termination which would
not have a Material Adverse Effect.
(xvii) No consent, approval, authorization or order of any
governmental authority is required for the issuance and sale by the
Issuer and the Guarantors of the Securities to the Initial
Purchasers or the other transactions contemplated in this Agreement,
except (i) as may be required in connection with the registration of
the Securities and the Exchange Notes and Private Exchange Notes and
the Guarantees to be endorsed on them, pursuant to the Registration
Rights Agreement and the qualification of the Indenture under the
TIA, or (ii) such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits (y) as
have been obtained and made or (z) as may be required under state
securities or "Blue Sky" laws, as to which such counsel need express
no opinion.
(xviii) None of the Issuer or the Guarantors is, and
immediately after the sale of the Securities to be sold hereunder
and the application of the proceeds from such sale (as described in
the Final Memorandum under the caption "Use of Proceeds") will be,
an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(xix) No registration under the Act of the Securities is
required in connection with the sale of the Securities to the
Initial Purchasers as contemplated by this Agreement and the Final
Memorandum or in connection with the initial resale of the
Securities by the Initial Purchasers in accordance with Section 8 of
this Agreement, and prior to the commencement of the Exchange Offer
(as defined in the Registration Rights Agreement) or the
effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement), the Indenture is not
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required to be qualified under the TIA, in each case assuming (i)
that the purchasers who buy such Securities in the initial resale
thereof are QIBs or Accredited Investors or purchase such Securities
in compliance with Regulation S under the Act, (ii) the accuracy of
the Initial Purchasers' representations in Section 8 and those of
the Issuer contained in this Agreement regarding the absence of a
general solicitation in connection with the sale of such Securities
to the Initial Purchasers and the initial resale thereof, (iii) the
due performance by the Initial Purchasers of the agreements set
forth in Section 8 hereof and the offering and transfer procedures
set forth in the Final Memorandum, and (iv) the accuracy of the
representations made by each Accredited Investor who purchases
Securities in the initial resale as set forth in the Final
Memorandum.
(xx) Neither the execution, delivery or performance by the
Issuer and the Guarantors of this Agreement nor the issuance or sale
of the Securities under the circumstances contemplated by this
Agreement nor the use of proceeds in the manner contemplated by the
Final Memorandum under the caption "Use of Proceeds" will violate
Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
(xxi) Neither the Issuer or any Guarantor nor any holder of
the Notes, the Exchange Notes or the Private Exchange Notes will
incur or be subject to any tax liability imposed by any governmental
authority as a result of the transactions contemplated by the
Reorganization (as defined in the Final Memorandum).
At the time the foregoing opinion is delivered, such counsel shall
additionally state that it has participated in conferences with officers
and other representatives of the Issuer and the Guarantors,
representatives of the independent public accountants for the Issuer and
the Guarantors, representatives of Canadian counsel for the Issuer and the
Guarantors and representatives of the Initial Purchasers and counsel for
the Initial Purchasers, at which conferences the contents of the Final
Memorandum and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except to the extent
specified in subsections 7(a)(ii), 7(a)(x), 7(a)(xi) and 7(a)(xii)), no
facts have come to its attention which lead it to believe that the Final
Memorandum, on the date thereof or at the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
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fact required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express
no opinion with respect to the financial statements and related notes
thereto and the other financial and accounting data included in the Final
Memorandum). The opinion of such counsel described in this Section shall
be rendered to the Initial Purchasers at the request of the Issuer and the
Guarantors and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
In rendering such opinion, such counsel may state that they express
no opinion as to the laws of any jurisdiction other than the federal laws
of the United States and the laws of the States of New York and Delaware.
Such counsel may also state that with respect to opinions as to the laws
of jurisdictions other than Delaware and New York, such counsel has relied
on the opinion of local counsel of the Issuer and the Guarantors who are
reasonably satisfactory to counsel for the Initial Purchasers; provided,
however, that Robinson & Cole LLP shall state that it believes that it,
the Initial Purchasers and counsel for the Initial Purchasers are
justified in relying on such opinion. Such counsel may also state that,
insofar as such opinion involves factual matters, such counsel have
relied, to the extent they deem proper, upon certificates of officers of
the Issuer and certificates of public officials; provided that such
certificates have been provided to the Initial Purchasers.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Stewart McKelvey Stirling Scales, Canadian counsel for the
Issuer and each Guarantor organized under the federal laws of Canada or a
province thereof (each a "Canadian Guarantor" and collectively, the
"Canadian Guarantors"), in form and substance satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers substantially to the
following effect (with customary qualifications and assumptions
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers):
(i) Each of the Issuer and the Canadian Guarantors is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization and has all requisite corporate
power and
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authority to own, lease and operate its properties and to conduct
its business as described in the Final Memorandum. Each of the
Issuer and the Canadian Guarantors is duly qualified to do business
as a foreign or extra-provincial corporation and is in good standing
in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse
Effect.
(ii) The Issuer has the authorized capitalization as set forth
in the Final Memorandum; all of the outstanding shares of capital
stock of the Issuer and each of the Canadian Guarantors have been
duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar
rights; all of the outstanding shares of capital stock of each of
the Canadian Guarantors are owned, directly or indirectly, by the
Issuer, free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability (other than those imposed
by the Securities Act (Nova Scotia) and the securities or "Blue Sky"
laws of certain jurisdictions) or voting.
(iii) To the knowledge of such counsel, except as set forth in
the Final Memorandum, (A) no options, warrants or other rights to
purchase from the Issuer or any Canadian Guarantor shares of capital
stock or ownership interests in the Issuer or any Canadian Guarantor
are outstanding, (B) no agreements or other obligations of the
Issuer or any Canadian Guarantor to issue, or other rights to cause
the Issuer or any Canadian Guarantor to convert, any obligation
into, or exchange any securities for, shares of capital stock or
ownership interests in the Issuer or any Canadian Guarantor are
outstanding and, (C) no holder of securities of the Issuer or any
Canadian Guarantor (other than the Registrable Notes) is entitled to
have such securities registered under a registration statement filed
by the Issuer and the Guarantors pursuant to the Registration Rights
Agreement.
(iv) The Issuer has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture; each of the Canadian Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under the Indenture and the Guarantees to be entered
into by such Canadian Guarantors (the "Canadian Guarantees"); the
Indenture has been duly and
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validly authorized, executed and delivered by each of the Issuer and
the Canadian Guarantors. The appointment of the Trustee, at its
principal office in the City of New York, as registrar, paying agent
and transfer agent for the Notes and as trustee for the holders of
the Notes has been duly authorized by the Issuer.
(v) The Notes have each been duly and validly authorized,
executed and delivered by the Issuer. The issuance of the Notes is
not subject to pre-emptive or other similar rights arising by
operation of law or under the constating documents of the Issuer.
(vi) The Canadian Guarantees have been duly and validly
authorized, executed and delivered by the Canadian Guarantors.
(vii) The Exchange Notes and the Private Exchange Notes and
the Canadian Guarantees to be endorsed on them have been duly and
validly authorized by the Issuer and the Canadian Guarantors. The
form of definitive certificate representing the Notes, the Exchange
Notes and the Private Exchange Notes has been duly approved and
adopted by the Issuer, and there are no provisions of the Companies
Act (Nova Scotia) applicable thereto.
(viii) Each of the Issuer and the Canadian Guarantors has all
requisite corporate power and authority to execute, deliver and
perform its obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been duly and validly authorized,
executed and delivered by the Issuer and the Canadian Guarantors.
(ix) Each of the Issuer and the Canadian Guarantors has all
requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; this Agreement and the
consummation by the Issuer and the Canadian Guarantors of the
transactions contemplated hereby have been duly and validly
authorized by the Issuer and the Canadian Guarantors. This Agreement
has been duly executed and delivered by the each of the Issuer and
the Canadian Guarantors.
(x) To the knowledge of such counsel, neither the Issuer nor
any of the Canadian Guarantors is in violation of its memorandum or
articles of association (or similar organizational documents).
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(xi) The execution, delivery and performance by the Issuer and
each of the Canadian Guarantors of the Operative Documents (to the
extent a party thereto), the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Securities to the Initial Purchasers) and
the fulfillment of the terms hereof and thereof will not conflict
with or constitute or result in a breach or a default under (or an
event which with notice or passage of time or both would constitute
a default under) or violation of or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a lien on any property or assets of
the Issuer or any Canadian Guarantor with respect to (i) any of the
terms or provisions of any Contract identified to such counsel as
material to the Issuer and the Subsidiaries taken as a whole,(ii)
the memorandum or articles of association or similar organizational
documents of the Issuer or any Canadian Guarantor, or (iii)
(assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation applicable to
the Issuer or any Canadian Guarantor or any of their respective
properties or assets.
(xii) To the knowledge of such counsel, each of the Issuer and
the Canadian Guarantors has obtained all Permits necessary to
conduct the businesses now or proposed to be conducted by it as
described in the Final Memorandum, the lack of which would,
individually or in the aggregate, have a Material Adverse Effect;
each of the Issuer and the Canadian Guarantors has fulfilled and
performed all of its obligations with respect to such Permits and no
event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any
other material impairment of the rights of the Issuer or any such
Canadian Guarantor as holder of any such Permit, except for any such
revocation or termination which would not have a Material Adverse
Effect.
(xiii) No legal or governmental proceedings are pending or, to
the knowledge of such counsel, threatened to which the Issuer or any
of the Guarantors is a party, or to which any of their respective
properties or assets are subject which seek to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or
sale of the
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Securities to be sold hereunder or the consummation of the other
transactions contemplated by the Operative Documents.
(xiv) No consent, approval, authorization or order of any
governmental authority in the Province of Nova Scotia is required
for the issuance and sale by the Issuer of the Notes to the Initial
Purchasers or the other transactions contemplated in this Agreement,
subject to the filing in Nova Scotia within 10 days from the date of
issuance and sale of the Notes of a copy of the Final Memorandum and
a report on Form 20, duly executed, together with the payment of
appropriate fees.
(xv) The statements made in the Final Memorandum under the
caption "Certain Income Tax Considerations," to the extent that they
constitute summaries of matters of Canadian law or regulations or
legal conclusions, have been reviewed by such counsel and fairly
summarize the matters described therein in all material respects.
(xvi) A court of competent jurisdiction in the Province of
Nova Scotia, Canada (a "Canadian Court") would uphold the choice of
law of the State of New York ("New York law") as the proper law
governing the Operative Documents, provided that such choice of law
is bona fide (in the sense that it was not made with a view to
avoiding the consequences of the laws of any other jurisdiction, and
provided further that such choice of law is not contrary to public
policy, as that term is applied by a Canadian Court ("Public
Policy"), and such choice of law is legal under the laws of the
State of New York. To our knowledge, no Public Policy would be
offended by recognition of the choice of New York law and the choice
is bona fide.
(xvii) The laws of the Province of Nova Scotia, Canada permit
an action to be brought in a court of competent jurisdiction on any
final and conclusive judgment in personam for a sum certain in money
of a New York Court (as defined below) which is not impeachable as
void or voidable under the internal laws of New York, without
reexamination or relitigation of the matters adjudicated upon if:
(A) the court rendering such judgment had jurisdiction,
in accordance with Canadian conflict of law rules, over the
judgment debtor (and submission by the Issuer and each of the
Canadian Guarantors to the jurisdiction of such court of
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the State of New York pursuant to the Operative Documents will
suffice for this purpose) and if the New York Court was not a
seriously inconvenient forum for the trial of the action;
(B) the judgment does not conflict with another final
and conclusive judgment in or relating to the same cause of
action in a different jurisdiction;
(C) the procedural rules for commencement and
maintenance of the enforcement proceedings in the New York
Court have been observed;
(D) there is a real and substantial connection between
the subject matter of the action upon which the judgment is
based and the State of New York;
(E) in the case of a judgment obtained by default there
has been no manifest error in the granting of such judgment;
(F) the judgment has neither been satisfied nor is it
for any other reason not a subsisting judgment;
(G) the proceedings in the New York Court were not
contrary to an agreement between the parties under which the
dispute in question was to be settled otherwise than by
proceedings in that court;
(H) the judgment debtors were duly served with the
process of the court proceedings to enable them to defend the
action;
(I) such judgment was not obtained by fraud or in a
manner contrary to natural justice and the enforcement thereof
would not be contrary to Public Policy, as such term is
understood under the laws of the Province of Nova Scotia and
the federal laws of Canada applicable therein;
(J) the enforcement of such judgment would not
constitute, directly or indirectly, the enforcement of a
foreign revenue, expropriation, confiscatory, penal, criminal
or public law;
(K) no new admissible evidence relevant to the action is
discovered prior to the rendering of judgment by the Canadian
Court; and
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(L) there has been compliance with the Limitation of
Actions Act (Nova Scotia) which has the effect that the action
to enforce such judgment must be commenced within 6 years
after the date of such judgment.
(xviii) In the event that any of the Operative Documents are
sought to be enforced in any action or proceeding in the Province of
Nova Scotia, Canada, the courts of the Province of Nova Scotia,
Canada would recognize the choice of laws made in the Operative
Documents and would apply the laws of the State of New York in any
such action or proceeding, upon appropriate evidence as to such laws
being adduced, provided that none of the provisions of the Operative
Documents, as the case may be, or of the laws of the State of New
York, are contrary to Public Policy, and a Canadian Court will not
apply those laws of New York which it characterizes as being of a
revenue, expropriatory, confiscatory, penal, criminal or public law
nature, and in matters of procedure or administration, the laws of
the Province of Nova Scotia, Canada will be applied. There are no
reasons under the laws of the Province of Nova Scotia, Canada or the
federal laws of Canada applicable therein and no reasons, to such
counsel's knowledge with respect to the application of New York law
by a Canadian Court, for avoiding enforcement of the Operative
Documents (except as to the indemnity and contribution provisions of
the Operative Documents, about which such counsel need not comment)
based on Public Policy.
(xix) In an action on a final and conclusive judgment in
personam of any federal or state court sitting in the Borough of
Manhattan in The City of New York (a "New York Court") that is not
impeachable as void or voidable under New York law, a Canadian Court
would recognize service of process on a duly appointed agent of the
Issuer or any of the Canadian Guarantors such as CT Corporation
System as service of process on the Issuer or any of the Canadian
Guarantors in the United States of America under the Operative
Documents and the provisions of the Operative Documents whereby the
Issuer and each of the Canadian Guarantors submit to the
non-exclusive jurisdiction of a New York Court would be recognized
by a Canadian Court as conferring jurisdiction on the New York
Court.
The opinion of such counsel described in this Section shall be
rendered to the Initial Purchasers at the request of the Issuer and the
Canadian Guarantors and shall so state
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therein. References to the Final Memorandum in this subsection (b) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date. In rendering such
opinion, such counsel may state that they express no opinion as to the
laws of any jurisdiction other than the federal laws of Canada and the
laws of the Province of Nova Scotia, Canada and the laws of Canada
applicable therein. If applicable, such counsel may also state that with
respect to opinions as to the laws of jurisdictions other than the federal
laws of Canada and the laws of the Province of Nova Scotia, Canada and the
laws of Canada applicable therein, such counsel has relied on the opinion
of other counsel of the Issuer and the Canadian Guarantors who are
reasonably satisfactory to counsel for the Initial Purchasers; provided,
however, that Stewart McKelvey Stirling Scales shall state that it
believes that it, the Initial Purchasers, and counsel for the Initial
Purchasers are justified in relying on such opinion. Such counsel may also
state that, insofar as such opinion involves factual matters, such counsel
have relied, to the extent they deem proper, upon certificates of officers
of the Issuer and the Canadian Guarantors and certificates of public
officials; provided that such certificates have been provided to the
Initial Purchasers.
(c) The Initial Purchasers shall have received opinions, dated the
Closing Date, of Winston & Strawn and Stikeman, Elliott, counsel for the
Initial Purchasers, with respect to certain legal matters relating to this
Agreement, and such other related matters as the Initial Purchasers may
reasonably require. In rendering such opinions, Winston & Strawn and
Stikeman, Elliott shall have received and may rely upon such certificates
and other documents and information as they may reasonably request to pass
upon such matters.
(d) On the date of the Final Memorandum prior to the execution of
this Agreement and also on the Closing Date, the Initial Purchasers shall
have received from Ernst & Young, independent public accountants for the
Issuer, and Kidsons Impey, chartered accountants for Marlborough, comfort
letters, dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers.
(e) The representations and warranties of the Issuer and the
Guarantors contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of
the Closing Date; each of the Issuer and the Guarantors shall have
performed in all material respects all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied
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hereunder at or prior to the Closing Date; and, except as set forth in the
Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), subsequent to the date of the most recent financial
statements in such Final Memorandum, there shall have been no events or
developments (including, without limitation, any loss or interference with
respect to the business, operations or properties of the Issuer or any of
the Guarantors) that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(f) The issuance and sale of the Securities pursuant to this
Agreement shall not be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued or any
action, suit or proceeding shall have been commenced with respect to this
Agreement or any other Operative Document before any court or governmental
authority.
(g) The Initial Purchasers shall have received certificates, dated
the Closing Date, signed on behalf of each of the Issuer and the
Guarantors by its Chief Financial Officer and its President or any Vice
President to the effect that:
(i) The representations and warranties of the Issuer and the
Guarantors in this Agreement are true and correct in all material
respects as if made on and as of the Closing Date, and each of the
Issuer and the Guarantors has performed in all material respects all
covenants and agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof and since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no events or developments have occurred, no information has
become known nor does any condition exist that, individually or in
the aggregate, has or would be reasonably likely to have a Material
Adverse Effect; and
(iii) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently) and no restraining order or
other injunctive order has been issued and no action, suit or
proceeding has been commenced with respect to this Agreement or any
other Operative Document before any court or governmental authority.
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(h) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Issuer and the
Guarantors and such agreement shall be in full force and effect at all
times from and after the Closing Date.
(i) The Indenture shall have been duly executed and delivered by the
Issuer, the Guarantors and the Trustee, the Notes and the Guarantees shall
have been duly executed by the Issuer and the Guarantors, respectively,
and the Notes shall have been duly authenticated by the Trustee.
(j) On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further
documents, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Issuer as they
shall have reasonably requested from the Issuer and the Guarantors.
All such documents, opinions, certificates and schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers. The Issuer shall furnish to the Initial
Purchasers such conformed copies of such documents, opinions, certificates and
schedules or instruments in such quantities as the Initial Purchasers shall
reasonably request.
8. Offering of Securities; Restrictions on Transfer. Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a QIB.
Each of the Initial Purchasers agrees with the Issuer (as to itself only) that
(i) it has not and will not solicit offers for, or offer or sell, the Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers for
the Securities only from, and will offer the Securities only to (A) in the case
of offers inside the United States, (x) persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (y) a limited number of other institutional investors reasonably
believed by the Initial Purchasers to be Accredited Investors that, prior to
their purchase of the Securities, deliver to the Initial Purchasers a letter
containing the representations and agreements set forth in Annex A to the Final
Memorandum and (B) in the case of offers
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outside the United States, to persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)) to whom it reasonably believes offers
and sales of Securities may be made in reliance on Regulation S; provided,
however, that in the case of this clause (B), in purchasing such Securities such
persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
9. Indemnification and Contribution. (a) The Issuer and the
Guarantors agree, jointly and severally, to indemnify and hold harmless
the Initial Purchasers and the affiliates, directors, officers, agents,
representatives and employees of the Initial Purchasers, and each other
person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which any
Initial Purchaser or any such affiliate, director, officer, agent,
representative, employee or controlling person may become subject under
the Act, the Exchange Act, the securities laws of Canada or any other
jurisdiction or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Memorandum or any amendment or
supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Issuer or any
Guarantor or based upon information furnished by or on behalf of the
Issuer or any Guarantor filed in any jurisdiction in order to
qualify the Securities under the securities or "Blue Sky" laws
thereof or filed with any securities association or securities
exchange (each, an "Application"); or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto, or in any
Application, a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
affiliate, director, officer, agent, representative and employee and each
such controlling person for any legal or other expenses reasonably
incurred by the Initial Purchasers, such affiliate, director, officer,
agent, representative or employee or such controlling person
36
<PAGE> 37
in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action; provided, however, that the Issuer and the Guarantors
will not be liable (i) in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
in any Memorandum or any amendment or supplement thereto, or in any
Application, in reliance upon and in conformity with the written
information described in the first sentence of Section 12 hereof furnished
to the Issuer by the Initial Purchasers specifically for use therein or
(ii) with respect to the Preliminary Memorandum, to the extent that any
such loss, claim, damage or liability arises solely from the fact that the
Initial Purchasers sold Securities to a person to whom there was not sent
or given a copy of the Final Memorandum (as amended or supplemented) at or
prior to the written confirmation of such sale if the Issuer shall have
previously furnished copies thereof to the Initial Purchasers in
accordance with Section 5(d) hereof and the Final Memorandum (as amended
or supplemented) would have corrected any such untrue statement or
omission. This indemnity agreement will be in addition to any liability
that the Issuer and the Guarantors may otherwise have to the indemnified
parties. The Issuer and the Guarantors shall not be liable under this
subsection (a) for any settlement of any claim or action effected without
its consent, which consent shall not be unreasonably withheld or delayed.
The Initial Purchasers shall not, without the prior written consent
of the Issuer and the Guarantors, effect any settlement or compromise of
any pending or threatened proceeding in respect of which the Issuer and
the Guarantors are or could have been a party, or indemnity could have
been sought hereunder by the Issuer and the Guarantors, unless such
settlement (A) includes an unconditional written release of the Issuer and
the Guarantors, in form and substance reasonably satisfactory to the
Issuer and the Guarantors, from all liability on claims that are the
subject matter of such proceeding and (B) does not include any statement
as to an admission of fault, culpability or failure to act by or on behalf
of the Issuer and the Guarantors.
(b) The Initial Purchasers agree, severally and not jointly, to
indemnify and hold harmless the Issuer and the Guarantors, their
respective affiliates, directors, officers, agents, representatives and
employees and each other person, if any, who controls the Issuer or any
Guarantor within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims,
37
<PAGE> 38
damages or liabilities to which the Issuer or any Guarantor or any such
affiliate, director, officer, agent, representative, employee or
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in
any Memorandum or any amendments or supplement thereto, or in any
Application or (ii) the omission or the alleged omission to state therein
a material fact required to be stated in any Memorandum or any amendment
or supplement thereto, or in any Application, or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information concerning such Initial Purchaser described in
the first sentence of Section 12 hereof furnished to the Issuer by such
Initial Purchaser specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses reasonably incurred by the Issuer or
any Guarantor or any such affiliate, director, officer, agent,
representative, employee or controlling person in connection with
investigating or defending against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any
liability that the Initial Purchasers may otherwise have to the
indemnified parties. The Initial Purchasers shall not be liable under this
Section 9 for any settlement of any claim or action effected without their
consent, which consent shall not be unreasonably withheld or delayed.
The Issuer and the Guarantors shall not, without the prior written
consent of the Initial Purchasers, effect any settlement or compromise of
any pending or threatened proceeding in respect of which any Initial
Purchaser is or could have been a party, or indemnity could have been
sought hereunder by any Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchasers, in
form and substance reasonably satisfactory to the Initial Purchasers, from
all liability on claims that are the subject matter of such proceeding and
(B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such
indemnified party is entitled to
38
<PAGE> 39
indemnification under this Section 9, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party
(i) will not relieve it from any liability under subsection (a) or (b)
above unless and to the extent such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will
not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided
in subsections (a) and (b) above. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such
action include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, or (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after receipt by
the indemnifying party of notice of the institution of such action, then,
in each such case, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or
parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified
party under this Section 9 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with
the proviso to the immediately preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall
not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction
39
<PAGE> 40
arising out of the same general allegations or circumstances, designated
by BT Alex. Brown Incorporated in the case subsection (a) of this Section
9 or the Issuer in the case of subsection (b) of this Section 9,
representing the indemnified parties under such subsection (a) or
subsection (b), as the case may be, who are parties to such action or
actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the prior written consent of the indemnifying party (which
consent shall not be unreasonably withheld), unless such indemnified party
waived in writing its rights under this Section 9, in which case the
indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding subsections of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law,
not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits
received by the Issuer and the Guarantors on the one hand and any Initial
Purchaser on the other shall be deemed to be in the same proportion as the
total proceeds from the issuance and sale of the Notes under this
Agreement (before deducting expenses) received by the Issuer bear to the
total discounts and commissions received by such Initial Purchaser. The
relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Issuer and the Guarantors on the one hand,
or such Initial Purchaser on the
40
<PAGE> 41
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate
in the circumstances. The Issuer, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if the amount of
such contribution were determined by pro rata or per capita allocation or
by any other method of allocation that does not take into account the
equitable considerations referred to in the first sentence of this
subsection (d). Notwithstanding any other provision of this subsection
(d), no Initial Purchaser shall be obligated to make contributions
hereunder that in the aggregate exceed the total discounts, commissions
and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or
alleged untrue statements or the omissions or alleged omissions to state a
material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this subsection (d), each affiliate,
director, officer, agent, representative and employee of an Initial
Purchaser and each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Initial Purchasers,
and each affiliate, director, officer, agent, representative and employee
of the Issuer and the Guarantors and each person, if any, who controls the
Issuer or any Guarantor within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution
as the Issuer and the Guarantors.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuer, the
Guarantors, their respective officers and directors and the Initial Purchasers
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Issuer, the Guarantors, any of their
respective officers or directors, the Initial Purchasers or any controlling
person referred to in Section 9 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6, 9, 15, 17 and 18 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated
41
<PAGE> 42
in the sole discretion of the Initial Purchasers by notice to the Issuer given
prior to the Closing Date in the event that the Issuer or any of the Guarantors
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior to
the date of such termination or, if at or prior to the Closing Date:
(i) either (x) the Issuer or any of the Guarantors shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference, in the sole judgment of the
Initial Purchasers, has had or could be reasonably likely to have a
Material Adverse Effect, or (y) there shall have been, in the sole
judgment of the Initial Purchasers, any event or development that,
individually or in the aggregate, has or could be reasonably likely
to have a Material Adverse Effect (including without limitation a
change in control of the Issuer), except in each case as described
in the Final Memorandum (exclusive of any amendment or supplement
thereto);
(ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market or
the Toronto Stock Exchange shall have been suspended or maximum or
minimum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New
York, United States or Canadian authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States or Canada and any foreign
power, or (B) an outbreak or escalation of any other insurrection or
armed conflict involving the United States or Canada or any other
national or international calamity or emergency or (C) any material
change in the financial markets of the United States or Canada that,
in the case of clauses (A), (B) or (C) above and in the sole
judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the
Securities as contemplated by the Final Memorandum; or
(v) any securities of the Issuer shall have been
42
<PAGE> 43
downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The statements
set forth in the last paragraph of the cover page and the third, fifth, seventh
and ninth paragraphs of the section entitled "Private Placement" constitute the
only information furnished by the Initial Purchasers to the Issuer for the
purposes of Sections 2(a) and 9 hereof. In addition, NatWest Capital Markets
Limited has provided the information set forth in the eighth paragraph of the
section entitled "Private Placement."
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchasers, shall be mailed or delivered or telecopied
and confirmed in writing to BT Alex. Brown Incorporated, One Bankers Trust
Plaza, 130 Liberty Street, New York, New York 10006, Attention: Corporate
Finance Department, and if sent to the Issuer or the Guarantors, shall be
mailed, delivered or telecopied and confirmed in writing to the Issuer at: 19
Fielding Avenue, Dartmouth, Nova Scotia, Canada B3B-1C9, Attention: Stewart
Allen, with copies to CF Capital Corporation, One Landmark Square, 11th Floor,
Stamford, Connecticut 06901, Attention: Stephen L. Larson and Robinson & Cole,
Financial Center - 5th Floor, 695 E. Main Street, Stamford, Connecticut 10305,
Attention: Richard A. Krantz.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Issuer, the Guarantors and their
respective successors, assigns and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the Initial Purchasers, the Issuer, the Guarantors and
their respective successors, assigns and legal representatives and for the
benefit of no other person except that (i) the indemnities of the Issuer and the
Guarantors contained in Section 9 of this Agreement shall also be for the
benefit of the affiliates, directors, officers, agents, representatives and
43
<PAGE> 44
employees of the Initial Purchasers and any person or persons who control any of
the Initial Purchasers within the meaning of Section 15 of the Act or Section 20
of the Exchange Act and (ii) the indemnities of the Initial Purchasers contained
in Section 9 of this Agreement shall also be for the benefit of the affiliates,
directors, officers, agents, representatives and employees of the Issuer and the
Guarantors and any person or persons who control the Issuer or any Guarantor
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of any of the Securities from the Initial Purchasers will be deemed
a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, each of the Issuer
and the Guarantors (i) acknowledges that it has, by separate written instrument,
designated and appointed CT Corporation System (the "Agent") (and any successor
entity) as its authorized agent upon which process may be served in any suit or
proceeding arising out of or relating to this Agreement that may be instituted
in any federal or state court in the Borough of Manhattan, The City of New York,
State of New York or brought under federal or state securities laws, and
acknowledges that the Agent has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding and (iii) agrees
that service of process upon the Agent and written notice of said service to the
Issuer and the Guarantors in accordance with this Section 17 shall be deemed in
every respect effective service of process upon the Issuer and the Guarantors in
any suit or proceeding. The Issuer and the Guarantors further agree to take any
and all action, including the execution and filing of any and all such documents
and instruments, as may be necessary to continue such designation and
appointment of the Agent in full force and effect so long as any of the
Securities, the Exchange Notes or the Private Exchange Notes shall be
outstanding; provided, however, that the Issuer and the Guarantors may (and, to
the extent the Agent ceases to be able to be served on the basis contemplated
herein, shall), by written notice to the holders of the Securities, the Exchange
Notes and the Private Exchange Notes, as applicable, designate such additional
or alternative agent for service of process under this Section 17 that (i)
maintains an office located in the Borough of Manhattan, The City of New York,
State of New York and (ii) is a corporate service company which acts as agent
for service of process for other persons in the ordinary course of its business.
