<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1998
REGISTRATION NO. 333-65307
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ZEMEX CANADA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
CANADA 1031 NONE
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
CANADA TRUST TOWER, BCE PLACE
161 BAY STREET, SUITE 3750
TORONTO, ONTARIO, CANADA M5J 2S1
(416) 365-8080
(Address and Telephone Number of Registrant's Principal Executive Office)
------------------------
PATRICIA K. MORAN
CANADA TRUST TOWER, BCE PLACE
161 BAY STREET, SUITE 3750
TORONTO, ONTARIO, CANADA M5J 2S1 (416) 365-8080
(Name, Address and Telephone Number of Agent for Service)
COPIES TO:
RONALD R. LEVINE, II, ESQ. JAY C. KELLERMAN, ESQ.
Davis, Graham & Stubbs LLP Stikeman Elliott
370 Seventeenth Street, Suite 4700 Commerce Court West, Suite 5300
Denver, Colorado 80202 Toronto, Ontario, Canada M5L 1B9
(303) 892-9400 (416) 869-5500
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE REQUISITE VOTES ARE OBTAINED PURSUANT TO THE SOLICITATION
BY ZEMEX CORPORATION REFERRED TO IN THIS REGISTRATION STATEMENT.
------------------------
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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 or the earlier effective registration statement
for the same offering. / / _______
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT OF SHARES MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Shares, without par value........... 8,950,000 shares $6.75(1) $60,412,500 $16,794(2)
</TABLE>
(1) Estimated in accordance with Rule 457, solely for the purpose of determining
the registration fee, on the basis of the average of the high and low prices
reported on the New York Stock Exchange Composite Tape on November 12, 1998
for the Common Stock, par value $1.00 per share, of Zemex Corporation, which
will be converted into Common Shares of Zemex Canada Corporation on a
one-for-one basis pursuant to the merger described in this Registration
Statement.
(2) $16,802 was previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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>
ZEMEX CORPORATION
CANADA TRUST TOWER, BCE PLACE
161 BAY STREET, SUITE 3750
TORONTO, ONTARIO, CANADA M5J 2S1
----------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
---------------------
A special meeting of the shareholders of Zemex Corporation will be held on
Friday, December 18, 1998, at 1:00 p.m. , in Room "C," 11th Floor, The Chase
Manhattan Bank, 270 Park Avenue, New York, New York 10017, for the purpose of
voting upon a proposal to reincorporate in Canada.
Upon approval, the reincorporation will be accomplished through a merger of
a subsidiary of Zemex Canada Corporation, a Canadian company, with Zemex
pursuant to the Agreement and Plan of Merger, dated October 1, 1998, between
Zemex, Zemex Canada and Zemex Acquisition Corporation. Pursuant to the merger
agreement:
(1) Each outstanding common share of Zemex will be converted into one common
share of Zemex Canada; and
(2) Zemex will become a wholly-owned subsidiary of Zemex Canada.
Once this transaction has been completed, Zemex Canada will be listed for
trading on both The Toronto Stock Exchange and the New York Stock Exchange.
Only shareholders of record at the close of business on November 10, 1998,
are entitled to notice of and to vote at the meeting. A complete list of those
shareholders will be open for examination by any shareholder for any purpose
germane to the meeting at the office of the Corporate Secretary of Zemex for a
period of 10 days prior to the meeting.
If you do not expect to attend in person, please sign and return the
enclosed proxy card.
By Order of the Board of Directors,
Patricia K. Moran
CORPORATE SECRETARY AND ASSISTANT
TREASURER
November , 1998
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1998
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS PROHIBITED.
<PAGE>
<TABLE>
<S> <C>
ZEMEX CANADA CORPORATION ZEMEX CORPORATION
CANADA TRUST TOWER, BCE PLACE CANADA TRUST TOWER, BCE PLACE
161 BAY STREET, SUITE 3750 161 BAY STREET, SUITE 3750
TORONTO, ONTARIO, CANADA M5J 2S1 TORONTO, ONTARIO, CANADA M5J 2S1
</TABLE>
------------------------------------
PROXY STATEMENT/PROSPECTUS
------------------------------------
Zemex Canada Corporation, a company organized under the Canada Business
Corporations Act, has agreed to a transaction which will facilitate the change
of domicile of Zemex Corporation from Delaware to Canada. Under this proposed
transaction each outstanding share of common stock of Zemex will be converted
into one common share of Zemex Canada, and Zemex will become a wholly-owned
subsidiary of Zemex Canada. A special meeting of Zemex shareholders will be held
to vote on a proposal to approve the merger agreement to accomplish the
reincorporation in Canada.
This proxy statement/prospectus constitutes the proxy statement of Zemex for
the solicitation of proxies from Zemex shareholders by the board of directors of
Zemex to approve the merger agreement. This proxy statement/prospectus also
constitutes the prospectus of Zemex Canada for the issuance of Zemex Canada
common shares to Zemex shareholders upon the consummation of the merger.
The merger will be consummated only if certain conditions are satisfied,
including the approval of the merger agreement by the holders of at least a
majority of the outstanding shares of Zemex common stock. As of November 10,
1998, there were 8,698,663 outstanding shares of Zemex common stock. The Zemex
Board of Directors has approved the merger agreement and the reincorporation
merger, and recommends that shareholders of Zemex vote FOR approval of the
merger agreement. Dundee Bancorp International Inc., which is the holder of
approximately 34% of the outstanding Zemex common stock, and members of the
Board of Directors of Zemex, who own approximately 12% of the outstanding Zemex
common stock, have indicated that they intend to vote for the approval of the
merger agreement.
The Zemex Board has approved the merger because it believes that
reincorporation in Canada will enable it to benefit from an active trading
market in Canada for Canadian natural resource companies such as Zemex. The
reincorporation merger will not change the assets, liabilities and operations of
Zemex, but following the merger, shareholders will be shareholders of a Canadian
and not a U.S. corporation.
Zemex common stock is currently listed for trading on the New York Stock
Exchange under the symbol "ZMX" and, immediately following the consummation of
the reincorporation merger, Zemex Canada common shares are expected to be listed
on the New York Stock Exchange and on The Toronto Stock Exchange.
This proxy statement/prospectus is first being mailed to shareholders of
Zemex common stock on or about November , 1998.
INVESTING IN ZEMEX COMMON STOCK AND ZEMEX CANADA COMMON SHARES INVOLVES
CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS NOVEMBER 17, 1998.
<PAGE>
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT ZEMEX THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS
DOCUMENT. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO HOLDERS OF ZEMEX
COMMON STOCK AND ZEMEX CANADA COMMON SHARES UPON WRITTEN OR ORAL REQUEST.
REQUESTS SHOULD BE MADE TO ZEMEX CORPORATION, CANADA TRUST TOWER, BCE PLACE, 161
BAY STREET, SUITE 3750, TORONTO, ONTARIO, CANADA M5J 2S1, ATTENTION: PATRICIA K.
MORAN, TELEPHONE: (416) 365-8080. TO OBTAIN TIMELY DELIVERY, YOU SHOULD REQUEST
INFORMATION NO LATER THAN .
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY............................... 1
The Companies....................... 1
Reincorporation Merger Proposal..... 1
SUMMARY FINANCIAL DATA................ 4
RISK FACTORS.......................... 5
Risk Factors Relating to the
Reincorporation Merger............ 5
Risk Factors Relating to Zemex
Canada's Business................. 6
REINCORPORATION MERGER PROPOSAL....... 8
MERGER AGREEMENT...................... 9
VOTING AND PROXY INFORMATION.......... 11
Special Meeting..................... 11
Proxy Solicitation.................. 12
Record Date......................... 12
Vote Required for Approval.......... 12
Proxies............................. 12
SHAREHOLDER PROPOSALS................. 13
DISSENTERS' RIGHTS.................... 13
COMPARATIVE RIGHTS OF SHAREHOLDERS.... 14
SELECTED FINANCIAL DATA............... 25
SECURITY OWNERSHIP.................... 26
BUSINESS OF ZEMEX..................... 29
BUSINESS OF ZEMEX CANADA.............. 29
MATERIAL UNITED STATES FEDERAL TAX
CONSIDERATIONS...................... 29
Tax Consequences of
Reincorporation................... 29
Tax Consequences of Ownership of
Zemex Canada Common Shares........ 31
MATERIAL CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS...................... 32
ACCOUNTING TREATMENT.................. 34
MANAGEMENT OF ZEMEX AND ZEMEX
CANADA.............................. 34
Directors........................... 34
Executive Officers and Certain Key
Employees......................... 35
DESCRIPTION OF SHARE CAPITAL.......... 35
Common Shares....................... 35
First Preference Shares............. 36
MARKET PRICES, DIVIDENDS AND TRADING
INFORMATION......................... 37
LEGAL MATTERS......................... 38
EXPERTS............................... 38
AVAILABLE INFORMATION................. 38
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE........................... 39
CAUTIONARY STATEMENT CONCERNING
FORWARD LOOKING STATEMENTS.......... 39
ANNEX A............................... A-1
Agreement and Plan of Merger........
</TABLE>
<PAGE>
SUMMARY
THIS SUMMARY PROVIDES AN OVERVIEW OF THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS AND DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD
CONSIDER. THEREFORE, YOU SHOULD ALSO READ THE MORE DETAILED INFORMATION SET
FORTH IN THIS DOCUMENT, THE FINANCIAL STATEMENTS OF THE COMPANY AND THE OTHER
INFORMATION THAT IS INCORPORATED BY REFERENCE. THE SYMBOL "$" REFERS TO UNITED
STATES DOLLARS.
THE COMPANIES
ZEMEX
Zemex Corporation was incorporated in 1985 in Delaware as the successor to
Pacific Tin Corporation. Zemex is a niche producer of industrial minerals and
metal products. Its principal businesses are industrial minerals, metal powders
and aluminum dross recycling. Its major products include feldspar, feldspathic
minerals, kaolin, sand, mica, talc, ferrous and non ferrous powders and aluminum
dross derivatives. Zemex's principal offices are located at Canada Trust Tower,
BCE Place, 161 Bay Street, Suite 3750, Toronto, Ontario, Canada M5J 2S1 and its
telephone number is (416) 365-8080.
ZEMEX CANADA
Zemex Canada Corporation, a company incorporated under the Canada Business
Corporations Act, was incorporated to facilitate the change of domicile of Zemex
from Delaware to Canada. After consummation of the reincorporation merger, the
outstanding capital stock of Zemex Canada will be held by the current
shareholders of Zemex, and Zemex will become a wholly-owned subsidiary of Zemex
Canada. Zemex Canada will continue to conduct the business in which Zemex is
currently engaged. Zemex Canada's registered office is located at Canada Trust
Tower, BCE Place, 161 Bay Street, Suite 3750, Toronto, Ontario, Canada M5J 2S1,
and its telephone number is (416) 365-8080.
REINCORPORATION MERGER PROPOSAL
GENERAL
The board of directors of Zemex has determined that it is advisable to
change Zemex's domicile from Delaware to Canada and proposes to effect the
change of domicile through the proposed merger. Under the merger agreement,
shareholders of Zemex will become shareholders of Zemex Canada, and Zemex will
become a wholly-owned subsidiary of Zemex Canada. The change of domicile will
not result in any material change to the business of Zemex and will not have any
effect on the relative equity or voting interests of Zemex's shareholders in the
Zemex business. The change of domicile will, however, result in certain changes
in the rights and obligations of current Zemex shareholders under applicable
corporate and tax laws. See "Risk Factors," "Comparative Rights of Shareholders"
and "Reincorporation Merger Proposal."
RECOMMENDATION OF THE ZEMEX BOARD OF DIRECTORS
THE ZEMEX BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT SHAREHOLDERS OF ZEMEX VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
The Zemex Board of Directors believes reincorporation in Canada will afford
greater access to the Canadian capital markets and investors that Zemex believes
have a significant interest in investing in natural resource companies. See
"Reincorporation Merger Proposal--Purposes and Effects of the Change of
Domicile" and "Certain United States Federal Tax Considerations." The expected
dual listing of Zemex Canada common shares on the New York Stock Exchange and
The Toronto Stock Exchange should also enhance liquidity for shareholders by
creating a broader and deeper trading market. See "Reincorporation Merger
Proposal."
1
<PAGE>
DISSENTERS' RIGHTS
Delaware law grants to shareholders appraisal rights which entitle
shareholders to receive payment of the fair value of their shares in certain
corporate transactions, such as a merger. However, Zemex shareholders will not
have appraisal rights in connection with the reincorporation merger because
Zemex common stock was listed on the New York Stock Exchange prior to the merger
and Zemex Canada common shares also will be listed on the exchange following the
merger. For more information see "Dissenters' Rights."
VOTES REQUIRED FOR APPROVAL
Approval of the merger agreement requires the affirmative vote of the
shareholders of Zemex holding at least a majority of the outstanding shares of
Zemex common stock. The directors and executive officers of Zemex together
directly owned approximately 12% of the total number of outstanding shares of
Zemex common stock. Dundee Bancorp International Inc. owns approximately 34% of
the outstanding shares of Zemex common stock. These shareholders have indicated
that they intend to vote all their shares for the approval of the merger
agreement. See "Voting and Proxy Information--Vote Required for Approval."
MATERIAL TAX CONSIDERATIONS
The following is a brief summary of the material tax consequences of the
reincorporation merger. Shareholders should consult their own tax advisers with
respect to their particular circumstances. A more detailed summary of material
tax consequences of the reincorporation merger is set out under "Material United
States Federal Tax Considerations" and "Material Canadian Federal Income Tax
Considerations."
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
- Holders of Zemex common stock who are treated as U.S. persons for U.S.
Federal income tax purposes will recognize gains but not losses on their
Zemex common stock.
- Holders of Zemex common stock who are treated as foreign persons for U.S.
Federal income tax purposes, including holders who hold directly and
constructively more than 5% of the outstanding Zemex common stock, will
not recognize taxable gain or loss on their Zemex common stock. See
"Material United States Federal Tax Considerations."
CANADIAN FEDERAL INCOME TAX CONSEQUENCES
- Holders of Zemex common stock who are resident or are deemed to be
resident in Canada for purposes of the Income Tax Act (Canada) who
exchange their Zemex common stock for Zemex Canada common shares will be
considered to have disposed of their Zemex common stock for proceeds of
disposition equal to the fair market value of Zemex Canada common shares
received in exchange.
- Holders who are neither resident nor deemed to be resident in Canada for
purposes of the Income Tax Act (Canada) and who do not use or hold their
Zemex common stock or Zemex Canada common shares in connection with
carrying on business in Canada will incur no tax liability under the
Income Tax Act (Canada) on any capital gain realized on the disposition of
Zemex common stock in exchange for Zemex Canada common shares. See
"Material Canadian Federal Income Tax Considerations."
ACCOUNTING TREATMENT
The indirect acquisition by Zemex Canada of the shares of Zemex in
connection with the reincorporation merger will be accounted for as a statutory
reincorporation. There will not be any "step-up" or write-up of assets for
accounting purposes as a result of the reincorporation merger.
2
<PAGE>
Pro forma financial information in contemplation of the reincorporation
merger has not been included in this proxy statement/prospectus because the
statutory reincorporation will largely result in a change in legal form only.
The carrying values of the assets and liabilities of Zemex Canada after the
transaction will substantially reflect the carrying values of the assets and
liabilities of Zemex prior to the transaction.
RISK FACTORS
An investment in Zemex Canada common shares involves certain risks. In
evaluating Zemex Canada and its business, investors should carefully consider
the following risk factors, in addition to the other information included in
this proxy statement/prospectus and the risks inherent in the existing business
of Zemex:
- certain possible adverse tax consequences; and
- possible volatility of stock price.
See "Risk Factors."
COMPARATIVE RIGHTS OF SHAREHOLDERS
The principal attributes of Zemex common stock and Zemex Canada common
shares will be identical in all material respects. However, the rights of
shareholders under Delaware law differ in certain substantive ways from the
rights of shareholders under the Canada Business Corporations Act. Examples of
some of the changes in shareholder rights which will result from reincorporation
are:
- Shareholders holding at least 5% of the shares entitled to vote may
require the board to call a special meeting of shareholders under Canadian
law. Delaware law does not contain a similar requirement.
- Shareholder actions by written consent are only valid under Canadian law
when all of the shareholders entitled to vote on the matter sign the
written consent. Delaware law requires the signatures of only a majority
of such shareholders for a valid action by written consent.
- Dissenter's rights are available to shareholders under more circumstances
under Canadian law than under Delaware law.
- Shareholders have a statutory oppression remedy under Canadian law that
does not exist under Delaware statute. It is similar to the common law
action in Delaware for breach of fiduciary duty, but the Canadian remedy
does not require shareholders to prove that the directors acted in bad
faith.
- A majority of the directors of a Canadian company must reside in Canada.
Delaware law does not contain a similar provision.
- A director's liability may not be limited under Canadian law as it may
under Delaware law.
For a more detailed explanation of these and other differences in the rights
of shareholders, see "Comparative Rights of Shareholders."