Such written notice shall identify the name of such agent for service of process
and the address of the office of such agent for service of process in the
Borough of Manhattan, The City of New York, State of New York.
44
<PAGE> 45
To the extent that the Issuer or any Guarantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents.
18. Judgment Currency. The Issuer and the Guarantors agree, jointly
and severally, to indemnify the Initial Purchasers against any loss incurred as
a result of any judgment or order being given or made for any amount due under
this Agreement and such judgment or order being expressed and paid in a currency
(the "Judgment Currency") other than United States dollars and as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the Judgment Currency for the purpose of such
judgment or order and (ii) the spot rate of exchange in The City of New York at
which any such person on the date of payment of such judgment or order is able
to purchase United States dollars with the amount of the Judgment Currency
actually received by such person. The foregoing indemnity shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "spot rate of exchange" shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, United States
dollars.
45
<PAGE> 46
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Issuer, the
Guarantors and the Initial Purchasers.
Very truly yours,
THE COMPANY:
SPARKLING SPRING WATER GROUP LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Vice Chairman
THE GUARANTORS:
SPARKLING SPRING WATER LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Vice Chairman
SPRING WATER, INC.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER JUG ENTERPRISES LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WITHEY'S WATER SOFTENING & PURIFICATION
LTD.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 47
AQUA CARE WATER SOFTENING & PURIFICATION
LTD.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
HIGH VALLEY WATER LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
3003969 NOVA SCOTIA LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CANADIAN SPRINGS WATER COMPANY LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
SPARKLING SPRING WATER (UK) LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
AQUAPORTE (UK) LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 48
CRYSTAL SPRING ACQUISITION, INC.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
MOUNTAIN FRESH ACQUISITION CORP.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
MARLBOROUGH EMPLOYMENT LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER AT WORK LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
NATURAL WATER LIMITED
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CULLYSPRING WATER CO., INC.
By: /s/ Stephen L. Larson
-------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 49
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED
By: /s/ David Hadley
Name: David Hadley
Title: Managing Director
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N.S. Coulbeck
Name: N.S. Coulbeck
Title: Director
<PAGE> 50
EXHIBIT A
[Form of Registration Rights Agreement]
<PAGE> 51
SCHEDULE I
Principal Amount of
Initial Purchaser Notes to be Purchased
----------------- ---------------------
BT Alex. Brown Incorporated $80,000,000
NatWest Capital Markets Limited $20,000,000
------------
Total $100,000,000
<PAGE> 1
Exhibit 10.2
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of November 19, 1997
Among
SPARKLING SPRING WATER GROUP LIMITED
and
THE GUARANTORS NAMED HEREIN
as Issuers
and
BT ALEX. BROWN INCORPORATED
and
NATWEST CAPITAL MARKETS LIMITED
as Initial Purchasers
11 1/2% Senior Subordinated Notes due 2007
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
November 19, 1997, among SPARKLING SPRING WATER GROUP LIMITED, a corporation
organized under the laws of the Province of Nova Scotia, Canada (the "Company"),
as issuer, the Guarantors named on the signature pages hereto (the "Guarantors,"
and together with the Company, the "Issuers") and BT ALEX. BROWN INCORPORATED
and NATWEST CAPITAL MARKETS LIMITED, as initial purchasers (the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of November 14, 1997, among the Issuers and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchasers of $100,000,000 aggregate principal amount of
the Company's 11 1/2% Senior Subordinated Notes due 2007 (the "Notes"),
guaranteed by the Guarantors (the "Guarantees" and, together with the Notes, the
"Securities"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Issuers have agreed to provide the registration rights
set forth in this Agreement for the benefit of the Initial Purchasers and any
subsequent holder or holders of the Notes. The execution and delivery of this
Agreement is a condition to the Initial Purchasers' obligation to purchase the
Securities under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions:
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4 hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Company: See the introductory paragraphs hereto.
Effectiveness Date: The 150th day after the Issue Date; provided,
however, that with respect to any Shelf Registration, the Effectiveness Date
shall be the 75th day after the Filing Date with respect thereto.
Effectiveness Period: See Section 3 hereof.
<PAGE> 3
Event Date: See Section 4 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Offer Registration Statement: See Section 2 hereof.
Filing Date: (A) In the case of an Exchange Offer Registration
Statement, the 45th day after the Issue Date; or (B) in the case of a Shelf
Registration (which may be applicable notwithstanding the consummation of the
Exchange Offer), the 30th day after a Shelf Notice is required to be delivered
pursuant to this Agreement.
Guarantees: See the introductory paragraphs hereto.
Guarantors: See the introductory paragraphs hereto.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of November 19, 1997, by and
among the Issuers and Bankers Trust Company, as Trustee, pursuant to which the
Notes and the Guarantees are being issued, as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(n) hereof.
Issue Date: November 19, 1997, the date of original issuance of the
Notes.
Issuers: See the introductory paragraphs hereto.
NASD: See Section 5(s) hereof.
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Notes: See the introductory paragraphs hereto.
Offering Memorandum: The final offering memorandum of the Company
dated November 14, 1997, in respect of the offering of the Notes.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, joint
stock company, trust, unincorporated association, union, business association,
firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act and any term sheet filed pursuant to Rule
434 under the Securities Act), as amended or supplemented by any prospectus
supplement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereof.
Records: See Section 5(n) hereof.
Registrable Notes: Each Note upon its original issuance and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until (i) a Registration Statement (other than, with respect
to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the
Exchange Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the SEC and such Note,
Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective
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<PAGE> 5
Registration Statement, (ii) such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes that may be resold without
restriction under state and federal securities laws, (iii) such Note, Exchange
Note or Private Exchange Note, as the case may be, ceases to be outstanding for
purposes of the Indenture or (iv) such Note, Exchange Note or Private Exchange
Note, as the case may be, may be resold without restriction pursuant to Rule 144
under the Securities Act.
Registration Statement: Any registration statement of the Company
and/or the Guarantors that covers any of the Notes, the Exchange Notes or the
Private Exchange Notes (and the related Guarantees) filed with the SEC under the
Securities Act, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of the issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraphs hereto.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
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TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and the trustee (if any)
under any indenture governing the Exchange Notes and Private Exchange Notes.
Underwritten registration or underwritten offering: A registration
in which securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer.
(a) The Issuers shall file with the SEC, no later than the Filing
Date, a Registration Statement (the "Exchange Offer Registration Statement") on
an appropriate registration form with respect to a registered offer (the
"Exchange Offer") to exchange any and all of the Registrable Notes for a like
aggregate principal amount of notes of the Company, guaranteed by the
Guarantors, that are identical in all material respects to the Notes, except
that the Exchange Notes shall contain no restrictive legend thereon (the
"Exchange Notes"), and which are entitled to the benefits of the Indenture or a
trust indenture which is identical in all material respects to the Indenture
(other than such changes to the Indenture or any such identical trust indenture
as are necessary to comply with the TIA) and which, in either case, has been
qualified under the TIA. The Exchange Offer shall comply with all applicable
tender offer rules and regulations under the Exchange Act and other applicable
law. The Issuers shall use their best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20
business days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to Holders; and (z) consummate the
Exchange Offer on or prior to the 45th day following the date on which the
Exchange Offer Registration Statement is declared effective by the SEC. If,
after the Exchange Offer Registration Statement is initially declared effective
by the SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, the Exchange Offer
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement.
Each Holder that participates in the Exchange Offer will be
required, as a condition to its participation in the Exchange Offer, to
represent to the Company in writing (which may be contained in the applicable
letter of transmittal) that any Exchange Notes to be received by it will be
acquired in the
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<PAGE> 7
ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of the Company within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Notes that are Private Exchange
Notes, Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange
Notes held by Participating Broker-Dealers (as defined), and the Issuers shall
have no further obligation to register Registrable Notes (other than Private
Exchange Notes and other than in respect of any Exchange Notes as to which
clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof.
No securities other than the Exchange Notes and the Guarantees shall
be included in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies represent the
prevailing views of the staff of the SEC. Such "Plan of Distribution" section
shall also expressly permit, to the extent permitted by applicable policies and
regulations of the SEC, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the extent
permitted by applicable policies and regulations of the SEC, all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.
The Issuers shall use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered by
all Persons subject to the prospectus delivery requirements of the Securities
Act for
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<PAGE> 8
such period of time as is necessary to comply with applicable law in connection
with any resale of the Exchange Notes covered thereby; provided, however, that
such period shall not exceed 180 days after such Exchange Offer Registration
Statement is declared effective (or such longer period if extended pursuant to
the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, any Holder holds
any Notes acquired by it that have, or that are reasonably likely to be
determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Exchange
Offer, the Company upon the request of any such Holder shall simultaneously with
the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to
any such Holder, in exchange (the "Private Exchange") for such Notes held by any
such Holder, a like principal amount of notes (the "Private Exchange Notes") of
the Company, guaranteed by the Guarantors, that are identical in all material
respects to the Exchange Notes except for the placement of a restrictive legend
on such Private Exchange Notes. The Private Exchange Notes shall be issued
pursuant to the same indenture as the Exchange Notes and bear the same CUSIP
number as the Exchange Notes.
Interest on the Exchange Notes will accrue (A) from the later of (i)
the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor, or (ii) if the Note is surrendered for
exchange on a date in a period which includes the record date for an interest
payment date to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment date or (B) if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) mail, or cause to be mailed, to each Holder of record
entitled to participate in the Exchange Offer a copy of the Prospectus
forming part of the Exchange Offer Registration Statement, together with
an appropriate letter of transmittal and related documents;
(2) use their best efforts to keep the Exchange Offer open for
not less than 20 business days after the date that notice of the Exchange
Offer is mailed to Holders (or longer if required by applicable law);
(3) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
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<PAGE> 9
(4) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day on
which the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer and the Private
Exchange, if any;
(2) deliver to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder of Notes, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
might materially impair the ability of the Issuers to proceed with the Exchange
Offer or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Issuers and
(iii) all governmental approvals shall have been obtained, which approvals the
Issuers deem necessary for the consummation of the Exchange Offer or Private
Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture and which, in either case, has been qualified under the TIA or
is exempt from such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter.
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<PAGE> 10
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated within 195 days
of the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Company within 45 days after the consummation of the Exchange
Offer, or (iv) in the case of any Holder that participates in the Exchange
Offer, such Holder does not receive Exchange Notes on the date of the exchange
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of any of
the Issuers within the meaning of the Securities Act), then in the case of each
of clauses (i) to and including (iv) of this sentence, the Company shall
immediately deliver to the Holders and the Trustee written notice thereof (the
"Shelf Notice") and shall file a Shelf Registration pursuant to Section 3
hereof.
3. Shelf Registration.
If at any time a Shelf Notice is delivered as contemplated by
Section 2(c) hereof, then:
(a) Shelf Registration. The Issuers shall file with the SEC a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange
Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is
applicable (the "Initial Shelf Registration"). The Issuers shall use their best
efforts to file with the SEC the Initial Shelf Registration on or before the
applicable Filing Date. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers shall not
permit any securities other than the Registrable Notes to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below).
The Issuers shall use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date which is two years from the
Issue Date, subject to extension pursuant to the last paragraph of Section 5
hereof (the "Effectiveness Period"), or such shorter period ending when (i) all
Registrable Notes covered by the Initial Shelf Registration have been sold in
the manner set forth and as contemplated in the Initial Shelf Registration or
(ii) a
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<PAGE> 11
Subsequent Shelf Registration covering all of the Registrable Notes covered by
and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration has been declared effective under the Securities Act; provided,
however, that the Effectiveness Period in respect of the Initial Shelf
Registration shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174 under
the Securities Act and as otherwise provided herein.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Issuers shall use
their best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent
Shelf Registration"). If a Subsequent Shelf Registration is filed, the Issuers
shall use their best efforts to cause the Subsequent Shelf Registration to be
declared effective under the Securities Act as soon as practicable after such
filing and to keep such subsequent Shelf Registration continuously effective for
a period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes.
4. Additional Interest.
(a) The Issuers and the Initial Purchasers agree that the Holders
will suffer damages if the Issuers fail to fulfill their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages
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<PAGE> 12
with precision. Accordingly, the Company agrees to pay, as liquidated damages,
additional interest on the Notes ("Additional Interest") under the circumstances
and to the extent set forth below (each of which shall be given independent
effect):
(i) if the Exchange Offer Registration Statement or any Shelf
Registration is not filed with the SEC on or prior to the Filing Date
applicable thereto, then, commencing on the day after any such Filing
Date, Additional Interest shall accrue on the principal amount of the
Notes at a rate of 0.50% per annum for the first 90 days immediately
following each such Filing Date, and such Additional Interest rate shall
increase by an additional 0.50% per annum at the beginning of each
subsequent 90-day period; or
(ii) if (A) the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the relevant Effectiveness
Date or (B) notwithstanding that the Issuers have consummated or will
consummate the Exchange Offer, the Issuers are required to file a Shelf
Registration and such Shelf Registration is not declared effective by the
SEC on or prior to the Effectiveness Date in respect of such Shelf
Registration, then, commencing on the day after either such Effectiveness
Dates, Additional Interest shall accrue on the principal amount of the
Notes at a rate of 0.50% per annum for the first 90 days immediately
following the day after either such Effectiveness Date, and such
Additional Interest rate shall increase by an additional 0.50% per annum
at the beginning of each subsequent 90-day period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to the 45th day after the date on which the Exchange
Offer Registration Statement relating thereto was declared effective or
(B) if applicable, a Shelf Registration has been declared effective and
such Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the
principal amount of the Notes at a rate of 0.50% per annum for the first
90 days commencing on the (x) 46th day after such effective date, in the
case of (A) above, or (y) the day such Shelf Registration ceases to be
effective in the case of (B) above, and such Additional Interest rate
shall increase by an additional 0.50% per annum at the beginning of each
subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes
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<PAGE> 13
as a result of the provisions of clauses (i), (ii) and (iii) above may not
exceed at any one time in the aggregate 2.0% per annum; provided, further,
however, that (1) upon the filing of the applicable Exchange Offer Registration
Statement or the applicable Shelf Registration as required hereunder (in the
case of clause (i) above of this Section 4(a)), (2) upon the effectiveness of
the Exchange Offer Registration Statement or the applicable Shelf Registration
Statement as required hereunder (in the case of clause (ii) of this Section
4(a)), or (3) upon the exchange of the applicable Exchange Notes for all Notes
tendered (in the case of clause (iii)(A) of this Section 4(a)), or upon the
effectiveness of the applicable Shelf Registration Statement which had ceased to
remain effective (in the case of (iii)(B) of this Section 4(a)), Additional
Interest on the Notes in respect of which such events relate as a result of such
clause (or the relevant subclause thereof), as the case may be, shall cease to
accrue.
(b) The Company shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of Section 4(a)
will be payable in cash semiannually on each May 15 and November 15 (to the
holders of record on the May 1 and November 1 immediately preceding such dates),
commencing with the first such date occurring after any such Additional Interest
commences to accrue. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the principal amount of
the Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.
5. Registration Procedures.
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuers hereunder each of the
Issuers shall:
(a) Prepare and file with the SEC prior to the applicable Filing
Date, a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use its best efforts to cause each such Registration
Statement to become
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<PAGE> 14
effective and remain effective as provided herein; provided, however, that, if
(1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus contained
in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period
relating thereto, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall furnish to and afford the
Holders of the Registrable Notes included in such Registration Statement or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case
at least five days prior to such filing, or such later date as is reasonable
under the circumstances). The Issuers shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto if the Holders of a
majority in aggregate principal amount of the Registrable Notes included in such
Registration Statement, or any such Participating Broker-Dealer, as the case may
be, their counsel, or the managing underwriters, if any, shall reasonably object
on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Offer Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to each of them with respect to the disposition
of all securities covered by such Registration Statement as so amended or in
such Prospectus as so supplemented and with respect to the subsequent resale of
any securities being sold by a Participating Broker-Dealer covered by any such
Prospectus. The Issuers shall be deemed not to have used their best efforts to
keep a Registration Statement effective during the Effectiveness Period or the
Applicable Period, as the case may be, relating thereto if any Issuer
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period unless such action is required by applicable
law or expressly permitted by this Agreement.
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<PAGE> 15
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period relating thereto from whom the Company has
received written notice that it will be a Participating Broker-Dealer in the
Exchange Offer, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly (but in any event within one day), and confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
under the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuers, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection with
sales of the Registrable Notes or resales of Exchange Notes by Participating
Broker-Dealers the representations and warranties of the Issuers contained in
any agreement (including any underwriting agreement) contemplated by Section
5(m) hereof cease to be true and correct in all material respects, (iv) of the
receipt by any Issuer of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in or
amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact
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<PAGE> 16
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Issuers' determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, use its best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering or any Participating Broker-Dealer, (i)
as promptly as practicable incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders, any Participating Broker-Dealer or counsel
for any of them reasonably request to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after any Issuer has received notification of the matters
to be incorporated in such prospectus supplement or post-effective amendment,
and (iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, furnish to each selling Holder of
Registrable Notes and to each such Participating Broker-Dealer who so requests
and to their respective counsel and each managing underwriter, if any, at the
sole expense of the Issuers, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by
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<PAGE> 17
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, deliver to each selling Holder of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be,
their respective counsel, and the underwriters, if any, at the sole expense of
the Issuers, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify, and to cooperate
with the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Notes for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters reasonably request in
writing; provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to perform Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h), keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or
the
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Registrable Notes covered by the applicable Registration Statement; provided,
however, that no Issuer shall be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction where it is not
then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may request.
(j) Use its best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be reasonably necessary to enable
the seller or sellers thereof to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature of such
selling Holder's business, in which case the Issuers will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole
expense of the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the Exchange
Notes to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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<PAGE> 19
Notwithstanding the foregoing, the Issuers shall not be required to amend or
supplement a Registration Statement, any related Prospectus or any document
incorporated therein by reference, in the event that, and for a period not to
exceed an aggregate of 60 days in any calendar year if, (i) an event occurs and
is continuing as a result of which the Shelf Registration would, in the
Company's good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and (ii) (a) the Company determines in its good faith judgment that the
disclosure of such event at such time would have a material adverse effect on
the business, operations or prospects of the Company or (b) the disclosure
otherwise relates to a pending material business transaction that has not yet
been publicly disclosed.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes.
(m) In connection with any underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the Notes
and take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to, and covenants with, the underwriters
with respect to the business of the Issuers and their respective subsidiaries
(including any acquired business, properties or entity, if applicable) and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of debt securities similar
to the Notes, and confirm the same in writing if and when requested; (ii) obtain
the written opinions of counsel to the Issuers and written updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings of debt securities
similar to the Notes and such other matters as may be reasonably requested by
the managing underwriter or underwriters; (iii) obtain "cold comfort" letters
and updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent public accountants of
the Issuers (and, if necessary, any other
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<PAGE> 20
independent public accountants of any subsidiary of any of the Issuers or of any
business acquired by any of the Issuers for which financial statements and
financial data are, or are required to be, included or incorporated by reference
in the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings of
debt securities similar to the Notes and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable to the sellers and underwriters, if any, than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable Notes covered
by such Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to such Section.
The above shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, make available for inspection by any selling
Holder of such Registrable Notes being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Notes, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating Broker-Dealer, as
the case may be, or underwriter (collectively, the "Inspectors"), at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and
subsidiaries of the Company (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and any of its subsidiaries to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement and
Prospectus. Each Inspector shall agree in writing that it will keep the Records
confidential and that it will not disclose any of the Records that the Company
determines, in good faith, to be confidential and notifies the Inspectors in
writing are confidential unless (i) the disclosure of such Records is necessary
to avoid or correct a material misstatement or material omission in such
Registration Statement or Prospectus, (ii) the
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<PAGE> 21
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (iii) the information in such Records has
been made generally available to the public; provided, however, that prior
notice shall be provided as soon as practicable to the Company of the potential
disclosure of any information by such Inspector pursuant to clauses (i) or (ii)
of this sentence to permit the Company to obtain a protective order (or waive
the provisions of this paragraph (n)) and that such Inspector shall take such
actions as are reasonably necessary to protect the confidentiality of such
information (if practicable) to the extent such action is otherwise not
inconsistent with, an impairment of or in derogation of the rights and interests
of the Holder or any Inspector.
(o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders
of the Registrable Notes, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders with regard to any applicable
Registration Statement, a consolidated earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 60 days
after the end of any fiscal quarter (or 120 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(q) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as
20
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the case may be, that the Exchange Notes or Private Exchange Notes, as the case
may be, the related Guarantees and the related indenture constitute legal, valid
and binding obligations of the Issuers, enforceable against them in accordance
with their respective terms, subject to customary exceptions and qualifications.
(r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the Company
(or to such other Person as directed by the Company) in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be, the Company
shall mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being canceled in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be; in no event shall such Registrable
Notes be marked as paid or otherwise satisfied
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use its best efforts to take all other steps reasonably
necessary to effect the registration of the Exchange Notes and/or Registrable
Notes covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Notes of any seller so long as such seller
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the
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<PAGE> 23
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force, the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by its acquisition of such Registrable Notes or Exchange
Notes to be sold by such Participating Broker-Dealer, as the case may be, that,
upon actual receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi)
hereof, such Holder will forthwith discontinue disposition of such Registrable
Notes covered by such Registration Statement or Prospectus or Exchange Notes to
be sold by such Holder or Participating Broker-Dealer, as the case may be, until
such Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Company shall give any such
notice, the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice.
6. Registration Expenses.
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers (other than any underwriting discounts or
commissions) shall be borne by the Company whether or not the Exchange Offer
Registration Statement or any Shelf Registration is filed or becomes effective
or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) reasonable fees and expenses of compliance with
state securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
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<PAGE> 24
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and reasonable fees and disbursements of one special
counsel for all of the sellers of Registrable Notes (exclusive of any counsel
retained pursuant to Section 7 hereof), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(m)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) Securities
Act liability insurance, if the Company desires such insurance, (vii) fees and
expenses of all other Persons retained by the Issuers, (viii) internal expenses
of the Issuers (including, without limitation, all salaries and expenses of
officers and employees of the Issuers performing legal or accounting duties),
(ix) the expense of any annual audit, (x) any fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, and the obtaining of a rating of the securities, in each case, if
applicable, and (xi) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, indentures
and any other documents necessary in order to comply with this Agreement.
7. Indemnification.
(a) Each of the Issuers, jointly and severally, agrees to indemnify
and hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the
affiliates, officers, directors, representatives, employees and agents of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without limitation, the
reasonable legal fees and other expenses actually incurred in
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<PAGE> 25
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein and with respect to any preliminary
prospectus, to the extent that any such loss, claim, damage or liability arises
solely from the fact that any Participant sold Notes to a person to whom there
was not sent or given a copy of the Prospectus (as amended or supplemented) at
or prior to the written confirmation of such sale if the Company shall have
previously furnished copies thereof to the Participant in accordance herewith
and the Prospectus (as amended or supplemented) would have corrected any such
untrue statement or omission.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers and their respective affiliates, officers,
directors, representatives, employees and agents and each Person who controls
each Issuer within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent (but on a several, and not joint, basis)
as the foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Persons against whom such indemnity may be sought (the "Indemnifying
Persons") in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel
24
<PAGE> 26
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Persons may reasonably designate in such
proceeding and shall pay the fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify any
Indemnifying Person (i) will not relieve it from any liability under paragraph
(a) or (b) above unless and to the extent such failure results in the forfeiture
by the Indemnifying Person of substantial rights and defenses and (ii) will not,
in any event, relieve the Indemnifying Person from any obligations to any
Indemnified Person other than the indemnification obligation provided in
paragraphs (a) and (b) above. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Persons and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Persons shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both any Indemnifying Person and the Indemnified
Person or any affiliate thereof and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Persons shall not, in
connection with such proceeding or separate but substantially similar related
proceeding in the same jurisdiction arising out of the same general allegations,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Notes and Exchange Notes sold by all such Participants and shall be
reasonably acceptable to the Company, and any such separate firm for the
Issuers, their affiliates, officers, directors, representatives, employees and
agents and such control Persons of the Issuers shall be designated in writing by
the Company and shall be reasonably acceptable to the Holders.
The Indemnifying Persons shall not be liable for any settlement of
any proceeding effected without its prior written consent (which consent shall
not be unreasonably withheld or delayed), but if settled with such consent or if
there be a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
each of the Indemnifying Persons agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or
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judgment. No Indemnifying Person shall, without the prior written consent of the
Indemnified Persons (which consent shall not be unreasonably withheld or
delayed), effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, or indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (A) includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of such Indemnified Person.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the original
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers on the one hand
or such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
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considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Issuer, its directors, officers, employees or agents or any person
controlling an Issuer, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A.
Each of the Issuers covenants and agrees that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
in accordance with the requirements of the Securities Act and the Exchange Act
and, if at any time such Issuer is not required to file such reports, such
Issuer will, upon the request of any Holder or beneficial owner of Registrable
Notes, make available such information as is necessary to permit sales pursuant
to Rule 144A under the
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Securities Act. Each of the Issuers further covenants and agrees, for so long as
any Registrable Notes remain outstanding, that it will take such further action
as any Holder of Registrable Notes may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Notes
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities Act,
as such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations.
If any of the Registrable Notes covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and the Issuers shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuers' other issued and outstanding
securities under any such agreements. The Issuers will not enter into any
agreement with respect to any of their securities which will grant to any Person
piggy-back registration rights with respect to any Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include
28
<PAGE> 30
such Registrable Notes in a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Company and (II)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect the Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the records
of the registrar under the Indenture.
(ii) if to the Issuers, at the address as follows:
c/o Sparkling Spring Water Group Limited
19 Fielding Avenue
Dartmouth, Nova Scotia
Canada B3B-1C9
Attention: Stewart Allen
29
<PAGE> 31
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, the Holders and the Participating Broker-Dealers.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
30
<PAGE> 32
(j) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.
(l) Judgment Currency. The Issuers, jointly and severally, agree to
indemnify the Initial Purchasers and each Holder against any loss incurred as a
result of any judgment or order being given or made for any amount due under
this Agreement and such judgment or order being expressed and paid in a currency
(the "Judgment Currency") other than United States dollars and as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the Judgment Currency for the purpose of such
judgment or order and (ii) the spot rate of exchange in The City of New York at
which any such person on the date of payment of such judgment or order is able
to purchase United States dollars with the amount of the Judgment Currency
actually received by such person. The foregoing indemnity shall continue in full
force and effect notwithstanding any such judgment or order as aforesaid. The
term "spot rate of exchange" shall include any premiums and costs of exchange
payable in connection with the purchase of, or conversion into, United States
dollars.
(m) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Holders on the one hand
and the Issuers on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged herein
and replaced hereby.
31
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
THE COMPANY:
SPARKLING SPRING WATER GROUP LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Vice Chairman
THE GUARANTORS:
SPARKLING SPRING WATER LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Vice Chairman
SPRING WATER, INC.
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER JUG ENTERPRISES LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WITHEY'S WATER SOFTENING & PURIFICATION
LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 34
AQUA CARE WATER SOFTENING & PURIFICATION
LTD.
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
HIGH VALLEY WATER LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
3003969 NOVA SCOTIA LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CANADIAN SPRINGS WATER COMPANY LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
SPARKLING SPRING WATER (UK) LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
AQUAPORTE (UK) LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 35
CRYSTAL SPRING ACQUISITION, INC.
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
MOUNTAIN FRESH ACQUISITION CORP.
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
MARLBOROUGH EMPLOYMENT LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
WATER AT WORK LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
NATURAL WATER LIMITED
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
CULLYSPRING WATER CO., INC.
By: /s/ Stephen L. Larson
----------------------------------------------
Name: Stephen L. Larson
Title: Chief Financial Officer
<PAGE> 36
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED
By: /s/ David Hadley
Name: David Hadley
Title: Managing Director
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N.S. Coulbeck
Name: N.S. Coulbeck
Title: Director
<PAGE> 1
Exhibit 10.3
MEMORANDUM
To: Stewart E. Allen
From: G. John Krediet
Date: October 2, 1997
Re: Compensation
The purpose of this memo is to document your compensation starting January '98
through the year 2000. Your base pay will be C$300,000 per annum adjusted for
inflation in January '99 and 2000.
Your annual bonus will be calculated as follows:
{3x(current year OCF - preceding year OCF) - Cap. EX.}x1.6%=Bonus
This is a continuation of the same formula that we used in preceding years. For
calculation purposes transactions closing prior to May 1 of any year will be
included in that year's bonus calculation, while transactions closing after that
date will be included in the following year bonus calculation.
The Company will also pay you C$40,000 in January '98 to compensate you for your
loss on your house in Nova Scotia. Your housing allowance currently in effect
will terminate on December 31st of this year.
A major change in our business may result in us having to adjust this package.
Stew I am very pleased that we were able to put a long term compensation plan
together since I have always enjoyed working with you and now we will have the
opportunity to go forward into the new millennium.
<PAGE> 1
Exhibit 10.4
SHAREHOLDER AGREEMENT
THIS AGREEMENT effective as of the 22nd day of October, 1997,
AMONG:
SPARKLING SPRING WATER GROUP LIMITED, a corporation
incorporated under the laws of the Province of Nova
Scotia ("Holdco")
OF THE FIRST PART;
SPARKLING SPRING WATER LIMITED, a corporation continued
under the laws of the Province of Nova Scotia (the
"CORPORATION")
OF THE SECOND PART;
- and -
CLAIRVEST GROUP INC., a corporation incorporated
under the laws of the Province of Ontario
("CLAIRVEST")
OF THE THIRD PART;
- and -
GASPAR LIMITED, a corporation incorporated under the
laws of Barbados ("GASPAR")
OF THE FOURTH PART;
- and -
C. SEAN DAY, of Stamford, Connecticut, United States
of America ("DAY")
OF THE FIFTH PART;
<PAGE> 2
- and -
STEPHEN L. LARSON, of Darien, Connecticut, United
States of America ("LARSON")
OF THE SIXTH PART;
- and -
KEVIN NEWMAN, of Darien, Connecticut, United States
of America ("NEWMAN")
OF THE SEVENTH PART;
- and -
MARK STITZER, of Greenwich, Connecticut, United
States of America ("MARK")
OF THE EIGHTH PART;
- and -
LUCY STITZER, of Greenwich, Connecticut, United
States of America ("LUCY")
OF THE NINTH PART;
- and -
STEWART ALLEN, of Burnaby, British Columbia ("ALLEN")
OF THE TENTH PART;
THIS AGREEMENT WITNESSES that in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto hereby
covenant and agree as follows:
RECITALS
<PAGE> 3
3
This Agreement recites the following circumstances:
1. Holdco was incorporated on October 22, 1997 under the Companies Act (Nova
Scotia) and is the registered and beneficial owner of all outstanding
shares in the capital stock of the Corporation.
2. The Corporation was continued on the 22nd day of February, 1994 under
the Companies Act (Nova Scotia).
3. The authorized capital of Holdco consists of:
3.1 One Million (1,000,000) Class A Common Shares with a par value of Cdn.
$0.0001 per share, 136,879 of which have been issued and are outstanding
as fully paid and non-assessable Class A Common Shares;
3.2 One Million (1,000,000) Class B Common Shares with a par value of Cdn.
$6.7790 per share, 118,209 of which have been issued and are outstanding
as fully paid and non-assessable Class B Common Shares;
3.3 One Million (1,000,000) Class C Common Shares with a par value of
Cdn.$13.4699 per share, 423,190 of which have been issued and are
outstanding as fully paid and non-assessable Class C Common Shares;
3.4 Ten Million (10,000,000) Class D Common Shares with no par value none of
which have been issued and are outstanding as fully paid and
non-assessable Class D Common Shares;
3.5 Ten Million (10,000,000) Class E non-voting Common Shares with no par
value none of which have been issued and are outstanding as fully paid and
non-assessable Class E Common Shares;
3.6 One Million (1,000,000) Class F Common Shares with a par value of
Cdn.$0.9401 per share, 705,050 of which have been issued and are
outstanding as fully paid and non-assessable Class F Common Shares;
3.7 Ten Million (10,000,000) Special Preferred Shares with a par value of Cdn.
$1.00, issuable in series, none of which have been issued and are
outstanding as fully paid and non-assessable Special Preferred Shares;
<PAGE> 4
4
3.8 Ten Million (10,000,000) Special Preferred Shares with no par value which
may be issued from time to time in one or more series, each series having
the designation, rights, privileges, restrictions and conditions
determined by the Board.
4. The authorized capital of the Corporation consists of ten million
(10,000,000) Common Shares without nominal or par value, ten million
(10,000,000) Class B Non-Voting Common Shares with no par value of which
one million, seven hundred and twenty thousand, seven hundred and
forty-six (1, 720,746) Common Shares are issued and outstanding as fully
paid and non-assessable.
5. The beneficial owners of all of the issued and outstanding Voting
Shares of Holdco are as follows:
Name of Shareholder Number of Common Shares
Gaspar 705,050
Clairvest 423,190
Mark and Lucy, as joint tenants 94,010
Larson 118,209
Newman 28,203
Day 8,994
Allen 5,672
ARTICLE II
RECITALS CORRECT
II.1 Recitals
Each of the parties hereto respectively acknowledges and declares that the
foregoing recitals, insofar as they relate to such party, are true and correct
both in substance and in fact.
ARTICLE III
DEFINITIONS AND INTERPRETATION
III.1 Definitions
In this Agreement, including the above recitals, the following terms have
the following meanings unless the context otherwise requires:
<PAGE> 5
5
"AFFILIATE" has the meaning attributed thereto in the Securities Act
(Ontario);
"AGREEMENT" means this agreement including the recitals and the following
schedules:
Schedule "A" - Assumption Agreement
Schedule "B" - Consolidated Sparkling Spring Water Income
Statement and EBTDAPS Projections
Schedule "C" - Registration Procedures
Schedule "D" - Fair Market Value Determination Procedures
Schedule "E" - Outstanding Options
Schedule "F" - Subscription Agreement
"ASSUMPTION AGREEMENT" means an agreement pursuant to which a Person who is not
a Shareholder agrees to be bound by this Agreement in the same manner as if it
had been an original party hereto and, in the case of Share transfers, to the
same extent as the transferor, which Assumption Agreement shall be in the form
attached hereto as Schedule "A";
"BOARD" means the board of directors of Holdco;
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
holiday in the Province of Nova Scotia;
"CANADIAN SECURITIES LAWS" means statutes and regulations applicable to the
trading of securities in any province or territory of Canada including
applicable rules, policies, statements and blanket rulings and orders made by
Canadian securities regulatory authorities;
"CORPORATION BOARD" means the board of directors of the Corporation;
"CORPORATION DIRECTOR" means a director of the Corporation;
"CLASS E SHAREHOLDERS" means the following Shareholders who own the number of
Class E Shares set opposite their name and who have all signed the subscription
agreement in the form attached hereto as Schedule "F":
Stephen Larson 1,000 Class E Non-Voting Shares
Arthur Goodick 180 Class E Non-Voting Shares
John Stiles 3,500 Class E Non-Voting Shares
Tom Ferries 1,800 Class E Non-Voting Shares
<PAGE> 6
6
Helen Martin 1,700 Class E Non-Voting Shares
Tim Dougherty 1,000 Class E Non-Voting Shares
Larry Brookes 180 Class E Non-Voting Shares
"DIRECTOR" means a director of Holdco;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time;
"LIQUID PUBLIC MARKET" means an average daily volume of Shares traded over the
facilities of The Toronto Stock Exchange, The Montreal Exchange, the Vancouver
Stock Exchange, the New York Stock Exchange, the London Stock Exchange or the
NASDAQ over the preceding thirty (30) days equal to or greater than five (5%)
percent of the number of Clairvest's Shares;
"MANAGEMENT SHAREHOLDERS" means, at the date hereof, Gaspar and Larson, and
shall also include G. John Krediet ("KREDIET") at such time as Shares are
registered in the name of Krediet, collectively, and "Management Shareholder"
means any one of them;
"PERSON" includes an individual, partnership, association, body corporate,
trustee, executor, administrator or legal representative;
"PROPORTIONATE SHARE" means the fraction that results when the number of Shares
held by a Shareholder is divided by the total number of Shares excluding, in the
case of Section 5.3, the number of Shares owned by the Shareholder who delivers
a Refusal Right under Section 5.3 hereof;
"PUBLIC OFFERING" means an underwritten or best efforts public offering of
Shares pursuant to an effective prospectus or registration statement under the
Securities Laws;
"PUBLIC SALE" means a sale (i) pursuant to a Public Offering, or (ii) under Rule
144 of the Securities Act and its equivalent under Canadian Securities Laws;
"REGISTRATION EXPENSES" means (i) all registration and prospectus filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Shares), (iii) printing expenses, (iv) internal expenses
of Holdco (including, without limitation, all salaries and expenses
<PAGE> 7
7
of its officers performing legal or accounting duties), (v) reasonable fees and
disbursements for counsel for Holdco and customary fees and expenses for
independent certified public or chartered accountants retained by Holdco
(including the expenses of any comfort letters or costs associated with the
delivery by accountants of a comfort letter or comfort letters requested
pursuant to paragraph (g) of Schedule "C" hereto), (vi) the reasonable fees and
expenses of any special experts retained by Holdco in connection with such
registration or qualification, (vii) reasonable fees and expenses of one counsel
for Clairvest, in the case of an offering in which Clairvest participates or of
the Holders (as defined in Section 6.1), in any other case, (viii) fees and
expenses in connection with any review of underwriting arrangements by the
National Association of Securities Dealers, Inc. or any comparable Canadian
association including fees and expenses of any "qualified independent
underwriter", (ix) fees and expenses of listing the Shares on an exchange or
other trading system, and (x) fees and disbursements of underwriters customarily
paid by issuers or sellers of securities; but shall not include any underwriting
fees, discounts or commission attributable to the sale of Shares, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Shareholders (or the agents who manage their accounts) or any fees and expenses
of underwriter's counsel;
"RULE 144" means Rule 144 and Rule 144A (or any successor provisions under
the Securities Act;
"SEC" means the Securities and Exchange Commission;
"SECURITIES ACT" means the United States Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time;
"SECURITIES LAW" shall mean the Securities Act, The Exchange Act and Canadian
Securities Laws;
"SHAREHOLDERS" means the Persons who are from time to time (i) shareholders of
Holdco and parties to this Agreement and for the time being Gaspar, Clairvest,
Day, Larson, Newman, Mark, Lucy and Allen and (ii) Persons who exercise options
after the date hereof pursuant to the Holdco stock option plan, as amended from
time to time, including the options set out in Schedule E hereto; but, for
greater certainty, shall not include the Class E Shareholders who have signed
the subscription agreement in the form attached as Schedule F hereto;
"SHARES" means shares in the capital stock of Holdco;
<PAGE> 8
8
"STITZER GROUP" means, collectively, Mark and Lucy and the survivor of them;
"VOTING SHARES" means all shares of the company that have the right to vote, for
the time being Class A Common Shares, Class B Common Shares, Class C Common
Shares, Class D Common Shares and Class F Common Shares;
III.2 Headings
The headings of the Sections and Articles of this Agreement are
inserted for convenience and reference only and shall not affect the
construction or interpretation of any provision of this Agreement.
III.3 Number and Gender
Words importing the singular shall include the plural and vice versa
and words importing the masculine gender shall include the feminine and neuter
and vice versa.
ARTICLE IV
TERM
IV.1 Term
This Agreement shall come into force and effect as of the date set out
above and shall continue in force, as may be amended from time to time in the
manner provided herein, until the earlier of the date on which only one
Shareholder holds Shares or the date on which Holdco makes a Public Offering.
IV.2 Termination of Prior Shareholder Agreement
This Agreement shall supersede and replace all other agreements whether
written or oral regarding the matters contained herein, including, without
limiting the generality of the foregoing, the Shareholders' Agreement made as of
the 12th day of January, 1996 among the Corporation, Clairvest, Gaspar,
MeesPierson Investeringsmaatschappij II BV, Larson, Newman, Mark, Lucy, Todd
Stitzer and Marenda Stitzer, and the assumption agreements dated May 23, 1996
and April 18, 1997, between the Corporation and Allen, and the Corporation and
Day, respectively, which Shareholder Agreement and assumption agreements shall
be terminated effective the date hereof.
<PAGE> 9
9
ARTICLE V
PRE-EMPTIVE RIGHT
V.1 Pre-Emptive Right
(a) Any Shares in the capital of Holdco of a class to be issued by Holdco,
or other securities, convertible into Shares, other than a Public Offering and
other than senior secured debt, such additional Shares or securities hereinafter
referred to as "ADDITIONAL SECURITIES", shall first be offered by Holdco to all
the then Shareholders holding shares of that class in their respective
Proportionate Share; provided, however, that the first issue by Holdco of any
class of its shares other than Voting Shares shall first be offered to all then
Shareholders holding Voting Shares in their respective Proportionate Share of
Voting Shares.
(b) In addition to its pre-emptive rights contained in Section 4.1(a),
Clairvest shall also have a right of first refusal, exercisable by Clairvest
within twenty (20) days from Clairvest's receipt of notice of Holdco's intention
to issue Additional Securities, to subscribe for, purchase or finance all such
Additional Securities that the Management Shareholders would otherwise be
entitled to subscribe for, purchase or finance pursuant to this Section 4.1
("MANAGEMENTS' ADDITIONAL SECURITIES"), provided however that Clairvest's right
of first refusal shall be exercisable upon the following terms:
(i) if at any time, Clairvest is a Shareholder and owns less than
30% of all Shares, on a fully diluted basis, it shall have the
right to subscribe for, purchase or finance, at Clairvest's
discretion, up to 75% of all Managements' Additional
Securities;
(ii) if at any time, Clairvest owns 30% or more of all outstanding
Shares on a fully diluted basis, and such Share ownership is
not more than 99% of all outstanding Shares owned by Gaspar
and Krediet in aggregate, on a fully diluted basis, Clairvest
shall have the right to subscribe for, purchase or finance, at
Clairvest's discretion, up to 50% of all of Managements'
Additional Securities.
(c) Within twenty (20) days of receipt of notice of Holdco's intention to
issue Additional Securities, any Shareholder who wishes to acquire its
Proportionate Share or less of Additional Securities shall submit a subscription
therefor to the secretary of Holdco. Such
<PAGE> 10
10
subscription shall specify the number, if any, of Additional Securities in
excess of its Proportionate Share the Shareholder desires to purchase. If any
Shareholder does not subscribe for its Proportionate Share, the unsubscribed
shares shall be used to satisfy the subscription of the Shareholders for shares
in excess of their Proportionate Share.
(d) If the subscriptions in excess are more than sufficient to exhaust the
unsubscribed shares, the unsubscribed shares shall be divided pro-rata among the
Shareholders desiring shares in excess of their Proportionate Share in
accordance with their Proportionate Share, but no Shareholder shall be bound to
take any shares in excess of the amount it so desires.
(e) If the Additional Securities are not fully subscribed by the then
Shareholders holding shares of the class of Additional Securities being offered,
Holdco shall then offer such unsubscribed Additional Securities to all the then
Shareholders holding Shares of any other class of capital stock of Holdco. Any
such offer shall be made to each class of Shareholders in the Proportionate
Share of value such class holds of Holdco's entire capital (excluding for
purposes of this calculation the class of Additional Securities being offered)
and to each Shareholder of each class in its respective Proportionate Share of
such class.
(f) Any Additional Securities not subscribed for in accordance with this
Section 4.1 may be offered by Holdco to Persons other than Shareholders. Every
issue of Additional Securities by Holdco shall be subject to the condition that
the subscriber therefor, shall, if not a party hereto, agree to be bound by the
terms of this Agreement and become a party hereto in accordance with the
provisions of Section 9.3 hereof by executing an Assumption Agreement.
(g) Notwithstanding anything to the contrary contained in this Section
4.1, the pre-emptive rights provided by this Section 4.1 shall not apply to
Shares issued by Holdco upon the exercise of the options granted by Holdco as
set out in Schedule "E" hereto, or upon the exercise of options hereafter
granted by the Holdco pursuant to Holdco's stock option plan; provided that the
optionee, shall, if not a party hereto, agree to be bound by the terms of this
Agreement and become a party hereto in accordance with the provisions of Section
9.4 hereof by executing an Assumption Agreement.
ARTICLE VI
DISPOSAL OF INTEREST
VI.1 Restrictions on Transfer
<PAGE> 11
11
Except as otherwise provided for herein or as specifically consented
to in writing by the Shareholders, the Shareholders shall not, and shall not
make any agreement to, directly or indirectly, sell, assign, transfer, give,
devise, bequeath, mortgage, charge, pledge, hypothecate or otherwise dispose of,
alienate or in anyway encumber or create a security interest in, or grant any
option on, any of the Shares. Any attempt to accomplish or effect any or all of
the acts prohibited hereby shall be null and void. For greater certainty, any
change or attempt to effect a change in the beneficial ownership of Shares by
any Shareholder (other than any transfer of shares of Clairvest) shall be deemed
to be a transfer or an attempt to transfer Shares by such Shareholder.
VI.2 Permitted Transfers
(a) Each of the Shareholders hereby agrees that, simultaneously with the
execution of this Agreement, it will execute and deliver to National Westminster
Bank Plc a mortgage, hypothecation and pledge of all of its Shares to National
Westminster Bank Plc as security for the debts and other obligations of the
Corporation to National Westminster Bank Plc.
(b) If at any time, or from time to time, the Board determines for any
reason that it is necessary or desirable that the Corporation change lenders,
each of the Shareholders hereby agrees that it will, at the request of such new
lender or lenders from time to time, execute and deliver in favour of such
lender or lenders a new mortgage, hypothecation and pledge of all its Shares as
security for the debts and other obligations of the Corporation in a form
approved by such lender or lenders provided, however, that such pledge shall be
limited in recourse to the Shares and shall contain substantially the same terms
and conditions, and shall be no more restrictive to the Shareholders than, the
pledge to National Westminster Bank Plc referred to in paragraph 5.2(a) and
further provided that no Shareholder will be required to grant such mortgage,
hypothecation and pledge unless all Shareholders are required to do so.
(c) It is agreed that no Shareholder shall be permitted to obtain a
release of any pledge of its Shares given pursuant to either paragraph 5.2(a) or
(b) hereof unless the pledges given by all Shareholders pursuant to paragraph
5.2(a) or (b), as the case may be, are released.
(d) Any Shareholder (herein referred to as the "BORROWING SHAREHOLDER")
may pledge (herein called the "SECOND PLEDGE") its Shares to another Shareholder
(herein referred to as the "LENDING SHAREHOLDER") as security for a loan made by
the Lending Shareholder to the Borrowing Shareholder provided always that such
Second Pledge is fully subordinated to any mortgage, pledge or charge of such
Shares in favour of National Westminster Bank Plc or a new lender as
contemplated in paragraphs 5.2(a) and (b) hereof.
<PAGE> 12
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(e) Upon death, by gift or otherwise, a Shareholder (in this Section 5.2
called the "TRANSFEROR") may transfer all, but not less than all, of the Shares
held by the Transferor to a spouse or lineal descendant of a Transferor or to a
holding company all the shares of which are owned exclusively by the Transferor
or to a trust the primary beneficiary of which is the Transferor or the spouse
or lineal descendant of the Transferor (the spouse, lineal descendant, holding
company or trust, as the case may be, of the Transferor being in this Section
5.2 called the "TRANSFEREE") and nothing in this Agreement shall prohibit such
transfer of Shares, provided that no such transfer shall be made until such time
as the Transferee shall become a party to this Agreement in accordance with
Section 9.3 hereof by executing an Assumption Agreement and that the Transferor
shall continue to be bound by this Agreement thereafter.
(f) The legal personal representative or representatives of a deceased
Shareholder may become registered as a Shareholder or Shareholders in respect of
any Shares held by such deceased Shareholder at the time of his death provided
that no such transfer shall be registered until the proposed transferee has
become a party to this Agreement in accordance with Section 9.3 hereof by
executing an Assumption Agreement.
(g) Subject to paragraphs (a), (b), (c) and (d) of this Section 5.2, any
Shareholder may sell, sign, transfer, give, devise, bequest, mortgage, charge,
pledge, hypothecate or otherwise dispose of, alienate or encumber or create a
security interest or grant any option on, any of such Shareholder's Shares to
any Affiliate of such Shareholder, provided that no such transfer shall be
registered until the proposed transferee has become a party to this Agreement in
accordance with Section 9.3 hereof by executing an Assumption Agreement.
Notwithstanding the foregoing, the execution by such Affiliate transferee shall
not release the transferor Shareholder from its obligations hereunder.
(h) It is hereby acknowledged and agreed that a change of control of
Clairvest shall not be considered or deemed to be a transfer by Clairvest of any
Shares owned or held, directly or indirectly, by Clairvest.
VI.3 Right of First Refusal
(a) Any Shareholder (in this Section 5.3 called the "OFFEROR") may sell
all (but not less than all) of its Shares if the Offeror shall have received a
bona fide offer (in this Section 5.3 called the "OFFER") from a Person with whom
the Offeror is dealing at arm's length (as the term arm's length is construed
for purposes of the Income Tax Act (Canada) at the date hereof) to buy such
<PAGE> 13
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Shares for a fixed price per Share (in this Section 5.3 called the "OFFER
PRICE") and the Offeror wishes to accept the Offer and complies with the
provisions of this Section 5.3.
(b) To comply with the provisions of this Section 5.3 the Offeror shall
deliver to each of the other Shareholders (in this Section 5.3 called the
"OFFEREES") an offer in writing (in this Section 5.3 called a "REFUSAL RIGHT")
offering to sell to the Offerees all of the Shares of the Offeror at the Offer
Price, which Refusal Right shall be irrevocable for twenty (20) days.
(c) Each of the Offerees shall be entitled to purchase at least his
Proportionate Share of the Shares of the Offeror at the Offer Price by giving
written notice to all of the Shareholders (including the Offeror) within twenty
(20) days of the receipt of the Refusal Right of the number of Shares of the
Offeror that such Offeree wishes to purchase. If any Offeree fails to give such
written notice within twenty (20) days as aforesaid, such Offeree shall be
deemed to have given notice that it wishes to buy none of such Shares; and
(d) If any of the Offerees wishes to purchase less than its respective
Proportionate Share, the unclaimed Shares shall be utilized to satisfy the
claims of other Offerees for Shares of the Offerees in excess of their
respective Proportionate Share and, if the claims in excess are more than
sufficient to exhaust such unclaimed Shares, the unclaimed Shares shall be
divided pro rata among the Offerees desiring excess Shares in the proportions
that the number of Shares in excess of their respective Proportionate Share
claimed by each such Offeree bears to the aggregate number of Shares claimed by
all of the Offerees in excess of their respective proportions, provided that no
Offeree shall be bound to take any Shares in excess of the number which it
desires.
(e) If one or more of the Offerees have agreed to purchase in the
aggregate all of the Shares owned by the Offeror in accordance with the
preceding subparagraphs of this Section 5.3 there shall thereupon be an
agreement of purchase and sale among the Offeror and such Offerees and each such
Offeree shall deliver to the Offeror, within sixty (60) days of the delivery of
the Refusal Right to the Offerees, its respective proportion of the purchase
price for the Shares by cash or certified cheque of the Offeree as the case may
be in accordance with the payment terms under the Offer.
(f) If fewer than all of the Shares of the Offeror are claimed by the
Offerees pursuant to either of subparagraphs (c) or (d) of this Section 5.3, or
if the Offerees who complied with subparagraph (c) have not complied with the
provisions of subparagraph (e) of this Section 5.3, the Offeror may then (but
only then) sell, all (but, except as provided in Section 5.4 hereof, not less
than all) of its Shares in accordance with the provisions of the Offer (but not
otherwise),
<PAGE> 14
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provided that the purchaser under the Offer agrees to be bound by the terms of
this Agreement as a Shareholder in accordance with Section 9.3 hereof and
executes an Assumption Agreement.
VI.4 Sale by Controlling Shareholder or Management Shareholders - Drag Along
(a) Subject to the right of first refusal contained in Section 5.3 hereof,
if any Shareholder or group of Shareholders acting in concert (the "CONTROLLING
SHAREHOLDER") owning more than 50% of the Shares on a fully diluted basis
proposes to sell more than 50% of the Shares to a Third Party, or if the
Management Shareholders propose to sell all, but not less than all, of the
Shares owned, directly or indirectly, by them to a Third Party (as such term is
defined in Section 5.5), the Controlling Shareholder or Management Shareholders,
as the case may be, may, at their option, by written notice to the other
Shareholders, accompanied by an irrevocable offer (the "DRAG ALONG OFFER") from
the Third Party to the other Shareholders to purchase, for a consideration that
is the same as, or the cash equivalent of, the consideration per Share at which
the Controlling Shareholder or Management Shareholders, as the case may be,
propose to sell their Shares to the Third Party, require the other Shareholders
to sell to the Third Party, all (but not less than all) of the Shares owned by
such other Shareholders (the "DRAGGED SHARES") at the price specified in the
Drag Along Offer. Subject to paragraph (b), the delivery by the Controlling
Shareholder or the Management Shareholders, as the case may be, of an
irrevocable Drag Along Offer shall bind the other Shareholders to sell the
Dragged Shares. The date on which the sale is to close and the other closing
arrangements (which shall be the same as those for the purchase and sale between
the Third Party and the Controlling Shareholder or the Management Shareholders,
as the case may be) shall be as specified in the Drag Along Offer. Except as
specifically provided for above, the Drag Along Offer shall contain only such
terms and conditions, if any, as are identical to those pursuant to which the
Controlling Shareholder or Management Shareholders, as the case may be, propose
to sell their shares to the Third Party.
(b) Notwithstanding the foregoing paragraph (a), this Section 5.4 shall
not apply to Clairvest unless either (i) Clairvest's realized price per share
yields Clairvest a compounded annual rate of return of at least twelve (12%)
percent, or (ii) after eighteen (18) months from the date hereof, the
Corporation has achieved the fully-diluted per share earnings before tax,
depreciation and amortization ("EBTDAPS") projections as shown on Schedule "B"
hereto. The irrevocable Drag Along Offer given by the Management Shareholders to
Clairvest shall include a calculation of the compounded annual rate of return or
EBTDAPS, as the case may be, and shall be accompanied by a copy of the audited
or unaudited financial results upon which such calculation is based. The
delivery by the Management Shareholders to Clairvest of an irrevocable Drag
Along Offer shall bind Clairvest to sell its Shares, provided that the
compounded annual rate of
<PAGE> 15
15
return or EBTDAPS calculation, as the case may be, is approved by Clairvest,
such approval not to be unreasonably withheld.
VI.5 Sale by Controlling Shareholder or Management Shareholder -
Tag Along
Subject to the right of first refusal contained in Section 5.3
hereof and notwithstanding the provisions of Section 5.4 hereof, if any
Controlling Shareholder or Management Shareholder, alone or in concert, receives
a bona fide offer from a Person (other than a "related person" as defined in the
Income Tax Act (Canada)) or a series of offers from a group of such Persons
acting in concert (a "THIRD PARTY") to purchase some or all of the Shares owned,
directly or indirectly, by them, such Controlling Shareholder(s) or Management
Shareholder(s), as the case may be, shall not accept the offer unless the Third
Party shall make an offer to purchase the Third Party's desired number of Shares
pro rata from such Controlling Shareholder(s) or Management Shareholder(s),as
the case may be, and the other Shareholders, at the same price and on the same
terms and conditions as are contained in the offer made to the Controlling
Shareholder(s) or Management Shareholder(s), as the case may be.
VI.6 Sale by Clairvest - Tag Along
Subject to the right of first refusal contained in Section 5.3
hereof and notwithstanding the provisions of Section 5.4 hereof, provided that
Clairvest owns in excess of twenty-five (25%) percent of the Common Shares, on a
fully-diluted basis, if Clairvest receives a bona fide offer from a Third Party
to purchase some or all of such Shares owned, directly or indirectly, by it,
Clairvest shall not accept the offer unless the Third Party shall make an offer
to purchase the Third Party's desired number of Shares pro rata from each of the
Shareholders, including Clairvest, at the same price and on the same terms and
conditions as contained in the offer made to Clairvest. The tag along rights
provided by this Section 5.6 shall not apply in respect of any such offer for
Shares of a class in respect of which Clairvest does not own, directly or
indirectly, in excess of twenty-five (25%) percent of the outstanding Shares of
said class of Shares.
VI.7 Sale by Clairvest - Right of First Opportunity and Drag Along
Provided that there does not exist a Liquid Public Market for
Shares, if at any time after March 31, 2003, Clairvest desires to sell all (but
not less than all) of its Shares of Holdco, such Shares shall first be offered
by Clairvest to Holdco for repurchase, at a price per Share equal to the per
Share fair market value of the Shares, to be determined in accordance with the
<PAGE> 16
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principles set out in Schedule "D" hereto.