3
<PAGE>
SUMMARY FINANCIAL DATA
THE FOLLOWING SUMMARY FINANCIAL INFORMATION FOR THE YEARS 1993 THROUGH 1997
INCLUDES BALANCE SHEET AND STATEMENT OF OPERATIONS DATA FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF ZEMEX. THE FOLLOWING SUMMARY FINANCIAL
INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 INCLUDES
BALANCE SHEET AND STATEMENT OF OPERATIONS DATA FROM UNAUDITED HISTORICAL
CONSOLIDATED FINANCIAL STATEMENTS OF ZEMEX. IN THE OPINION OF MANAGEMENT, THE
UNAUDITED FINANCIAL STATEMENTS REFLECT ALL ADJUSTMENTS (CONSISTING OF NORMAL
RECURRING ADJUSTMENTS) NECESSARY FOR A FAIR STATEMENT OF RESULTS FOR THE
UNAUDITED INTERIM PERIODS. THE INFORMATION CONTAINED IN THIS TABLE SHOULD BE
READ IN CONJUNCTION WITH "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND THE CONSOLIDATED FINANCIAL STATEMENTS
AND ACCOMPANYING NOTES INCLUDED IN THE 1997 FORM 10-K, THE MARCH 31, 1998 FORM
10-Q , THE JUNE 30, 1998 FORM 10-Q AND THE SEPTEMBER 30, 1998 FORM 10-Q THAT ARE
INCORPORATED BY REFERENCE.
The financial statements of Zemex have been prepared in accordance with
accounting principles generally accepted in the United States. The application
of Canadian generally accepted accounting principles, which will be applicable
to Zemex Canada's financial statements, would not result in any material
differences from the Zemex financial statements.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- --------- ---------- ---------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
U.S. GAAP
STATEMENT OF OPERATIONS DATA:
Net sales................................ $ 78,056 $ 73,672 $ 97,226 $ 86,420 $ 85,056 $ 55,306 $ 47,958
Reorganization and restructuring
charge................................. -- -- -- 1,752 -- -- --
Operating income......................... 7,896 6,392 8,371 3,066 8,342 5,841 1,237
Other income (expense)................... (2,384) (164) (309) (1,403) (443) (262) 2,421
Net income............................... 3,859 4,021 5,793 2,612 8,418 6,250 1,852
Earnings per common share
Basic.................................. $ 0.48 $ 0.50 $ 0.72 $ 0.33 $ 1.07 $ 1.21 $ 0.45
Fully diluted.......................... 0.46 0.49 0.70 0.32 1.03 1.12 0.40
BALANCE SHEET DATA (AT PERIOD END)
Working capital.......................... $ 24,779 $ 18,975 $ 18,688 $ 19,709 $ 26,046 $ 9,288
Total assets............................. 151,536 118,774 109,376 96,681 70,864 48,414
Long-term debt........................... 39,810 20,527 17,797 7,485 5,461 8,735
Shareholders' equity..................... 79,754 76,535 70,997 70,900 54,052 26,530
</TABLE>
4
<PAGE>
RISK FACTORS
An investment in Zemex Canada common shares involves certain risks. In
evaluating Zemex Canada and its business, investors should carefully consider
the following risk factors in addition to the other information included or
incorporated by reference in this proxy statement/prospectus.
RISK FACTORS RELATING TO THE REINCORPORATION MERGER
ADVERSE TAX CONSEQUENCES TO SHAREHOLDERS IN THE REINCORPORATION MERGER
Generally, for U.S. Federal income tax purposes, the reincorporation merger
will cause shareholders of Zemex common stock who are taxable as U.S. persons to
recognize gains, but not losses, on their Zemex common stock. See "Material
United States Federal Tax Consequences." Any dividends that are paid to United
States holders of Zemex Canada common shares after the reincorporation merger
may be subject to Canadian withholding taxes at the rate of 15% for holders who
own less than 10% of Zemex Canada voting stock. See "Material Canadian Federal
Income Tax Considerations." In addition, payments of dividends or interest by
Zemex to Zemex Canada could also be subject to United States withholding taxes
at rates of 15% and 10%, respectively.
POSSIBLE VOLATILITY OF STOCK PRICE DUE TO CHANGE IN DOMICILE AND POSSIBLE
REDUCED DEMAND IN UNITED STATES FOR ZEMEX CANADA COMMON SHARES
The market price of Zemex Canada common shares may be subject to significant
fluctuations in response to variations in results of operations and other
factors. Developments affecting the specialty materials industry generally,
including national and international economic conditions, currency fluctuations
and government regulation, could also have a significant impact on the market
price of the Zemex Canada common shares. In addition, in recent years, the stock
market has experienced a high level of price and volume volatility and market
prices for the stock of many companies have experienced wide price fluctuations
which have not necessarily been related to the operating performance of such
companies. These broad market fluctuations, which are beyond the control of
Zemex Canada, could have a material adverse effect on the market price of Zemex
Canada common shares.
Prior to the reincorporation merger, there has been no public market for
Zemex Canada common shares (although there has been a public market for the
Zemex common stock). Zemex Canada cannot predict what effect the reincorporation
will have on the market price prevailing from time to time or the liquidity of
Zemex Canada common shares. While the Zemex common stock has been and Zemex
Canada common shares will be listed for trading on the New York Stock Exchange,
the change in domicile and expected increase in investment interest in Canada
may decrease the demand for Zemex Canada common shares in United States trading
markets. The decrease may not be offset by increased demand on The Toronto Stock
Exchange.
RESTRICTIONS ON FREE TRANSFER OF ZEMEX CANADA COMMON SHARES IN CANADA
Zemex Canada common shares to be issued to shareholders resident in certain
provinces of Canada will be subject to restrictions imposed by law that limit
the ability of a shareholder to resell such securities within such province. As
an example, shareholders resident in the Province of Ontario will be subject to
restrictions on resale of their Zemex Canada common shares in Ontario until
Zemex has been listed on the Toronto Stock Exchange for over one year.
Additionally, any person, company or combination of persons or companies holding
a sufficient number of Zemex Canada common shares to affect materially the
control of Zemex Canada will be restricted in selling Zemex Canada common shares
pursuant to securities laws applicable in Canada.
5
<PAGE>
RISK FACTORS RELATING TO ZEMEX CANADA'S BUSINESS
In addition to the risk factors set forth above relating to the
reincorporation merger, Zemex Canada will engage in the same business as Zemex.
That business is subject to the following risks, which should be considered
carefully in evaluating Zemex Canada and its business.
VULNERABILITY TO ECONOMIC CYCLES
Zemex Canada's future operating results will depend largely upon the
economic environments in which it operates. In the past, recessionary pressures
in the housing, automotive, construction, transportation and durable goods
industries has adversely affected demand for Zemex's products. Zemex Canada
expects that product demand (and consequently results of operations) will
continue to be highly sensitive to North American economic conditions and other
factors beyond Zemex Canada's control.
ACQUISITION DUE DILIGENCE RISKS
Acquisition of specialty materials businesses has been a key element of
Zemex's success, and Zemex Canada will continue to seek acquisitions in the
future. Zemex has performed and Zemex Canada will continue to perform reviews of
the operations to be acquired that it believes is consistent with industry
practices. However, such reviews are inherently incomplete. In addition,
representations, warranties and indemnities received from sellers may not be
adequate to limit acquisition risks. It is generally not feasible to review
in-depth all of the operations and records of an acquired business. Ordinarily,
Zemex Canada will focus most of its due diligence efforts on the operation's
more significant assets. However, even an in-depth review of operations and
records may not necessarily reveal existing or potential problems, nor will it
permit a buyer to become familiar enough with the operations to assess fully
their deficiencies and capabilities. Moreover, environmental problems, such as
ground water contamination, are not necessarily observable even when an in-depth
inspection is undertaken. Zemex Canada may assume environmental and other
liabilities in connection with acquired assets and operations.
MARKET RISK ASSOCIATED WITH SUBSTITUTE INDUSTRIAL MINERAL PRODUCTS
Zemex Canada believes that there are few current effective substitutes for
Zemex's industrial mineral products (E.G., feldspar, talc and mica). With
respect to feldspar, substitute products exist for use in the ceramics industry,
but their use has been accompanied by product quality problems. With respect to
talc and mica, substitute products are continually being developed for use in
the plastics industry, but Zemex continues to engage in research to ensure that
its products provide the most satisfactory product performance. If alternative
products are discovered or developed to a stage of competitive price and
performance level, they could potentially erode Zemex Canada's market share and
adversely affect results of operations.
COMPETITION FOR SALES IN SPECIALTY MATERIALS INDUSTRY
The specialty materials industry is highly competitive. Zemex Canada will
compete for acquisitions and in the development, production and marketing of
specialty materials with other companies. The markets for talc and metal powders
products are dominated by several large competitors of Zemex, and are
characterized by competition in price and product development. Zemex Canada
competes for sales in its Alumitech operations based principally upon
technological know-how. While Zemex believes it has a dominant market position
in its feldspar and mica operations, competition in that market is based on
price, quality and development of new product applications. Some of the
competitors of Zemex Canada have substantially greater financial and other
resources than Zemex Canada. Zemex Canada cannot be certain that competitors
will not succeed in developing products based upon new processor technologies
that are more effective or less expensive than Zemex Canada's products.
6
<PAGE>
NEED FOR BANK FINANCING TO MEET CAPITAL REQUIREMENTS
Zemex has utilized, and Zemex Canada will continue to utilize, bank debt in
addition to cash flow from operations to support its growth and to finance its
capital expansion program. The ability to borrow under Zemex's current bank
facility depends upon meeting specified levels of cash flow from operations.
Accordingly, bank borrowings could be restricted at a time when Zemex's capital
needs are strained by reduced cash flows. Any significant reductions in the
availability of bank borrowings could have a material adverse effect on the
Company's prospects.
ADVERSE EFFECT OF GOVERNMENT ENVIRONMENTAL, HEALTH AND SAFETY REGULATION
Zemex Canada's extraction and processing activities are subject to
comprehensive U.S. federal, state and local, Canadian federal and provincial and
other foreign laws and regulations relating to the environment and health and
safety. Zemex has and Zemex Canada will continue to regularly monitor and review
operations, procedures and policies for compliance with these laws and
regulations including, but not limited to, solid and hazardous waste
regulations, worker health and safety regulations, worker and community
right-to-know requirements, and clean water and clean air permitting and
compliance requirements specific to the extraction and processing of industrial
minerals and metal powders. Despite compliance efforts, the risk of
environmental and other damage is inherent in the extraction and processing of
industrial minerals and metal powders. Zemex Canada cannot be certain that it
will not incur material environmental liabilities in the future. Moreover, the
historical trend toward stricter environmental regulation may continue. Future
regulation may give rise to additional compliance requirements and costs that
could have a material adverse effect on Zemex Canada. These events may include
changes in, or modified interpretations of, existing laws and regulations or
enforcement policies. These events may also include further investigation or
evaluation of the potential health hazards of certain industrial mineral and
metal powder products, intermediate products, by-products and wastes, and the
environmental impact of Zemex Canada operations.
EXTRACTION AND PROCESSING RISKS AND POTENTIAL INADEQUACY OF INSURANCE COVERAGE
The business of extraction and processing of industrial minerals and metal
powders is subject to many risks and hazards, including environmental hazards,
industrial accidents, periodic interruptions due to inclement weather
conditions, labor disputes, power interruptions, critical equipment failures,
fires, unusual or unexpected geological or mining conditions and flooding. Such
risks could result in damage to, or destruction of, extraction or processing
facilities, personal injury, environmental damage, delays in extraction or
production, monetary loss and possible legal liability. Although Zemex Canada
will maintain insurance within ranges of coverage consistent with industry
practice, it cannot be certain that such insurance will be adequate to cover
losses or continue to be available at economically acceptable rates in the
future. Zemex Canada may become subject to liability for pollution, accidents or
other hazards against which it is uninsured.
ADVERSE EFFECT OF FLUCTUATIONS IN EXCHANGE RATES
Currency fluctuations may affect the revenue which Zemex Canada will realize
from its operations as its products are sold in the world market in United
States dollars. The costs of Zemex Canada will be incurred principally in
Canadian dollars and United States dollars. Fluctuations in the value of such
currencies could have an adverse effect on Zemex Canada.
RISK OF WORK STOPPAGE DUE TO STRIKE OR LOCKOUT
Approximately 35% of Zemex Canada's workforce is unionized and represented
by unions. The current contracts expire at different times between December 31,
1998 and February 28, 2002. If Zemex Canada does not renew the contracts on
their expiration, work stoppages due to strike or lockout may result.
7
<PAGE>
REINCORPORATION MERGER PROPOSAL
BACKGROUND OF THE REINCORPORATION MERGER PROPOSAL
The board of directors of Zemex has determined that it is advisable to
change Zemex's domicile from Delaware to Canada. A principal reason for the
change in domicile is to take advantage of investment interest by, and legal
investment regulations affecting, Canadian pension and retirement funds.
Generally, Canadian pension and retirement funds may only invest up to 20% of
the cost of their assets in foreign property. Foreign property does not include
shares of a Canadian corporation which maintains an office in Canada so long as
the corporation, or another corporation that is controlled by the corporation,
employs more than five individuals in Canada full time in its business
activities. Zemex Canada common shares meet this test and accordingly, do not
constitute foreign property so that Canadian pension and retirement funds would
not be restricted in their investments in Zemex Canada common shares by the 20%
test, thereby giving these funds greater flexibility to invest in such shares
than in Zemex common stock. Management believes that Canadian pension and
retirement plans have substantial interest in investment in natural resource and
specialty material companies and that the ability of such funds to invest in
Zemex Canada common shares would positively affect the market for these shares.
Over the past 18 months, Zemex has pursued several acquisition proposals,
each of which would, if consummated, have resulted in Zemex being, or being part
of, a Canadian corporation. For various reasons, none of the acquisition
transactions were consummated, and the board is now proposing that the change of
domicile be effected directly pursuant to the merger agreement. Pursuant to the
merger agreement, shareholders of Zemex will become shareholders of Zemex
Canada, and Zemex will become a wholly-owned subsidiary of Zemex Canada. The
change of domicile will not result in any material change to the business of
Zemex and will not have any effect on the relative equity or voting interests of
Zemex's shareholders in the Zemex business. The change in domicile will,
however, result in certain changes in the rights and obligations of current
Zemex shareholders under applicable corporate and tax laws. See "Risk Factors,"
"Comparative Rights of Shareholders," "Certain United States Federal Tax
Considerations" and "Certain Canadian Federal Income Tax Considerations."
PURPOSES AND EFFECTS OF THE CHANGE OF DOMICILE
The purpose of the reincorporation merger is to change Zemex's domicile from
Delaware to Canada, which the Zemex board of directors believes will afford
greater access to the Canadian capital markets and investors (which have a
significant interest in natural resource companies). The expected dual listing
of Zemex Canada common shares for trading on the New York Stock Exchange and The
Toronto Stock Exchange should also enhance liquidity for shareholders through
the creation of a broader and deeper trading market.
RECOMMENDATION OF THE ZEMEX BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF ZEMEX HAS UNANIMOUSLY APPROVED THE PROPOSED
TRANSACTION AND RECOMMENDS THAT SHAREHOLDERS APPROVE THE MERGER AGREEMENT.
In reaching its decision, the board reviewed the fairness to Zemex and its
shareholders of the proposed transactions and considered, without assigning
relative weights to, the following factors:
- The belief of the board of directors that the reincorporation merger
should provide greater access to the Canadian capital markets and
investors, which the board believes have a significant interest in mining
and other natural resource issues;
- The belief of the board of directors that liquidity for shareholders of
Zemex Canada should be enhanced by the dual listing of Zemex Canada common
shares for trading on The Toronto Stock Exchange and the New York Stock
Exchange;
8
<PAGE>
- The belief that adverse tax consequences of the proposed transaction will
be minimized due to the current low trading price of the Zemex common
stock. For U.S. tax purposes, Zemex stockholders who are U.S. persons must
recognize taxable gains, but not losses, on their Zemex stock;
- The fact that Zemex's principal executive office is currently located in
Canada, and that it has, through operations in Canada, established
relationships with the investment and mining communities in Canada; and
- The fact that the shareholders have an opportunity to vote on the
reincorporation merger.
Without relying on any single factor listed above more than any other
factor, the Zemex board of directors, based upon its consideration of all such
factors taken as a whole, has concluded that the proposed transaction is fair to
Zemex and its shareholders. ACCORDINGLY, THE ZEMEX BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE REINCORPORATION MERGER.
MERGER AGREEMENT
The following summary of the terms of the merger agreement is qualified in
its entirety by reference to the full text of the merger agreement, attached as
Annex A to this proxy statement/prospectus.
GENERAL
Under the terms of the merger agreement, Zemex Acquisition Corporation, a
newly formed subsidiary of Zemex Canada, will merge with and into Zemex. The
separate corporate existence of Zemex Acquisition will cease and Zemex will be
the surviving corporation. Each previously outstanding share of Zemex
Acquisition common stock will be converted into one share of Zemex common stock
and each previously outstanding share of Zemex common stock will be converted
into one Zemex Canada common share. The previously outstanding Zemex Canada
common shares will be canceled. As a result of the foregoing, upon consummation
of the reincorporation merger, Zemex will become a wholly-owned subsidiary of
Zemex Canada, and the current shareholders of Zemex will own all of the
outstanding Zemex Canada common shares. In the reincorporation merger, Zemex
will change its name to Zemex U.S. Corporation and immediately prior to the
reincorporation merger, Zemex Canada will change its name to Zemex Corporation.