The fair market value of the Shares shall then be negotiated in good
faith among Clairvest and Holdco in accordance with the principles set out in
Schedule "D" hereto. If Holdco does not advise Clairvest in writing of its
desire to repurchase from Clairvest all of Clairvest's Shares at the agreed upon
fair market value of the Shares, or if Clairvest and Holdco cannot agree upon
the fair market value of the Shares within thirty (30) days following receipt of
Clairvest's notice of its desire to sell its Shares, Holdco shall, within
fifteen (15) days thereafter, deliver to Clairvest a notice stating the per
Share consideration (the "BEST OFFER") at which Holdco would be willing to
repurchase all (but not less than all) of Clairvest's Shares, and Clairvest may
(i) within fifteen (15) days, accept the Best Offer, failing which the Best
Offers shall expire, or (ii) within one hundred and eighty (180) days, by
written notice to the other Shareholders accompanied by an irrevocable Drag
Along Offer from a Third Party to such Shareholders to purchase, for
consideration that is the same as, or the cash equivalent of, the consideration
per Share at which Clairvest proposes to sell its Shares to the Third Party,
require the other Shareholders to sell to the Third Party all (but not less than
all) of the Shares owned, directly or indirectly, by the other Shareholders, at
the price specified in the Drag Along Offer; provided that such consideration
shall not be less than the Best Offer. In the event that Clairvest accepts the
Best Offer, Holdco shall repurchase Clairvest's Shares within sixty (60) days
from the date of such acceptance.
The delivery by Clairvest of an irrevocable Drag Along Offer shall
bind the other Shareholders to sell all (but not less than all) of the Shares
owned, directly or indirectly, by such Shareholders to which the Drag Along
Offer relates.
ARTICLE VII
REGISTRATION RIGHTS
VII.1 Demand Registration
(a) Provided that Clairvest owns, directly or indirectly, in excess of
twenty (20%) percent of the Shares, on a fully-diluted basis, Clairvest may at
any time after January 12, 2001, upon written request that Holdco effect the
registration or qualification under the Securities Laws of Clairvest's Shares,
and specifying the intended method of disposition thereof, Holdco will promptly
give written notice of such requested registration (a "DEMAND REGISTRATION") at
least twenty (20) days prior to the anticipated filing date of the prospectus or
registration statement relating to such Demand Registration to all other
Shareholders, and thereupon will use its best
<PAGE> 17
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efforts to effect, as expeditiously as possible, the registration under the
Securities Laws of:
(i) the Shares that Holdco has been so requested to
qualify or register by Clairvest, then held by
Clairvest; and
(ii) all other Shares that any other Shareholder (all such
Shareholders, together with Clairvest, the "HOLDERS")
has requested Holdco to qualify or register, subject to
Section 6.2 hereof, by written request received by
Holdco within ten (10) days after the receipt by such
Holders of such written notice given by Holdco,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Shares so to be registered;
provided that (i) Holdco shall not be obligated to effect more than one Demand
Registration in any six-month period, and (ii) Holdco shall not be obligated to
effect more than three (3) Demand Registrations for Clairvest pursuant to this
Section 6.1, unless Holdco shall be eligible to file a registration statement on
Form S-3 under the Securities Act (or other comparable short form, including a
short form prospectus under National Policy No. 47 of the Canadian Securities
Administrators), in which event there shall be no limit on the number of such
Demand Registrations pursuant to this Section 6.1; provided that the number of
Demand Registrations that Holdco shall be obligated to effect pursuant to this
Section 6.1 shall be reduced by one (1) in the event that Clairvest requests one
or more Incidental Registrations as defined in and pursuant to Section 6.2,
regardless of the number of Incidental Registrations requested by Clairvest.
Promptly after the expiration of the ten (10) day period referred to
in Section 6.1(a)(ii) hereof, Holdco will notify all the Holders to be included
in the Demand Registration of the other Holders and the number of Shares
requested to be included therein. Clairvest may, at any time prior to the
effective date of the prospectus or registration statement relating to such
registration, revoke such request, without liability to any of the other
Holders, by providing a written notice to Holdco and such other Holders revoking
such request, in which case such request, so revoked shall not be considered a
Demand Registration if any fees incurred by Holdco as a result of such revoked
request are paid by Clairvest.
(b) Subject to Section 6.1(c), Holdco will pay all Registration Expenses
in connection with any Demand Registration; provided that if Holdco is required
to undertake an audit of Holdco that it would not otherwise have been required
to undertake, the costs associated with such audit shall be for the account, pro
rata, of Clairvest and the other Holders, if any,
<PAGE> 18
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participating in the Demand Registration.
(c) A qualification or registration requested pursuant to this Section 6.1
shall not be deemed to have been effected unless the prospectus or registration
statement relating thereto (i) has become effective under the Securities Laws,
and (ii) has remained effective for a period of at least ninety (90) days (or
such shorter period in which all Shares of the Holders included in such
registration has actually been sold thereunder); provided that if after any
prospectus or registration statement requested pursuant to this Section 6.1
becomes effective such prospectus or registration statement is interfered with
by any stop order, cease trade order, injunction or other order or requirement
of the SEC, the Canadian securities regulatory authorities or other governmental
agency or court solely due to the actions or omissions to act of Holdco, such
prospectus or registration statement shall be at the sole expense of Holdco and
shall not be considered a Demand Registration. In the event that less than
seventy-five (75%) percent of Clairvest's Shares initially proposed to be
included in such prospectus or registration have been sold thereunder and
Clairvest pays all Registration Expenses in connection with such prospectus or
registration, such requested qualification or registration shall be deemed not
be a Demand Registration pursuant to this Section 6.1.
(d) If a Demand Registration involves a Public Offering and the managing
underwriter shall advise Holdco and Holders that, in its view, (i) the number of
Shares requested to be included in such registration or qualification (including
Shares which Holdco proposes to be included), or (ii) the inclusion of some or
all of the Shares owned by the Holders, in either case, exceeds the largest
number of Shares which can be sold without having an adverse effect on such
offering, including the price at which such Shares can be sold (the "MAXIMUM
OFFERING SIZE"), Holdco will include in such registration or qualification, in
the priority listed below, up to the Maximum Offering Size:
(i) first, so much of the Shares requested to be included
in such registration or qualification by Clairvest,
as would not cause the offering to exceed the Maximum
Offering Size;
(ii) second, such number of Shares requested to be
included in such registration or qualification by the
other Holders (allocated, if necessary, for the
offering not to exceed the Maximum Offering Size, pro
rata among such other Holders on the basis of the
relative number of Shares requested by such other
Holders to be included in such registration or
qualification); and
<PAGE> 19
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(iii) third, any Shares proposed to be registered or
qualified by Holdco.
(e) No Shareholder shall have the right to restrain or delay any
registration or qualification of Shares by Holdco on the basis of any dispute or
controversy concerning a Demand Registration.
VII.2 Incidental Registration
(a) If Holdco proposes to register any of its Shares under the Securities
Laws, it will each such time, subject to the provisions of Section 6.2(b)
hereof, give prompt written notice at least twenty (20) days prior to the
anticipated filing date of the prospectus or registration statement relating to
such registration to each Shareholder which notice shall set forth such
Shareholders' rights under this Section 6.2 and shall offer all Shareholders the
opportunity to include in such prospectus or registration statement such number
of Shares as each such Shareholder may request (an "INCIDENTAL REGISTRATION").
Upon the written request of any such Shareholder made within ten (10) days after
the receipt of notice from Holdco (which request shall specify the number of
Shares intended to be disposed of by such Shareholder), Holdco will use its best
efforts to effect the qualification or registration under the Securities Laws of
all Shares which Holdco has been so requested to quality or register by such
Shareholders, to the extent requisite to permit the disposition of the Shares so
to be qualified or registered; provided that (A) if such qualification or
registration involves a Public Offering, all such Shareholders requesting to be
included in Holdco's prospectus or registration must sell their Shares to the
underwriters of the Public Offering on the same terms and conditions as apply to
Holdco, and (B) if, at any time after giving written notice of its intention to
qualify or register any Shares pursuant to this Section 6.2(a) and prior to the
effective date of the prospectus or registration statement filed in connection
with such qualification or registration, Holdco shall determine for any reason
not to qualify or register such Shares, Holdco shall give written notice to all
such Shareholders and, thereupon, shall be relieved of its obligation to
register any Shares in connection with such qualification or registration
(without prejudice, however, to rights of any of the Shareholders under Section
6.1 hereof). No qualification or registration effected under this Section 6.2
shall relieve Holdco of its obligations to effect a Demand Registration to the
extent required by Section 6.1 hereof. Holdco will pay all Registration Expenses
in connection with each qualification or registration of Shares requested
pursuant to this Section 6.2.
(b) If a qualification or registration pursuant to this Section 6.2
involves a Public Offering (other than in the case of a Public Offering
requested by Clairvest, in a Demand
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Registration, in which case the provisions with respect to priority of inclusion
in such offering set forth in Section 6.1(d) shall apply) and the managing
underwriter advises Holdco that, in its view, the number of Shares that Holdco
and such Shareholders intend to include in such qualification or registration
exceeds the Maximum Offering Size, Holdco will include in such qualification or
registration the Maximum Offering Size:
(i) first, so much of the Shares proposed to be qualified
or registered by Holdco, not to exceed two-thirds (_)
of the Maximum Offering Size;
(ii) second, all Shares requested to be included in such
qualification or registration by any Shareholder
pursuant to this Section 6.2 (allocated, if necessary
for the offering not to exceed the Maximum Offering
Size, pro rata among such Shareholders on the basis of
the relative number of Shares so requested to be
included in such qualification or registration); and
(iii) so much of the remainder of the Shares proposed to be
qualified or registered by Holdco as would not cause the
offering to exceed the Maximum Offering Size.
VII.3 Holdback Agreements
If any qualification or registration of Shares shall be in
connection with a Public Offering, each Shareholder agrees not to effect any
Public Sale of any Shares or of any securities convertible into or exchangeable
or exercisable for any Shares (in each case, other than as part of such Public
Offering) except as the managing underwriter may advise reasonably.
ARTICLE VIII
CORPORATE GOVERNANCE
VIII.1 Voting and Replacement
Each of the Shareholders shall vote or cause to be voted the Shares
beneficially owned or controlled by it and exercise its influence so that:
(a) The Board shall consist of seven (7) Directors;
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(b) The Corporation Board shall consist of seven (7) Corporation
Directors, who shall be the same seven (7) individuals as comprise
the Board;
(c) Four (4) nominees of Gaspar, two (2) nominees of Clairvest and one
(1) nominee of the Stitzer Group, shall be elected and maintained in
office as Directors and as Corporation Directors;
(d) On the appointment or election of each Director, the secretary of
Holdco shall make note of the nominator of the Director in the
records of Holdco, and the nominator shall be entitled by direction
in writing, from time to time, to remove its nominee or nominees and
to nominate his successor or successors who shall promptly be
elected a Director as contemplated herein;
(e) On the appointment or election of each Corporation Director, the
secretary of the Corporation shall make note of the nominator of the
Corporation Director in the records of the Corporation, and the
nominator shall be entitled by direction in writing, from time to
time, to remove its nominee or nominees and to nominate his
successor or successors who shall promptly be elected a Corporation
Director as contemplated herein;
(f) The number of Directors from time to time constituting a quorum at
the meetings of the Board shall be a majority of the Directors,
provided that at least one (1) Director nominated by Clairvest must
be present;
(g) Notwithstanding Section 7.1(f) hereof, if notice of a meeting of the
Board has been duly given and on two consecutive occasions there is
no quorum by reason of the absence of the Clairvest nominee, a third
notice of meeting of the Board may be issued, a quorum for such
meeting constituted and the meeting held without the Clairvest
nominee being present;
(h) The number of Corporation Directors from time to time constituting a
quorum at the meetings of the Corporation Board shall be a majority
of the Corporation Directors, provided that at least one (1)
Director nominated by Clairvest must be present;
(i) Notwithstanding Section 7.1(h) hereof, if notice of a meeting of the
Corporation
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Board has been duly given and on two consecutive occasions there is
no quorum by reason of the absence of the Clairvest nominee, a third
notice of meeting of the Board may be issued, a quorum for such
meeting constituted and the meeting held without the Clairvest
nominee being present;
(j) Subject to Section 7.1(k) hereof, resolutions of the Directors
and the Corporation Directors shall be decided by a majority of
those voting;
(k) A resolution to amend any provision of the Management Agreement
among the Corporation, C.F. Capital Corporation, G. John Krediet
and Stephen L. Larson dated January 12, 1996, as amended from
time to time, may only be passed with the unanimous approval of
the Corporation Directors;
(l) A resolution authorizing or approving any of the following matters
in respect of Holdco may only be passed provided at least one (1) of
the Directors nominated by Clairvest approves the resolution, such
approval not to be unreasonably withheld:
(i) any acquisition over Five Million ($5,000,000)
Canadian Dollars;
(ii) capital expenditures which, in the aggregate, would
exceed the annual budget of Holdco by in excess of
ten (10%) percent thereof;
(iii) any issuance of debt or equity securities or options
to acquire such securities;
(iv) any sale or disposition of any material part of the
business of Holdco other than the sale of all or
substantially all of the assets of Holdco in
circumstances in which either Clairvest's realized
price per Share yields Clairvest a simple annual rate
of return of at least twelve (12%) percent, or after
eighteen (18) months from the date hereof, Holdco has
achieved the earnings before tax, depreciation and
amortization ("EBTDAPS") projections as shown on
Schedule "B";
(v) any winding-up, liquidation or dissolution of Holdco
or any of its subsidiaries;
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(vi) any merger, amalgamation or arrangement with any
other entity, corporate or otherwise, other than the
amalgamation contemplated in Section 11.1 hereof;
(vii) any approval of the annual budget of Holdco, or any
amendments or modifications thereof;
(viii) any transaction or course of action which may cause
Holdco to deviate materially from its annual budget;
(ix) any determination concerning compensation of the
Management Shareholders; and
(x) any declaration or payment of a dividend or other
distribution to any Shareholder.
provided, that such approval of at least one (1) of the Directors
nominated by Clairvest upon such matters need not be obtained if
there has been a change of control of Clairvest at any time after
the date of this Agreement;
(m) A resolution authorizing or approving any of the following matters
in respect of the Corporation may only be passed provided at least
one (1) of the Corporation Directors nominated by Clairvest approves
the resolution, such approval not to be unreasonably withheld
(i) any acquisition over Five Million ($5,000,000)
Canadian Dollars;
(ii) capital expenditures which, in the aggregate, would
exceed the annual budget of the Corporation by in
excess of ten (10%) percent thereof;
(iii) any issuance of debt or equity securities or options
to acquire such securities;
(iv) any sale or disposition of any material part of the
business of the Corporation other than the sale of
all or substantially all of the assets of the
Corporation in circumstances in which either
<PAGE> 24
24
Clairvest's realized price per Share yields Clairvest
a simple annual rate of return of at least twelve
(12%) percent, or after eighteen (18) months from the
date hereof, the Corporation has achieved the
earnings before tax, depreciation and amortization
("EBTDAPS") projections as shown on Schedule "B";
(v) any winding-up, liquidation or dissolution of the
Corporation or any of its subsidiaries;
(vi) any merger, amalgamation or arrangement with any
other entity, corporate or otherwise, other than the
amalgamation contemplated in Section 11.1 hereof;;
(vii) any approval of the annual budget of the Corporation,
or any amendments or modifications thereof;
(viii) any transaction or course of action which may cause
the Corporation to deviate materially from its annual
budget;
(ix) any determination concerning compensation of the
Management Shareholders; and
(x) any declaration or payment of a dividend or other
distribution to any Shareholder.
provided, that such approval of at least one (1) of the Directors
nominated by Clairvest upon such matters need not be obtained if
there has been a change of control of Clairvest at any time after
the date of this Agreement;
(n) The Chairman of a meeting of the Board or the Corporation
Board shall not have a second or casting vote;
(o) The Directors shall be paid such remuneration as may from
time to time be determined by the Board. Such remuneration
shall be in addition to any salary or professional fees
payable to a Director who services Holdco in any other
capacity. In addition, the Directors shall be reimbursed
for their out-of-pocket expenses incurred in attending
Board meetings or meetings
<PAGE> 25
25
of Shareholders or otherwise in the performance by them of
their duties as the Board may from time to time determine;
(p) The Corporation Directors shall be paid such remuneration
as may from time to time be determined by the Corporation
Board. Such remuneration shall be in addition to any
salary or professional fees payable to a Corporation
Director who services the Corporation in any other
capacity. In addition, the Corporation Directors shall be
reimbursed for their out-of-pocket expenses incurred in
attending Corporation Board meetings or meetings of
Shareholders or otherwise in the performance by them of
their duties as the Corporation Board may from time to time
determine;
(q) A meeting of the Board, in person or, if agreed unanimously by
the Board, by teleconference, shall, at a minimum, be held no
later than six (6) months from the date of the last meeting of
the Board.
(r) A meeting of the Corporation Board, in person or, if agreed
unanimously by the Corporation Board, by teleconference,
shall, at a minimum, be held no later than six (6) months from
the date of the last meeting of the Corporation Board.
VIII.2 Meetings with Management
Clairvest may request a meeting with management of Holdco, the date,
location, which members of senior management shall be in attendance, and the
agenda of which meeting shall be set by Clairvest, provided that senior
management of Holdco shall only be obliged to participate in two (2) such
meetings in any particular fiscal year.
ARTICLE IX
RESOLUTION OF DISPUTES
IX.1 Arbitration
Any dispute, difference or disagreement arising out of or relating
to this Agreement which cannot be settled by the Shareholders may be submitted
by any of the Shareholders to arbitration in Halifax pursuant to the provisions
of the Arbitration Act of Nova Scotia. There shall be a single arbitrator
jointly appointed by the Shareholders or, if they are
<PAGE> 26
26
unable to agree, pursuant to the provisions of the Arbitration Act of Nova
Scotia. The arbitrator may order the parties to produce any documents prior to
the arbitration or to submit any witness to pre-arbitration discovery.
IX.2 Arbitrator's Fees
The arbitrator's fees and disbursements and all other reasonable
fees and disbursements including legal fees, incurred by the Parties in
connection with the arbitration shall be borne by the unsuccessful party,
provided however, that if there is no clear unsuccessful party, the parties
agree to pay such fees and expenses in opposite proportion to how their
respective position is upheld by the arbitrator.
ARTICLE X
ENFORCEMENT OF SHAREHOLDERS' AGREEMENT
X.1 Voting Power - Holdco
The Shareholders shall at all times use their voting powers (whether
expressed by way of vote or written consent) in accordance with the provisions
of this Agreement for the purposes of giving effect to the same and to ensure
that the Directors shall exercise their powers as members of the Board
consistent with this Agreement and for the purposes of effectuating the same.
The Board shall ensure that the officers and employees of Holdco shall carry out
all duties which they are required to perform under the provisions of this
Agreement.
X.2 Voting Power - Corporation
Holdco shall at all times use its voting powers (whether expressed
by way of vote or written consent) in accordance with the provisions of this
Agreement for the purposes of giving effect to the same and to ensure that the
Corporation Directors shall exercise their powers as members of the Corporation
Board consistent with this Agreement and for the purposes of effectuating the
same. The Board shall ensure that the officers and employees of the Corporation
shall carry out all duties which they are required to perform under the
provisions of this Agreement.
X.3 Legend
Reference to and notice of this Agreement shall be endorsed on all
certificates
<PAGE> 27
27
issued by the Corporation and by Holdco representing Shares.
X.4 Additional Parties
Every issue and transfer of Shares shall be subject to the condition
that each subscriber or transferee, as the case may be, shall, if not a party
hereto execute an Assumption Agreement. The President and Secretary of Holdco
are hereby expressly authorized to execute Assumption Agreements from time to
time on behalf of the Shareholders. Any agreement to be bound hereby and any
other agreement in favour of the parties hereto shall be effectively delivered
to each party hereto by delivering to the secretary of Holdco a signed copy
thereof and the secretary shall thereupon forward a photocopy of such copy to
each party hereto.
X.5 Conflict with Memorandum and Articles of Association
In the event of a conflict or inconsistency between the terms of
this Agreement and the Memorandum and Articles of Association of Holdco or the
Corporation, the provisions of this Agreement shall prevail.
ARTICLE XI
BUSINESS OF HOLDCO AND CORPORATION
XI.1 Except with the written consent of Clairvest and the holders of not
less than 50% of the Shares, Holdco shall not engage in any business other the
holding of the shares of the Corporation, and the Corporation shall not engage
in any business other than the manufacturing, bottling, distribution and/or sale
of beverages of any nature or kind.
ARTICLE XII
FUTURE TRANSACTION
XII.1 The parties hereto acknowledge and agree that Holdco, the
Corporation and certain of its wholly owned Canadian subsidiaries shall
amalgamate in the future, and in any event prior to January 1, 1999, and that
following such amalgamation this shareholder's agreement shall continue to apply
to the amalgamated company, mutatis mutandis. For greater certainty and without
limiting the generality of the foregoing, it is acknowledged and agreed that
following such amalgamation, references herein to Holdco or the Corporation
shall be deemed to be references to the corporation continuing from such
amalgamation.
<PAGE> 28
28
XII.2 The parties further acknowledge and agree that the capital structure of
Holdco shall be reorganized on or prior to June 1, 1998, such that the holders
of Class A Common Shares, Class B Common Shares, Class C Common Shares and Class
F Common Shares of Holdco shall exchange such Shares on a one for one basis for
Class D Common Shares of Holdco, which Class D Common Shares shall have the same
rights and attributes as the Class A Common Shares of the Corporation.
Notwithstanding anything in this Agreement, until such capital reorganization
shall have been effected and so long as there remains outstanding more than one
class of shares, references in this Agreement to any one class of shares shall
be deemed to be references to all outstanding classes of shares, as if there
were only one class of shares outstanding at the relevant time.
ARTICLE XIII
COVENANTS, REPRESENTATIONS AND WARRANTIES
XIII.1 Holdco represents and warrants to the Shareholders that as of the date
hereof:
(a) Holdco has the necessary corporate power to own or lease its
property and to carry on its business as now being conducted by it
and is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the business conducted by it
makes such qualification necessary; and
(b) No person, firm or corporation has any agreement or option or any
right or privilege capable of becoming an agreement, for the
purchase, subscription, allotment or issuance of any of the unissued
shares in the capital of Holdco.
XIII.2 The Corporation represents and warrants to the Shareholders that as of
the date hereof:
(a) The Corporation has the necessary corporate power to own or lease
its property and to carry on its business as now being conducted by
it and is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the business conducted by it
makes such qualification necessary; and
(b) Other than the options set out in Schedule E, no person, firm or
corporation has any agreement or option or any right or privilege
capable of becoming an
<PAGE> 29
29
agreement, for the purchase, subscription, allotment or issuance of any
of the unissued shares in the capital of the Corporation.
XIII.3 Holdco covenants and agrees that it will deliver to each of the
Shareholders audited financial statements of Holdco within ninety (90) days of
each fiscal year end of Holdco. Holdco further covenants and agrees that it will
deliver to each of the Shareholders periodic financial statements for each of
its subsidiaries, and on a consolidated basis, within thirty (30) days after the
end of the period, which will include an income statement, a statement of cash
flows, balance sheet, and exhibits detailing net cooler placements and water
sales in units. For the purposes of this agreement, a "PERIOD" shall mean a
period of four (4) calendar weeks, of which there are thirteen (13) such periods
in a particular fiscal year.
XIII.4 Except as otherwise provided for herein or as specifically consented
to in writing by the Shareholders, Holdco shall not, and shall not make any
agreement to, directly or indirectly, sell, assign, transfer, give, devise,
bequeath, mortgage, charge, pledge, hypothecate or otherwise dispose of,
alienate or in anyway encumber or create a security interest in, or grant any
option on, any shares in the capital stock of the Corporation. Any attempt to
accomplish or effect any or all of the acts prohibited hereby shall be null and
void. For greater certainty, any change or attempt to effect a change in the
beneficial ownership of shares in the capital stock of the Corporation by Holdco
shall be deemed to be a transfer or an attempt to transfer shares in the capital
stock of the Corporation by Holdco.
ARTICLE XIV
MISCELLANEOUS
XIV.1 Amendments
This Agreement represents the entire agreement among the parties and
may be amended only in writing signed by all parties affected thereby.
XIV.2 Notices
All notices given pursuant to this Agreement shall be in writing and
given by mail, courier, fax or personal delivery to the parties as follows:
To Holdco and the Corporation: 19 Fielding Avenue
Dartmouth, Nova Scotia
B3B 1C9
<PAGE> 30
30
Fax No. 468-2751
Attention: President
To Clairvest: 22 St. Clair Avenue East
Suite 1700
Toronto, Ontario
M4T 2S3
Fax No. (416) 964-5828
Attention: Kenneth B. Rotman
To Gaspar: Cartrust Corporation Limited
White Park House
White Park Road
P.O. Box 806 E
Bridgetown, Barbados
Fax No. (246) 436-7867
Attention: Marry Ellen Bourque
To C. Sean Day: c/o Navios Corporation
Stamford Harbour Park
333 Ludlow Street
Stamford, CT 06902
Fax No. 203-961-0650
To Larson: c/o C.F. Capital Corporation
One Landmark Square
Eighteen Floor
Stamford, Connecticut
U.S.A. 06901
Fax No. 203-325-1057
To Newman: Kevin Newman
200 Park Avenue
Suite 2200
New York, New York 10166
Fax No. 212-297-4024
To Mark Stitzer: 290 Round Hill Road
Greenwich, Connecticut
USA 06831
<PAGE> 31
31
Fax No. 203-629-0939
To Lucy Stitzer: 290 Round Hill Road
Greenwich, Connecticut
USA 06831
Fax No. 203-629-0939
To Stewart Allen: c/o Canadian Springs Water Company
17-3771 North Fraser Way
Burnaby, BC V5J 5K6
Fax No. 604-437-4002
or to such other address, fax number or office of a party as that party may
notify all other parties from time to time.
XIV.3 Effective Time of Notice
Notices shall be deemed given upon the earlier of the following:
(a) If mailed, on the fifth Business Day following deposit in the
mails;
(b) If given by fax, on transmission;
(c) On receipt.
XIV.4 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Nova Scotia and the federal laws of Canada
applicable therein.
XIV.5 Assigns
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
XIV.6 Further Assurances
<PAGE> 32
32
The parties hereto shall do such further acts, execute and deliver
such further documents and give such further assurances as may be necessary or
desirable to give full effect to this Agreement.
XIV.7 Time
Time is of the essence of this Agreement.
XIV.8 Counterparts
This Agreement may be executed in one or more counterparts each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have properly executed this
Agreement on the date and at the place first written above.
SPARKLING SPRING WATER
GROUP LIMITED
Per: /s/Stephen Larson
-------------------------------
c/s
Per: /s/Art Goodick
-------------------------------
SPARKLING SPRING WATER LIMITED
Per: /s/Stephen Larson
-------------------------------
c/s
Per: /s/Art Goodick
-------------------------------
CLAIRVEST GROUP INC.
<PAGE> 33
33
Per: /s/Ken Rotman
-------------------------------
c/s
Per: /s/Abby Strahl
-------------------------------
GASPAR LIMITED
Per: /s/Mary Ellen Bourque
-------------------------------
c/s
Per:
-------------------------------
<PAGE> 34
34
/s/C. Sean Day
- -------------------------------- -------------------------------
Witness to C. Sean Day C. SEAN DAY
/s/Stephen Larson
- -------------------------------- -------------------------------
Witness to Stephen L. Larson STEPHEN L. LARSON
/s/Kevin Newman
- -------------------------------- -------------------------------
Witness to Kevin Newman KEVIN NEWMAN
/s/ Mark Stitzer
- -------------------------------- -------------------------------
Witness to Mark Stitzer MARK STITZER
/s/Lucy Stitzer
- -------------------------------- -------------------------------
Witness to Lucy Stitzer LUCY STITZER
/s/Stewart Allen
- -------------------------------- -------------------------------
Witness to Stewart Allen STEWART ALLEN
<PAGE> 35
SCHEDULE "A"
THIS ASSUMPTION AGREEMENT made the day of 19 ;
B E T W E E N:
SPARKLING SPRING WATER GROUP LIMITED (hereinafter called
"Holdco")
- and -
, of , and , of
acting on behalf of themselves and the Shareholders
- and -
, of , and , of
acting on behalf of themselves and the Shareholders
(hereinafter the "NEW SHAREHOLDER")
WHEREAS Holdco and the Shareholders entered into an agreement dated
o , 1997 (hereinafter the "AGREEMENT"), a copy of which is attached hereto,
affecting the transfer or pledge of shares in Holdco and other rights of the
holders of shares.
AND WHEREAS the Agreement provides that no shares shall be issued to
any other party unless and until such party executes this Assumption Agreement;
AND WHEREAS the New Shareholder is desirous of having
( ) shares in Holdco registered in the name of the New Shareholder;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and subject to the terms and
conditions hereinafter set out, the parties agree as follows:
1. All terms in this Assumption Agreement shall have the same meaning as in the
Agreement and this Assumption Agreement shall amend the Agreement as provided
herein and shall be read and construed therewith as if they constituted but one
document.
<PAGE> 36
2. The New Shareholder agrees to be bound by the terms and conditions of the
Agreement as if the New Shareholder were one of the Shareholders named in such
Agreement.
3. Holdco and the Shareholders agree to accept the New Shareholder as a
shareholder in Holdco and to be bound to the New Shareholder as if the New
Shareholder had been one of the Shareholders originally named in the Agreement.
4. The New Shareholder agrees to assume all the rights and obligations of under
the Agreement so that as of the date hereof, the New Shareholder shall replace
as a Shareholder.
5. Any notices or other communications given pursuant to the Agreement to the
New Shareholder shall be given in accordance with Section 12.2 of the Agreement
to the New Shareholder, addressed as follows:
Name of Party
Address
Fax No.
Attention:____________________ (insert office such as President)
IN WITNESS WHEREOF the parties hereto have executed these presents
by affixing their hands and seals the day and year first above written.
SIGNED, SEALED AND DELIVERED ) SPARKLING SPRING WATER
in the presence of: ) GROUP LIMITED
)
)
) Per:____________________________________
)
)
) Per:____________________________________
)
)
) _____________________________________
) President
)
)
) _____________________________________
) Secretary
)
) The President and Secretary signing on their
) own behalf and on behalf of the Shareholders
)
)
)
______________________________________
<PAGE> 37
SCHEDULE B - PAGE 1
(Shareholders Agreement)
CONSOLIDATED SPARKLING SPRING WATER INCOME STATEMENT
<TABLE>
<CAPTION>
(C$ Thousands)
Revenue 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Buxton 5,770 7,440 7,876 8,902 11,436 13,151 14,729
Aquaporte 0 1,224 1,592 2,324 2,823 3,244 3,568
SSW 3,813 4,595 4,975 6,109 7,246 8,129 8,775
CS 5,419 6,461 8,079 10,179 12,138 13,331 14,853
--------------------------------------------------------------------------------------------
15,002 19,720 22,522 27,515 33,642 37,856 41,926
Growth 31.5% 14.2% 22.2% 22.3% 12.5% 10.8%
Cost of Sales and Operating Costs
Buxton 6,273 6,682 6,266 6,624 7,724 8,627 9,226
Aquaporte 0 1,146 1,224 1,763 1,874 1,945 2,030
SSW 2,908 3,873 3,925 4,728 5,440 5,938 6,346
CS 3,650 4,491 6,392 7,601 9,205 9,707 9,860
--------------------------------------------------------------------------------------------
12,831 16,172 17,808 20,713 24,243 26,217 27,463
Operating Cash Flow
Buxton (503) 778 1,609 2,278 3,711 4,524 5,503
Aquaporte 0 78 368 562 949 1,299 1,538
SSW 905 722 1,050 1,384 1,806 2,191 2,439
CS 1,769 1,970 1,687 2,578 2,933 3,624 4,993
--------------------------------------------------------------------------------------------
2,171 3,548 4,714 6,801 9,399 11,639 14,463
Margin % 14.5% 18.0% 20.9% 24.7% 27.9% 30.7% 34.5%
Growth % 63.4% 32.9% 44.3% 38.2% 23.8% 24.3%
Corporate Overhead, which includes
Larson & Krediet Compensation &
C.F. Capital expenses 1,367 1,469
----------------------------
EBITDA 10,272 12,994
Depreciation and Amort. 4,205 4,289
Interest Expense 3,059 2,852
Other Expense/(Income) 126 126
----------------------------
Pre-Tax Income 2,881 5,727
Income Tax 299 2,205
Dividends 0 0
----------------------------
Net Income Available to Common 2,582 3,522
</TABLE>
<TABLE>
<CAPTION>
Revenue 1998 1999 2000 2001 2002
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Buxton 16,202 17,822 19,605 21,565 23,721
Aquaporte 3,925 4,318 4,750 5,225 5,747
SSW 9,464 10,208 11,013 11,882 12,823
CS 16,338 17,972 19,419 20,603 21,861
---------------------------------------------------------------
45,930 50,320 54,785 59,275 64,152
Growth 9.5% 9.6% 8.9% 8.25 8.2%
Cost of Sales and Operating Costs
Buxton 10,028 10,908 11,874 12,934 14,102
Aquaporte 2,229 2,392 2,588 2,760 2,970
SSW 6,787 7,262 7,775 8,330 8,930
CS 10,817 11,888 12,799 13,560 14,366
---------------------------------------------------------------
29,862 82,430 35,016 37,585 40,368
Operating Cash Flow
Buxton 6,174 6,914 7,731 8,631 9,619
Aquaporte 1,696 1,926 2,181 2,484 2,777
SSW 2,677 2,946 3,237 3,552 3,893
CS 5,521 6,104 6,620 7,043 7,494
---------------------------------------------------------------
16,068 17,890 19,769 21,690 23,783
Margin % 35.0% 35.6% 36.1% 36.6% 37.1%
Growth % 11.1% 11.3% 10.5% 9.7% 9.6%
Corporate Overhead, which includes
Larson & Krediet Compensation &
C.F. Capital expenses
1,569 1,679 1,790 1,903 2,024
----------------------------------------------------------------
EBITDA 14,499 16,211 17,979 19,788 21,759
Depreciation and Amort. 4,024 4,043 3,882 2,395 2,403
Interest Expense 2,404 1,840 1,153 379 (465)
Other Expense/(Income) 126 83 0 0 0
----------------------------------------------------------------
Pre-Tax Income 7,945 10,265 12,945 17,014 19,811
Income Tax 3,059 3,952 4,984 6,550 7,627
Dividends 0 0 0 0 0
----------------------------------------------------------------
Net Income Available to Common 4,886 6,313 7,961 10,463 12,184
</TABLE>
Notes
(1) Prior to 1996 CS figures represent a March 31 Year-end. (The 3/31/95 year
is placed in the 1994 column.)
<PAGE> 38
SCHEDULE B - PAGE 2
(Shareholders Agreement)
EBTDAPS PROJECTION
For the purposes of section 5.04(b) of the Shareholders Agreement and sections
2.02 and 2.04 of the Management Agreement EBTDAPS shall mean: Net Income plus
(i) Income Taxes, (ii) Depreciation, (iii) Amortization, and (iv) payments made
to Krediet, Larson and C.F. as described in sections 2.04(a) and (b) of the
Management Agreement, DIVIDED BY the number of fully diluted shares outstanding
at the time. The depreciation of assets and amortization of goodwill will
utilize the same accounting practices as in the December 31, 1995 audited
financials for the company as prepared by Ernst & Young. For greater clarity,
the calculation will be on an after interest expense basis.
EBTDAPS Target in Canadian Dollars
<TABLE>
<CAPTION>
<S> <C>
1996 $ 3.86
1977 $ 5.31
1998 $ 6.30
1999 $ 7.45
2000 $ 8.68
2001 $ 9.98
2002 $11.16
</TABLE>
<PAGE> 39
3
) [New Shareholder]
SCHEDULE "C"
REGISTRATION PROCEDURES
Whenever Shareholders request that any Shares be qualified or
registered pursuant to Section 6.1 or 6.2, Holdco will, subject to the
provisions of such Sections, use its best efforts to effect the qualification or
registration and the sale of such Shares in accordance with the intended method
of disposition thereof as quickly as practicable, and in connection with any
such request:
(a) Holdco will as expeditiously as possible prepare and file with the SEC
and/or with the relevant Canadian securities regulatory authority a prospectus
and/or registration statement on any form for which Holdco then qualifies or
which counsel for Holdco shall deem appropriate and which form shall be
available for the sale of the Shares to be qualified or registered thereunder in
accordance with the intended method of distribution thereof, and use its best
efforts to cause such filed prospectus and/or registration statement to become
and remain effective for a period of not less than ninety (90) days.
(b) Holdco will, if requested, prior to filing a registration statement or
prospectus or any amendment or supplement thereto, furnish to each Shareholder
and each underwriter, if any, of the Shares covered by such registration
statement copies of such registration statement as proposed to be filed, and
thereafter Holdco will furnish to such Shareholder and underwriter, if any, such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
Shareholder or underwriter may reasonably request in order to facilitate the
disposition of the Shares owned by such Shareholder.
(c) After the filing of the prospectus and/or registration statement,
Holdco will promptly notify each Shareholder holding Shares covered by such
prospectus and/or registration statement of any stop order or cease trade order
issued or threatened by the SEC or by any relevant Canadian securities
regulatory authority and take all reasonable actions required to prevent the
entry of such stop order or cease trade order or to remove or revoke it if
entered.
(d) Holdco will use its best efforts to (i) register or qualify the Shares
covered by such prospectus or registration statement under such other securities
or blue sky laws of such
<PAGE> 40
3
jurisdictions in the United States and Canada as any Shareholder holding such
Shares reasonably (in light of such Shareholder's intended plan of distribution)
requests and (ii) cause such Shares to be qualified or registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of Holdco and do any and all other acts
and things that may be reasonably necessary or advisable to enable such
Shareholder to consummate the disposition of the Shares owned by such
Shareholder; provided that Holdco will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in any such
jurisdiction, or (C) consent to general service of process in any such
jurisdiction.
(e) Holdco will immediately notify each Shareholder holding such Shares,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Laws, of the occurrence of an event requiring the preparation of
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Shares, such prospectus will contain full, true and plain
disclosure of all material facts relating to the securities covered thereby and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made and
promptly prepare and make available to each such Shareholder any such supplement
or amendment.
(f) Upon the execution of confidentiality agreements in form and substance
satisfactory to Holdco, Holdco will make available for inspection by any
Shareholder and any underwriter participating in any disposition pursuant to a
prospectus or registration statement being filed by Holdco and any attorney,
accountant or other professional retained by any such Shareholder or underwriter
(collectively, the "INSPECTORS"), all financial and other records, pertinent
corporate documents and properties of Holdco (collectively, the "RECORDS") as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause Holdco's officers, directors and employees to supply
all information reasonably requested by any Inspectors in connection with such
prospectus or registration statement. Records that Holdco determines, in good
faith, to be confidential and that it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
prospectus or registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or from any Canadian securities regulatory authority.
(g) Holdco will furnish to each such Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter, of (i)
an opinion or opinions of counsel to Holdco and (ii) a comfort letter or comfort
letters from Holdco's independent public or chartered
<PAGE> 41
4
accountants, each in customary form and covering such matters the type
customarily covered by opinions or comfort letters, the case may be, as the
Holders or managing underwriter therefor reasonably requests.
(h) Holdco will otherwise use its best efforts comply with all applicable
rules and regulations of the SEC and the relevant Canadian securities regulatory
authorities.
(i) Holdco may require each such Shareholder to promptly furnish in
writing to Holdco such information regarding the distribution of the Shares as
Holdco may from time to time reasonably request and such other information as
may be legally required in connection with such registration or qualification.
Each such Shareholder agrees that, upon receipt of a notice from
Holdco of the happening of any event of the kind described in paragraph (e)
above, such Shareholder will forthwith discontinue disposition of Shares
pursuant to the prospectus or registration statement covering such Shares until
such Shareholder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (e) above, and, so directed by Holdco, such
Shareholder will deliver to Holdco all copies, other than any permanent file
copies then in such Shareholder's possession, of the most recent prospectus
covering such Shares at the time of receipt of such notice. In the event that
Holdco shall give such notice, Holdco shall extend the period during which such
prospectus or registration statement shall be maintained effective (including
the period referred to in paragraph (a) above) by the number of days during the
period from and including the date of the giving of notice pursuant to paragraph
(e) above to the date when Holdco shall make available to such Shareholder a
prospectus supplemented or amended to conform with the requirements of paragraph
(e) above.
Holdco agrees to indemnify and hold harmless each Shareholder
holding Shares covered by a prospectus or registration statement, its officers,
directors and agents, and each person, if any, who controls such Shareholder
within the meaning of Section 15 of the Securities Act, Section 20 of the
Exchange Act or Section 1 of the Securities Act (Ontario) from and against any
and all losses, claims, damages and liabilities (including those resulting from
any order made or any inquiry, investigation or proceeding commenced or
threatened by any securities regulatory authority, stock exchange or by any
other competent authority) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Shares (as amended or supplemented if Holdco shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
<PAGE> 42
5
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to Holdco by such Shareholder or on such
Shareholder's behalf expressly for use therein; provided that Holdco shall not
be liable for any untrue statement or omission contained in a preliminary
prospectus which untrue statement or omission was corrected in a final
prospectus or supplement which was furnished to such Shareholder. Holdco also
agrees to indemnify any underwriters of the Shares, their officers, directors,
employees and agents and each person who controls such underwriters (other than
in respect of loss of profit or information relating solely to the underwriters)
on substantially the same basis as that of the indemnification of the
Shareholders provided in this paragraph and which indemnification shall provide,
in addition, an indemnity in respect of any breach of representation or warranty
of Holdco contained in any underwriting agreement in respect of Shares.
<PAGE> 43
SCHEDULE "D"
FAIR MARKET VALUE DETERMINATION PROCEDURES
For the purposes of Section 5.7, "FAIR MARKET VALUE" shall mean the greater of:
(ii) the potential public market value of the Shares being
valued;
(iii) the value at which a strategic buyer would pay for
all of the outstanding Shares of Holdco multiplied by
the relevant percentage of Holdco being appraised; and
(iv) the value at which a financial buyer would pay for all
of the outstanding Shares of Holdco multiplied by the
relevant percentage of Holdco being appraised.
Fair market value shall be determined on a per Share basis (based on the
aggregate fair market value of all Shares assuming that all conversion rights
attached thereto have been exercised). Fair market value shall be calculated:
(b) on the basis that the buyer is under no compulsion to
buy and the seller is under no compulsion to sell,
(c) on a going-concern basis,
(d) without any discount for minority interest or any
premium for control;
(e) assuming that all non-arm's length agreements are no
longer in place, including the Management Agreement; and
(f) there are no restrictions on transfer and that there are
no costs associated with determining the fair market
value.
<PAGE> 44
SCHEDULE "E"
OUTSTANDING OPTION
<PAGE> 45
SCHEDULE "F"
SUBSCRIPTION AGREEMENT
FOR
*
TO: SPARKLING SPRING WATER GROUP LIMITED (the "COMPANY")
WHEREAS the undersigned (the "SUBSCRIBER") is an employee of the Company
or one of its operating subsidiaries or affiliated companies, and the Company
deems it desirable to issue Class E non-voting common shares in the capital
stock of the Company;
AND WHEREAS the Subscriber has agreed to subscribe for Class E non-voting
common shares upon the terms and conditions contained in this Subscription
Agreement, and the Company has agreed to accept the subscription for Class E
non-voting common shares upon the terms and conditions contained in this
Subscription Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
covenant and agree as follows:
1. SUBSCRIPTION AND ACCEPTANCE
1.1 The Subscriber hereby subscribes for _ Class E non-voting common shares
(the "CLASS E SHARES") for an aggregate subscription price of U.S. $*
payable to the Company in cash within 30 days from the date hereof.
1.2 The Company hereby accepts the subscription for Class E Shares and agrees
to issue the Class E Shares provided that it receives an executed copy of
this Agreement and the subscription price payable to "Stewart McKelvey
Stirling Scales in trust" on or prior to January 15, 1998.
2. POWER OF ATTORNEY AND PROXY
2.1 The Subscriber hereby irrevocably constitutes and appoints the
Vice-Chairman of the Company, and failing which, the Chairman of the
Company:
<PAGE> 46
(a) as proxyholder to attend and to vote on behalf of the Subscriber
or otherwise act as its proxy or representative at every meeting
of the Company at which the Subscriber as holder of Class E
Shares or any shares or securities into which such Class E Shares
shall have been converted or exchanged or any shares or other
securities resulting from a reclassification thereof (hereinafter
collectively referred to as the "SHARES"), is entitled to vote,
including without limitation, any meeting at which a class vote
is held in respect of non-voting shares of the Company; and
(b) as its attorney for the Subscriber and in the Subscriber's name
to vote and act in respect of the Shares (including signing
resolutions in writing in lieu of meetings), to execute a proxy
in respect of the Shares, to execute and deliver a pledge of the
Shares to the lenders of the Company to secure loans to the
Company, and to endorse and transfer to the Company, or its
nominee, any of the Shares which may require endorsements or
transfer, in order that full title to the Shares may be vested in
the Company or its nominee, all as fully and effectually as the
Subscriber could do.
2.2 The Subscriber declares that the power of attorney granted hereby is
irrevocable and is coupled with an interest and will survive the death,
incapacity and bankruptcy of the Subscriber and will extend to and be
binding upon the heirs, executors, administrators, and legal personal
representatives of the Subscriber.
3. REPRESENTATIONS AND WARRANTIES
3.1 By executing this Subscription Agreement, the Subscriber represents,
warrants and covenants to the Company (and acknowledges that the Company
is relying thereon) that:
(a) the Subscriber acknowledges that no market exists for the Shares and
none is expected to develop. The investment in the Shares is subject
to a number of risks and the Subscriber acknowledges that no
reliance has been made on any representation, express or implied;
(b) the Subscriber has been independently advised about and is aware of
the characteristics of the Shares, the risks relating to an
investment therein and the fact that the Subscriber may not sell or
transfer the Shares except in accordance with the provisions set out
in this Subscription Agreement, and the Subscriber confirms that no
representations have been made to the Subscriber by or on behalf of
the Company with respect to the Shares;
<PAGE> 47
(c) the Subscriber is a resident of _ ;
(d) this Subscription Agreement constitutes a legal, valid, binding
and enforceable obligation of the Subscriber;
(e) the Subscriber is familiar with and understand the terms of this
Subscription Agreement and that the Subscriber has such knowledge
and experience in financial and business matters that the Subscriber
is capable of evaluating the merits and risks of the investment in
the Shares;
(f) the Subscriber is purchasing the Shares as principal for its own
account, not for the benefit of any other person, and not with a
view to the resale or distribution of all or any of the Shares;
(g) no offering memorandum has been delivered to the Subscriber in
connection with the sale of the Shares, and the Subscriber has not
become aware of any advertisement in printed media of general and
regular paid circulation, radio or television with respect to the
distribution of the Shares or any other advertising or sales
literature (as defined in subsection 56(2) of the Securities Act
(Nova Scotia));
(h) the Company is a "private company" within the meaning ascribed to
that term in the Securities Act (Nova Scotia) and the articles of
association of the Company contain restrictions on the transfer
of the Shares, prohibit any invitation to the public to subscribe
for securities of the Company and restrict the number of
shareholders of the Company, exclusive of persons who are in the
employment of the Company and persons who, having been formerly
in the employment of the Company, were, while in that employment,
and have continued after termination of that employment, to own
at least one share of the Company, to not more than 50 in
number;
(i) the rights conferred on the Subscriber by this Subscription
Agreement pertain only to the Shares and this Subscription
Agreement does not constitute any agreement in respect of or
create any rights with respect to any shares other than the
Shares, and without restricting the generality of the foregoing,
this Subscription Agreement shall not be construed as concerning
any shares of the Company issued to the Subscriber under any
stock option plan of the Company; and
<PAGE> 48
(j) the calculation by the Company of Fair Market Value (as defined
below) shall be final and absolute and shall be binding upon the
Subscriber and all heirs, executors, administrators, and legal
personal representatives of the Subscriber, notwithstanding that the
Shares or other shares in the Company may be sold or valued at an
amount different from Fair Market Value as determined by the
Company.
4. SHARE TRANSFER RIGHTS
4.1 General Restriction
Except as otherwise provided for herein or as specifically consented to in
writing by the Company, no Subscriber shall be entitled to, directly or
indirectly, sell, assign, transfer, give, devise, bequeath, mortgage,
charge, pledge, hypothecate or otherwise dispose of, alienate or in anyway
encumber or create a security interest in, or grant any option on, any of
the Shares. Any attempt to accomplish or effect any or all of the acts
prohibited hereby shall be absolutely null and void.
4.2 Put Option
The Company hereby grants to the Subscriber the option to require the
Company to redeem or purchase all but not less than all of the Shares held
by the Subscriber at a purchase price equal to the Fair Market Value (as
hereinafter defined) of the Shares at the time of giving notice of
exercise. The option is subject to the following terms and conditions:
(a) The Subscriber may exercise the option during the month of May in
each year by delivering notice in writing to the Company on or
before May 31 in each year;
(b) The closing of the purchase and sale of the Shares shall take place
within 30 days following receipt by the Company of notice of
exercise;
(c) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A"; and
(d) The right of the Subscriber to require the Company to purchase all
of the Shares shall be subject to the financial covenants and
financing requirements affecting the Company from time to time and
all applicable solvency tests.
4.3 Company's Option To Purchase Shares
The Subscriber hereby grants to the Company the option, but not the
obligation, to
<PAGE> 49
purchase all but not less than all the Shares for a purchase price equal
to the Fair Market Value (as hereinafter defined) of the Shares at the
time of giving notice of exercise. The option is subject to the following
terms and conditions:
(a) The right of the Company shall be exercisable at any time by
delivery of notice in writing to the Subscriber or the
Subscriber's representatives;
(b) The closing of the purchase and sale of the Shares shall take place
within 30 days following delivery by the Company of notice of
exercise; and
(c) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A".
4.4 Company's Right of First Refusal
In the event the Subscriber desires to sell or transfer any Shares, the
Subscriber shall first make an offer in writing to the Company to sell all
but not less than all of the Shares, specifying the price per Share, the
manner of payment and the time and place of closing. The Company shall
have the right, but not the obligation to accept such offer in or whole or
in part by delivering notice of acceptance to the Subscriber within 30
days following receipt of such offer. In the event that no acceptance is
received by the Subscriber from the Company within such period, the offer
shall be deemed to have been refused. If the Company does not accept the
offer by the Subscriber, the Subscriber shall not sell or transfer any
Shares at a lower price per Share or in a manner or on terms and
conditions more favourable than those offered to the Company. The right of
first refusal is subject to the following terms and conditions:
(a) The closing of the purchase and sale of the Shares shall take place
within 30 days following delivery by the Company of notice of
acceptance; and
(b) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A".
4.5 Fair Market Value
In this Subscription Agreement:
(a) "FAIR MARKET VALUE" at any particular time means the amount per
share that is the result of (w) the Net Value at the particular
time, divided by (x) the sum of (i) the number of shares in the
capital stock of the Company issued and outstanding immediately
before the particular time, and (ii) the number of shares in the
capital
<PAGE> 50
stock of the Company that would have been issued and outstanding on
the conversion or exchange into or for shares or exercise of all
securities and options issued and outstanding immediately before the
particular time that were convertible, exchangeable or carried the
right to subscribe for shares (whether or not such other securities
or options were convertible, exchangeable or carried the right to
subscribe for shares as at the particular time);
(b) "NET VALUE" at any particular time means the balance remaining when
(y) the total amount of outstanding debt of the Company at the
particular time calculated on a consolidated basis, is subtracted
from (z) the product obtained when 7.66 is multiplied by the
Operating Cash Flow; and
(c) "OPERATING CASH FLOW" at any particular time means the consolidated
earnings of the Company for the four immediately preceding fiscal
quarters, before interest, taxes, depreciation, amortization and
corporate overhead, calculated in accordance with generally accepted
accounting principles applied on a basis consistent with historical
policies.
5. PLEDGE OF SHARES AND CUSTODY OF SHARE CERTIFICATES
5.1 As security for the performance by the Subscriber of the Subscriber's
obligations hereunder, the Subscriber hereby pledges the Shares to and in
favour of the Company and directs the Company to hold all certificates
representing the Shares until released upon mutual agreement of the
Subscriber and the Company or upon the event of a sale or transfer of the
Shares in accordance with this Subscription Agreement.
5.2 Upon a default or breach of any term of this Subscription Agreement by the
Subscriber, the Company, without notice, advertisement, demand for payment
or any other formality (all of which are hereby waived) may repurchase the
Shares or sell by public or private sale or otherwise deal with the Shares
in such manner as it thinks fit, and may hold the proceeds in lieu of any
Shares realized and appropriate the same on account of any liability of
the Subscriber to the Company as the Company may reasonably determine.
5.3 The Subscriber, until there has been a default or breach of any term of
this Subscription Agreement, the Subscriber is entitled to receive
dividends or other distributions made by the Company in respect of the
Shares.
5.4 The Subscriber shall execute and deliver upon request by the Company a
pledge of the Shares to the lenders of the Company for the purpose of
securing loans to the Company.
<PAGE> 51
The Subscriber acknowledges that for the purposes of securing such loans,
the Company may execute and deliver on behalf of and in the name of the
Subscriber a pledge of the Shares.
6. EMPLOYMENT TERMS UNAFFECTED
6.1 This Subscription Agreement is a special benefit, not a regular benefit,
and shall not be construed as an agreement or understanding, express or
implied, for the employment of the Subscriber for any specific period or
for the issuance of any shares other than the Class E Shares described
above. The Subscriber shall remain subject to discipline and termination
to the same extent as if this Subscription Agreement had not been entered
into by the parties.
7. TERMINATION
7.1 The rights, obligations and liabilities of the Subscriber and the Company
arising from this Subscription Agreement shall terminate with respect to
the Subscriber, upon the sale of his Shares in accordance with this
Agreement.
7.2 At the sole discretion of the Company, the Company may, by written notice
to the Subscriber, terminate this Agreement upon the Shares being listed
for trading on a recognized stock exchange in Canada or the United States
of America.
8. GENERAL
8.1 The Subscriber agrees to execute and deliver to the Company such further
agreements, documents and assurances as may be required to give effect to
the matters contemplated by this Subscription Agreement.
8.2 This Subscription Agreement shall be governed by the laws of Nova Scotia
and the parties irrevocably attorn to the jurisdiction of the Courts of
Nova Scotia.
8.3 This Subscription Agreement may not be assigned by the Subscriber.
8.4 This agreement shall enure to the benefit of and be binding upon the
parties and their respective successors, heirs, executors, administrators,
and legal personal representatives.
IN WITNESS WHEREOF the Subscriber has executed this Agreement this day
<PAGE> 52
of October, 1997.
- ----------------------------- -------------------------------
Signature Witness
- ----------------------------- -------------------------------
- -----------------------------
Street Address
- -----------------------------
City and Province
- -----------------------------
Postal Code
Receipt and acceptance of the foregoing subscription for Class E Shares
and consideration therefor is acknowledged by the Company this__________ day
of________________________ , 1997.
SPARKLING SPRING WATER GROUP LIMITED
BY:
-------------------------
<PAGE> 1
Exhibit 10.5
THIS MANAGEMENT AGREEMENT dated the 16th day of December, 1993, as
amended and restated the 12th day of January, 1996;
B E T W E E N:
SPARKLING SPRING WATER LIMITED ("SSWL")
OF THE FIRST PART
- and -
C.F. CAPITAL CORPORATION ("C.F.")
OF THE SECOND PART
- and -
G. JOHN KREDIET ("Krediet")
OF THE THIRD PART
- and -
STEPHEN L. LARSON ("Larson")
OF THE FOURTH PART
WHEREAS C.F. provides management services to SSWL pursuant to the terms
and premises of that certain management agreement (the "Management Agreement")
dated the 16th day of December, 1993, among SSWL, C.F., Krediet and Larson;
AND WHEREAS Krediet and Larson are principles of C.F.;
AND WHEREAS the parties hereto desire to amend and restate the terms
and premises
<PAGE> 2
of the Management Agreement;
NOW THEREFORE in consideration of the premises and the mutual
agreements and covenants herein contained and the sum of Ten Dollars ($10.00)
now paid by each of the parties hereto to the other (the receipt and sufficiency
whereof as to each of the parties is mutually admitted), the parties covenant
and agrees as follows:
ARTICLE I
INTERPRETATION
1.01 Words importing the singular include the plural and vice versa and words
importing gender include all genders.
1.02 The titles or headings contained herein are included solely for
convenience, are not intended to be full accurate descriptions of the context
thereof and shall not be considered part of this Agreement.
1.03 The Management Agreement is hereby amended and restated and replaced by the
provisions of this agreement.
ARTICLE II
SERVICES AGREEMENT
2.01 C.F. agrees to provide management services to SSWL including, without
restricting the generality of the foregoing, managing the operations of SSWL and
negotiating such contracts, financial agreements and other arrangements and
performing such other services as may be directed from time to time by the Board
of Directors of SSWL.
2.02. The parties acknowledge that nothing in this Agreement shall be construed
as a delegation of any of the duties or powers of the Board of Directors of SSWL
to manage the business
<PAGE> 3
-3-
and affairs of SSWL and all of such powers and duties, including policy and
decision making powers, are hereby expressly reserved. For greater certainty,
and without limiting the generality of the foregoing, C.F. shall not, and shall
ensure that management of SSWL shall not, authorize or take any action in
furtherance of the following matters without the approval of the Board of
Directors of SSWL;
(i) any acquisition over One Million ($1,000,000)
Canadian dollars;
(ii) capital expenditures which, in the aggregate, would
exceed the annual budget of SSWL by in excess of ten
(10%) percent thereof;
(iii) any issuance of debt or equity securities or options
to acquire such securities;
(iv) any sale or disposition of any material part of the
business of SSWL other than the sale of all or
substantially all of the assets of SSWL in
circumstances in which either Clairvest Group Inc.'s
("Clairvest") realized price per share yields
Clairvest a simple annual rate of return of at least
twelve (12%) percent, or after June 12, 1997, SSWL
has achieved the fully-diluted per share earnings
before tax, depreciation and amortization ("EBTDAPS")
projections as shown on Schedule "A" hereto;
(v) any winding-up, liquidation or dissolution of SSWL or
any of its subsidiaries;
(vi) any merger, amalgamation or arrangement with any
other identity, corporate or otherwise;
<PAGE> 4
-4-
(vii) any approval of the annual budget of SSWL, or any
amendments or modifications thereof;
(viii) any transaction or course of action which may cause
SSWL to deviate materially from its annual budget;
(ix) any determination concerning compensation of C.F.;
and
(x) any declaration or payment of a dividend or other
distribution to any shareholder of SSWL.