For accounting purposes, the assets and liabilities of Zemex Canada and its
subsidiaries on a consolidated basis immediately after the consummation of the
reincorporation merger will be substantially identical to the assets and
liabilities of Zemex and its subsidiaries on a consolidated basis immediately
prior to the reincorporation merger.
EFFECTIVE TIME OF THE REINCORPORATION MERGER
The reincorporation merger will become effective upon:
1. The approval of the merger agreement by the shareholders of Zemex and
Zemex Acquisition;
2. The delivery of a duly executed and verified certificate of merger to
the Secretary of State of the State of Delaware; and
3. The satisfaction or waiver of the other conditions set forth below.
See "--Conditions to the Consummation of the Reincorporation Merger." It is
anticipated that the certificate of merger will be filed shortly after the
special meeting of Zemex shareholders.
9
<PAGE>
CONDITIONS TO THE CONSUMMATION OF THE REINCORPORATION MERGER
The obligation of each of the parties to the merger agreement to effect the
reincorporation merger is subject to the satisfaction of certain conditions at
or prior to the time the merger becomes effective, including:
1. The shareholders of Zemex and Zemex Acquisition shall have duly approved
the transactions contemplated by the merger agreement;
2. No action, suit or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator or other
governmental entity wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would:
- prevent consummation of any of the transactions contemplated by the
merger agreement;
- cause any of the transactions contemplated by the merger agreement
to be rescinded following consummation;
- cause Zemex Canada or Zemex, or any of their officers or directors,
to become liable for any material damages; or
- affect adversely the right of the surviving corporation after the
reincorporation merger to own the former assets or to operate the
former businesses of Zemex (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect) and there shall
not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the reincorporation merger by any
governmental entity which prevents the consummation of the
reincorporation merger;
3. There shall not have been a breach of any representation, warranty,
covenant or agreement of Zemex, Zemex Canada, or Zemex Acquisition set
forth in the merger agreement which, individually or in the aggregate,
would have a material adverse effect on Zemex; and
4. Zemex Canada common shares shall have been listed for trading on the New
York Stock Exchange and The Toronto Stock Exchange.
The merger agreement also provides that, subject to certain limitations, any
term or provision of the merger agreement may be waived by written agreement of
Zemex.
THIRD PARTY CONSENTS
The only material consents, approvals or authorizations of or filings with
any governmental entity required to consummate the reincorporation merger are
the approval of the shareholders of Zemex and Zemex Acquisition in accordance
with the laws of the State of Delaware and the filing with the Secretary of
State of the State of Delaware of the certificate of merger for the
reincorporation merger.
EXCHANGE OF SHARE CERTIFICATES
No exchange of certificates that, prior to the effective time of the merger,
represented shares of Zemex common stock is required with respect to the
reincorporation merger and the transactions contemplated by the merger
agreement. Promptly after the effective time of the merger, The Montreal Trust
Company of Canada shall mail to each record holder of certificates that
immediately prior to the effective time of the merger represented shares of
Zemex common stock a letter of transmittal and instructions for use in
surrendering such certificates. Upon the surrender of each certificate formerly
representing Zemex common stock, together with a properly completed letter of
transmittal, Montreal Trust shall issue in exchange a common share certificate
of Zemex Canada representing Zemex Canada common shares and the Zemex common
stock certificate shall be canceled. Until so surrendered and
10
<PAGE>
exchanged, each Zemex common stock certificate shall represent solely the right
to receive Zemex Canada common shares.
EMPLOYEE MATTERS; STOCK OPTIONS
Following the reincorporation merger, Zemex will continue pension benefit
plans for Zemex employees, most of whom will continue to be employed by Zemex
(and not Zemex Canada) following the merger. The cost of such plans is expected
to be consistent with costs historically incurred by Zemex for employee
benefits.
As of the effective time of the reincorporation merger, all options to
purchase shares of Zemex common stock granted or issued prior to the effective
time of the merger and all rights to purchase Zemex common stock arising under
Zemex stock purchase plans will entitle the holder to purchase an equal number
of Zemex Canada common shares. After the effective date of the merger, Zemex
Canada will adopt new option and stock purchase plans to replicate Zemex's
existing plans. Future options and rights would be subject to and governed by
the terms of the new option or purchase plan or plans and any related
agreements.
INDEMNIFICATION
For six years after the reincorporation merger, Zemex Canada will indemnify
any current or former directors and officers of Zemex or any of Zemex's
subsidiaries against all losses and liabilities arising out of their service in
such capacities prior to and including the effective time of the reincorporation
merger. Zemex Canada has also included provisions in its bylaws for the
limitation of liability of directors and indemnification of directors and
officers to the fullest extent permitted by applicable law.
TERMINATION
The merger agreement may be terminated and the reincorporation merger may be
abandoned at any time, either before or after approval thereof by the
shareholders of Zemex by action of the board of directors of Zemex.
VOTING AND PROXY INFORMATION
SPECIAL MEETING
A special meeting of the Zemex shareholders will be held at 1:00 p.m. on
Friday, December 18, 1998, at The Chase Manhattan Bank, Room "C," 11th Floor,
270 Park Avenue, New York, New York 10017 (or at any adjournments or
postponements thereof) to consider and vote on the proposal to approve the
merger agreement and any other matters that may properly come before such
meeting. The presence, in person or by proxy, of shareholders holding a majority
of the outstanding shares of Zemex common stock will constitute a quorum.
The vote of any Zemex shareholder who is represented at the special meeting
by proxy will be cast as specified in the proxy. If no vote is specified in a
duly executed and delivered proxy, such vote will be cast FOR the proposal. Any
Zemex shareholder of record who is present at the special meeting in person will
be entitled to vote at the meeting regardless of whether he has previously
granted a proxy with respect thereto.
THE BOARD OF DIRECTORS OF ZEMEX HAS APPROVED THE PROPOSED REINCORPORATION
MERGER AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT.
11
<PAGE>
PROXY SOLICITATION
The total cost of soliciting proxies will be borne by Zemex. Proxies may be
solicited by officers and regular employees of Zemex without extra remuneration
by personal interviews, telephone and by electronic means. Zemex anticipates
that bank, brokerage houses and other custodians, nominees and fiduciaries will
forward soliciting material to shareholders and those persons will be reimbursed
for the related out-of-pocket expenses they incur.
RECORD DATE
Only those shareholders of record at the close of business on November 10,
1998, as shown in Zemex's records, will be entitled to vote or to grant proxies
to vote at the special meeting.
VOTE REQUIRED FOR APPROVAL
Approval of the merger agreement requires the affirmative vote of the
shareholders of Zemex holding at least a majority of the outstanding shares of
Zemex common stock. Abstentions and broker "non-votes" will have the effect of
votes against the approval of the merger agreement. As of November 10, 1998,
there were 8,698,663 shares of Zemex common stock outstanding and entitled to
vote. The directors and executive officers of Zemex and their affiliates
directly owned, in the aggregate, 1,084,903 shares (approximately 12%) of the
total number of shares of Zemex common stock outstanding at the record date. In
addition, Dundee Bancorp International Inc. owns approximately 34% of the
outstanding shares of Zemex common stock. These persons have indicated that they
will vote all of their shares of Zemex common stock for the approval of the
merger agreement.
PROXIES
GENERAL
Each Zemex shareholder as of November 10, 1998, will receive a proxy card.
- A shareholder of Zemex may grant a proxy to vote for or against, or to
abstain from voting on, the proposal to approve the merger agreement by
marking his/her proxy card appropriately and executing it in the space
provided.
- Holders of Zemex common stock whose names appear on the stock records of
Zemex should return their proxy card to Zemex's transfer agent, First
Union National Bank, in the envelope provided with the proxy card.
- Zemex shareholders who hold their Zemex common stock in the name of a
bank, broker or other nominee should follow the instructions provided by
their bank, broker or nominee on voting their shares.
TO BE EFFECTIVE, A PROXY CARD MUST BE RECEIVED PRIOR TO THE SPECIAL MEETING.
ANY PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION
INDICATED ON SUCH PROXY CARD. A PROPERLY EXECUTED AND RETURNED PROXY CARD IN
WHICH NO SPECIFICATION IS MADE WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT.
If any other matters are properly presented at the special meeting for
consideration, including consideration of a motion to adjourn the meeting to
another time and/or place (including adjournment for the purpose of soliciting
additional proxies), the persons named in the proxy card and acting under its
authority will have discretion to vote on such matters in accordance with their
best judgment.
12
<PAGE>
REVOCATION
Holders of Zemex common stock whose names appear on the stock records of
Zemex may revoke their proxy card at any time prior to its exercise by:
- giving written notice of such revocation to First Union National Bank;
- appearing and voting in person at the special meeting; or
- properly completing and executing a later-dated proxy and delivering it to
First Union National Bank at or before the special meeting. Presence
without voting at the special meeting will not automatically revoke a
proxy, and any revocation during the meeting will not affect votes
previously taken.
Zemex shareholders who hold their Zemex common stock in the name of a bank,
broker or other nominee should follow the instructions provided by their bank,
broker or nominee in revoking their previously voted shares. See "Voting and
Proxy Information--Proxies."
VALIDITY
All questions as to the validity, form, eligibility (including time of
receipt), and acceptance of proxy cards will be determined by the Zemex board of
directors. Any such determination will be final and binding. The Zemex board of
directors will have the right to waive any irregularities or conditions as to
the manner of voting. Zemex may accept proxies by any reasonable form of
communication so long as Zemex can be reasonably assured that the communication
is authorized by the Zemex shareholder.
SHAREHOLDER PROPOSALS
Shareholders of Zemex Canada may submit proposals to be considered for
shareholder action at the 1999 Annual Meeting of Shareholders if they do so in
accordance with the applicable regulations of the SEC and Canadian Business
Corporations Act. In order to be considered for inclusion in Zemex Canada's
proxy statement for the meeting, the Corporate Secretary must receive proposals
no later than February 28, 1999. Shareholder proposals should be addressed to
the Corporate Secretary, Zemex Canada, Canada Trust Tower, BCE Place, 161 Bay
Street, Suite 3750, Toronto, Ontario, M5J 2S1.
DISSENTERS' RIGHTS
Under Section 262 of the Delaware General Corporation Law, shareholders are
entitled to the payment of the fair value of their shares in certain corporate
transactions, such as a merger. However, under Section 262(b) such appraisal
rights are not available in a merger if:
1. The shares of the corporation were listed on a national securities
exchange prior to the merger; and
2. The shareholders of the corporation receive in the merger shares of a
corporation that are listed for trading on a national securities
exchange.
Because the Zemex common stock was, and Zemex Canada common shares will be,
listed for trading on the New York Stock Exchange, Zemex shareholders will not
have appraisal rights in the reincorporation merger.
13
<PAGE>
COMPARATIVE RIGHTS OF SHAREHOLDERS
When the reincorporation merger is effective, the shareholders of Zemex, a
Delaware corporation, will become shareholders of Zemex Canada, a Canadian
corporation organized under the Canada Business Corporations Act, or the CBCA.
Differences between the CBCA and the Delaware General Corporate Law, or DGCL,
will result in various changes in the rights of shareholders of Zemex.
The following is a summary of the rights of Zemex shareholders compared to
those of Zemex Canada shareholders under applicable law and charter documents.
This summary does not purport to be complete and is qualified in its entirety by
reference to Zemex Canada's Articles of Continuance, the text of which is
attached to the registration statement of which this proxy statement/prospectus
is a part and Zemex Canada's Bylaw No. 1, the text of which is attached to the
registration statement of which this proxy statement/prospectus is a part.
GENERALLY
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
REMOVAL OF DIRECTORS Generally, shareholders may remove Shareholders may remove directors, with or
directors, with or without cause, by a vote without cause, by a resolution passed by a
of the holders of a majority of the shares majority of the votes cast by shareholders
entitled to vote in an election of voting on the resolution.
directors.
FILLING VACANCIES ON
THE BOARD OF
DIRECTORS A vacancy on the board of directors may be A vacancy on the board of directors may be
filled by the majority vote of the filled for the remaining term of the
remaining directors. vacated directorship by a vote of the
Newly created directorships resulting from directors, unless:
an increase in the number of directors - The company's articles of incorporation
elected by all of the stockholders who have provide otherwise;
the right to vote as a single class may - The vacancy results from an increase in
also be filled by the remaining directors. the number of directors;
Vacancies and newly created directorships - The vacancy results from a failure to
which arise in director positions which the elect the number or minimum number of
holders of a class or series of stock are directors; or
entitled to elect may be filled by a - The vacancy is in the term of a director
majority or the sole remaining director(s) elected exclusively by holders of a given
elected by the same series or class. class or series of shares.
Under Zemex Canada's articles of
continuance, directors may fill vacancies,
but the number of directorships filled in
this manner may not exceed one-third of the
number of directors elected at the previous
annual meeting.
NOTICE OF
SHAREHOLDER
MEETINGS Notice of shareholder meetings must be Notice of shareholder meetings must be
given no less than 10 and no more than 60 given no less than 21 and no more than 50
days before a meeting. days before a meeting.
ADJOURNMENT AND
NOTICE OF
SHAREHOLDER
MEETINGS Shareholders' meetings may be adjourned for Shareholders' meetings may be adjourned for
up to 30 days without giving notice of the up to 29 days without additional notice,
adjourned meeting other than by but for an adjournment of 30 days or more
announcement at the adjourned meeting the company must give the same notice for
(unless the Bylaws provide otherwise). For the subsequent meeting that it gave for the
an adjournment more than 30 days, notice original meeting.
must be given as it was for the original
meeting.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
CALL FOR SPECIAL
SHAREHOLDER
MEETINGS Special meetings of shareholders may be Special meetings may be called by the board
called by the board of directors or by a of directors and must be called by the
person authorized by the charter or bylaws. board when the holders of at least 5% of
the shares entitled to vote request a
meeting.
SHAREHOLDER CONSENT
IN LIEU OF MEETING Shareholder action may be taken without a Shareholder action without a meeting may
meeting by a written consent signed by only be taken by written resolution signed
shareholders having at least the minimum by ALL shareholders who would be entitled
number of votes that would be necessary to to vote on the matter at a meeting.
authorize the action at a meeting. The Approval of a majority would be
company's charter may prohibit action by insufficient for written consent.
written consent.
NOMINATION OF
DIRECTORS Under Delaware law, a company may place Shareholders may nominate candidates at an
reasonable notice, time and place annual meeting of shareholders through a
restrictions on shareholder nominations of shareholder proposal signed by shareholders
directors. holding at least 5% of a class of the
shares entitled to vote at the meeting. The
proposal must be submitted at least 90 days
before the anniversary date of the previous
annual meeting.
BUSINESS INTRODUCED
BY SHAREHOLDERS AT
ANNUAL MEETINGS Under the Exchange Act, shareholders may Shareholders entitled to vote at the annual
submit a proposal to be included in a meeting who wish to raise a matter at the
company's proxy statement if the meeting may submit a notice of the matter
shareholder: to the corporation and the corporation must
- Owns at least 1% or $2,000 market value then set out the proposal in the proxy
of the securities entitled to be voted on circulated for the meeting, or attach the
the proposal; proposal to the proxy. Proposals must be
- Have owned the securities for at least 1 submitted to the corporation at least 60
year prior to the date of the proposal; and days prior to the anniversary date of the
- Continue to own the securities through last annual meeting. The shareholder can
the date of the meeting. then require the corporation to include
The proposal must be received by the statement of up to 200 words by the
company 120 calendar days before the date shareholder in support of the proposal in
on which the proxy statement was released the management proxy circular.
to shareholders for the previous year's At the annual meeting, a shareholder can
meeting. discuss any matter for which he would have
been entitled to submit a shareholder
proposal
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
SHAREHOLDER
PROPOSALS THAT MAY
BE EXCLUDED The company may omit a shareholder proposal The corporation does not have to entertain
for various reasons, such as if the proposals which:
proposal: - Are self serving for the shareholder;
- Is not proper for shareholder action; - Have been included in a management proxy
- Would require the company to violate the circular within the past two years and
law or is beyond the company's power; were defeated; or
- Is contrary to SEC proxy rules; - Are submitted by a shareholder who
- Involves a personal claim or grievance; requested to have a proposal included in
- Relates to insignificant operations of a proxy within the prior two years but
the company; failed to present the proposal at the
- Relates to the conduct of the company's meeting.
ordinary business;
- Relates to an election to office;
- Counters a proposal to be submitted by
the company at the same meeting;
- Deals with the same matter as a prior
proposal that received little support; or
- Relates to specific amounts of cash or
stock dividends.
DISSENTER'S RIGHTS Shareholders are entitled to exercise Shareholders are entitled to exercise
dissenter's rights and receive fair value dissenters rights and be paid for the fair
for their shares in the event of a merger value of their shares in connection with
if the holders comply with the requirements certain matters, including:
of section 262 of the DGCL. - Any amalgamation with another corporation
Appraisal rights are not available if: (other than with certain affiliated
- Before the merger, the corporation was corporations);
listed on a national securities exchange or - An amendment to the articles to modify
similar system; any provisions restricting or constraining
- The stock of the corporation was held by the issue, transfer or ownership of their
more than 2,000 shareholders; shares;
- The corporation survived the merger and - An amendment to a corporation's articles
the approval of its shareholders was not to modify a restriction upon the business
required for the merger because the the corporation may conduct;
merger agreement did not amend the - A continuance under the laws of another
surviving corporation's certificate of jurisdiction;
incorporation and did not provide for the - A sale, lease or exchange of all or
issuance of common stock of the survivor substantially all the property of the
in excess of 20% of such survivor's corporation other than in the ordinary
shares outstanding immediately prior to course of business;
the merger; or - The granting of a court order permitting
- The merger was with or into a a shareholder to dissent from an
wholly-owned subsidiary and certain application to the court for an order
conditions were met. approving an arrangement proposed by the
corporation; or
- A matter which requires a separate class
or series vote.
A shareholder is not entitled to dissent if
an amendment to the articles is effected by
a court order approving a reorganization or
by a court order for an oppression remedy.
In addition, shareholders may seek an
oppression remedy (see below).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
DERIVATIVE ACTIONS:
WHO MAY BRING THEM Derivative actions may be brought in A shareholder may apply to the court for
Delaware by a shareholder on behalf of, and leave to bring an action in the name of and
for the benefit of, the corporation. The on behalf of a corporation or any
shareholder must have been a shareholder of subsidiary, or to intervene in an existing
the corporation at the time of the action to which the corporation is a party.
transaction of which he complains. A complainant may include:
- Present/former registered holders or
beneficial owners of securities of a
corporation or any of its affiliates;
- Present/former officers or directors of
the corporation or any of its affiliates;
- The CBCA Director; or
- Any other person who in the discretion of
the court is a proper person to make such
application.
DERIVATIVE ACTIONS:
REQUIREMENTS The shareholder must first seek remedial The court must be satisfied that
action from the board of directors unless a - The complainant gave reasonable notice to
demand for redress is excused. the directors of his intention to apply
The board of directors can appoint an to the court;
independent litigation committee to review - The complainant acted in good faith; and
the shareholder's request for a derivative - It is in the interests of the corporation
action and the litigation committee, acting that the action be brought, prosecuted,
independently, reasonably and in good defended or discontinued.
faith, can terminate the shareholder's
action subject to a court's review of the
committee's independence, good faith and
reasonable investigation.
DERIVATIVE ACTIONS:
REMEDIES When a derivative action proceeds, the The court may make any order it thinks fit,
court may apply a variety of legal and including an order:
equitable remedies on behalf of the - Authorizing the complainant or another
corporation which vary depending on the person to control the conduct of the
facts and circumstances of the case and the action,
nature of the claim brought. - Giving directions for the conduct of the
action,
- Directing that any amount adjudged
payable by a defendant in the action shall
be paid to security holders instead of to
the corporation;
- Requiring the corporation to pay the com-
plainant's reasonable legal fees; and/or
- Requiring the corporation to pay the com-
plainant's interim costs, including legal
fees and disbursements (the complainant
may be held accountable for the costs on
final disposition but is not required to
give security).
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
OPPRESSION REMEDY There is no statutory oppression remedy, A statutory oppression remedy enables the
but there are a variety of legal and court to make any order, both interim and
equitable remedies available to final, to rectify the matters complained of
shareholders for improper acts or omissions if satisfied upon application by a
of a corporation, its officers or complainant that:
directors. Under the DGCL, only - Any act or omission of the corporation or
shareholders can bring an action alleging a an affiliate effects a result;
breach of fiduciary duty by the directors - The business or affairs of the
of a corporation. The shareholder must corporation or an affiliate are or have
overcome the "business judgment rule," been carried on or conducted in a manner;
under which, absent a showing of or
intentional misconduct, gross negligence or - The powers of the directors of the
a conflict of interest, disinterested corporation or an affiliate are or have
directors' decisions are presumed by the been exercised in a manner that is
courts to have been made in good faith and oppressive or unfairly prejudicial to or
in the best interests of the corporation. that unfairly disregards the interests of
any security holder, creditor, director
or officer.
The complainant does not have show that the
directors acted in bad faith. The court may
order the corporation to pay the
complainant's interim expenses but may hold
the complainant accountable for those
expenses on final disposition.
The oppression remedy may be sought by any
shareholder or by other complainants with a
substantial interest in the corporation,
such as holders of secured debt of the
corporation.
DIVIDENDS AND
DISTRIBUTIONS Subject to any restrictions contained in a Directors may not declare or pay a dividend
corporation's charter, the directors if:
generally may declare and pay dividends: - There are reasonable grounds for
- Out of surplus (defined as the excess, if believing that the corporation is, or would
any, of net assets over stated capital) or, after the payment be, unable to pay its
when no surplus exists, liabilities as they become due or
- Out of net profits for the fiscal year in - The realizable value of the corporation's
which the dividend is declared and/or the assets would be less than the sum of its
preceding fiscal year. liabilities and stated capital as a
Dividends may not be paid out of net result of the dividend payment.
profits if the stated capital of the
corporation is less than the aggregate
amount of stated capital represented by the
issued and outstanding stock of all classes
having a preference upon the distribution
of assets.
DIRECTOR QUALIFICA-
TIONS Delaware law has no residency requirement A majority of the directors of a CBCA
for directors. corporation must be resident Canadians.
NUMBER OF DIRECTORS The number of directors of a Delaware The articles must specify the number of
corporation shall be fixed by, or in the directors or state a range. Where the
manner provided in, the bylaws, unless the articles specify a range, the shareholders
charter fixes the number of directors. normally determine the initial number
within such range and thereafter delegate
this power to the directors.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
INDEMNIFICATION OF
OFFICERS AND
DIRECTORS The DGCL authorizes a corporation to indem- Under the CBCA, a corporation may indemnify
nify the following persons: the following persons:
- Directors - A current or former director or officer
- Officers - A person who acts or has acted at the
- Employees and corporation's request as a director or
- Agents officer of an entity of which the
The corporation may indemnify against all corporation is or was a shareholder or
reasonable expenses (including attorneys' creditor
fees) for all judgments, fines and amounts The corporation may indemnify against all
paid in settlement. These indemnification costs, costs, including reasonable amounts
rights are not exclusive of other paid in settlement or to satisfy a
indemnification rights. judgment, for any civil, criminal or
administrative action to which the
indemnified person is made a party because
he is a director or officer.
REQUIREMENTS OF
INDEMNIFICATION Indemnification is only available if: The person may be indemnified only if:
- The indemnified person acted in good - He acted honestly and in good faith with
faith and in a manner which he reasonably a view to the best interests of the
believed to be in, or not opposed to, the corporation and
best interests of the corporation and - In the case of a criminal or
- In the case of a criminal proceeding, had administrative action or proceeding that is
no reasonable cause to believe his conduct enforced by a monetary penalty, he had
was unlawful. reasonable grounds for believing that his
No indemnification shall be made if the conduct was lawful.
individual is held liable to the company,
unless the court determines that the
individual is fairly and reasonably
entitled to indemnification for the amount
of expenses the court deems proper.
DETERMINATION OF
INDEMNIFICATION A corporation's determination of whether to For an action by or on behalf of the
indemnify someone is to be made: corporation, a corporation may, with court
- By a majority vote of the disinterested approval, provide indemnification against
directors (even if less than a quorum); all costs, charges and expenses reasonably
- By a committee of disinterested directors incurred by indemnified persons in
designated by the majority vote of the connection with the action who fulfill the
disinterested directors (even if less conditions set forth immediately above.
than a quorum);
- By independent legal counsel if there are
no disinterested directors or if the
disinterested directors so direct; or
- By the shareholders.
Where the person defends a matter
successfully, indemnification for
reasonable expenses is mandatory. Officers'
and directors' expenses may be paid in
advance of final disposition if the person
agrees to repay the advances if he is later
determined not to be entitled to
indemnification. Advance payment for other
employees is at the board's discretion.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW & US SECURITIES LAWS CANADIAN LAWS
------------------------------------------- -------------------------------------------
<S> <C> <C>
INSURANCE ON BEHALF
OF INDEMNITEES The DGCL permits a corporation to maintain The CBCA permits a corporation to purchase
insurance on behalf of an indemnitee and maintain insurance for the same persons
against any liability or expenses incurred the corporation is permitted to indemnify.
in the capacity in which he serves the The insurance may cover any liabilities
corporation or arising out of his status as covered by such a person:
such, whether or not the corporation would - In his capacity as a director or officer,
have the power to indemnify him against except where the liability relates to his
such expenses and liabilities under the failure to act honestly and in good faith
applicable provisions of the DGCL. with a view to the best interests of the
corporation or
- In his capacity as a director or officer
of another corporation where he acts or
acted in that capacity at the
corporation's request, except where the
liability relates to his failure to act
honestly and in good faith with a view to
the best interests of the corporation.
DIRECTOR LIABILITY The charter of a Delaware corporation may The CBCA does not permit any such
include a provision which limits or limitation of a director's liability.
eliminates the personal liability of
directors to the corporation or its
shareholders for monetary damages for
breach of fiduciary duty as a director,
provided such liability does not arise from
certain proscribed conduct, including
intentional misconduct and breach of the
duty of loyalty.
AMENDMENT TO ARTI-
CLES OF INCORPORA-
TION The DGCL requires the approval of the Under the CBCA, any amendment to the arti-
holders of a majority of the outstanding cles generally requires approval by special
stock entitled to vote for any amendment to resolution. A special resolution is a
the certificate of incorporation unless the resolution passed by at least two-thirds of
level of approval is increased by the the votes cast by the shareholders who vote
certificate of incorporation. If the on the resolution.
amendment proposes to change the number or
par value of shares or adversely affect the
rights of a particular class of stock, that
class is entitled to vote separately on the
amendment, whether or not it is designated
as voting stock.
AMENDMENT TO THE
BYLAWS The DGCL provides shareholders with the The CBCA provides that shareholders
right to amend the bylaws, although a entitled to vote at shareholder meetings
corporation is permitted in its charter to may confirm, reject or amend any bylaw or
give this right to the directors as well. amendment or repeal of a bylaw submitted by
Director action is subject to being amended directors by ordinary resolution, which
by shareholders. must be passed by a majority of the votes
cast by shareholders who voted thereon.
Shareholders may also make a proposal to
make, amend or repeal a bylaw subject to
compliance with the CBCA requirements for
shareholder proposals described above under
Business Introduced by Shareholders at
Annual Meetings.
</TABLE>
20
<PAGE>
REQUIREMENTS FOR EXTRAORDINARY CORPORATE TRANSACTIONS
Under the DGCL, a merger or consolidation requires the approval of a
majority of each corporation's shareholders entitled to vote on the matter
except:
- For a corporation which survives the merger where
(1) The merger requires the issuance of common stock not exceeding 20% of
such corporation's shares outstanding immediately prior to the
merger;
(2) The merger agreement does not amend the survivor's certificate of
incorporation;
(3) Each share of the corporation's stock outstanding immediately prior
to the merger is to be an identical outstanding or treasury share of
the surviving corporation after the merger; and
(4) Shareholder approval is not specifically mandated in the survivor's
certificate of incorporation;
- For both corporations where the corporation surviving the merger owned at
least a 90% of the stock of the other corporation prior to the merger; or
- Where a corporation merges with or into a wholly-owned subsidiary and
certain conditions are met.
The DGCL provides that unless a greater percentage is required by the
charter, the approval of a merger, consolidation, dissolution or sale of
substantially all of a corporation's assets requires the affirmative vote of the
holders of a majority of the shares entitled to vote.
Under the CBCA, certain extraordinary corporate actions are required to be
approved by special resolution of the holders of all shares, whether or not the
shares are designated as voting shares. Those extraordinary corporate actions
include certain amalgamations, continuances, sales, leases or exchanges of all
or substantially all the assets of a corporation other than in the ordinary
course of business, and other extraordinary corporate actions such as
liquidations, dissolutions or court ordered arrangements. A special resolution
is a resolution passed by at least two-thirds of the votes cast by the
shareholders who voted on the resolution. In certain cases, the special
resolution is also required to be approved by shareholders separately as a class
or series.
TAKEOVER AND ISSUER BIDS
Under the CBCA, a takeover bid for a corporation means, with certain
statutory exemptions, an offer:
- Made to shareholders of the corporation at approximately the same time;
- To acquire shares that, if combined with shares already beneficially owned
or controlled, directly or indirectly, by the offeror or affiliates or
associates of the offeror on the date of the takeover bid, would exceed
10% of any class of issued shares of the corporation; and
- Includes every offer, subject to certain statutory exceptions, by the
corporation to repurchase its own shares (which is generally termed an
issuer bid under provincial securities legislation).
Takeover bids (with a 20% threshold instead of a 10% threshold) and issuer
bids are also defined and regulated under provincial securities legislation.
There are differences in such definitions and in the rules applicable to such
bids from those contained in the CBCA. Takeover bids or issuer bids are,
however, subject to the applicable provisions of both the CBCA and relevant
provincial securities legislation.
As a general matter, any takeover bid or issuer bid must be made to all
holders resident in Canada of securities of the class that is subject to the
bid. The holders must be offered identical consideration and the bid must
otherwise be made in compliance with applicable provisions of the CBCA and
provincial securities legislation governing bids, subject to limited statutory
exemptions. In particular, the CBCA excludes from the CBCA definition of a
takeover bid an exempt offer, which includes an offer to fewer
21
<PAGE>
than 15 shareholders to purchase shares by way of separate agreements. The scope
of the exemption is limited, however, by the analogous statutory exemptions in
the securities legislation of certain provinces. For example, the Securities Act
(Ontario) provides for a statutory exemption for a takeover bid (but not an
issuer bid) where purchases are made from not more than five persons or
companies in the aggregate, the bid is not made generally to securityholders of
the subject class of securities and the value of the consideration paid for any
of the securities, including brokerage fees or commissions, does not exceed 115%
of the market price of the securities of that class at the date of the bid
determined in accordance with the applicable legislation.
POST-BID ACQUISITIONS
In addition, provincial securities legislation of certain provinces,
including Ontario, provides for integration of a subsequent take-over bid that
is a formal bid or an issuer bid with prior pre-bid private transactions and
restrictions on post-bid acquisitions. Under the Securities Act (Ontario), a
post-bid acquisition arises when:
- An offeror makes a takeover bid that is a formal bid or an issuer bid; and
- Within the period of 90 days immediately preceding the bid, the offeror
acquired beneficial ownership of securities of the class pursuant to a
transaction not generally available to holders of that class of
securities,
For post-bid acquisitions, the offeror must:
- Offer consideration at least equal to the highest consideration paid per
security in the prior transactions (or at least the cash equivalent of
such consideration); and
- Offer to acquire a number of securities from the seller that would be the
same percentage of the total number of securities of that class
beneficially owned by the seller at the time of the prior transaction.
An offeror is also prohibited from acquiring beneficial ownership of
securities of the class by way of a transaction that is not generally available
on identical terms to the holders of that class of securities for a 20 day
period following the expiration of the bid, whether or not any securities are
taken up under the bid.
Ontario Securities Commission Policy No. 9.1 provides for additional
requirements in connection with insider bids, issuer bids, going-private
transactions and related party transactions.
INSIDER BIDS
An insider bid means a takeover bid (as defined in the Securities Act
(Ontario)) made:
- By an insider of the offeree issuer;
- By any associate or affiliate of an insider of an offeree issuer;
- By any associate or affiliate of the offeree issuer; or
- By an offeror acting jointly or in concert with any of the foregoing.
An insider bid does not include an issuer bid. With respect to insider bids
and issuer bids, Policy 9.1 requires enhanced disclosure in the offering
document and, subject to a limited exemption, that a formal valuation of the
securities of the offeree issuer that are the subject of the bid be prepared and
summarized in the offering document.
22
<PAGE>
GOING-PRIVATE TRANSACTIONS
A going-private transaction means any acquisition or other transaction
involving an issuer where the shareholders' interest may be terminated without
their consent and without substituting an interest of equivalent value in a
participating security of the issuer, a successor to the business of the issuer
or a successor to the business of another entity that controls the issuer. A
going-private transaction does not include the acquisition of participating
securities pursuant to a statutory right of acquisition.
With respect to going-private transactions, Policy 9.1 requires:
- Enhanced disclosure in the proxy material sent to securityholders in
connection with the transactions;
- The preparation of a formal valuation of any securities of the issuer in
which the interest of the holders will be terminated and any non-cash
consideration will be offered for the securities;
- The inclusion of a summary in the proxy material; and
- That the minority shareholders of the issuer separately approve the
transaction (depending on the circumstances, the required level of
approval may be a simple majority or two-thirds of the votes cast by the
minority shareholders).