2.03 The parties agree that Krediet and Larson shall be the individuals who
shall provide, on behalf of C.F., the services to SSWL described above. Krediet
shall devote the majority of his time and attention to the affairs of SSWL and
shall use his best efforts to promote the best interests of SSWL, and covenants
and agrees that SSWL shall be his principle business interest; it being
understood and acknowledged that, subject to Section 2.05 hereof, Krediet has
and may continue to have other investments in which he undertakes a passive
function. Larson shall devote his entire time and attention during business
hours to the affairs of SSWL and shall use his best efforts to promote the best
interests of SSWL; it being acknowledge that Larson currently and may continue
to hold the office of a director of companies including and other than SSWL.
2.04 In consideration for C.F.'s services to SSWL hereunder, SSWL agrees to
pay to C.F.:
(a) Base Fee:
(i) a base fee of Four Hundred (U.S. $400,000.00) United
States Dollars for services rendered by C.F. to SSWL
hereunder during the fiscal year ended December 31, 1996;
<PAGE> 5
-5-
(ii) in each successive fiscal year of SSWL, a base fee equal
to the base fee paid to C.F. in the immediately preceding
fiscal year of SSWL multiplied by the percentage increase
or decrease, as the case may be, of the total annual
revenue of SSWL for the fiscal year then ended from the
total annual revenue of SSWL in the immediately preceding
fiscal year, such base fee to be calculated and payable
monthly and commencing March 31, 1997, to be adjusted
quarterly; provided that the base fee payable by SSWL to
C.F. in any particular fiscal year shall not in any event
exceed Seven Hundred and Fifty (U.S. $750,000.00)
Thousand United States Dollars.
(b) Bonus:
(i) in each fiscal year of SSWL through the fiscal year
ended December 31, 2002, a bonus equal to fifty (50%)
percent of the base fee paid to C.F. in such fiscal
year, provided that SSWL achieves the fully-diluted
per share earnings before tax depreciation and
amortization ("EBTDAPS") target for such fiscal year
as set out in Schedule "A" hereto;
(ii) in the event that the SSWL does not achieve the
EBTDAPS target for the fiscal year ended December 31,
1997 as set out in Schedule "A" hereto, C.F. shall,
provided that SSWL achieves an EBTDAPS for the fiscal
year ended December 31, 1997 equal to one hundred and
five (105%) percent of the EBTDAPS for the fiscal
year ended December 31, 1996, be entitled to a bonus
equal to that fraction of the base fee paid to C.F.
for the fiscal year ended December 31, 1997 that is
obtained by multiplying (i) the quotient of (A) the
number obtained by subtracting one hundred and five
(105%) percent of the EBTDAPS for the fiscal year
ended December 31,
<PAGE> 6
-6-
1996 from the EBTDAPS achieved by SSWL during the
fiscal year ended December 31, 1997, and (B) the
number obtained by subtracting one hundred and five
(105%) of the EBTDAPS achieved by SSWL during the
fiscal year ended December 31, 1996 from the EBTDAPS
target for the fiscal year ended December 31, 1997 as
set out in Schedule "A" hereto, by (ii) 0.5; and,
(iii) in the event that SSWL does not achieve the EBTDAPS
target for any fiscal year ended after December 31,
1997 as set out in Schedule "A" hereto, C.F. shall,
provided that SSWL achieves an EBTDAPS for such
fiscal year then ended equal to one hundred and three
(103%) percent of the EBTDAPS achieved by SSWL in the
immediately preceding fiscal year ended, be entitled
to a bonus equal to that fraction of the base fee
paid to C.F. for the fiscal year then ended that is
obtained by multiplying (i) the quotient of (A) the
number obtained by subtracting one hundred and three
(103%) percent of the EBTDAPS achieved by SSWL in the
immediately preceding fiscal year ended from the
EBTDAPS achieved by SSWL during the fiscal year then
ended, and (B) the number obtained by subtracting one
hundred and three (103%) of the EBTDAPS achieved by
SSWL in the immediately preceding fiscal year ended
from the EBTDAPS target for the fiscal year then
ended as set out in Schedule "A" hereto, by (ii) 0.5;
provided, that for the purposes of this paragraph (b), all EBTDAPS calculations
shall be calculated without giving effect to the payment of base salary under
paragraph (a) of this Section 2.04, and all revenue calculations shall be
calculated on a consolidated basis; provided further that no bonus calculated
pursuant to this Section 2.04 may be less than zero ($0.00) dollars.
2.05 Neither C.F., Krediet nor Larson shall, directly or indirectly, pursue,
participate, provide
<PAGE> 7
-7-
advice with respect to or have any interest in any transaction (a "Corporate
Opportunity") involving the manufacturing, bottling, sale or distribution of
beverages unless such participation or interest shall have first been offered to
SSWL. C.F. will also be permitted to charge, and SSWL hereby agrees to pay,
reasonable and customary fees in respect of investment banking advisory services
provided by C.F. to SSWL from time to time in connection with successful
acquisitions of Corporate Opportunities but, in any case, not for raising
capital whether or not in connection with an acquisition. Provided, however,
that such fees will be on a cash basis only and will be a percentage of the
value of the transaction subject to the following limits:
2% on the first Cdn. $3,000,000;
1% on any amount in excess thereof;
2.06 In addition to the fees described in Section 2.03 and 2.04 hereof, SSWL
shall reimburse C.F. for all reasonable out-of-pocket disbursements and office
expenses incurred by C.F. from time to time in the performance of its services
pursuant to this Agreement, not to exceed One Hundred Thousand (U.S.
$100,000.00) United States Dollars per annum;
2.07 C.F., Krediet and Larson recognize and acknowledge that in the course of
carrying out, performing and fulfilling their respective obligations to SSWL
hereunder, each will have access to and will be entrusted with information that
would reasonably be considered confidential to SSWL, the disclosure of which to
competitors of SSWL or to the general public, will be highly detrimental to the
best interest of SSWL. Such information includes, without limitation, trade
secrets, know-how, marketing plans, cost figures, client lists, software, and
information relating to employees, suppliers and persons in contractual
relationships with SSWL. Except as may be required in the course of carrying out
their respective duties hereunder, C.F., Krediet and Larson covenant and agree
that they will not disclose, for the duration of this Agreement or at any time
thereafter, any of such information to any person, other than to the directors,
officers or employees of SSWL that have a need to know of such information, nor
shall they use, nor exploit,
<PAGE> 8
-8-
directly or indirectly, the same information for any purpose other than for the
purpose of SSWL. Without limiting the generality of the foregoing, neither C.F.,
Krediet and Larson shall for the duration of this Agreement or for a period of
three (3) years thereafter have any interest or investment in any corporation,
joint venture or other enterprise, directly or indirectly, involved in the
manufacturing, bottling, sale or distribution of bottled water or the rental of
coolers.
ARTICLE III
TERM, RENEWAL AND TERMINATION
3.01 The term of this Agreement (the "initial term") is ten (10) years
commencing December 16, 1993. Unless otherwise cancelled or extended in
accordance with the terms of this Agreement, this Agreement expires on December
15, 2003.
3.02 This Agreement shall be automatically renewed for a further term of ten
(10) years upon the expiration of any term hereof unless at least thirty (30)
days prior to the expiration of any such term, either party hereto notifies the
other that the Agreement is to terminate on the expiration of that term.
3.03 Either party may terminate this Agreement at any time upon one hundred and
eighty (180) days written notice to the other party, and all payments due to
each party hereunder shall be paid in full as at the effective date of such
termination.
ARTICLE IV
AMENDMENTS
4.01 Subject to Section 4.02 hereof, no amendment of this Agreement shall be
binding unless executed or initialled in writing by each of the parties hereto.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof
<PAGE> 9
-9-
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided. Furthermore, any amendment of this
Agreement and any waiver by SSWL of any provision of this Agreement must be
approved by each director of SSWL.
4.02 SSWL hereby expressly acknowledges and agrees that additional non-cash
management options, incentives or other remuneration consistent with industry
standards may be granted from time to time to C.F., Krediet and Larson and that
the entering into of this Agreement shall not preclude the future negotiation
and payment of such options, incentives and remuneration. In no event shall any
such additional option, incentive or other remuneration arrangement exceed 15%
of the fully diluted common share ownership of SSWL as such ownership exists
from time to time. Any option, incentive or other remuneration granted pursuant
to this Section 4.02 shall be at a price that is no less than the fair market
value at the time of such grant.
ARTICLE V
GENERAL
5.01 The parties hereto shall with reasonable diligence do all such things,
provide all such reasonable assurances as may be required to consummate the
transactions contemplated by this Agreement and carry out its provisions whether
in the present or future.
5.02 This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns.
5.03 This Agreement shall be governed by and construed in accordance with the
laws of the province of Nova Scotia.
5.04 This Agreement may be executed in one or more counterparts each of which
shall be deemed to be an original and all of which taken together shall
constitute one and the same
<PAGE> 10
-10-
instrument.
ARTICLE VI
ARBITRATION
6.01 In the event that any disagreement arises between the parties hereto with
reference to this Agreement, any matter arising hereunder or any matter arising
in connection herewith in respect of which the parties cannot agree, then every
such disagreement may be submitted by either party hereto to arbitration in
Halifax pursuant to the provisions of the Arbitration Act (Nova Scotia). The
party desiring arbitration shall give written notice thereof to the other
parties hereto setting forth the matter or matters to be arbitrated. The
reference to arbitration shall be made to one arbitrator who shall be mutually
agreeable to all parties or, if they are unable to agree, pursuant to the
provisions of the Arbitration Act (Nova Scotia). The decision of the arbitrator,
where practicable, shall be within one (1) month of the appointment as
arbitrator. The decision of the arbitrator shall be final and be binding upon
the parties with the cost of the arbitrator borne equally by C.F. and SSWL.
IN WITNESS WHEREOF the parties hereto have set their hands and affixed
their seals on the day and year first above written.
SIGNED, SEALED AND DELIVERED SPARKLING SPRING WATER LIMITED
in the presence of:
Per: /s/Stephen Larson
- ---------------------------------- ----------------------------------------
<PAGE> 11
C.F. CAPITAL CORPORATION
Per: /s/Stephen Larson
- ---------------------------------- ----------------------------------------
/s/G. John Krediet
- ---------------------------------- ----------------------------------------
G. JOHN KREDIET
/s/Stephen Larson
- ---------------------------------- ----------------------------------------
STEPHEN L. LARSON
<PAGE> 12
SCHEDULE A - PAGE 1
(Management Agreement)
CONSOLIDATED SPARKLING SPRING WATER INCOME STATEMENT
(C$ Thousands)
<TABLE>
<CAPTION>
Revenue 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Buxton 5,770 7,440 7,876 8,902 11,436 13,151 14,729
Aquaporte 0 1,224 1,592 2,324 2,823 3,244 3,568
SSW 3,813 4,595 4,975 6,109 7,246 8,129 8,775
CS 5,419 6,461 8,079 10,179 12,138 13,331 14,853
-------------------------------------------------------------------------------------------------
15,002 19,720 22,522 27,515 33,642 37,856 41,926
Growth 31.5% 14.2% 22.2% 22.3% 12.5% 10.8%
Cost of Sales and Operating
Costs
Buxton 6,273 6,682 6,266 6,624 7,724 8,627 9,226
Aquaporte 0 1,146 1,224 1,763 1,874 1,945 2,030
SSW 2,908 3,873 3,925 4,728 5,440 5,938 6,346
CS 3,650 4,491 6,392 7,601 9,205 9,707 9,860
-------------------------------------------------------------------------------------------------
12,831 16,172 17,808 20,713 24,243 26,217 27,463
Operating Cash Flow
Buxton (503) 778 1,609 2,278 3,711 4,524 5,503
Aquaporte 0 78 368 562 949 1,299 1,538
SSW 905 722 1,050 1,384 1,806 2,191 2,439
CS 1,769 1,970 1,687 2,578 2,933 3,624 4,993
-------------------------------------------------------------------------------------------------
2,171 3,548 4,714 6,801 9,399 11,639 14,463
Margin % 14.5% 18.0% 20.9% 24.7% 27.9% 30.7% 34.5%
Growth % 63.4% 32.9% 44.3% 38.2% 23.8% 24.3%
Corporate Overhead, which
includes Larson & Krediet
Compensation & C.F. Capital 1,367 1,469
------------------------
EBITDA 10,272 12,994
Depreciation and Amort. 4,205 4,289
Interest Expense 3,059 2,852
Other Expense/(Income) 126 126
------------------------
2881 5,727
Income Tax 299 2,205
Dividends 0 0
------------------------
Net Income Available to Common 2,582 3,522
</TABLE>
<TABLE>
<CAPTION>
Revenue 1998 1999 2000 2001 2002
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Buxton 16,202 17,822 19,605 21,565 23,721
Aquaporte 3,925 4,318 4,750 5,225 5,747
SSW 9,464 10,208 11,013 11,882 12,823
CS 16,338 17,972 19,419 20,603 21,861
--------------------------------------------------------
45,930 50,320 54,785 59,275 64,152
Growth 9.5% 9.6% 8.9% 8.25 8.2%
Cost of Sales and Operating
Costs
Buxton 10,028 10,908 11,874 12,934 14,102
Aquaporte 2,229 2,392 2,588 2,760 2,970
SSW 6,787 7,262 7,775 8,330 8,930
CS 10,817 11,888 12,799 13,560 14,366
--------------------------------------------------------
29,862 82,430 35,016 37,585 40,368
Operating Cash Flow
Buxton 6,174 6,914 7,731 8,631 9,619
Aquaporte 1,696 1,926 2,181 2,484 2,777
SSW 2,677 2,946 3,237 3,552 3,893
CS 5,521 6,104 6,620 7,043 7,494
--------------------------------------------------------
16,068 17,890 19,769 21,690 23,783
Margin % 35.0% 35.6% 36.1% 36.6% 37.1%
Growth % 11.1% 11.3% 10.5% 9.7% 9.6%
Corporate Overhead, which
includes Larson & Krediet
Compensation & C.F. Capital 1,569 1,679 1,790 1,903 2,024
--------------------------------------------------------
EBITDA 14,499 16,211 17,979 19,788 21,759
Depreciation and Amort. 4,024 4,043 3,882 2,395 2,403
Interest Expense 2,404 1,840 1,153 379 (465)
Other Expense/(Income) 126 83 0 0 0
--------------------------------------------------------
7,945 10,265 12,945 17,014 19,811
Income Tax 3,059 3,952 4,984 6,550 7,627
Dividends 0 0 0 0 0
--------------------------------------------------------
Net Income Available to Common 4,886 6,313 7,961 10,463 12,184
</TABLE>
Notes
(1) Prior to 1996 CS figures represent a March 31 Year-end. (The 3/31/95 year
is placed in the 1994 column.)
<PAGE> 13
SCHEDULE A - PAGE 2
(Management Agreement)
EBTDAPS PROJECTION
For the purposes of section 5.04(b) of the Shareholders Agreement and sections
2.02 and 2.04 of the Management Agreement EBTDAPS shall mean: Net Income plus
(i) Income Taxes, (ii) Depreciation, (iii) Amortization, and (iv) payments made
to Krediet, Larson and C.F. as described in sections 2.04(a) and (b) of the
Management Agreement, DIVIDED BY the number of fully diluted shares outstanding
at the time. The depreciation of assets and amortization of goodwill will
utilize the same accounting practices as in the December 31, 1995 audited
financials for the company as prepared by Ernst & Young. For greater clarity,
the calculation will be on an after interest expense basis.
EBTDAPS Target in Canadian Dollars
<TABLE>
<CAPTION>
<S> <C> <C>
1996 $ 3.86
1977 $ 5.31
1998 $ 6.30
1999 $ 7.45
2000 $ 8.68
2001 $ 9.98
2002 $ 11.16
</TABLE>
<PAGE> 1
Exhibit 10.6
THIS AMENDMENT AGREEMENT dated October 22, 1997 ;
AMONG:
SPARKLING SPRING WATER LIMITED, ("SSWL")
OF THE FIRST PART
- and -
C.F. CAPITAL CORPORATION, ("C.F.")
OF THE SECOND PART
- and -
G. JOHN KREDIET, ("KREDIET")
OF THE THIRD PART
- and -
STEPHEN L. LARSON, ("LARSON")
OF THE FOURTH PART
- and -
SPARKLING SPRING WATER GROUP LIMITED, ("GROUP")
OF THE FIFTH PART
WITNESS THAT in consideration of the premises and the mutual agreements
and covenants herein contained and the sum of $10 now paid by each of the
parties to the other (the receipt and sufficiency whereof as to each of the
parties is mutually admitted), the parties covenant and agrees as hereinafter
set out.
<PAGE> 2
-2-
ARTICLE I.
INTERPRETATION
I.1 In this Agreement, unless the context requires otherwise:
(a) "ORIGINAL AGREEMENT" means the Management Agreement dated the
16th day of December. 1993, as amended and restated the 12th
day of January, 1996 among SSWL, C.F., Krediet and Larson;
(b) "EFFECTIVE DATE" means October 22, 1997;
(c) Words and expressions defined in the Original Agreement have
the same meaning when used herein as contained therein.
I.2 The provisions contained herein shall be deemed to be additions to the
provisions contained in the Original Agreement to the extent necessary
to give full and complete effect to the provisions contained herein,
and this Agreement shall be supplemental to the Original Agreement and
shall be read and construed therewith as if the Original Agreement and
this Agreement constituted but one document.
ARTICLE II.
INTENT
II.1 C.F. provides management services to SSWL pursuant to the terms and
premises of the Original Agreement.
II.2 The parties have agreed to amend the Original Agreement with effect on
and from the Effective Date in accordance with the provisions set out
herein.
ARTICLE III.
AMENDMENT AGREEMENT
III.1 Notwithstanding anything contained in the Original Agreement, the
parties hereby agree that on and from the Effective Date the Original
Agreement be and is hereby amended by:
<PAGE> 3
-3-
(i) adding the following immediately following paragraph 2.04(iii)
"(iv) C.F. shall be entitled to an additional bonus
commencing January 1, 1998 for any year that the base
fee is greater than or equal to US$750,000, such
additional bonus to be an amount equal to 25% of the
base fee paid to C.F. in respect of such fiscal year,
provided that SSWL achieves the EBTDAPS target for
such year as set out in Schedule "B" attached hereto.
For greater certainty, the EBTDAPS target in Schedule
"B" is for this additional bonus only and shall not
affect any other bonus paid under the Original
Agreement;" and
(ii) adding the attached schedule as "Schedule "B" to the Original
Agreement;
ARTICLE IV.
GENERAL
IV.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
IV.2 The parties hereto shall with reasonable diligence do all such things,
provide all such reasonable assurances as may be required to consummate
the transactions contemplated by this Agreement and carry out its
provisions whether in the present or future.
IV.3 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Nova Scotia.
IV.4 This Agreement may be executed in one or more counterparts each of
which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.
<PAGE> 4
-4-
IN WITNESS WHEREOF the parties hereto have set their hands and affixed
their seals on the day and year first above written.
SIGNED, SEALED AND DELIVERED
in the presence of: SPARKLING SPRING WATER LIMITED
Per: /s/Stephen Larson
- ---------------------------------- -----------------------------------
SPARKLING SPRING WATER GROUP LIMITED
Per: /s/Stephen Larson
- ---------------------------------- -----------------------------------
C.F. CAPITAL CORPORATION
Per: /s/Stephen Larson
- ---------------------------------- -----------------------------------
Per:
- ---------------------------------- -----------------------------------
/s/G. John Krediet
- ---------------------------------- ---------------------------------------
G. JOHN KREDIET
/s/Stephen Larson
- ---------------------------------- ---------------------------------------
STEPHEN L. LARSON
<PAGE> 5
SCHEDULE A
CONSOLIDATED SPARKLING SPRING WATER INCOME STATEMENT
(C$ Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue 1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Buxton 5,770 7,440 7,876 8,902 11,436 13,151 14,729
Aquaporte 0 1,224 1,592 2,324 2,823 3,244 3,568
SSW 3,813 4,595 4,975 6,109 7,246 8,128 8,776
CS 5,419 6,461 8,079 10,179 12,138 13,331 14,853
------- ------- ------- ------- ------- ------- -------
15,002 19,720 22,522 27,515 33,642 37,856 41,926
Growth 31.5% 14.2% 22.2% 22.3% 12.5% 10.8%
Cost of Sales and
Operating Costs
Buxton 6,273 6,682 6,266 6,624 7,724 8,627 9,226
Aquaporte 0 1,146 1,224 1,763 1,874 1,945 2,030
SSW 2,908 3,873 3,925 4,728 5,440 5,938 6,346
CS 3,650 4,491 6,392 7,601 9,205 9,707 9,860
------- ------- ------- ------- ------- ------- -------
12,831 16,172 17,808 20,713 24,243 26,217 27,463
Operating Cash Flow
Buxton (503) 778 1,609 2,278 3,711 4,524 5,503
Aquaporte 0 78 368 562 949 1,299 1,538
SSW 905 722 1,050 1,384 1,806 2,191 2,439
CS 1,769 1,970 1,687 2,578 2,933 3,624 4,993
------- ------- ------- ------- ------- ------- -------
2,171 3,548 4,714 6,801 9,399 11,639 14,463
Margin % 14.5% 18.0% 20.9% 24.7% 27.9% 30.7% 34.5%
Growth % 63.4% 32.9% 44.3% 38.2% 23.8% 24.3%
Corporate Overhead, which
includes Larson & Krediet
Compensation & C.F.
Capital expenses 1,367 1,469
------- -------
EBITDA 10,272 12,994
Depreciation and Amort. 4,205 4,289
Interest Expense 3,059 2,852
Other Expense/(Income) 126 126
------- -------
Pre-Tax Income 2,881 5,727
Income Tax 299 2,205
Dividends 0 0
------- -------
Net Income Available to Common 2,582 3,522
</TABLE>
<TABLE>
<CAPTION>
Revenue 1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Buxton 16,202 17,822 19,605 21,565 23,721
Aquaporte 3,925 4,318 4,76 0,225 5,747
SSW 9,464 10,208 11,013 11,882 12,823
CS 16,339 17,972 19,419 20,603 21,861
------- ------- ------- ------- -------
45,930 50,320 54,785 59,275 64,152
Growth 9.5% 9.6% 8.9% 8.25 8.2%
Cost of Sales and
Operating Costs
Buxton 10,028 10,908 11,874 12,934 14,102
Aquaporte 2,229 2,392 2,588 2,760 2,970
SSW 6,787 7,262 7,775 8,330 8,930
CS 10,817 11,888 12,799 13,560 14,366
------- ------- ------- ------- -------
29,862 82,430 35,016 37,585 40,368
Operating Cash Flow
Buxton 6,174 6,914 7,731 8,631 9,619
Aquaporte 1,696 1,926 2,181 2,484 2,777
SSW 2,677 2,946 3,237 3,552 3,893
CS 5,521 6,104 6,620 7,043 7,494
------- ------- ------- ------- -------
16,068 17,890 19,769 21,690 23,783
Margin % 35.0% 35.6% 36.1% 36.6% 37.1%
Growth % 11.1% 11.3% 10.5% 9.7% 9.6%
Corporate Overhead, which
includes Larson & Krediet
Compensation & C.F
Capital expenses 1,569 1,679 1,790 1,903 2,024
------- ------- ------- ------- -------
EBITDA 14,499 16,211 17,979 19,788 21,759
Depreciation and Amort 4,024 4,043 3,882 2,395 2,403
Interest Expense 2,404 1,840 1,153 379 (465)
Other Expense/(Income) 126 83 0 0 0
------- ------- ------- ------- -------
Pre-Tax Income 7,945 10,265 12,945 17,014 19,811
Income Tax 3,059 3,952 4,984 6,550 7,627
Dividends 0 0 0 0 0
------- ------- ------- ------- -------
Net Income
Available to
Common 4,886 6,313 7,961 10,463 12,184
</TABLE>
Notes
(1) Prior to 1996 CS figures represent a March 31 Year-end. (The 3/31/95 year
is placed in the 1994 column.)
<PAGE> 6
CONSOLIDATED SPARKLING SPRING WATER
INCOME STATEMENT
($ Thousands)
<TABLE>
<CAPTION>
Revenues 1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
United Kingdom 7,490 8,590 10,607 14,360 16,345 18,968
Maritime Provinces 3,358 3,635 4,519 5,153 5,595 6,284
British Columbia 4,721 5,904 9,326 10,928 12,855 14,980
United States 0 6,066 7,227 8,588 9,463 10,252
--------- --------- --------- --------- --------- ---------
$ 15,569 $ 24,195 $ 31,680 $ 39,029 $ 44,257 $ 50,485
Growth 109.9% 55.4% 30.9% 23.2% 13.4% 14.1%
Cost of Sales/Operating Costs
United Kingdom 6,668 6,720 7,805 10,236 11,224 12,305
Maritime Provinces 2,830 3,006 3,695 4,219 4,485 4,985
British Columbia 3,282 4,671 6,949 8,264 8,770 10,133
United States 0 4,590 5,523 6,540 7,140 7,466
--------- --------- --------- --------- --------- ---------
12,779 18,986 23,971 29,258 31,618 34,889
--------- --------- --------- --------- --------- ---------
Operating Cash Flow $ 2,789 $ 5,209 $ 7,708 $ 9,771 $ 12,639 $ 15,596
========= ========= ========= ========= ========= =========
Margin % 17.9% 21.5% 24.3% 25.0% 28.6% 30.9%
Growth % 981.9% 86.7% 48.0% 26.8% 29.4% 23.4%
Performance to Forecast 100.0% 100.0%
Corporate Overhead $ 764 $ 1,430
Depreciation and Amort 6,354
Interest Expense 2,455 8,805
Other Expense/(Income) 136
--------- ---------
Pre-Tax Income ($ 1,130)
Income Tax @ 40.0% 0
Dividends 0
=========
Net Income Available to Common ($ 1,130)
=========
Fully Diluted Shares Outstanding 1,612
EPS ($ 0.70)
</TABLE>
<TABLE>
<CAPTION>
Revenues 1998 1999 2000 2001 2002 2003
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
United Kingdom 21,895 25,106 28,695 32,577 36,992 42,014
Maritime Provinces 6,810 7,380 7,995 8,659 9,378 10,158
British Columbia 16,660 18,395 20,163 21,767 23,501 25,375
United States 11,488 12,765 14,021 15,245 16,488 17,836
--------- --------- --------- --------- --------- ---------
$ 56,852 $ 63,646 $ 70,874 $ 78,247 $ 86,359 $ 95,383
Growth 12.6% 12.0% 11.4% 10.4% 10.4% 10.4%
Cost of Sales/Operating Costs
United Kingdom 13,271 14,507 15,840 17,228 18,760 20,451
Maritime Provinces 5,287 5,611 5,960 6,335 6,741 7,178
British Columbia 11,093 12,129 13,206 14,224 15,327 16,522
United States 7,788 8,491 9,191 9,874 10,522 11,218
--------- --------- --------- --------- --------- ---------
37,438 40,739 44,197 47,663 51,350 55,369
--------- --------- --------- --------- --------- ---------
Operating Cash Flow $ 19,414 $ 22,908 $ 26,677 $ 30,585 $ 35,009 $ 40,014
========= ========= ========= ========= ========= =========
Margin % 34.1% 36.0% 37.6% 39.1% 40.5% 42.0%
Growth % 24.5% 18.0% 16.5% 14.7% 14.5% 14.3%
Performance to Forecast 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Corporate Overhead $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500
Depreciation and Amort 6,302 6,447 6,582 6,504 6,089 6,176
Interest Expense 8,726 8,514 8,195 7,749 7,167 6,462
Other Expense/(Income) 136 136 35 35 35 35
--------- --------- --------- --------- --------- ---------
Pre-Tax Income $ 2,750 $ 6,311 $ 10,365 $ 14,797 $ 20,218 $ 25,841
Income Tax @ 40.0% 648 2,524 4,146 5,919 8,087 10,336
Dividends 0 0 0 0 0 0
========= ========= ========= ========= ========= =========
Net Income Available to Common $ 2,102 $ 3,787 $ 6,219 $ 8,878 $ 12,131 $ 15,505
========= ========= ========= ========= ========= =========
Fully Diluted Shares Outstanding 1,612 1,612 1,612 1,612 1,612 1,612
EPS $ 1.30 $ 2.35 $ 3.86 $ 5.51 $ 7.53 $ 9.62
</TABLE>
<TABLE>
<CAPTION>
Revenues 2004 2005 2006 2007
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
United Kingdom 45,795 49,917 54,409 59,306
Maritime Provinces 11,072 12,069 13,155 14,339
British Columbia 27,658 30,148 32,861 35,818
United States 19,441 21,191 23,098 25,177
--------- --------- --------- ---------
$ 103,967 $ 113,324 $ 123,523 $ 134,640
Growth 9.0% 9.0% 9.0% 9.0%
Cost of Sales/Operating Costs
United Kingdom 22,291 24,298 26,484 28,868
Maritime Provinces 7,824 8,528 9,296 10,133
British Columbia 18,009 19,630 21,397 23,323
United States 12,227 13,328 14,527 15,835
--------- --------- --------- ---------
60,352 65,784 71,705 78,158
--------- --------- --------- ---------
Operating Cash Flow $ 43,615 $ 47,540 $ 51,819 $ 56,482
========= ========= ========= =========
Margin % 42.0% 42.0% 42.0% 42.0%
Growth % 9.0% 9.0% 9.0% 9.0%
Performance to Forecast 100.0% 100.0% 100.0% 100.0%
Corporate Overhead $ 1,500 $ 1,500 $ 1,500 $ 1,500
Depreciation and Amort 6,732 7,338 7,998 8,718
Interest Expense 5,627 4,654 3,545 (127)
Other Expense/(Income) 0 0 0 0
--------- --------- --------- ---------
Pre-Tax Income $ 29,755 $ 34,048 $ 38,776 $ 46,391
Income Tax @ 40.0% 11,902 13,619 15,510 18,556
Dividends 0 0 0 0
========= ========= ========= =========
Net Income Available to Common $ 17,853 $ 20,429 $ 23,265 $ 27,835
========= ========= ========= =========
Fully Diluted Shares Outstanding 1,612 1,612 1,612 1,612
EPS $ 11.08 $ 12.67 $ 14.43 $ 17.27
</TABLE>
Notes
- -------------
1) All acquisitions are included from 1991.
2) No new acquisitions are assumed.
<TABLE>
<S> <C> <C> <C> <C> <C>
Pre-Senior Mgmt EBTDA 6,421 10,318 14,024 18,112 22,466
Pre-Senior Mgmt EBTDA per share US$ $ 3.98 $ 6.40 $ 8.70 $ 11.24 $ 13.94
Pre-Senior Mgmt EBTDA per share C$ C$5.49 C$8.83 C$12.00 C$15.50 C$19.22
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pre-Senior Mgmt EBTDA 27,472 33,182 37,617 42,516 47,904 56,239
Pre-Senior Mgmt EBTDA per share US$ $ 17.04 $ 20.58 $ 23.34 $ 26.37 $ 29.72 $ 34.89
Pre-Senior Mgmt EBTDA per share C$ C$23.51 C$28.39 C$32.19 C$36.38 C$40.99 C$48.12
</TABLE>
Page 1
<PAGE> 7
CONSOLIDATED SPARKLING SPRING WATER
POST REORGANIZATION SHARE OWNERSHIP
($ Thousands)
<TABLE>
<CAPTION>
OPTIONS
--------------------------------------------
Total Warrants Mgmt Mgmt Mgmt
Description Voting % @$1 @ C$1.82 @ C$5.5 @ $4.326
------------ ------- ----- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gaspar/Krediet Management 705,050 50.6% 0
Mark and Lucy Stitzer Cargill Family 94,010 6.8%
Stephen Larson Management 119,209 8.6% 41,787
Stewart Allen Management 5,672 0.4% 55,111 39,595
Kevin Newman Financial Advisor 28,203 2.0%
Art Goodick Management 180 0.0% 5,000 5,000
Peter Kooman Cargill Family 0 0.0% 9,354
John Stiles Management 3,500 0.3%
Robert Sedgeman Management 0 0.0%
Clairvest Merchant Banker 423,190 30.4% 0
Sean Day Investor 8,994 0.6%
Tom Ferries Management 1,800 0.1%
Helen Martin Management 1,700 0.1%
Tim Daugherty Management 1,000 0.1%
Larry Brookes Management 180 0.0%
Natwest Markets Senior Lender 0 0.0% 51,100
------- ----- ------ ------ ----- ------
1392688 100.0% 51,100 55,111 5,000 95,736
======= ===== ====== ====== ===== ======
Proceeds from Issuance 1 100 28 567
Exchange 0.73
</TABLE>
<TABLE>
<CAPTION>
OPTIONS Fully
---------------------------------
Mgmt Mgmt Mgmt Diluted
@ $10.27 @ $14 @ $20 Shares %
-------- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C>
Gaspar/Krediet 8,250 713,300 43.4%
Mark and Lucy Stitzer 94,010 5.7%
Stephen Larson 12,000 172,996 10.5%
Stewart Allen 10,000 110,378 6.7%
Kevin Newman 28,203 1.7%
Art Goodick 5,000 15,180 0.9%
Peter Kooman 9,354 0.6%
John Stiles 5,000 8,500 0.5%
Robert Sedgeman 5,000 5,000 0.3%
Clairvest 423,190 25.7%
Sean Day 8,994 0.5%
Tom Ferries 1,800 0.1%
Helen Martin 1,700 0.1%
Tim Daugherty 1,000 0.1%
Larry Brookes 180 0.0%
Natwest Markets 51,100 3.1%
----- ----- ------ ------- -----
5,000 5,000 35,250 1644885 100.0%
===== ===== ====== ======= =====
Proceeds from Issuance 70 96 966 1,732
Exchange 0.73
</TABLE>
Page 1
<PAGE> 1
Exhibit 10.7
SPARKLING SPRING WATER GROUP LIMITED
One Landmark Square
Stamford, Connecticut 06901
(203) 325-0077
______________, 1997
The ____________________
Corporate Trust Trustee Administration
___________________
______________
New York, NY _____
Re: EXCHANGE AGENT AGREEMENT
Ladies and Gentlemen:
Sparkling Spring Water Group Limited, a Nova Scotia corporation (the
"Issuer"), and the Guarantors (the "Guarantors") identified in the Registration
Statement (as defined herein) propose to make an offer (the "Exchange Offer") to
exchange up to $100,000,000 aggregate principal amount of the Issuer's 11 1/2%
Senior Subordinated Notes due 2007 (the "Exchange Notes") (and the related
guarantees of the Guarantors) for a like principal amount of the Issuer's
outstanding 11 1/2% Senior Subordinated Notes due 2007 (the "Private Notes")
(and the related guarantees of the Guarantors). The terms and conditions of the
Exchange Offer are set forth in a prospectus (the "Prospectus") included in the
Issuer's and the Guarantors' registration statement on Form F-4 (File No.
333-_____), as amended (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission"), and proposed to be distributed to
all record holders of the Private Notes. The Private Notes and the Exchange
Notes are collectively referred to herein as the "Notes." Capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Prospectus or the Letter of Transmittal which constitutes part of the
Prospectus.
The Issuer hereby appoints ____________________ to act as exchange agent
(the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "You" shall refer to ____________________.
The Exchange Offer is expected to be commenced by the Issuer on or about
______________, 1997. The Letter of Transmittal accompanying the Prospectus is
to be used by the holders of the Private Notes to accept the Exchange Offer, and
contains instructions with respect to the delivery of Private Notes tendered.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on
______________, 1997, or on such later date or time to which the Issuer may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Issuer
<PAGE> 2
expressly reserves the right to extend the Exchange Offer from time to time, and
may extend the Exchange Offer by giving notice (such notice if given orally, to
be confirmed in writing) to you before 9:00 A.M., New York City time, on the
next New York Stock Exchange trading day after the previously scheduled
Expiration Date.
The Issuer expressly reserves the right, in its sole discretion, to amend
or terminate the Exchange Offer, and not to accept for exchange any Private
Notes not theretofore accepted for exchange. The Issuer will give notice (such
notice if given orally, to be confirmed in writing) of any amendment,
termination or nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are specifically set
forth in the section of the Prospectus captioned "The Exchange Offer," in
the Letter of Transmittal accompanying the Prospectus, or as specifically
set forth herein; provided, however, that in no way will your general duty
to act in good faith and without gross negligence or willful misconduct be
limited by the foregoing.
2. You will establish an account with respect to the Private Notes at the
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes
of the Exchange Offer within two New York Stock Exchange trading days
after the date of the Prospectus, and any financial institution that is a
participant in the Book-Entry Transfer Facility's systems may make
book-entry delivery of the Private Notes by causing the Book-Entry
Transfer Facility to transfer such Private Notes by causing the Book-Entry
Transfer Facility to transfer such Private Notes into your account in
accordance with the Book-Entry Transfer Facility's procedures for such
transfer.
3. You are to examine each of the Letters of Transmittal and certificates for
Private Notes (and confirmation of book-entry transfers of Private Notes
into your account at the Book-Entry Transfer Facility) and any other
documents delivered or mailed to you by or for holders of the Private
Notes, to ascertain whether (i) the Letters of Transmittal, certificates
and any such other documents are duly executed and properly completed in
accordance with instructions set forth therein and that such book-entry
confirmations are in due and proper form and contain the information
required to be set forth therein, and (ii) the Private Notes have
otherwise been properly tendered. In each case where the Letter of
Transmittal or any other document has been improperly completed or
executed, or where book-entry confirmations are not in due and proper form
or omit certain information, or any of the certificates for Private Notes
are not in proper form for transfer or some other irregularity in
connection with the acceptance of the Exchange Offer exists, you will
endeavor to inform the presenters of the need for fulfillment of all
requirements and to take any other action as may be necessary or advisable
to cause such irregularity to be corrected.
4. With the approval of the Chairman, the President or any of the Vice
Presidents of the Issuer (such approval, if given orally, to be confirmed
in writing) or any other person
2
<PAGE> 3
designate by such an officer in writing, you are authorized to waive any
irregularities in connection with any tender of Private Notes pursuant to
the Exchange Offer.
5. Tenders of Private Notes may be made only as set forth in the Letter of
Transmittal and in the section of the Prospectus captioned "The Exchange
Offer--Procedures for Tendering," and Private Notes shall be considered
properly tendered to you only when tendered in accordance with the
procedures set forth therein. Notwithstanding the provisions of this
paragraph 4, Private Notes which the Chairman, the President, the
Executive Vice President, the Senior Vice President or any of the Vice
Presidents of the Issuer or any other officer of the Issuer designated by
any such person shall approve as having been properly tendered shall be
considered to be properly tendered (such approval, if given orally, shall
be confirmed in writing).
6. You shall advise the Issuer with respect to any Private Notes received
subsequent to the Expiration Date and accept its instructions with respect
to disposition of such Private Notes.
7. You shall accept tenders:
(a) in cases where the Private Notes are registered in two or more names
only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority so to act is
submitted; and
(c) from persons other than the registered holder of Private Notes
provided that customary transfer requirements, including those
regarding any applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Private Notes when so indicated and as
permitted in the Letter of Transmittal and deliver certificates for Private
Notes to the transfer agent for split-up and return any untendered Private Notes
to the holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Issuer will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Private Notes properly tendered and you, on behalf of the
Issuer, will exchange such Private Notes for Exchange Notes and cause such
Private Notes to be canceled. Delivery of Exchange Notes will be made on
behalf of the Issuer by you at the rate of $1,000 principal amount of
Exchange Notes for each $1,000 principal amount of Exchange Notes if given
orally, to be confirmed in writing ***TEXT CUT OFF*** Private Notes by the
Issuer; provided, however, that in all cases, Private Notes tendered
pursuant to the Exchange Offer will be exchanged only after timely receipt
by you of certificates for such Private Notes (or confirmation of
book-entry transfer into
3
<PAGE> 4
your account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees and any other required documents. Unless
otherwise instructed by the Issuer, you shall issue Exchange Notes only in
denominations of $1,000 or any integral multiple thereof.
9. Tenders, pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Private Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time on or prior to the Expiration
Date in accordance with the terms of the Exchange Offer.
10. The Issuer shall not be required to exchange any Private Notes tendered in
any of the conditions set forth in the Exchange Offer are not met. Notice
of any decision by the Issuer not to exchange any Private Notes tendered
shall be given (and confirmed in writing) by the Issuer to you.
11. If, pursuant to the Exchange Offer, the Issuer does not accept for
exchange all or part of the Private Notes tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus
or otherwise, you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted
Private Notes (or effect appropriate book-entry transfer), together with
any related required documents and the Letters of Transmittal relating
thereto that are in your possession, to the persons who deposited them (or
effected such book-entry transfer).
12. All certificates for reissued Private Notes, unaccepted Private Notes or
for Exchange Notes (other than those effected by book-entry transfer)
shall be forwarded by first-class certified mail, return receipt
requested.
13. You are not authorized to pay or offer to pay any concessions, commissions
or other solicitation fees to any broker, dealer, commercial bank, trust
company or other nominee or to engage or use any person to solicit
tenders.
14. As Exchange Agent hereunder, you:
(a) shall have no duties or obligations other than those specifically
set forth in the Prospectus, the Letter of Transmittal or herein, or
as may be subsequently agreed to in writing by you and the Issuer;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or
genuineness of any of the certificates for the Private Notes
deposited with you pursuant to the Exchange Offer, and will not be
required to and will make no representation as to the validity,
value of genuineness of the Exchange Offer;
(c) shall not be obligated to taken any legal action hereunder which
might in your reasonable judgment involve any expense or liability,
unless you shall have been furnished with reasonable indemnity;
4
<PAGE> 5
(d) may reasonably rely on and shall be protected in acting in reliance
upon any certificate, instrument, opinion, notice, letter, telegram
or other document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper
party or parties;
(e) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also
as to the truth and accuracy of any information contained therein,
which you shall in good faith believe to be genuine or to have been
signed or represented by a proper person or persons;
(f) may rely on and shall be protected in acting upon written or oral
instruments from any officer of the Issuer;
(g) may consult with your counsel with respect to any questions relating
to your duties and responsibilities, and the opinion of such counsel
shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by you
hereunder in good faith and in accordance with the opinion of such
counsel; and
(h) shall not advise any person tendering Private Notes pursuant to the
Exchange Offer as to whether to tender or refrain from tendering all
or any portion of Private Notes or as to the market value, decline
or appreciation in market value of any Private Notes that may or may
not occur as a result of the Exchange Offer or as to the market
value of the Exchange Notes;
provided, however, that in no way will your general duty to act in good faith
and without gross negligence or willful misconduct be limited by the foregoing.
15. You shall take such action as may from time to time be requested by the
Issuer or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal
and the Notice of Guaranteed Delivery (as described in the Prospectus) or
such other forms as may be approved from time to time by the Issuer to all
persons requesting such documents and to accept and comply with telephone
requests for information relating to the Exchange Offer; provided, that
such information shall relate only to the procedures for accepting (or
withdrawing from) the Exchange Offer. The Issuer will furnish you with
copies of such documents at your request.
16. You shall advise by facsimile transmission or telephone, and promptly
thereafter confirm in writing to Steven L. Larson, President of the Issuer
(telephone number (203) 325-0500[?], facsimile number (203) ___-____) and
such other person or persons as the Issuer may request, daily (and more
frequently during the week immediately preceding the Expiration Date and
if otherwise requested), up to and including the Expiration Date, as to
the aggregate principal amount of Private Notes which have been duly
tendered pursuant to the Exchange Offer and the items received by you
pursuant to the Exchange Offer and
5
<PAGE> 6
this Agreement, separately reporting and giving cumulative totals as to
items properly received and items improperly received. In addition, you
will also inform, and cooperate in making available to, the Issuer or any
such other person or persons upon oral request made from time to time
prior to the Expiration Date of such other information as it or he or she
reasonably requests. Such cooperation shall include, without limitation,
the granting by you to the Issuer and such person as the Issuer may
request of access to those persons on your staff who are responsible for
receiving tenders, in order to ensure that immediately prior to the
Expiration Date the Issuer shall have received information in sufficient
detail to enable it to decide whether to extend the Exchange Offer. You
shall prepare a final list of all persons whose tenders were accepted, the
aggregate principal amount of Private Notes tendered, the aggregate
principal amount of Private Notes accepted and the identity of any
broker-dealer if you have knowledge that such person is a broker-dealer
who will receive Exchange Notes for its own account in exchange for
Private Notes and the aggregate principal amount of Exchange Notes
delivered to each, and deliver said list to the Issuer.
17. Letters of Transmittal, book-entry confirmations and Notices of Guaranteed
Delivery received by you shall be preserved by you for a period of time at
least equal to the period of time you preserve other records pertaining to
the transfer of securities, or two years, whichever is longer, and
thereafter shall be delivered by you to the Issuer. You shall dispose of
unused Letters of Transmittal and other surplus materials as instructed by
the Issuer.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for
the payment of transfer taxes by reasons of amounts, if any, borrowed by
the Issuer, or any of its subsidiaries or affiliates pursuant to any loan
or credit agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be entitled
to such compensation as set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter of
Transmittal and further acknowledge that you have examined each of them.
Any inconsistency between this Agreement, on the one hand, and the
Prospectus and the Letter of Transmittal (as they may be amended from time
to time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect to the duties, liabilities and
indemnifications of you as Exchange Age, which shall be controlled by this
Agreement.
21. The Issuer covenants and agrees to indemnify and hold you harmless in your
capacity as Exchange Agent hereunder against any loss, liability, cost or
expense, including reasonable attorneys' fees and expenses arising out of
or in connection with any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably
believed by you to be valid, genuine and sufficient and in accepting any
tender or effecting nay transfer of Private Notes reasonably believed by
you in good faith to be authorized,
6
<PAGE> 7
and in delaying or refusing in good faith to accept any tenders or effect
any transfer of Private Notes; provided, however that anything in this
Agreement to the contrary notwithstanding, the Issuer shall not be liable
for indemnification or otherwise for any loss, liability, cost or expense
to the extent arising out of your gross negligence or willful misconduct.
In no case shall the Issuer be liable under this indemnity with respect to
any claim against you unless the Issuer shall be notified by you, by
letter or cable or by facsimile which is confirmed by letter, of the
written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written
assertion or notice of commencement of action. The Issuer shall be
entitled to participate, at its own expense, in the defense of any such
claim or other action, and, if the Issuer so elects, the Issuer may assume
the defense of any pending or threatened action against you in respect of
which indemnification may be sought hereunder, in which case the Issuer
shall not thereafter be responsible for the subsequently incurred fees and
disbursements of legal counsel for you under this paragraph, so long as
the issuer shall retain counsel reasonably satisfactory to you to defend
such action, and unless the Issuer is also a party to such proceeding and
you have reasonably determined in good faith that joint representation
would be inappropriate. You understand and agree that the Issuer shall not
be liable under this paragraph for the fees and expenses of more than one
legal counsel for you; provided, however, that this sentence shall not be
construed to prohibit you from engaging successor counsel to continue to
represent you in connection with a proceeding under this paragraph in the
event that you have terminated counsel initially chosen by you or such
counsel has terminated its representation of you.
22. You shall arrange to comply with all requirements under the tax laws of
the United States, including those relating to missing Tax Identification
Numbers, and shall file any appropriate reports with the Internal Revenue
Service. The Issuer understands that you are required, in certain
instances, to deduct thirty-one percent (31%) with respect to interest
paid on the Exchange Notes and proceeds from the sale, exchange,
redemption or retirement of the Exchange Notes from holders who have not
supplied their correct Taxpayer Identification Numbers or required
certification. Such funds will be turned over to the Internal Revenue
Service in accordance with applicable regulations.
23. You shall notify the Issuer of the amount of any transfer taxes payable in
respect of the exchange of Private Notes and, upon receipt of a written
approval from the Issuer, shall deliver or cause to be delivered, in a
timely manner to each governmental authority to which any transfer taxes
are payable in respect of the exchange of Private Notes, your check in the
amount of all transfer taxes so payable, and the Issuer shall reimburse
you for the amount of any and all transfer taxes payable in respect of the
exchange of Private Notes; provided, however, that you shall reimburse the
Issuer for amounts refunded to you in respect of your payment of any such
transfer taxes, at such time as such refund is received by you.
24. This Agreement and your appointment as Exchange Agent hereunder shall be
construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within
such state, and without regard to conflicts of law principles.
7
<PAGE> 8
25. This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Without limitation of the foregoing, the parties hereto expressly agree
that no holder of Private Notes or Exchange Notes shall have any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
26. This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement.
27. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
28. This Agreement shall not be deemed or construed to be modified, amended,
rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
29. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed
to it, at its address or telecopy number set forth below:
If to the Issuer, to:
Sparkling Spring Water Water Group Limited
One Landmark Square
Stamford, Connecticut 06901
Telephone: (203) 325-0077
Telecopy: (203) ___-____
Attention: Steven L. Larson
President
with a copy to:
Robinson & Cole LLP
695 E. Main Street
Stamford, CT 06904
Telephone: (203) 462-7500
Telecopy: (203) 462-7599
Attention: Richard A. Krantz, Esq.
8
<PAGE> 9
If to the Exchange Agent, to:
________________________
________________________
________________________
New York, NY
Telephone:
Telecopy: (212) ___-____
Attention: Corporate Trust Trustee Administration
30. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, paragraphs 17, 19, 21, 23 and 24 shall survive the termination
of this Agreement. Upon any termination of this Agreement you shall
promptly deliver to the Issuer any certificates for Notes, funds or
property then held by you as Exchange Agent under this Agreement.
31. This Agreement shall be binding and effective as of the date hereof.
Please acknowledge receipt of this Agreement and confirm the arrangements herein
provided by signing and returning the enclosed copy.
SPARKLING SPRING WATER GROUP LIMITED
By:
---------------------------------
Name:
Title:
Accepted as of the date first above written:
____________________, as Exchange Agent
By:
------------------------------------
Name:
Title:
9
<PAGE> 10
SCHEDULE I
FEE SCHEDULE FOR EXCHANGE AGENT SERVICES
$2,500 plus $500 per extension.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Sparkling Spring Water Limited
Spring Water, Inc.
Cullyspring Water Co., Inc.
Crystal Spring Acquisition, Inc.
Mountain Fresh Acquisition Corp.
Water Jug Enterprises Limited
Withey's Water Softening & Purification Ltd.
Aqua Care Water Softening & Purification Inc.
High Valley Water Limited
3003969 Nova Scotia Limited
Canadian Springs Water Company Limited
Sparkling Spring Water (UK) Limited
Aquaporte (UK) Limited
Marlborough Employment Limited
Water at Work Limited
Natural Water Limited
<PAGE> 1
EXHIBIT 23.1
[ERNST & YOUNG LETTERHEAD]
We consent to the reference to our firm under the caption "Experts" and
to the use of (i) our report dated November 19, 1997 to the directors of
Sparkling Spring Water Group Limited (the "Company") on the consolidated
financial statements of the Company as at December 31, 1996 and 1995 and for
each of the years in the three year period ended December 31, 1996, (ii) our
report dated July 11, 1997 to the directors of Sparkling Spring Water Limited on
the financial statements of Canadian Springs Water Company Limited as at January
17, 1996 and March 31, 1995 and for the 292 days ended January 17, 1996 and the
year ended March 31, 1995, (iii) our report dated October 10, 1997 to the
directors of Sparkling Spring Water Limited on the financial statements of
Cullyspring Water Co., Inc. as at December 31, 1996 and 1995 and for the years
then ended and (iv) our report dated October 10, 1997 to the directors of
Sparkling Spring Water Limited on the financial statements of D&D and Company,
Inc. as at December 31, 1996 and for the year then ended, in the Registration
Statement (Form F-4) for the registration of $100,000,000 of the Company's
11 1/2% Senior Subordinated Notes due 2007.
/s/ Ernst & Young
Halifax, Canada
December ____, 1997
<PAGE> 1
EXHIBIT 23.2
[KIDSONS IMPEY LETTERHEAD]
To the Board of Directors and Stockholders
of Sparkling Spring Water Group Limited
We consent to the use in this Registration Statement of Sparkling
Spring Water Group Limited (the "Company") and the Additional Registrants named
therein on Form F-4 of our report dated October 28, 1997 of Marlborough
Employment Limited and Subsidiaries, for the year ended January 31, 1997 and to
the reference to us under the heading "Experts" in the Prospectus, which is part
of the Registration Statement.
/s/ Kidsons Impey
Glasgow, Scotland
December 1997
<PAGE> 1
EXHIBIT 25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
SPARKLING SPRING WATER GROUP LIMITED
(Exact name of obligor as specified in its charter)
NOVA SCOTIA, CANADA
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
ONE LANDMARK SQUARE
STAMFORD, CT 06901
(203) 325-0077
(Address of principal executive offices)
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
NAME ADDRESS
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3. -15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated September 17, 1997, copy
attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate
trust powers Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended
on February 18, 1997, Incorporated herein by
reference to Exhibit 4 filed with Form T-1 Statement,
Registration No. 333-24509-01.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of June 30, 1997. Copy attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 25th day
of November, 1997.
BANKERS TRUST COMPANY
By: /s/ Kevin Weeks
Kevin Weeks
Assistant Vice President
-4-
<PAGE> 5
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 6/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
-------------------
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | //////////////////|
a. Noninterest-bearing balances and currency and coin(1) ............................ | 0081 1,724,000|1.a.
b. Interest-bearing balances(2) ..................................................... | 0071 2,648,000|1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... | 1754 0|2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)...................... | 1773 3,990,000|2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | 1350 26,430,000|3.
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ............................................................... |
b. Securities purchased under agreements to resell .................................. |
4. Loans and lease financing receivables: | ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 17,815,000 | ////////////////// |4.a.
b. LESS: Allowance for loan and lease losses.................. RCFD 3123 723,000 | ////////////////// |4.b.
c. LESS: Allocated transfer risk reserve ..................... RCFD 3128 0 | ////////////////// |4.c.
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) .............................. | 2125 17,092,000|4.d.
5. Assets held in trading accounts ....................................................... | 3545 40,350,000|5.
6. Premises and fixed assets (including capitalized leases) .............................. | 2145 937,000|6.
7. Other real estate owned (from Schedule RC-M) .......................................... | 2150 195,000|7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) | 2130 96,000|8.
9. Customers' liability to this bank on acceptances outstanding .......................... | 2155 691,000|9.
10. Intangible assets (from Schedule RC-M) ................................................ | 2143 85,000|10.
11. Other assets (from Schedule RC-F) ..................................................... | 2160 4,633,000|11.
12. Total assets (sum of items 1 through 11) .............................................. | 2170 98,871,000|12.
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 6/30/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
-------------------------------------
Dollar Amounts in Thousands | //////// Bil Mil Thou |
<S> <C> <C>
LIABILITIES | ////////////////// |
13. Deposits: | ////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) | RCON 2200 18,026,000|13.a.
(1) Noninterest-bearing(1) ......................RCON 6631 3,184,000.... | ////////////////// |13.a.(1)
(2) Interest-bearing ............................RCON 6636 14,842,000.... | ////////////////// |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E | ////////////////// |
part II) | RCFN 2200 22,173,000|13.b.
(1) Noninterest-bearing ........................RCFN 6631 1,454,000 | ////////////////// |13.b.(1)
(2) Interest-bearing ...........................RCFN 6636 20,719,000 | ////////////////// |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in | // // 2800 14,623,000|14.
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds purchased .......................................................... | RCFD 0278 |14.a.
b. Securities sold under agreements to repurchase ................................... | RCFD 0279 |14.b.
15. a. Demand notes issued to the U.S. Treasury ......................................... | RCON 2840 0|15.a.
b. Trading liabilities .............................................................. | RCFD 3548 19,819,000|15.b.
16. Other borrowed money: | ////////////////// |
a. With original maturity of one year or less ..................................... | RCFD 2332 6,877,000|16.a.
b. With original maturity of more than one year ................................... | A547 217,000|16.b.
c. With a remaining maturity of more than three years ............................. | A548 4,848,000|16.c.
17. Mortgage indebtedness and obligations under capitalized leases ......................
18. Bank's liability on acceptances executed and outstanding ............................ | RCFD 2920 691,000|18.
19. Subordinated notes and debentures ................................................... | RCFD 3200 1,251,000|19.
20. Other liabilities (from Schedule RC-G) .............................................. | RCFD 2930 4,872,000|20.
21. Total liabilities (sum of items 13 through 20) ...................................... | RCFD 2948 93,397,000|21.
| ////////////////// |
22. Limited-life preferred stock and related surplus .................................... | RCFD 3282 0|22.
EQUITY CAPITAL | ////////////////// |
23. Perpetual preferred stock and related surplus ....................................... | RCFD 3838 1,000,000|23.
24. Common stock ........................................................................ | RCFD 3230 1,001,000|24.
25. Surplus (exclude all surplus related to preferred stock) ............................ | RCFD 3839 540,000|25.
26. a. Undivided profits and capital reserves ........................................... | RCFD 3632 3,314,000|26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ........... | RCFD 8434 (3,000)|26.b.
27. Cumulative foreign currency translation adjustments ................................. | RCFD 3284 (378,000)|27.
28. Total equity capital (sum of items 23 through 27) ................................... | RCFD 3210 5,474,000|28.
29. Total liabilities, limited-life preferred stock, and equity capital | ////////////////// |
(sum of items 21, 22, and 28) ....................................................... | RCFD 3300 98,871,000|29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank Number
by independent external auditors as of any date during 1996 ......................... | RCFD 6724 N/A | M.1
</TABLE>
<TABLE>
<S> <C> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed
with generally accepted auditing standards by a certified by other external auditors (may be required
public accounting firm which submits a report on the bank by state chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements
conducted in accordance with generally accepted auditing by external auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial
submits a report on the consolidated holding company statements by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax
preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 7
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated September 17, 1997, providing for an increase in
authorized capital stock from $2,001,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,201,666,670 consisting of 120,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York, this 26TH day of SEPTEMBER in the Year
of our Lord one thousand nine hundred and
NINETY-SEVEN.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion, Two Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($2,201,666,670), divided into
One Hundred Twenty Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (120,166,667) shares with a par value of $10 each
designated as Common Stock and 1000 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE> 9
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
17th day of September, 1997.