INTERESTED SHAREHOLDER TRANSACTIONS
The DGCL prohibits a "business combination" between the corporation and an
"interested shareholder" within three years of the shareholder becoming an
"interested shareholder." An "interested shareholder" is any person (other than
the corporation or a majority owned subsidiary) who, directly or indirectly,
controls 15% or more of the outstanding voting stock. A "business combination"
includes a merger, consolidation, sale or other disposition of assets having an
aggregate value in excess of 10% of the consolidated assets of the corporation,
and certain transactions that would increase the interested shareholder's
proportionate share ownership in the corporation. This provision does not apply
where:
- The business combination or the transaction that caused the shareholder to
become an "interested shareholder" is approved by the corporation's board
of directors prior to the time the interested shareholder acquired its
shares;
- Upon completion of the transaction in which the shareholder became an
"interested shareholder," such shareholder held at least 85% of the
outstanding voting stock of the corporation (excluding from the number of
shares outstanding shares held by persons who are directors and also
officers or by employee stock plans in which participants do not have the
right to determine confidentially whether shares held subject to the plan
will be tendered);
- The business combination is approved by a majority of the board of
directors and the affirmative vote of two-thirds of the votes entitled to
be cast by disinterested shareholders at an annual or special meeting;
- The corporation does not have a class of voting stock that is listed on a
national securities exchange, authorized for quotation on the NASDAQ Stock
Market, or held by more than 2,000 shareholders unless any of the
foregoing results from action taken, directly or indirectly, by an
interested shareholder; or
- The corporation has opted out of this provision.
The CBCA does not contain a comparable provision with respect to business
combinations. However, policies of certain Canadian securities regulatory
authorities, including Policy 9.1, contain requirements in connection with
related party transactions. A related party transaction means, generally, any
transaction by which an issuer, directly or indirectly, acquires or transfers an
asset, acquires or issues treasury securities or
23
<PAGE>
assumes or transfers a liability from or to a related party by any means.
"Related party" is defined in Policy 9.1 and includes directors, senior officers
and holders of at least 10% of the voting securities of the issuer. Policy 9.1
requires more detailed disclosure in the proxy material sent to security holders
in connection with a related party transaction, and, subject to certain
exemptions, the preparation of a formal valuation of the subject matter of the
related party transaction and any non-cash consideration offered and the
inclusion of a summary of the valuation in the proxy material. Policy 9.1 also
requires, subject to certain exemptions, that the minority shareholders of the
issuer separately approve the transaction, by either a simple majority or
two-thirds of the votes cast, depending on the circumstances.
CHANGES IN CONTROL
The business combination provisions of the DGCL described above may have had
the effect of deterring merger proposals, tender offers or other attempts to
effect changes in control of Zemex that were not negotiated with and approved by
the board of directors.
As noted above under "Votes Required for Extraordinary Corporate
Transactions," takeover bids in Canada are regulated by corporate and securities
legislation. However, shareholder-ratified shareholders rights plans also exist
in Canada to further protect shareholders' rights by giving shareholders
adequate time to assess a takeover bid without undue pressure and to allow
competing bids to emerge.
24
<PAGE>
SELECTED FINANCIAL DATA
THE FOLLOWING SELECTED FINANCIAL INFORMATION FOR THE YEARS 1993 THROUGH 1997
INCLUDES BALANCE SHEET AND STATEMENT OF OPERATIONS DATA FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF ZEMEX. THE FOLLOWING SELECTED FINANCIAL
INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 INCLUDES
BALANCE SHEET AND STATEMENT OF OPERATIONS DATA FROM UNAUDITED HISTORICAL
CONSOLIDATED FINANCIAL STATEMENTS OF ZEMEX. IN THE OPINION OF MANAGEMENT, THE
UNAUDITED FINANCIAL STATEMENTS REFLECT ALL ADJUSTMENTS (CONSISTING OF NORMAL
RECURRING ADJUSTMENTS) NECESSARY FOR A FAIR STATEMENT OF RESULTS FOR THE
UNAUDITED INTERIM PERIODS. THE INFORMATION CONTAINED IN THIS TABLE SHOULD BE
READ IN CONJUNCTION WITH "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND THE CONSOLIDATED FINANCIAL STATEMENTS
AND ACCOMPANYING NOTES INCLUDED IN THE 1997 FORM 10-K, THE MARCH 31, 1998 FORM
10-Q, THE JUNE 30, 1998 FORM 10-Q AND THE SEPTEMBER 30, 1998 FORM 10-Q THAT ARE
INCORPORATED BY REFERENCE.
The financial statements of Zemex have been prepared in accordance with
accounting principles generally accepted in the United States. The application
of Canadian generally accepted accounting principles, which will be applicable
to Zemex Canada's financial statements, would not result in any material
differences in the Zemex financial statements.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- --------- ---------- ---------- --------- --------- ---------
(UNAUDITED)(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GAAP
STATEMENT OF OPERATIONS DATA:
Net sales............................... $ 78,056 $ 73,672 $ 97,226 $ 86,420 $ 85,056 $ 55,306 $ 47,958
Reorganization and restructuring
charge................................ -- -- -- 1,752 -- -- --
Operating income........................ 7,896 6,392 8,371 3,066 8,342 5,841 1,237
Other income (expense).................. (2,384) (164) (309) (1,403) (443) (262) 2,421
Net income.............................. 3,859 4,021 5,793 2,612 8,418 6,250 1,852
Earnings per common share
Basic................................. $ 0.48 $ 0.50 $ 0.72 $ 0.33 $ 1.07 $ 1.21 $ 0.45
Fully diluted......................... 0.46 0.49 0.70 0.32 1.03 1.12 0.40
BALANCE SHEET DATA (AT PERIOD END)
Working capital......................... $ 24,779 $ 18,975 $ 18,688 $ 19,709 $ 26,046 $ 9,288
Total assets............................ 151,536 118,774 109,376 96,681 70,864 48,414
Long-term debt.......................... 39,810 20,527 17,797 7,485 5,461 8,735
Shareholders' equity.................... 79,754 76,535 70,997 70,900 54,052 26,530
</TABLE>
25
<PAGE>
SECURITY OWNERSHIP
The Company is incorporated under the Canada Business Corporations Act, and
was incorporated to facilitate the change of domicile of Zemex from Delaware to
Canada. All of the outstanding capital stock of Zemex Canada is currently owned
by Zemex. At the effective time of the reincorporation merger, each share of
Zemex common stock outstanding immediately prior to the consummation of the
reincorporation merger will be automatically converted into one Zemex Canada
common share and the existing Zemex Canada common shares will be canceled.
Accordingly, upon consummation of the reincorporation merger, the share
ownership of Zemex Canada will be identical to the stock ownership of Zemex
immediately prior to the reincorporation merger. In addition, outstanding
options to purchase shares of Zemex common stock will upon exercise entitle the
holder to purchase an equal number of Zemex Canada common shares.
The following table sets forth certain information as of November 3, 1998
with respect to the beneficial ownership of the shares of Zemex common stock by
(1) each person known by Zemex to be the beneficial owner of more than 5% of the
outstanding shares of Zemex common stock; (2) each director of Zemex; (3) each
named executive officer of Zemex who was an executive officer as of such date;
and (4) all directors and executive officers of Zemex as a group.
<TABLE>
<CAPTION>
5% SHAREHOLDERS, DIRECTORS,
NAMED EXECUTIVE OFFICERS
AND DIRECTORS AND EXECUTIVE PERCENT
OFFICERS AS A GROUP(1)(2)(3) NUMBER OF SHARES BENEFICIALLY OWNED(4) OF CLASS
- ------------------------------ ---------------------- ---------
<S> <C> <C>
Dundee Bancorp International 2,955,177(8) 34.2%
Inc. .......................
Scotia Plaza, 55th Floor
40 King Street West
Toronto, Ontario, Canada M5H
4A9
Paul A. Carroll............... 25,019(5)(6) *
Morton A. Cohen............... 318,886(5)(6)(7) 3.7%
John M. Donovan............... 30,520(5)(6) *
Thomas B. Evans, Jr........... 35,290(5)(6) *
Garth A.C. MacRae............. 0(8) *
Peter O. Lawson-Johnston...... 97,692(5)(6)(9) 1.1%
Richard L. Lister ............ 810,902(6)(10)(12)(14) 9.2%
Canada Trust Tower, BCE
Place
161 Bay Street, Suite 3750
Toronto, Ontario, Canada M5J
2S1
Patrick H. O'Neill............ 35,370(5)(6) *
William J. vanden Heuvel...... 43,196(5)(6) *
Allen J. Palmiere............. 80,520(6)(11) *
Peter J. Goodwin.............. 76,690(11)(14) *
Terrance J. Hogan............. 78,917(11)(13)(14) *
George E. Gillespie........... 13,901(11)(14) *
All Directors and Named 1,646,903(5)(6)(7)(8)(9)(10)(11)(12)(13)(14) 17.8%
Officers as a group
(13 persons)................
</TABLE>
- ------------------------
* Denotes less than 1% of Zemex common stock outstanding.
(1) A Schedule 13G, prepared on behalf of Merrill Lynch & Co., Inc. and various
of its subsidiaries, was filed with the SEC indicating that it could be
construed to be a beneficial owner of 898,177 shares of Zemex common stock
as of December 31, 1997. However, Merrill Lynch & Co., Inc. disclaims any
beneficial ownership of the shares of Zemex common stock because they were
held in proprietary trading accounts.
26
<PAGE>
(2) Zesiger Capital Group LLC has filed a Schedule 13G with the SEC indicating
that it could be deemed to be a beneficial owner of 935,815 shares of Zemex
common stock as of December 31, 1997. However, Zesiger Capital Group LLC
disclaims any beneficial ownership of the shares of Zemex common stock
because they were purchased for customer accounts.
(3) Dimensional Fund Advisors Inc., a registered investment advisor, is deemed
to have beneficial ownership of 438,572 shares of Zemex common stock as of
December 31, 1997, all of which shares of Zemex common stock are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, for all of
which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares of Zemex common stock.
(4) Computed in accordance with Rule 13d-3(d)(1) of the Exchange Act.
(5) These directors were each granted options for 15,000 shares of Zemex common
stock at $5.50 per share exercisable in two installments of 7,500 each
beginning on May 26, 1994 and May 26, 1995, respectively. These options
expire on May 26, 1999. On February 8, 1995, these directors were each
granted options for an additional 5,000 shares of Zemex common stock at
$9.125 per share exercisable in two installments of 2,500 each beginning on
February 8, 1996 and February 8, 1997, respectively, and expiring on
February 8, 2001. On April 21, 1997, each of these directors was granted
options for 10,000 shares of Zemex common stock at $7.00 per share
exercisable in two installments of 5,000 each beginning on April 21, 1998
and April 21, 1999, respectively. These options expire April 21, 2003.
Additionally, each of these directors was granted options for 7,500 shares
of Zemex common stock at $10.1875 per share exercisable in two installments
of 3,750 each beginning on May 15, 1999 and May 15, 2000, respectively.
These options expire May 15, 2004. Shares shown in the table include the
25,000 currently exercisable options for each director, respectively, except
for Mr. Carroll who exercised 15,000 options in March 1998.
(6) Each of these directors and members of management purchased 5,000 shares of
Zemex common stock from G.E. Wood, former President and Chief Executive
Officer, as part of an assignment of Zemex's settlement agreement with Mr.
Wood dated August 10, 1993.
(7) Includes 282,393 shares of Zemex common stock owned by Clarion Capital
Corporation, a company of which Mr. Cohen may be deemed to be the beneficial
owner.
(8) Excludes 2,897,233 shares of Zemex common stock owned by Dundee Bancorp
International Inc., a wholly-owned subsidiary of Dundee Bancorp Inc. Mr.
MacRae is Vice Chairman of the Board of Dundee Bancorp Inc., but disclaims
any beneficial ownership of the shares of Zemex common stock owned by Dundee
Bancorp International Inc.
(9) Includes 18,366 shares of Zemex common stock beneficially owned by Elgerbar
Corporation. Mr. Lawson-Johnston is President and Director of Elgerbar
Corporation and has shared voting and investment power with respect to the
shares of Zemex common stock held by it.
(10) In 1991, Richard L. Lister, President and Chief Executive Officer of Zemex,
acquired 357,000 shares of Zemex common stock under Zemex's Key Executive
Stock Purchase Plan for an aggregate purchase price of $1,749,300 ($4.90 per
share). Zemex loaned Mr. Lister the full amount of the purchase price. This
non-interest bearing loan, which was originally scheduled to mature in 1997,
has been extended for two years by approval of the Board. The loan is
evidenced by a promissory note secured by a pledge of the shares of Zemex
common stock. If Mr. Lister leaves the employ of Zemex at any time prior to
full payment of the loan, the principal amount will be due in full 30 days
after the date his employment terminates. Any balance remaining unpaid on
the loan after it is due will bear interest at the prime rate plus 1.0%. So
long as the loan is outstanding, Mr. Lister is required to vote
27
<PAGE>
the 357,000 shares of Zemex common stock in a manner consistent with the
recommendation of the Board.
(11) Includes shares of Zemex common stock issuable upon exercise of vested
options as follows: Mr. Lister, 220,000 shares; Mr. Palmiere, 75,000 shares;
Mr. Goodwin, 55,000 shares; Mr. Hogan, 39,500 shares; Mr. Gillespie, 12,500
shares; and all named officers and directors as a group, 587,000 shares.
(12) During 1997, Zemex agreed to guarantee a personal loan in the amount
$600,000 drawn down by Mr. Lister. The proceeds of the loan were used to
acquire 85,700 shares of Zemex common stock on the open market. The shares
of Zemex common stock acquired are held by Zemex as security for the loan
guarantee.
(13) As part of Zemex's purchase of Alumitech, Inc. in May 1995, Mr. Hogan was
issued 28,558 shares of Zemex common stock and options for an additional
22,000 shares of Zemex common stock at $9.75 per share exercisable in two
installments of 11,000 shares each beginning on May 12, 1996 and May 12,
1997, respectively, in exchange for his interest in Alumitech, Inc. The
options expire on May 12, 2001.
(14) Includes shares of Zemex common stock purchased in 1995, 1996, 1997 and the
first six months of 1998, plus any applicable stock dividends, in accordance
with the terms and conditions of Zemex's employee stock purchase plan as
follows: Mr. Lister, 21,198 shares; Mr. Goodwin, 11,705 shares; Mr. Hogan
7,364 shares; and Mr. Gillespie, 1,115 shares.
28
<PAGE>
BUSINESS OF ZEMEX
Zemex was incorporated in 1985 as the successor to Pacific Tin Corporation.
Zemex is a niche producer of industrial minerals and metal products. Its
principal businesses are industrial minerals, metal powders, and aluminum waste
recycling. Its major products include feldspar, feldspathic minerals, kaolin,
sand, mica, talc, ferrous and non ferrous powders, and aluminum dross
derivatives.
BUSINESS OF ZEMEX CANADA
The Company was incorporated in December 1997 under the Canada Business
Corporations Act. It has not carried on an active business. The Company has been
organized to facilitate the change of domicile of Zemex from Delaware to Canada.
All of the outstanding common shares of Zemex Canada are currently owned by
Zemex. After consummation of the reincorporation merger, Zemex will be a wholly-
owned subsidiary of Zemex Canada and Zemex Canada will continue to conduct the
operations in which Zemex is now engaged.
MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of material United States tax consequences
generally applicable to United States holders of Zemex common stock or, after
the reincorporation merger, Zemex Canada common shares, who hold the Zemex
common stock or Zemex Canada common shares as capital assets and who do not own,
directly, indirectly or constructively, 10% or more of Zemex's outstanding
voting stock or Zemex Canada's outstanding voting shares. As used in this
summary, the term "U.S. holder" means a beneficial owner of Zemex common stock
or, after the reincorporation merger, Zemex Canada common shares, that is (1) a
citizen or resident of the United States; (2) a corporation organized under the
laws of the United States or any state; or (3) otherwise subject to United
States federal income taxation on a net income basis in respect of Zemex common
stock or, after the reincorporation merger, Zemex Canada common shares.
This summary does not address material income tax considerations of special
concern to insurance companies, broker-dealers, investors liable for alternative
minimum tax, investors that hold Zemex common stock, or, after the
reincorporation merger, Zemex Canada common shares, as part of a straddle or a
hedging or conversion transaction, or investors whose functional currency is not
the U.S. dollar.
This summary is based on the Internal Revenue Code of 1986, as amended,
judicial decisions, administrative pronouncements, and existing and proposed
U.S. Treasury Department regulations, changes to any of which after the date of
this proxy statement/prospectus could apply on a retroactive basis and affect
the tax consequences described herein. Each U.S. holder should obtain
independent advice regarding such person's tax consequences based on such
person's own particular circumstances.
TAX CONSEQUENCES OF REINCORPORATION
CONSEQUENCES FOR U.S. HOLDERS
As used herein, the term "U.S. holder" means (1) a citizen or resident of
the United States; (2) a corporation or partnership created or organized under
the laws of the United States or any State thereof (including the District of
Columbia), including any organization treated as a U.S. partnership under any
applicable Treasury Regulation; (3) an estate or trust described in Section
7701(a)(30) of the Internal Revenue Code; or (4) a person otherwise subject to
U.S. Federal income taxation on its worldwide income. U.S. HOLDERS WILL
RECOGNIZE GAIN WITH RESPECT TO THEIR ZEMEX COMMON STOCK ON THE REINCORPORATION
MERGER IN AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF THE
ZEMEX COMMON STOCK OVER THEIR BASIS IN THE ZEMEX COMMON STOCK. A U.S. HOLDER
WILL NOT RECOGNIZE LOSS, IF ANY, WITH RESPECT TO THE U.S. HOLDER'S ZEMEX COMMON
STOCK AS A RESULT OF THE REINCORPORATION MERGER. In addition, if the U.S. holder
holds some Zemex common stock at a gain and other Zemex common stock at a loss,
the U.S. holder will, as a result of the reincorporation merger, recognize the
gains but not losses inherent in the Zemex common stock. Any
29
<PAGE>
gain recognized by a U.S. holder on Zemex common stock in the reincorporation
merger will be capital gain if the U.S. holder has held such common stock as a
capital asset, and will be long term capital gain if the U.S. holder has held
such common stock for more than one year before the consummation of the
reincorporation merger.
A U.S. holder's basis in Zemex Canada common shares received in the
reincorporation merger will equal the sum of: (1) the U.S. holder's basis in the
Zemex common stock and (2) the amount of any gain recognized by the U.S. holder
in the reincorporation merger. A U.S. holder's holding period in Zemex Canada
common shares should include their holding period in the Zemex common stock
transferred upon the merger, even if the U.S. holder recognized a gain on the
Zemex common stock prior to transfer.
A U.S. holder will be required to report the reincorporation merger to the
Internal Revenue Service on Form 926 (and may be subject to penalties for
failure to file such form) if:
- The U.S. holder fails to timely report any gain from the transaction on
the U.S. holder's income tax return for the year of the transaction; or
- In certain circumstances, if the U.S. holder owns, directly or by
attribution, 5% or more, by vote or value, of the common shares of Zemex
Canada immediately after the reincorporation merger.
Under Treas. Reg. Section 1.351-3(a), a U.S. holder who receives stock in a
transfer to a controlled corporation under a Section 351 transaction must file
with its income tax return for the year of the transaction a statement
describing:
- The property transferred;
- The stock received; and
- The liabilities assumed in the transfer.
Under the "wash sale" rules, a taxpayer who sells stock at a loss generally
may not claim the loss if the taxpayer acquired "substantially identical"
securities within the 61-day period beginning 30 days before, and ending 30 days
after, the loss sale. Under these rules, there may be some risk that a U.S.
holder who recognizes gain on his Zemex common stock in the reincorporation
merger would be prevented from claiming a loss on the sale either of Zemex
common stock or Zemex Canada common shares during the period beginning 30 days
before and ending 30 days after the reincorporation merger.
CONSEQUENCES FOR FOREIGN HOLDERS
Except as discussed below, a "foreign holder," or a holder of Zemex common
stock who is not a U.S. holder, should not recognize gain or loss for U.S.
income tax purposes as a result of the merger.
A foreign holder who has owned, directly or constructively, more than 5% of
the outstanding Zemex common stock at any time during the five years preceding
the reincorporation merger (or, if shorter, the foreign holder's holding period
in the Zemex common stock) would recognize taxable gain or loss with respect to
the Zemex common stock if the Zemex common stock is a "U.S. real property
interest" as defined in Section 897(c) of the Internal Revenue Code. In general,
a 5% foreign holder's Zemex common stock would be a U.S. real property interest
if 50% or more of the fair market value of Zemex's trade or business and real
property assets have consisted of interests in U.S. real property at any time
during the preceding five years (or, if shorter, the 5% foreign holder's holding
period in the Zemex common stock). Zemex believes that Zemex common stock does
not constitute a U.S. real property interest as to its 5% foreign holders.
Accordingly, Zemex does not believe that 5% foreign holders will recognize
taxable gain or loss on their Zemex common stock as a result of the
reincorporation merger.
In accordance with Treasury Regulations, at the request of a 5% foreign
holder, Zemex will inform the 5% foreign holder whether, in Zemex's
determination, the 5% foreign holder's interest in Zemex has been a U.S. real
property interest during the applicable period, and will provide notice of such
determination to
30
<PAGE>
the Internal Revenue Service within a reasonable time of receiving such a
request. The request of a 5% foreign holder for such a determination should be
accompanied by the name, address and U.S. taxpayer identification number (if
any) of the 5% foreign holder.
CONSEQUENCES FOR ZEMEX AND ZEMEX CANADA
It is not anticipated that Zemex or Zemex Canada will be subject to adverse
U.S. income tax consequences as a result of the reincorporation merger. If,
subsequent to the reincorporation merger, Zemex Canada receives dividend or
interest payments from Zemex, such payments will be subject to U.S. withholding
tax at a rate of 5% or 10%, respectively.
TAX CONSEQUENCES OF OWNERSHIP OF ZEMEX CANADA COMMON SHARES
Distributions made by Zemex Canada with respect to Zemex Canada common
shares (which for these purposes will include the amount of any Canadian taxes
withheld therefrom) will generally be includible in the gross income of a U.S.
holder as foreign source dividend income to the extent that such distributions
are paid out of Zemex Canada's current or accumulated earnings and profits as
determined under U.S. federal income tax principles. To the extent, if any, that
the amount of any such distribution exceeds Zemex Canada's current and
accumulated earnings and profits as so computed, it will first reduce the U.S.
holder's tax basis in its Zemex Canada common shares to the extent thereof, and
to the extent in excess of such tax basis, will be treated as gain from the sale
or exchange of property. The amount of any cash distribution paid in Canadian
dollars will be equal to the U.S. dollar value of the Canadian dollars
determined at the spot Canadian dollar/U.S. dollar rate on the date of receipt,
regardless of whether the payment is in fact converted into U.S. dollars at that
time. Gain or loss, if any, realized on the sale or disposition of Canadian
dollars will generally be U.S. source ordinary income or loss for a U.S. holder.
U.S. holders will not be entitled to claim a dividends received deduction with
respect to distributions by Zemex Canada (unless the U.S. holder is a
corporation which owns by vote and value at least 10% of the stock of Zemex
Canada, in which case a portion of such distributions may be eligible for such
deduction).
Future distributions of Zemex Canada common shares or other interests in
Zemex Canada, or of rights to subscribe for Zemex Canada common shares, may be
treated as distributions subject to U.S. federal income tax.
Subject to certain limitations, Canadian taxes withheld from or paid on
dividend distributions generally will be eligible for credit against the U.S.
holder's U.S. federal income taxes. The limitation on foreign taxes eligible for
credit is calculated separately with respect to specific classes of income.
A U.S. holder will generally recognize a capital gain or loss for U.S.
federal income tax purposes on the sale or disposition of Zemex Canada common
shares in the same manner as on the sale or disposition of any other shares held
as capital assets and such capital gain or loss will be long-term capital gain
or loss if the U.S. holder's holding period for such Zemex Canada common shares
exceeds one year on the date of sale or disposition. Gain, if any, will
generally be U.S. source gain.
Under certain limited circumstances, foreign holders of Zemex Canada common
shares will be subject to U.S. federal income taxation at graduated rates upon
dividends or gain with respect to their Zemex Canada common shares, if such
income or gain is treated as effectively connected with the conduct of the
recipient's trade or business within the United States.
Zemex Canada believes that, following the reincorporation merger, it will
not be a "passive foreign investment company," a "foreign personal holding
company" or a "controlled foreign corporation" for U.S. Federal income tax
purposes. If Zemex Canada were one of these three types of companies following
the reincorporation merger, some or all U.S. holders of Zemex Canada common
shares would be required to include in their taxable income certain
undistributed amounts of Zemex Canada's income or, in certain
31
<PAGE>
circumstances, to pay an interest charge together with tax calculated at maximum
rates on certain "excess distributions," defined as including gain on the sale
of stock.
Any U.S. holder who owns 10% or more in value of the stock of Zemex Canada
be may required to file IRS Form 5471 with respect to Zemex Canada.
In general, information reporting requirements may apply to dividend
payments (or other taxable distributions) for Zemex Canada common shares made
within the United States to a non-corporate United States person, and "backup
withholding" at the rate of 31% may apply to such payments if the holder or
beneficial owner fails to provide an accurate taxpayer identification number in
the manner required by United States law and applicable regulations, if there
has been notification from the Internal Revenue Service of a failure by the
holder or beneficial owner to report all interest or dividends required to be
shown on its federal income tax returns or, in certain circumstances, if the
holder or beneficial owner fails to comply with applicable certification
requirements. Certain corporations and persons that are not United States
persons may be required to establish their exemption from information reporting
and backup withholding by certifying their status on Internal Revenue Service
Forms W-8 or W-9.
Amounts withheld under the backup withholding rules may be credited against
a holder's tax liability, and a holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the United States Internal Revenue Service.
MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material Canadian federal income tax
considerations under the Income Tax Act (Canada) generally applicable to
shareholders of Zemex common stock who dispose of their shares pursuant to the
merger agreement, who for purposes of the Income Tax Act hold their Zemex common
stock as capital property, deal at arm's length with Zemex and Zemex Canada and
are not affiliated with Zemex or Zemex Canada. This summary does not apply to a
holder that is a "financial institution" within the meaning of subsection
142.2(1) of the Income Tax Act as such definition is proposed to be amended by
the Federal Budget dated February 24, 1998, nor does this summary apply to any
holder in respect of whom Zemex or Zemex Acquisition Corporation is a foreign
affiliate for purposes of the Income Tax Act nor to any holder in respect of
whom any such shares constitute an "offshore investment fund property" for
purposes of the Income Tax Act. This summary is based on the assumption that all
issued Zemex Canada common shares are at all times listed on The Toronto Stock
Exchange or another prescribed stock exchange.
The summary is based on the current provisions of the Income Tax Act, the
regulations thereunder, jointly referred to as the tax regulations, the current
provisions of the Canada-United States Income Tax Convention, 1980, referred to
as the Tax Treaty and an understanding of the current publicly available
statements of the administrative practices of Revenue Canada, Customs, Excise
and Taxation. This summary takes into account specific proposals to amend the
Income Tax Act and tax regulations publicly announced by the Minister of Finance
(Canada) prior to the date hereof, but there is not certainty that such
proposals will be enacted in the form proposed or at all. This summary does not
otherwise take into account tax legislation or considerations of any province,
territory or foreign jurisdiction.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS FOR ADVICE WITH RESPECT TO THE
TAX CONSEQUENCES OF THE PROPOSED TRANSACTIONS.
RESIDENTS OF CANADA
The following portion of the summary is applicable only to holders who are
resident or are deemed to be resident in Canada for purposes of the Income Tax
Act.
Holders of Zemex common stock who exchange their shares pursuant to the
merger agreement Zemex Canada common shares will be considered to have disposed
of their Zemex common stock for
32
<PAGE>
proceeds of disposition equal to the fair market value of Zemex Canada common
shares received in exchange. The aggregate adjusted cost base of Zemex Canada
common shares immediately after the exchange will be equal to their fair market
value at that time. Holders who exchange their Zemex common stock and holders
who dispose of Zemex Canada common shares in the future will be considered to
have realized a capital gain (or capital loss) to the extent the proceeds of
disposition exceed (or are less than) the aggregate of the adjusted cost base of
the Zemex common stock or Zemex Canada common shares immediately before the
exchange or disposition and any reasonable costs of disposition.
Three-quarters of any capital gain realized on an exchange of Zemex common
stock or on a future disposition of Zemex Canada common shares will be included
in income as a taxable capital gain and three-quarters of any capital loss
sustained under these circumstances may be deducted against other taxable
capital gains in accordance with the detailed rules in the Income Tax Act in
that regard. Taxable capital gains of a Canadian-controlled private corporation
may be subject to an additional 6 2/3% refundable tax, which may be refundable
in the circumstances and to the extent specified in the Income Tax Act.
NON-RESIDENTS OF CANADA
The following portion of the summary is applicable only to holders who are
neither resident nor deemed to be resident in Canada for purposes of the Income
Tax Act and who do not use or hold, and are not deemed to use or hold, their
Zemex common stock or Zemex Canada common shares in connection with carrying on
business in Canada.
No tax will be payable under the Income Tax Act on any capital gain realized
by a non-resident holder on the disposition of Zemex common stock in exchange
for Zemex Canada common shares pursuant to the merger agreement.
No tax will be payable under the Income Tax Act on any capital gain realized
by non-resident holders on a future disposition of Zemex Canada common shares
unless Zemex Canada common shares constitute taxable Canadian property at that
time. Zemex Canada common shares of non-resident holders will not constitute
"taxable Canadian property" unless at any time during the period of five years
immediately preceding the date such shares are disposed of, 25% or more of the
issued shares (and in the view of Revenue Canada, taking into account certain
interests in or rights to acquire shares) of any class or series of the capital
stock of Zemex Canada were owned by the non-resident holder, by persons with
whom the non-resident holder did not deal at arm's length, or by any combination
thereof. Even if Zemex Canada common shares are taxable Canadian property, a
gain realized on such disposition may be exempt from tax under the provisions of
an applicable income tax treaty. For example, the Tax Treaty will generally
exempt from Canadian tax a gain realized on such disposition by a holder who is
resident in the United States for purposes of the Tax Treaty provided the value
of Zemex Canada common shares is not at that time derived principally from real
property situated in Canada.
Dividends paid or credited to a non-resident holder of Zemex Canada common
shares will be subject to non-resident withholding tax under the Income Tax Act
at 25%, although such rate may be reduced under the provisions of an applicable
income tax treaty. For example, under the Tax Treaty, the rate is generally
reduced to 15% in respect of dividends paid to a person who is the beneficial
owner and who is resident in the United States for purposes of the Tax Treaty
(and who owns less than 10% of Zemex Canada's voting stock). Under the Tax
Treaty, dividends paid to certain religious, scientific, charitable and other
tax exempt organizations and certain pension organizations that are resident in,
and exempt from tax in, the United States are exempt from Canadian withholding
tax. Provided that certain administrative procedures are observed by the holder,
Zemex Canada will not be required to withhold tax on dividend payments to such
organizations.
33
<PAGE>
ACCOUNTING TREATMENT
The indirect acquisition by Zemex Canada of the assets and liabilities of
Zemex in connection with the reincorporation merger will be accounted for as a
statutory reincorporation. There will not be any "step-up" or write-up of assets
for accounting purposes as a result of the reincorporation merger.
Pro forma financial information in contemplation of the reincorporation
merger has not been included in this proxy statement/prospectus because the
statutory reincorporation will largely result in a change in legal form only.
The carrying values of the assets and liabilities of Zemex Canada after the
transaction will substantially reflect the carrying values of the assets and
liabilities of Zemex prior to the transaction.
MANAGEMENT OF ZEMEX AND ZEMEX CANADA
DIRECTORS
The following table sets forth the names and ages as of August 31, 1998 of
the directors of Zemex. Mr. Lawson-Johnston serves as the chairman of the Zemex
board of directors.
<TABLE>
<CAPTION>
NAME AGE
- ---------------------------------------------------------------------------------------- ---
<S> <C>
Paul A. Carroll......................................................................... 57
Morton A. Cohen......................................................................... 63
John M. Donovan......................................................................... 70
Thomas B. Evans, Jr..................................................................... 66
Peter O. Lawson-Johnston................................................................ 71
Richard L. Lister....................................................................... 59
Garth A.C. MacRae....................................................................... 64
Patrick H. O'Neill...................................................................... 83
William J. vanden Heuvel................................................................ 68
</TABLE>
Currently, Zemex Canada directors include all of the Zemex directors, as
well as R. Peter Gillin. Upon the reincorporation merger, it is expected that
the directors of Zemex, other than Patrick H. O'Neill, will remain as directors
of Zemex Canada, and it is expected that Mr. O'Neill will become a Director
Emeritus of Zemex Canada. A majority of the members of the board of Zemex Canada
currently is, and after the reincorporation merger will continue to be, resident
in Canada.
Garth A.C. MacRae joined the Board of Zemex in June 1998. Since 1994, he has
been Vice Chairman of Dundee Bancorp Inc., having served as President of Dundee
Bancorp Inc. from 1991 to 1994. Dundee Bancorp Inc. is the sole shareholder of
Dundee Bancorp International Inc., Zemex's principal shareholder. Mr. McRae is
also a director of Dundee Bancorp Inc. and of BGR Precious Metals, Inc.,
Breakwater Resources Ltd., Black Hawk Mining Inc., Dimethaid Research Inc.,
Reserve Royalty Corporation and Eurogas Corporation.
R. Peter Gillin joined the Board of Zemex Canada in September 1998. Since
1996, he has been Vice Chairman and a director of NM Rothschild & Sons Canada
Limited. From 1973 to 1996, he was Managing Director and Head of the Mining
Group at Scotia Mcleod Inc.
34
<PAGE>
EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES
The following table sets forth certain information with respect to the
executive officers and certain key employees of Zemex as of August 31, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------- ----------- ------------------------------------------
<S> <C> <C>
Richard L. Lister........................... 59 President and Chief Executive Officer
Allen J. Palmiere........................... 45 Vice President, Chief Financial Officer
and Assistant Secretary
Peter J. Goodwin............................ 48 Vice President; President Industrial
Minerals Group
Terrance J. Hogan........................... 43 President, Alumitech, Inc.