/s/ James T. Byrne, Jr.
-----------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Sworn to before me this 17th day
of September, 1997.
Josephine A. Monti
------------------
Notary Public
JOSEPHINE A. MONTI
Notary Public State of New York
No. 52-4519901
Qualified in New York County
Commission Expires October 19, 1997
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL FOR
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
OF SPARKLING SPRING WATER GROUP LIMITED
PURSUANT TO THE OFFER TO EXCHANGE
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL OUTSTANDING
11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
----------
PURSUANT TO THE PROSPECTUS, DATED _____________, 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_____________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS OF PRIVATE NOTES (AS DEFINED HEREIN) MAY BE WITHDRAWN AT
ANY TIME PRIOR TO THE EXPIRATION DATE.
TO: ____________________, EXCHANGE AGENT (THE "EXCHANGE AGENT")
Facsimile Transmissions:
By Hand Or Overnight (Eligible Institutions Only) By Registered Or
Delivery: Certified Mail:
(212) ________
To Confirm by Telephone or
for Information Call:
(212) ________
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
HOLDERS (AS DEFINED HEREIN) WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES
(AS DEFINED HEREIN) FOR THEIR PRIVATE NOTES PURSUANT TO THE EXCHANGE OFFER (AS
DEFINED HEREIN) MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR PRIVATE NOTES TO
THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE> 2
By execution hereof, the undersigned acknowledges receipt of the
Prospectus (the "Prospectus"), dated December __, 1997, of Sparkling Spring
Water Group Limited., a Nova Scotia corporation (the "Issuer"), which, together
with this Letter of Transmittal and the instructions hereto (the "Letter of
Transmittal"), constitute the Issuer's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its registered 11 1/2% Senior Subordinated Notes due
2007 (the "Exchange Notes"), for each $1,000 principal amount of its outstanding
unregistered 11 1/2% Senior Subordinated Notes due 2007 (the "Private Notes"
and, together with the Exchange Notes, the "Notes"), of which $100,000,000
aggregate principal amount was outstanding on the date of the Prospectus. The
Exchange Notes have been registered under the Securities Act of 1933, as
amended.
The Issuer reserves the right, at any time or from time to time, to extend
the Exchange Offer at its sole discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Issuer shall notify the holders of the Private Notes of any
extension by means of a press release or other public announcement prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
This Letter of Transmittal is to be used by Holders of Private Notes if:
(i) a certificate representing Private Notes is to be physically delivered to
the Exchange Agent herewith by Holders; or (ii) tender of Private Notes is to be
made by book-entry transfer to the account maintained by the Exchange Agent at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in "The Exchange Offer --Book-Entry Transfer" section
of the Prospectus by any financial institution that is a participant in The
Depository Trust Company (the "Depository") whose name appears on a security
position listing as the owner of the Private Notes; or (iii) tender of Private
Notes is to be made by the guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. DELIVERY OF DOCUMENTATION TO THE BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Private Notes are registered on the books of the Issuer or any
other person who has obtained a properly completed bond power, as applicable,
from the registered holder, or (ii) whose Private Notes are held of record by
the Depository (or its nominee), whose name appears on a security position
listing as the owner of Private Notes (and is a participant in the Depository)
and who desires to deliver such Private Notes by book-entry transfer at the
Depository.
----------
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR PRIVATE
NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
Ladies and Gentlemen:
-2-
<PAGE> 3
The undersigned hereby tenders to the Issuer the aggregate principal
amount of Private Notes indicated in this Letter of Transmittal, upon the terms
and subject to the conditions set forth in the Prospectus, dated
____________________, 1997 (the "Prospectus"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal. All capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Prospectus.
Subject to, and effective upon, the acceptance for exchange of the Private
Notes tendered hereby, the undersigned hereby sells, assigns and transfers to,
or upon the order of, the Issuer all right, title and interest in and to such
Private Notes as are being tendered hereby and hereby irrevocably constitutes
and appoints the Exchange Agent as its agent and attorney-in-fact with respect
to such Private Notes (with full knowledge that the Exchange Agent acts as agent
of the Issuer and as Trustee under the Indenture for the Private Notes and the
Exchange Notes), with full power of substitution (such power of attorney being
an irrevocable power coupled with an interest), to:
(a) deliver such Private Notes in registered certificated form, or
transfer ownership of such Private Notes through book-entry transfer at the
Book-Entry Transfer Facility, to or upon the order of the Issuer, upon receipt
by the Exchange Agent, as the undersigned's agent, of the same aggregate
principal amount of Exchange Notes; and
(b) present such Private Notes for transfer on the books of the Issuer and
receive, for the account of the Issuer, all benefits and otherwise exercise, for
the account of the Issuer, all rights of beneficial ownership of the Private
Notes tendered hereby in accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Private Notes
tendered hereby and that the Issuer will acquire good, marketable and
unencumbered title thereto, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or other
obligations relating to their sale or transfer, and not subject to any adverse
claim when the same are accepted by the Issuer.
The undersigned also acknowledges that this Exchange Offer is being made
in reliance on the Issuer's belief, based upon interpretations by the staff of
the Securities and Exchange Commission (the "Commission") set forth in no-action
letters issued to third parties unrelated to the Issuer, that the Exchange Notes
issued pursuant to the Exchange Offer in exchange for the Private Notes may be
offered for resale, resold and otherwise transferred by any holder thereof
(other than (i) any such holder that is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act or (ii) any broker-dealer that
purchased Notes from the Issuer to resell pursuant to Rule 144A under the
Securities Act or any other available exemption under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act; provided that the holder acquires the Exchange Notes in the
ordinary course of its business and is not engaging, and has no intention to
engage, and has no arrangement or understanding with any person to participate,
in the distribution of the Exchange Notes.
The undersigned hereby further represents that (i) the Exchange Notes
acquired in exchange for Private Notes tendered hereby will have been acquired
in the ordinary course of business of the person receiving such Exchange Notes,
whether or not such person is the
-3-
<PAGE> 4
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes and neither the holder of such Private Notes nor any such
person is engaging in, or intends to engage in, the distribution of such
Exchange Notes, and (iii) except as indicated herein, neither the undersigned
nor any such other person is an "affiliate" of the Issuer within the meaning of
Rule 405 under the Securities Act or, if such holder or any such other person is
an affiliate of the Issuer, that such holder or such other person will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. The undersigned has read and agrees to all of the
terms of the Exchange Offer as described in the Prospectus and herein. If the
undersigned or any beneficial owner for whom the undersigned is tendering
Private Notes is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Private Notes, where such Private Notes were acquired by
such broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned or such beneficial
owner will not be deemed to admit that it is an "underwriter" within the meaning
of the Securities Act.
The Issuer has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Notes received in exchange for Private Notes acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities, for a period ending 90 days after the Expiration Date
or, if earlier, when all such Exchange Notes have been disposed of by such
Participating Broker-Dealer. In that regard, each Participating Broker-Dealer by
tendering such Private Notes and executing this Letter of Transmittal, agrees
that, upon receipt of notice from the Issuer of the occurrence of any event or
the discovery of any fact which makes any statement contained or incorporated by
reference in the Prospectus untrue in any material respect or which causes the
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference therein, in light of the
circumstances under which they were made, not misleading, such Participating
Broker-Dealer will suspend the sale of Exchange Notes pursuant to the Prospectus
until the Issuer has amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to the Participating Broker-Dealer or the Issuer has given notice
that the sale of the Exchange Notes may be resumed, as the case may be. If the
Issuer gives such notice to suspend the sale of the Exchange Notes, it shall
extend the 90-day period referred to above during which Participating
Broker-Dealers are entitled to use the Prospectus in connection with the resale
of Exchange Notes by the number of days during the period from and including the
date of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the Exchange Notes or to and including
the date on which the Issuer has given notice that the sale of Exchange Notes
may be resumed, as the case may be.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuer or the Exchange Agent to be necessary or
desirable to complete the sale, assignment and transfer of the Private Notes
tendered hereby. All authority conferred or agreed to be conferred in this
Letter of Transmittal and every obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or
-4-
<PAGE> 5
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal of Tenders"
section of the Prospectus.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Private Notes when the Issuer has given oral or
written notice thereof to the Exchange Agent. If any tendered Private Notes are
not accepted for exchange pursuant to the Exchange Offer for any reason,
certificates for any such unaccepted Private Notes will be returned (except as
noted herein with respect to tenders through the Book-Entry Transfer Facility),
without expense, to the undersigned at the address shown below or at a different
address as may be indicated under "Special Issuance Instructions" as promptly as
practicable after the Expiration Date.
The undersigned understands that tenders of the Private Notes pursuant to
any one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Issuer in accordance with the
terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus under "The Exchange Offer -- Certain Conditions to the Exchange
Offer," the Issuer may not be required to accept for exchange any of the Private
Notes tendered. Private Notes not accepted for exchange or withdrawn will be
returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" herein.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions", please deliver the Exchange Notes (and, if applicable, substitute
certificates representing Private Notes for any Private Notes not exchanged) in
the name of the undersigned or, in the case of a book-entry delivery of Private
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the Exchange Notes (and, if
applicable, substitute certificates representing Private Notes for any Private
Notes not exchanged) to the undersigned at the address shown above in the box
entitled "Description of Private Notes." The undersigned recognizes that the
Issuer has no obligation pursuant to the "Special Issuance Instructions" and
"Special Delivery Instructions" to transfer any Private Notes from the name of
the registered holder(s) thereof if the Issuer does not accept for exchange any
of the Private Notes so tendered.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF PRIVATE
NOTES" AND SIGNING THIS LETTER OF TRANSMITTAL AND DELIVERING SUCH PRIVATE NOTES
AND THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT, WILL BE DEEMED TO HAVE
TENDERED THE PRIVATE NOTES AS SET FORTH IN SUCH BOX.
-5-
<PAGE> 6
List below the Private Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Private Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
DESCRIPTION OF PRIVATE NOTES TENDERED
Name(s) and Address(es)
of Holder(s) Certificate Number(s)* Aggregate Principal Amount
(Please fill in if blank) (Attach signed list if Tendered (if less than all)**
necessary)
TOTAL PRINCIPAL AMOUNT OF PRIVATE NOTES TENDERED
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all
Private Notes listed. See Instruction 2.
USE OF BOOK ENTRY TRANSFER
[_] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT THE DEPOSITORY
TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:__________________________________________________
DTC Book-Entry Account No.:_____________________________________________________
Transaction Code No.:___________________________________________________________
USE OF GUARANTEED DELIVERY
If Holders desire to tender Private Notes pursuant to the Exchange
Offer and (i) certificates representing such Private Notes are not
lost but are not immediately available, (ii) time will not permit
this Letter of Transmittal, certificates representing such Private
Notes or other required documents to reach the Exchange Agent prior
to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such
Holders may effect a tender of such Private Notes in accordance with
the guaranteed delivery procedures set forth in the Prospectus under
"The Exchange Offer -- Guaranteed Delivery Procedures."
-6-
<PAGE> 7
[_] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO THE
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Private Notes:
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
If Delivered by Book-Entry Transfer, Name of Tendering Institution:
DTC Book-Entry Account No.:
Transaction Code No.:
BROKER-DEALER COPIES OF PROSPECTUS
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO
Name:
Address:
Aggregate Principal Amount of Private Notes so held:
FOR USE BY AFFILIATES
[_] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU ARE TENDERING
PRIVATE NOTES IS AN AFFILIATE OF THE ISSUER
Name:
Address:
Aggregate Principal Amount of Private Notes so held: $
-7-
<PAGE> 8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF PRIVATE NOTES REGARDLESS OF
WHETHER PRIVATE NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
If a Holder is tendering any Private Notes, this Letter of Transmittal must be
signed by the Holder(s) of the Private Notes exactly as the name(s) appear(s) on
the certificate(s) for the Private Notes or, if tendered by a participant in The
Depository Trust Company, exactly as such participant's name appears on a
security position listing as the owner of the Private Notes, or by any person(s)
authorized to become Holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, please set forth full title and submit evidence
satisfactory to the Issuer of each such person's authority to so act. See
Instruction 3.
If the signature appearing below is not of a registered Holder of the Private
Notes, then the registered Holder must sign a valid proxy.
X Date:
----------------------------------- ----------------------------------
Date:
----------------------------------- ----------------------------------
Signature(s) of Holder(s) or
Authorized Signatory
Name(s):____________________________ Address:_______________________________
____________________________ _______________________________
(Please Print) (Including Zip Code)
Capacity:___________________________ Area Code and Telephone No.:___________
Social Security No.:________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- --------------------------------------------------------------------------------
(Address (including Zip Code) and Telephone Number
(including Area Code) of Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date:_____________________________
-8-
<PAGE> 9
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 HEREIN)
To be completed ONLY if certificates for Private Notes not exchanged and/or
Exchange Notes are to be issued in the name of and sent to someone other than
the person or persons whose signature(s) appear(s) on this Letter of
Transmittal, or if Private Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Name:____________________________________________
(Please Print)
Address:_________________________________________
(Please Print)
_________________________________________________
Zip Code
_________________________________________________
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
Credit unexchanged Private Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
____________________________________________________________
(Book Entry Transfer Facility Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 HEREIN)
To be completed ONLY if certificates for Private Notes not exchanged and/or
Exchange Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) above on this Letter of Transmittal or to such person or
persons at an address other than shown above in the box entitled "Description of
Private Notes" on this Letter of Transmittal.
Mail Exchange Notes and/or Private Notes to:
Name:________________________________________________
(Please Print)
Address:_____________________________________________
(Please Print)
_____________________________________________________
Zip Code
_____________________________________________________
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
-9-
<PAGE> 10
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYER'S NAME: ____________________, AS EXCHANGE AGENT
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR
FORM W-9 TIN IN THE BOX AT RIGHT AND Social Security Number
DEPARTMENT OF THE CERTIFY BY SIGNING AND
TREASURY DATING BELOW
INTERNAL REVENUE SERVICE OR
PAYER'S REQUEST FOR Employer Identification
TAXPAYER IDENTIFICATION Number
NUMBER (TIN)
PART 2--Certification--Under PART 3 -
Penalties of Perjury, I Awaiting TIN [ ]
certify that: (1) The number
shown on this form is my
correct Taxpayer
Identification Number (or I
am waiting for a number to
be issued to me) and
(2) I am not subject to
backup withholding because:
(a) I am exempt from backup
withholding, (b) I have not
been notified by the
Internal Revenue Services
("IRS") that I am subject to
backup withholding as a
result of failure to report
all interest or dividends,
or (c) the IRS has notified
me that I am no longer
subject to backup
withholding.
Certificate instructions--
You must cross out item (2)
in Part 2 above if you have
been notified by the IRS
that you are subject to
backup withholding because
of under reporting interest
or dividends on your tax
return. However, if after
being notified by the IRS
that you were subject to
backup withholding you
received another
notification from the IRS
stating that you are no
longer subject to backup
withholding, do not cross
out item (2).
SIGNATURE__________________ DATE________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
-10-
<PAGE> 11
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within 60 days, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ------------------------------------ --------------------------
Signature Date
-11-
<PAGE> 12
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PRIVATE NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by Holders of
Private Notes either if certificates are to be forwarded herewith or if tenders
are to be made pursuant to the procedures for delivery by book-entry transfer
set forth in "The Exchange Offer -- Book-Entry Transfer" section of the
Prospectus. Certificates for all physically tendered Private Notes, or a timely
confirmation of the book-entry transfer of Private Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation"), as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile hereof) and any
other documentation required by this Letter of Transmittal, must be received by
the Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below and in the "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Prospectus. Private Notes may only be tendered in a
principal amount of $1,000 and any integral multiple thereof.
Holders of Private Notes whose certificates for Private Notes are not
immediately available or who cannot deliver their certificates and all other
required documentation to the Exchange Agent on or prior to the Expiration Date,
or who cannot complete the procedure for book-entry transfer on a timely basis,
may tender their Private Notes pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of
the Prospectus. Pursuant to such procedures, (i) such tender must be made
through an Eligible Institution (as defined below), (ii) prior to the Expiration
Date, the Exchange Agent must receive from such Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Issuer (by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight courier), mail or
hand delivery), setting forth the name and address of the holder of Private
Notes, the certificate number(s) of such Private Notes (if applicable) and the
principal amount of Private Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange ("NYSE")
trading days after the Expiration Date, this Letter of Transmittal (or a
facsimile thereof), together with the certificates for all physically tendered
Private Notes in proper form for transfer, or a Book-Entry Confirmation of such
Private Notes, and any other documentation required by this Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) a properly executed Letter of Transmittal (or a facsimile
thereof), as well as the certificates for all physically tendered Private Notes
in proper form for transfer or a Book-Entry Confirmation of such Private Notes,
as the case may be, and all other documentation required by this Letter of
Transmittal, must be received by the Exchange Agent within five NYSE trading
days after the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE PRIVATE NOTES
AND ALL OTHER REQUIRED DOCUMENTATION IS AT THE ELECTION AND RISK OF THE
TENDERING HOLDERS, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY
-12-
<PAGE> 13
INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE. DO NOT SEND THIS LETTER OF TRANSMITTAL OR ANY PRIVATE NOTES TO THE ISSUER.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF PRIVATE NOTES WHO TENDER
BY BOOK-ENTRY TRANSFER); WITHDRAWAL RIGHTS. Tenders of Private Notes will be
accepted only in the principal amount of $1,000 and integral multiples thereof.
If less than all of the Private Notes evidenced by a submitted certificate are
to be tendered, the tendering Holder(s) should fill in the aggregate principal
amount of Private Notes to be tendered in the box above entitled "Description of
Private Notes -- Aggregate Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Private Notes will be sent to such
tendering Holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, promptly after the Expiration Date. ALL OF THE PRIVATE
NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED
UNLESS OTHERWISE INDICATED.
Any Holder who has tendered Private Notes may withdraw the tender by
delivering written notice of withdrawal (which may be sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier), mail or hand delivery) to the Exchange Agent
prior to the Expiration Date. For a withdrawal to be effective, a written notice
of withdrawal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having tendered the Private Notes to be withdrawn
(the "Depositor"), (ii) identify the Private Notes to be withdrawn (including
the certificate number or numbers and principal amount of such Private Notes),
(iii) be timely received and signed by the Holder in the same manner as the
original signature on the Letter of Transmittal by which such Private Notes were
tendered or as otherwise set forth in Instruction 3 below (including any
required signature guarantees), or be accompanied by documents of transfer
sufficient to have the Trustee (as defined in the Prospectus) register the
transfer of such Private Notes pursuant to the terms of the Indenture into the
name of the person withdrawing the tender and (iv) specify the name in which any
such Private Notes are to be registered, if different from that of the
Depositor. If Private Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Private Notes or otherwise comply with the Book-Entry Transfer
Facility's procedures. See "The Exchange Offer -- Withdrawal of Tenders" section
of the Prospectus. Withdrawals of tenders of Private Notes may not be rescinded.
Private Notes properly withdrawn will not be deemed to have been validly
tendered for purposes of the Exchange Offer, and no Exchange Notes will be
issued with respect thereto unless the Private Notes so withdrawn are validly
retendered. Properly withdrawn Private Notes may be retendered at any subsequent
time on or prior to the Expiration Date by following the procedures described in
"The Exchange Offer -- Procedures for Tendering" section of the Prospectus.
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Issuer, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Issuer, any Guarantor, any employees, agents, affiliates or assigns
of the Issuer, the Exchange Agent or any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for
-13-
<PAGE> 14
failure to give such notification. Any Private Notes which have been tendered
but which are withdrawn will be returned to the holder thereof without cost to
such holder as promptly as practicable after withdrawal.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the Holder
of the Private Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates or on a securities position
listing without any change whatsoever.
If any tendered Private Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Private Notes are registered in different names on several
certificates or securities positions listings, it will be necessary to complete,
sign and submit as many separate copies of this Letter of Transmittal as there
are different registrations.
The signatures on this Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by an Eligible Institution unless the
Private Notes tendered pursuant hereto are tendered (i) by a registered Holder
of the Private Notes (including any participant in The Depository Trust Company
whose name appears on a security position listing as the owner of Private Notes)
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in this Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that the signatures in this
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States, or another "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (collectively, "Eligible Institutions").
If this Letter of Transmittal is signed by a person other than the Holder
of any Private Notes listed therein, such Private Notes must be endorsed or
accompanied by a properly completed bond power signed by such Holder exactly as
the name or names of such Holder or Holders appear(s) on such Private Notes with
the signatures on the Private Notes or the bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Private Notes or assignments or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Issuer, evidence satisfactory to the Issuer of their
authority to so act must be submitted with this Letter of Transmittal.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders of
Private Notes should indicate in the applicable box the name and address to
which Exchange Notes issued pursuant to the Exchange Offer and/or substitute
certificates evidencing Private Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the Employer
Identification or Social Security Number of the person named must also be
indicated. A Holder of Private Notes tendering Private Notes by book-entry
transfer may request that Private Notes not exchanged be
-14-
<PAGE> 15
credited to such account maintained at the Book-Entry Transfer Facility as such
Holder may designate hereon. If no such instructions are given, such Private
Notes not exchanged will be returned to the name or address of the person
signing this Letter of Transmittal or credited to the account listed beneath the
box entitled "Description of Private Notes," as the case may be.
5. TAX IDENTIFICATION NUMBER. Federal income tax law generally requires
that a tendering Holder whose Private Notes are accepted for exchange must
provide the Issuer (as payor) with such Holder's correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9 below, which, in the case of a tendering
Holder who is an individual, is his or her Social Security Number. If the Issuer
is not provided with the current TIN or an adequate basis for an exemption, such
tendering Holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to such tendering Holder of Exchange Notes may be
subject to backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an overpayment of
taxes, a refund may be obtained.
Exempt Holders of Private Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering Holder of Private Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN) and that (i) the Holder is exempt from backup withholding, (ii) the Holder
has not been notified by the Internal Revenue Service that such Holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the Holder that
such Holder is no longer subject to backup withholding. If the tendering Holder
of Private Notes is a nonresident alien or foreign entity not subject to backup
withholding, such Holder must give the Issuer a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Private Notes are in more than one name or are not in the name of the actual
owner, such Holder should consult the W-9 Guidelines for information on which
TIN to report. If such Holder does not have a TIN, such Holder should consult
the W-9 Guidelines for instructions on applying for a TIN, check the box in Part
3 of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking such box and writing "applied for" on the form means that such Holder
has already applied for a TIN or that such Holder intends to apply for one in
the near future. If such Holder does not provide its TIN to the Issuer within 60
days, backup withholding will begin and continue until such Holder furnishes its
TIN to the Issuer.
6. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the transfer of Private Notes to it or its order pursuant to the
Exchange Offer. If, however, Exchange Notes and/or substitute Private Notes not
exchanged are to be delivered to, or are to be registered or issued in the name
of, any person other than the Holder of the Private Notes tendered hereby, or if
tendered Private Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the transfer of Private Notes to the Issuer or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering Holder.
-15-
<PAGE> 16
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER
TAX STAMPS TO BE AFFIXED TO THE PRIVATE NOTES SPECIFIED IN THIS LETTER OF
TRANSMITTAL.
7. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8. DETERMINATION OF VALIDITY. The Issuer will determine, in its sole
discretion, all questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of Private
Notes, which determination shall be final and binding on all parties. The Issuer
reserves the absolute right to reject any and all tenders determined by it not
to be in proper form or the acceptance of which, or exchange for which, may be
unlawful. The Issuer also reserves the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer set forth in the
Prospectus under the caption "The Exchange Offer - Certain Conditions to the
Exchange Offer" or any conditions or irregularity in any tender of Private Notes
of any particular Holder whether or not similar conditions or irregularities are
waived in the case of other Holders.
The Issuer's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Private Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. Although the Issuer intends to notify holders of defects or
irregularities with respect to tenders of Private Notes, none of the Issuer, the
Guarantors, any employees, agents, affiliates or assigns of the Issuer, the
Exchange Agent, or any other person shall be under any duty to give notification
of any irregularities in tenders or incur any liability for failure to give such
notification.
9. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering Holders of Private Notes, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of their Private Notes for exchange.
10. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES. Any Holder whose
Private Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions. The
Holder will then be instructed as to the steps that must be taken to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the Private Notes have been replaced.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent, at the address and telephone number indicated above.
12. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of Private Notes being tendered and the certificate
number or numbers (if available) should be listed on a separate schedule
attached hereto and separately signed by all parties required to sign this
Letter of Transmittal.
-16-
<PAGE> 17
The Exchange Agent for the Exchange Offer is:
--------------------
By Hand Or Overnight Facsimile Transmissions: By Registered Or
Delivery: Certified Mail:
(Eligible Institutions Only)
(212) ________
To Confirm by Telephone or
for Information Call:
(212) ________
-17-
<PAGE> 1
Exhibit 99.2
<PAGE> 2
NOTICE OF GUARANTEED DELIVERY
FOR 11 1/2% SENIOR SUBORDINATED NOTES DUE 2007
OF SPARKLING SPRING WATER GROUP LIMITED
As set forth in the Prospectus, dated _____________, 1997 (the
"Prospectus"), of Sparkling Spring Water Group Limited (the "Issuer"), and in
the accompanying Letter of Transmittal and instructions thereto (the "Letter of
Transmittal"), holders who wish to tender their 11 1/2% Senior Subordinated
Notes due 2007 of the Issuer (the "Private Notes"), and (i) whose Private Notes
are not immediately available, or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documentation to the Exchange
Agent prior to the Expiration Date (as hereinafter defined), may effect a tender
if: (a) tender is made through an Eligible Institution; (b) prior to the
Expiration Date, the Exchange Agent receives from such Eligible Institution this
properly completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier), mailed or hand delivery) setting forth the name
and address of the holder, the certificate number(s) of such Private Notes and
the principal amount of the Private Notes being tendered, stating that the
tender is being made hereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, the Letter of Transmittal (or a
facsimile thereof) together with the certificate(s) representing the Private
Notes (or a Book-Entry Confirmation), as the case may be, and any other
documentation required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and (c) such properly completed
and executed Letter of Transmittal (or a facsimile thereof), as well as the
certificate(s) representing all tendered Private Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documentation required by the Letter of Transmittal, are received by the
Exchange Agent within five New York Stock Exchange trading days after the
Expiration Date. This Notice of Guaranteed Delivery may be delivered or
transmitted by facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight courier), mail or hand delivery to
the Exchange Agent as set forth below. See "The Exchange Offer -- Procedures for
Tendering" section of the Prospectus. Capitalized terms used herein but not
defined herein have the respective meanings given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_______________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
PRIVATE NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE AGENT: ____________________
By Hand or Overnight Facsimile Transmissions: By Registered Or
Delivery: Certified Mail:
(Eligible Institutions Only)
(212) ____________
To Confirm by Telephone or
for Information Call:
(212) ________
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE
TRANSMISSION, MAIL OR HAND DELIVERY, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 3
The undersigned hereby tender(s) to the Issuer, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Private Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
The undersigned understands that tenders of Private Notes pursuant to the
Exchange Offer may not be withdrawn after 5:00 p.m., New York City time, on the
Expiration Date. Tenders of Private Notes may also be withdrawn if the Exchange
Offer is terminated without any such Private Notes being exchanged thereunder or
as otherwise provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE COMPLETE AND SIGN
Signature(s) of Registered Owner(s) Name(s) of Registered Holder(s):_________
or Authorized Signatory:___________ _________________________________________
___________________________________ _________________________________________
___________________________________
Principal Amount of Private Address:_________________________________
Notes tendered:
___________________________________
Certificate No(s). of Private Notes Area Code and Telephone No.:_____________
(if available):
___________________________________
___________________________________
If Private Notes will be delivered by
book-entry transfer at The Depository
Trust Company, insert Depository Account
No.:
Date:______________________________ _________________________________________
This Notice of Guaranteed Delivery must be signed by the holder(s) of Private
Notes exactly as its (their) name(s) appear on certificates for Private Notes or
on a security position listing as the owner of Private Notes, or by person(s)
authorized to become holder(s) by endorsements and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must provide the following
information.
Please print name(s) and address(es)
Name(s): _______________________________________
Capacity: _______________________________________
Address(es): _______________________________________
_______________________________________
_______________________________________
Do not send Private Notes with this form. Private Notes should be sent to the
Exchange Agent together with a properly completed and duly executed Letter of
Transmittal.
2
<PAGE> 4
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank of trust company having an office or a correspondent in the
United States, hereby (a) represents that each holder of Private Notes on whose
behalf this tender is being made "own(s)" the Private Notes covered hereby
within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, (b) represents that such tender of Private Notes complies with such
Rule 14e-4, and (c) guarantees that, within five New York Stock Exchange trading
days after the Expiration Date, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with certificates representing
the Private Notes covered hereby in proper form for transfer (or confirmation of
the book-entry transfer of such Private Notes into the Exchange Agent's account
at The Depository Trust Company, pursuant to the procedure for book-entry
transfer set forth in the Prospectus) and required documents will be deposited
by the undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of
Transmittal and Private Notes tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in financial
loss to the undersigned.
Name of Firm:___________________________________________________________________
Authorized Signature
Address:______________________________ Name:_______________________________
Title:______________________________
______________________________________ Date:_______________________________
Area Code and Telephone No.:__________
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
3