George E. Gillespie......................... 56 President, Metal Powders
</TABLE>
Upon the reincorporation merger, it is expected that the executive officers
of Zemex will become the executive officers of Zemex Canada. Zemex Canada's
current executive officers are as follows:
<TABLE>
<S> <C> <C>
Peter O. Lawson-Johnston........... 71 Chairman
Richard L. Lister.................. 59 President and Chief Executive
Officer
Allen J. Palmiere.................. 45 Vice President and Chief Financial
Officer
Patricia K. Moran.................. 32 Corporate Secretary and Assistant
Treasurer
</TABLE>
DESCRIPTION OF SHARE CAPITAL
The authorized capital stock of Zemex Canada currently consists of an
unlimited number of first preference shares without par value and an unlimited
number of common shares without par value. As of the completion of the
reincorporation merger, approximately 8,698,663 common shares and no first
preference shares will be issued and outstanding. The following description of
the capital stock of Zemex Canada does not purport to be complete or to give
full effect to the provisions of statutory or common law and is subject in all
respects to the applicable provisions of Zemex Canada's Articles (a copy of
which is attached to the registration statement of which this proxy
statement/prospectus is a part) and Zemex Canada's Bylaws (a copy of which is
attached to the registration statement of which this proxy statement/ prospectus
is a part), and the information herein is qualified in its entirety by this
reference.
The following is a summary of the attributes of the common shares and first
preference shares.
COMMON SHARES
VOTING
Each common share entitles its holder to receive notice of and to attend all
general and special meetings of shareholders of Zemex Canada other than meetings
at which only the holders of a particular class or series are entitled to vote.
Each such common share entitles its holder to one vote.
DIVIDENDS
The holders of common shares are, at the discretion of the Board of
Directors of Zemex Canada, entitled to receive, out of any or all profits or
surplus of Zemex Canada properly available for the payment
35
<PAGE>
of dividends (after the payment of any dividend payable on securities of Zemex
Canada entitled to receive dividends in priority to the common shares), any
dividends declared by the Board of Directors and payable by Zemex Canada on the
common shares.
DISSOLUTION
Subject to the prior rights of the holders of first preference shares, the
holders of Zemex Canada common shares are entitled to share ratably in any
distribution of the assets of Zemex Canada upon the liquidation, dissolution or
winding-up of Zemex Canada or other distribution of its assets among its
shareholders for the purpose of winding-up its affairs.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for Zemex Canada common shares will be The
Montreal Trust.
FIRST PREFERENCE SHARES
First preference shares are issuable in series. Subject to Zemex Canada's
Articles, the Board of Directors is authorized to fix, before issuance, the
designation, rights, privileges, restrictions and conditions attaching to the
shares of each series. The first preference shares rank prior to Zemex Canada
common shares with respect to dividends and return of capital on dissolution.
Except for matters on which holders of first preference shares as a class are
entitled by law to vote, the holders of first preference shares are not entitled
to receive notice of, to attend or to vote at meetings of shareholders of Zemex
Canada.
36
<PAGE>
MARKET PRICES, DIVIDENDS AND TRADING INFORMATION
ZEMEX COMMON STOCK
The closing sales price of Zemex common stock, as reported on the New York
Stock Exchange Composite Tape, on October , 1998, the day before the
reincorporation merger was announced, was $ . The closing sales price on
November 12, 1998 was $6.75. As of November 10, 1998, the 8,698,663 outstanding
shares of Zemex common stock were held by 1,845 holders of record. The following
table sets forth, for the periods indicated, the high and low closing sale
prices of Zemex common stock as reported on the New York Stock Exchange
Composite Tape. In the fourth quarter of each of 1996, 1997 and 1998, Zemex
declared a 2% stock dividend.
<TABLE>
<CAPTION>
SALE PRICES
--------------------
HIGH LOW
--------- ---------
<S> <C> <C>
1996
First Quarter............................................................. $ 10.00 $ 8.88
Second Quarter............................................................ 9.63 7.50
Third Quarter............................................................. 8.13 6.88
Fourth Quarter............................................................ 8.88 7.00
1997
First Quarter............................................................. 7.75 6.75
Second Quarter............................................................ 8.00 6.75
Third Quarter............................................................. 9.50 7.88
Fourth Quarter............................................................ 10.94 7.94
1998
First Quarter............................................................. 9.63 7.81
Second Quarter............................................................ 10.44 8.75
Third Quarter............................................................. 9.19 6.00
Fourth Quarter (through November 12, 1998)................................ 6.81 6.25
</TABLE>
ZEMEX CANADA COMMON SHARES
There is currently no established public trading market for Zemex Canada
common shares, and no first preference shares are outstanding. Immediately
following the reincorporation merger, Zemex Canada common shares are expected to
be listed on the New York Stock Exchange and on The Toronto Stock Exchange.
Until surrendered, the certificates representing shares of Zemex common stock
will be deemed to represent Zemex Canada common shares.
As of the date of this proxy statement/prospectus, there were 100 Zemex
Canada common shares outstanding held by Zemex. Following the consummation of
the reincorporation merger, there will be approximately 8,698,663 Zemex Canada
common shares outstanding.
RESTRICTIONS ON FREE TRANSFER OF ZEMEX CANADA COMMON SHARES IN CANADA
Zemex Canada common shares to be issued to shareholders resident in certain
provinces of Canada will be subject to restrictions imposed by law that may
limit the ability of a shareholder to resell such securities within such
province. As an example, shareholders resident in the Province of Ontario will
only be able to resell their Zemex Canada common shares in Ontario without
having to rely on regulatory exemptions or discretionary relief after Zemex has
been listed on the Toronto Stock Exchange for over one year. Such shareholders
should consult their legal advisors for a further description of such possible
restrictions. Additionally, any person, company or combination of persons or
companies holding a
37
<PAGE>
sufficient number of Zemex Canada common shares to affect materially the control
of Zemex Canada will be restricted in selling Zemex Canada common shares
pursuant to securities laws applicable in Canada.
DIVIDEND POLICY
The declaration and payment of dividends by Zemex Canada will be subject to
the discretion of its Board of Directors. The amount of any such dividend and
the Board's policy with respect to the payment of dividends will depend on Zemex
Canada's results of operations, financial condition, capital requirements,
contractual restrictions and other factors deemed relevant by Zemex Canada's
board of directors.
LEGAL MATTERS
The validity of the issuance of Zemex Canada common shares offered hereby
will be passed upon for Zemex Canada by Stikeman, Elliott, Toronto, Ontario.
EXPERTS
The financial statements of Zemex for the years 1993 through 1997 included
in the 1997 Form 10-K, that have been incorporated by reference in this proxy
statement/prospectus, have been audited by Deloitte & Touche, chartered
accountants, as stated in their report appearing in the 1997 Form 10-K. The
balance sheet of Zemex Canada as at June 30, 1998 has been audited by Deloitte &
Touche as stated in their report appearing in this document. The financial
statements and balance sheet have been incorporated in reliance upon Deloitte &
Touche's reports given upon their authority as experts in accounting and
auditing.
AVAILABLE INFORMATION
Zemex has been and is currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended. In accordance with those
requirements, Zemex files, and following the reincorporation merger Zemex Canada
will file, reports, proxy statements, and other information with the Securities
and Exchange Commission. Such reports, proxy statements, and other information
can be inspected and copied at the offices of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the SEC at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of such material can be obtained from the public reference section at the
principal office of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates, or by calling the SEC at 1-800-SEC-0330. In addition,
registration statements and certain other filings made with the SEC through its
Electronic Data Gathering, Analysis and Retrieval system are publicly available
through the SEC's site on the Internet's World Wide Web, located at
http://www.sec.gov.
Zemex Canada has filed with the SEC a Registration Statement on Form S-4
under the Securities Act of 1933, as amended, with respect to Zemex Canada
common shares offered hereby. This proxy statement/ prospectus does not contain
all the information set forth in that registration statement and the related
exhibits. Statements contained herein concerning the provisions of documents are
necessarily summaries of those documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the SEC.
The registration statement and any subsequent amendments, including exhibits
filed as a part of the registration statement, are available for inspection and
copying as set forth above.
38
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This proxy statement/prospectus incorporates important business and
financial information about Zemex that is not included in or delivered with this
proxy statement/prospectus. This information is available without charge to each
person to whom a copy of this proxy statement/prospectus is delivered, upon
written or oral request to Zemex Corporation, Canada Trust Tower, BCE Place, 161
Bay Street, Suite 3750, Toronto, Ontario, Canada M5J 2S1, Attention: Patricia K.
Moran, Telephone (416) 365-8080.
This proxy statement/prospectus incorporates by reference the documents
listed below that Zemex has previously filed with the SEC. These documents
contain important information about Zemex and its financial condition.
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
2. Amendment on Form 10-K/A-1 to Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, filed November , 1998;
3. Quarterly Reports on Form 10-Q for: the quarter ended March 31, 1998;
the quarter ended June 30, 1998; and the quarter ended September 30,
1998.
4. Current Report on Form 8-K dated May 20, 1998.
All documents filed by Zemex under Section 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of this proxy statement/prospectus and prior to the
termination of the offering of Zemex Canada common shares offered in this proxy
statement/prospectus shall be deemed to be incorporated by reference in this
proxy statement/prospectus and to be a part of this proxy statement/prospectus
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be deemed to be
modified or superseded for purposes of this proxy statement/prospectus to the
extent that a statement contained in this document or in any other subsequently
filed document which is also incorporated or deemed to be incorporated by
reference modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this proxy statement/prospectus.
This proxy statement/prospectus is accompanied by a copy of the Zemex 1997
Form 10-K, the 1997 Form 10-K/A-1, the 1997 Annual Report to Shareholders filed
as an exhibit thereto and the September 30, 1998 Form 10-Q. Portions of the 1997
Annual Report that are not specifically incorporated by reference into the 1997
Form 10-K are not part of the registration statement of which this proxy
statement/ prospectus is a part.
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
With the exception of historical matters, the matters discussed or
incorporated by reference in this proxy statement/prospectus are forward looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from targeted or projected results. These forward-looking
statements include statements regarding the intent, belief or current
expectations of Zemex Canada and members of its senior management team,
including without limitation, post transaction performance and opportunities,
the attractiveness of an investment in Zemex Canada to Canadian and other
investors, market acceptance in the Canadian capital markets and enhanced
liquidity. Factors that could cause actual results to differ materially include:
- fluctuations in aluminum prices;
- problems regarding unanticipated competition;
- processing, access and transportation of supplies;
- availability of materials and equipment;
39
<PAGE>
- force majeure events;
- the failure of plant equipment or processes to operate in accordance with
specifications or expectations;
- accidents, labor relations or delays in start-up dates;
- environmental costs and risks;
- the outcome of acquisition negotiations and general domestic and
international economic and political conditions; and
- other factors described in this proxy statement/prospectus or Zemex
filings with the SEC.
Many of these factors are beyond the ability of Zemex to predict or control.
Readers are cautioned not to put undue reliance on forward looking statements.
The safe harbor of the United States Private Securities Litigation Act of
1995 is not available to Zemex Canada because it is a new issuer.
40
<PAGE>
AUDITORS' REPORT
To the Directors of
Zemex Canada Corporation
We have audited the balance sheet of Zemex Canada Corporation as at
September 30, 1998. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in Canada. 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, this balance sheet presents fairly, in all material
respects, the financial position of the Company as at September 30, 1998, in
accordance with generally accepted accounting principles in Canada.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Toronto, Ontario
November 13, 1998
F-1
<PAGE>
ZEMEX CANADA CORPORATION
BALANCE SHEET
AS AT SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Cash................................................................................ $ 1
SHAREHOLDER'S EQUITY
Share capital
Authorized
Unlimited number of common shares
Unlimited number of first preference shares
Issued
100 common shares............................................................... $ 1
</TABLE>
APPROVED BY THE BOARD:
<TABLE>
<CAPTION>
/s/ Richard L. Lister /s/ Paul A. Carroll
<S> <C>
DIRECTOR DIRECTOR
</TABLE>
F-2
<PAGE>
ZEMEX CANADA CORPORATION
NOTES TO THE BALANCE SHEET
SEPTEMBER 30, 1998
1. BASIS OF PRESENTATION
Zemex Canada Corporation (the "Company") was incorporated on December 4,
1997 under the Business Corporations Act (Ontario). The Company is a
wholly-owned subsidiary of Zemex Corporation ("Zemex"), a New York Stock
Exchange listed company headquartered in Toronto, Canada. By articles of
continuance dated June 5, 1998, the Company was continued under the Canada
Business Corporations Act. The Company has been incorporated and organized for
the purposes of facilitating a merger with Zemex which will result in a change
of Zemex's domicile from the United States to Canada. The pro forma effect of
this transaction, and a complete description of the merger has been disclosed in
registration statement No. 333-65307. The transaction is summarized in Note 2
below.
Statements of operations and changes in financial position are not included
with the accompanying balance sheet as all aspects of the Company's operations
and cash flows are readily apparent from financial information presented.
2. SUBSEQUENT EVENT
Under the terms of a merger agreement dated October 1, 1998, the Company
will merge a newly-formed subsidiary which is incorporated under the laws of
Delaware (the "Delaware subsidiary"), with and into Zemex (the "Reincorporation
Merger"). The separate corporate existence of the Delaware subsidiary will
cease, and Zemex will be the surviving corporation. Each previously outstanding
share of the Delaware subsidiary's common stock will be converted into one share
of Zemex common stock and each previously outstanding share of Zemex common
stock will be converted into the right to receive one Company common share. The
previously outstanding Company common shares will be canceled. As a result,
Zemex will become a wholly-owned subsidiary of the Company and the current
stockholders of Zemex will own the outstanding Company common shares. For
accounting purposes, the assets and liabilities of the Company and its
subsidiaries on a consolidated basis immediately after the consummation of the
merger will be substantially identical to the assets and liabilities of Zemex
and its subsidiaries on a consolidated basis immediately prior to the merger.
F-3
<PAGE>
ANNEX A
AGREEMENT AND PLAN
OF
MERGER
BY AND AMONG
ZEMEX CANADA CORPORATION,
ZEMEX ACQUISITION CORPORATION,
AND
ZEMEX CORPORATION
OCTOBER 1, 1998
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C> <C>
ARTICLE I THE MERGER............................................................................... 4
Section 1.01 The Merger............................................................... 4
Section 1.02 Effective Time; Closing.................................................. 4
Section 1.03 Effects of the Merger; Subsequent Actions................................ 4
Section 1.04 Certificate of Incorporation and By-Laws of the Surviving Corporation.... 5
Section 1.05 Directors................................................................ 5
Section 1.06 Officers................................................................. 5
Section 1.07 Conversion of Shares..................................................... 5
Section 1.08 Conversion of Mergeco Common Stock....................................... 5
Section 1.09 Outstanding Common Shares of the Company................................. 5
Section 1.10 Exchange of Certificates................................................. 6
Section 1.11 Zemex Stock Option Plan.................................................. 6
Section 1.12 Zemex Stock Purchase Plans............................................... 6
Section 1.13 Stockholders' Meeting.................................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF ZEMEX.................................................. 7
Section 2.01 Organization and Qualification........................................... 7
Section 2.02 Capitalization........................................................... 7
Section 2.03 Authority Relative to this Agreement..................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGECO................................ 8
Section 3.01 Organization and Qualification........................................... 8
Section 3.02 Authority Relative to this Agreement..................................... 8
ARTICLE IV COVENANTS................................................................................ 8
Section 4.01 Conduct of Business of Zemex............................................. 8
Section 4.02 Employee Benefit Arrangements............................................ 9
Section 4.03 Directors' and Officers' Indemnification; Insurance...................... 9
Section 4.04 Option Plan; Stock Purchase Plans........................................ 10
Section 4.05 Name Changes............................................................. 10
Section 4.06 Registration Statement/Proxy Statement................................... 11
Section 4.07 Listing on Stock Exchanges............................................... 11
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER................................................. 12
Section 5.01 Conditions to Each Party's Obligation to Consummate
the Merger............................................................... 12
ARTICLE VI TERMINATION; AMENDMENT................................................................... 12
Section 6.01 Termination.............................................................. 12
Section 6.02 Effect of Termination.................................................... 12
Section 6.03 Amendment................................................................ 13
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE VII MISCELLANEOUS............................................................................ 13
Section 7.01 Non-Survival of Representations and Warranties........................... 13
Section 7.02 Entire Agreement......................................................... 13
Section 7.03 Validity................................................................. 13
Section 7.04 Governing Law............................................................ 13
Section 7.05 Descriptive Headings..................................................... 13
Section 7.06 Counterparts............................................................. 13
Section 7.07 Certain Definitions...................................................... 13
Section 7.08 No Third Party Beneficiaries............................................. 14
</TABLE>
LIST OF SCHEDULES
Schedule 2.02--Capitalization
Schedule 4.02--Employee Benefits
A-3
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger dated as of October 1, 1998, by and among Zemex
Canada Corporation, a Canadian corporation (the "Company"), Zemex Acquisition
Corporation, a Delaware corporation and a subsidiary of the Company ("Mergeco"),
and Zemex Corporation, a Delaware corporation ("Zemex").
Whereas, the respective Boards of Directors of Zemex, Mergeco and the
Company have approved the merger of Mergeco into Zemex and the other
transactions contemplated hereby on the terms and subject to the conditions set
forth herein; and
Whereas, in furtherance thereof, upon the terms and subject to the
conditions of this Agreement, (i) Mergeco would be merged (the "Merger") with
and into Zemex in accordance with the General Corporation Law of the State of
Delaware (the "DGCL") and (ii) each share of common stock, par value US$1.00 per
share, of Zemex (collectively, the "Shares"), issued and outstanding immediately
prior to the Effective Time would, except as otherwise expressly provided
herein, be converted into the right to receive the Merger Consideration.
Now, therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Zemex,
Mergeco and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.01 THE MERGER. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the DGCL, at the Effective Time Mergeco shall
be merged with and into Zemex. As of and following the Effective Time, the
separate corporate existence of Mergeco shall cease and Zemex shall continue as
the surviving corporation (the "Surviving Corporation").
Section 1.02 EFFECTIVE TIME; CLOSING. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article V, Zemex and
Mergeco shall execute in the manner required by the DGCL and deliver to the
Secretary of State of the State of Delaware a duly executed and verified
certificate of merger, and the parties shall take such other and further actions
as may be required by law to make the Merger effective. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time." Prior to such filing, a closing (the "Closing") shall be held
at the offices of Stikemen Elliott, Commerce Court West, Suite 5300, Toronto,
Ontario, Canada M5L 1B9, or such other place as the parties hereto shall agree,
for the purpose of confirming the satisfaction or waiver of the conditions set
forth in Article V. The date on which the Closing occurs is referred to herein
as the "Closing Date."
Section 1.03 EFFECTS OF THE MERGER; SUBSEQUENT ACTIONS. The Merger shall
have the effects set forth in Section 259 of the DGCL. Without limiting the
generality of the foregoing, and subject thereto and any other applicable laws,
at the Effective Time, all properties, rights, privileges, powers and franchises
of Zemex and Mergeco shall vest in the Surviving Corporation, and all debts,
liabilities, restrictions, disabilities and duties of Zemex and Mergeco shall
become debts, liabilities, restrictions, disabilities and duties of the
Surviving Corporation.
Section 1.04 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.
(a) The Certificate of Incorporation of Mergeco, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law;
provided, however, that the name of the Surviving Corporation shall, in
accordance with the provisions hereof and applicable law, be changed to
"Zemex U.S. Corporation" at the Effective Time.
A-4
<PAGE>
(b) The By-Laws of Mergeco in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation, until thereafter amended in accordance
with the provisions thereof and hereof and applicable law.
Section 1.05 DIRECTORS. Subject to applicable law, the directors of
Mergeco immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
Section 1.06 OFFICERS. The officers of Mergeco immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
Section 1.07 CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of Zemex, Mergeco, the Company or
the holders of the following securities, each Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the Merger Consideration. Such Shares shall be canceled by virtue of the
Merger. As used herein, "Merger Consideration" means one common share of the
Company, without par value.
Section 1.08 CONVERSION OF MERGECO COMMON STOCK. At the Effective Time,
each share of common stock, par value US$.01 per share, of Mergeco issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock of the Surviving Corporation.
Section 1.09 OUTSTANDING COMMON SHARES OF THE COMPANY. All of the common
shares of the Company outstanding immediately prior to the Effective Time shall,
by virtue of the Merger, be canceled as of the Effective Time.
Section 1.10 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, the Company shall designate the
Montreal Trust Company of Canada to act as exchange agent (the "Exchange
Agent") in effecting the exchange for the Merger Consideration of
certificates (the "Certificates") that, prior to the Effective Time,
represented Shares. Upon the surrender of each such Certificate formerly
representing Shares, together with a properly completed letter of
transmittal described in Section 1.10(b) below, the Exchange Agent shall
issue in respect thereof a common share certificate of the Company
representing the Merger Consideration (a "Company Certificate") multiplied
by the number of Shares formerly represented by each such Certificate, in
exchange therefor, and each such Certificate shall forthwith be canceled.
Until so surrendered and exchanged, each such Certificate shall represent
solely the right to receive the Merger Consideration. If the Merger
Consideration is to be delivered to any person other than the person in
whose name the Certificate formerly representing Shares surrendered in
exchange therefor is registered, it shall be a condition to such exchange
that the Certificate so surrendered shall be properly endorsed or
accompanied by a stock power and shall otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the
delivery of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such taxes have been paid or are not
applicable.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each record holder of Certificates that immediately prior to the Effective
Time represented Shares a letter of transmittal and instructions for use in
surrendering such Certificates and receiving the Merger Consideration in
exchange therefor.
A-5
<PAGE>
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to
the Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for the Merger Consideration as provided in this Section 1.10.
Section 1.11 ZEMEX STOCK OPTION PLAN. Effective as of the Effective
Time, each outstanding option (an "Option") issued, awarded or granted pursuant
to Zemex's 1995 Stock Option Plan (the "Option Plan") to purchase Shares will
entitle the holder upon exercise to acquire an equivalent number of Company
Common Shares.
Section 1.12 ZEMEX STOCK PURCHASE PLANS. Effective as of the Effective
Time, all rights to purchase Shares arising under the Zemex Employee Stock
Purchase Plan and the Zemex Key Executive Common Stock Purchase Plan (the "Stock
Purchase Plans") will entitle the holder to purchase an equivalent number of
Company Common Shares.
Section 1.13 STOCKHOLDERS' MEETING.
(a) Zemex, acting through its Board of Directors (the "Board"), shall,
in accordance with the DGCL:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Stockholders' Meeting") as soon as practicable
following the date hereof for the purpose of considering and taking
action upon this Agreement; and
(ii) subject to Section 4.06 below, prepare and file with the
Securities and Exchange Commission (the "SEC") a preliminary proxy or
information statement relating to the Merger and this Agreement and use
all reasonable efforts (x) to obtain and furnish the information required
by the SEC to be included in the Proxy Statement and, after consultation
with the Company, to respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information statement and cause
a definitive proxy or information statement (the "Proxy Statement") to be
mailed to its stockholders and (y) to obtain the necessary approvals of
the Merger and this Agreement by its stockholders.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ZEMEX
Zemex represents and warrants that, except as set forth in any Schedule
hereto, the statements contained in this Article II are correct and complete as
of the date of this Agreement.
Section 2.01 ORGANIZATION AND QUALIFICATION. Zemex is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
Section 2.02 CAPITALIZATION. The authorized capital stock of Zemex
consists of 20,000,000 Shares and 5,000 shares of preferred stock ("Preferred
Stock"). As of the close of business on September 30, 1998, 8,511,742 Shares
were issued and outstanding. As of the close of business on September 25, 1998,
there were no shares of Preferred Stock issued and outstanding. Zemex has no
shares reserved for issuance, except that, as of September 25, 1998, there were
674,393 Shares reserved for issuance pursuant to (i) outstanding Options under
the Option Plan and (ii) purchase rights under the Stock Purchase Plans. Zemex
has no options, warrants or rights to purchase Shares outstanding other than as
set forth on Schedule 2.02.
Section 2.03 AUTHORITY RELATIVE TO THIS AGREEMENT. Zemex has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Zemex and the consummation by Zemex of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board and
A-6
<PAGE>
no other corporate proceedings on the part of Zemex are necessary to authorize
or approve this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the approval and adoption of the Merger
and this Agreement by the affirmative vote of the holders of a majority of the
Shares then outstanding). This Agreement has been duly and validly executed and
delivered by Zemex and, assuming the due and valid authorization, execution and
delivery of this Agreement by the Company and Mergeco, constitutes a valid and
binding obligation of Zemex enforceable against Zemex in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGECO
The Company and Mergeco represent and warrant that the statements contained
in this Article III are correct and complete as of the date of this Agreement
insofar as such statements pertain to such Person.
Section 3.01 ORGANIZATION AND QUALIFICATION. Mergeco is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is a corporation duly organized, validly existing
and in good standing under the laws of Canada.
Section 3.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Company
and Mergeco has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and Mergeco and the
consummation by the Company and Mergeco of the transactions contemplated hereby
have been duly and validly authorized and approved by the Boards of Directors of
the Company and Mergeco and no other corporate proceedings on the part of the
Company or Mergeco are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby, other than the approval of this
Agreement and the transactions contemplated hereby by the sole stockholder of
Mergeco. This Agreement has been duly executed and delivered by each of the
Company and Mergeco and, assuming the due and valid authorization, execution and
delivery by Zemex, constitutes a valid and binding obligation of each of the
Company and Mergeco enforceable against each of them in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
ARTICLE IV
COVENANTS
Section 4.01 CONDUCT OF BUSINESS OF ZEMEX. Except as contemplated by
this Agreement or with the prior consent of the Company, during the period from
the date of this Agreement to the Effective Time, Zemex will, and will cause
each of its Subsidiaries to, conduct its operations only in the ordinary and
usual course of business consistent with past practice and will use its
reasonable efforts, and will cause each of its Subsidiaries to use its
reasonable efforts, to preserve intact the business organization of Zemex and
each of its Subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise contemplated by this Agreement, Zemex will
not, and will not permit any of its Subsidiaries to, prior to the Effective
Time, without the prior written consent of the Company:
(a) adopt any amendment to its Certificate of Incorporation or By-laws
or comparable organizational documents;
(b) except for issuances of capital stock of the Zemex's Subsidiaries to
Zemex or a wholly-owned Subsidiary of Zemex, issue, reissue, pledge or sell,
or authorize the issuance, reissuance, pledge or sale
A-7
<PAGE>
of (i) additional shares of capital stock of any class, or securities
convertible into capital stock of any class, or any rights, warrants or
options to acquire any convertible securities or capital stock, other than
the issuance of Shares, in accordance with the terms of the instruments
governing such issuance on the date hereof, pursuant to the exercise of
Options outstanding on the date hereof, or Shares purchasable pursuant to
the Stock Purchase Plans, or (ii) any other securities in respect of, in
lieu of, or in substitution for, Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock other than between Zemex
and any of its wholly-owned Subsidiaries; or
(d) agree in writing or otherwise to take any of the foregoing actions
prohibited under Section 4.01 or any action which would cause any
representation or warranty of Zemex in this Agreement to be or become untrue
or incorrect in any material respect.
Section 4.02 EMPLOYEE BENEFIT ARRANGEMENTS. Zemex and the Company hereby
agree to the provisions set forth on Schedule 4.02 hereto relating to the
provision of employee benefits and other related employee matters.
Section 4.03 DIRECTORS' AND OFFICERS' INDEMNIFICATION; INSURANCE.
(a) From and after the Effective Time, the Company shall indemnify and
hold harmless each person who is, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of
Zemex or any of its Subsidiaries (collectively, the "Indemnified Parties"
and individually, the "Indemnified Party") against all losses, liabilities,
expenses, claims or damages in connection with any claim, suit, action,
proceeding or investigation based in whole or in part on the fact that such
Indemnified Party is or was a director or officer of Zemex or any of its
Subsidiaries and arising out of acts or omissions occurring prior to and
including the Effective Time (including but not limited to the transactions
contemplated by this Agreement) to the fullest extent permitted by
applicable law, for a period of not less than six years following the
Effective Time; provided, however, that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until final
disposition of any and all such claims.
(b) The Company shall cause the Certificate of Incorporation and By-Laws
of the Surviving Corporation to include provisions for the limitation of
liability of directors and indemnification of the Indemnified Parties to the
fullest extent permitted under applicable law and shall not permit the
amendment of such provisions in any manner adverse to the Indemnified
Parties, as the case may be, without the prior written consent of such
persons, for a period of six years from and after the Effective Time.
(c) Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including,
without limitation, the transactions contemplated by this Agreement,
occurring prior to, and including, the Effective Time, the Company will pay
as incurred such Indemnified Party's legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith.
The Company shall pay all expenses, including attorneys' fees, that may be
incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 4.03 or any action involving an
Indemnified Party resulting from the transactions contemplated by this
Agreement.
(d) Any determination to be made as to whether any Indemnified Party has
met any standard of conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, the Company and the
Surviving Corporation, retained at the Company's and the Surviving
Corporation's expense.
A-8
<PAGE>
(e) This Section 4.03 is intended to benefit the Indemnified Parties and
their respective heirs, executors and personal representatives and shall be
binding on the successors and assigns of the Company, Mergeco and the
Surviving Corporation.
Section 4.04 OPTION PLAN; STOCK PURCHASE PLANS. Subject to the
provisions of Sections 1.11 and 1.12 above, at the Effective Time, the Option
Plan and the Stock Purchase Plans shall be canceled and terminated. Prior to the
effective time of the registration statement contemplated by Section 4.06 below,
the Company shall adopt an option plan and stock purchase plans providing
benefits substantially similar to those provided under the Option Plan and the
Stock Purchase Plans, and all options and grants made pursuant to Sections 1.11
and 1.12 above shall be subject to and governed by the terms of such new option
plan and stock purchase plans and any option and stock purchase agreements
executed pursuant thereto.
Section 4.05 NAME CHANGES. In the Merger, the Surviving Corporation will
change its name to Zemex U.S. Corporation, and immediately prior to the Merger,
the Company will change its name to Zemex Corporation. Each of such corporations
will replace its current name with its new company name on all stationery,
business cards, real and personal property, directories, labels, advertising and
promotional material and any and all applications, registrations or other
documents filed or to be filed with international, national and local
governmental offices, agencies or authorities in any country.
Section 4.06 REGISTRATION STATEMENT/PROXY STATEMENT.
(a) Zemex and the Company shall jointly prepare and file with the SEC as
soon as practicable after the date hereof a Registration Statement (the
"Registration Statement") on Form S-4 under the Securities Act of 1933, as
amended, with respect to the Merger Consideration issuable in the Merger and
this Agreement, which Registration Statement shall also serve as the "Proxy
Statement" for purposes of obtaining the approval of Zemex's stockholders to
this Agreement. Zemex and the Company shall use all reasonable efforts to
have the Registration Statement declared effective by the SEC as promptly as
practicable. Zemex and the Company shall use all reasonable efforts to
obtain, prior to the effective date of the Registration Statement, all
necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement, and Zemex will
pay all expenses incident thereto. The Registration Statement, when declared
effective by the SEC, will not include 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 or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The Company, Zemex and Mergeco shall cooperate with one another in
the preparation and filing of the Registration Statement and shall use their
reasonable best efforts to promptly obtain and furnish the information
required to be included in the Registration Statement and to respond
promptly to any comments or requests made by the SEC with respect to the
Registration Statement. Each party hereto shall promptly notify the other
parties of the receipt of comments of, or any requests by, the SEC with
respect to the Registration Statement and shall promptly supply the other
parties with copies of all correspondence between such party (or its
representatives) and the SEC (or its staff) relating thereto. The Company,
Zemex and Mergeco each agrees to correct any information provided by it for
use in the Registration Statement which shall have become, or is, false or
misleading.
(c) As soon as possible after completion of review of the Proxy
Statement by the SEC, Zemex shall mail the Proxy Statement to its
stockholders who are entitled to vote at the Stockholders' Meeting. Subject
to the fiduciary obligations of the Board under applicable law and the DGCL,
the Proxy Statement shall contain the recommendation of the Board that the
stockholders of Zemex adopt this Agreement and the Merger.
Section 4.07 LISTING ON STOCK EXCHANGES. The Company and Zemex shall
prepare and submit to the New York Stock Exchange and The Toronto Stock Exchange
any necessary documents covering the
A-9
<PAGE>
Common Shares of the Company comprising the Merger Consideration to be issued in
connection with the Merger and shall obtain, prior to the Effective Time,
approval for the listing of such Company Common Shares upon official notice of
issuance.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE THE
MERGER. Subject to the right of any party hereto to waive any of the following
conditions with respect to itself and not with respect to any other party, the
respective obligations of Zemex, Mergeco and the Company to consummate the
Merger and the transactions contemplated hereby are subject to the satisfaction,
at or before the Effective Time, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. If required by the DGCL, the stockholders of
Zemex and Mergeco shall have duly approved the transactions contemplated by
this Agreement.
(b) INJUNCTIONS, ILLEGALITY. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator or any governmental or regulatory authority, agency or other
entity (a "Governmental Entity") wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent consummation of
any of the transactions contemplated hereby, (ii) cause any of the
transactions contemplated hereby to be rescinded following consummation,
(iii) cause any of Zemex, the Company, or any of their officers or
directors, to become liable for any material damages or (iv) affect
adversely the right of the Surviving Corporation to own the former assets or
to operate the former businesses of Zemex (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect) and there shall not have
been any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger.
(c) NO BREACH. There shall not have been a breach of any representation,
warranty, covenant or agreement of the Company, Mergeco or Zemex set forth
in this Agreement which, individually or in the aggregate, would have a
material adverse effect on the Surviving Corporation.
(d) LISTING OF COMPANY COMMON SHARES. The Merger Consideration issuable
in the Merger shall be listed for trading on the New York Stock Exchange and
the Toronto Stock Exchange, subject to official notice of issuance.
ARTICLE VI
TERMINATION; AMENDMENT
Section 6.01 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of Zemex, by action
of the Company or the board of directors of Zemex.
Section 6.02 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 6.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders.
Section 6.03 AMENDMENT. This Agreement may be amended, modified or
supplemented by written agreement of Zemex and the Company at any time prior to
the Effective Time, whether before or after the approval of this Agreement by
the stockholders of Zemex, but, after any such vote, no amendment, modification
or supplement shall be made if the Board shall determine that such amendment,
modification, supplement would have a material adverse effect on the rights of
the holders of Shares without the further approval of such holders.
A-10
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. The covenants and other agreements contained herein shall
survive in accordance with their respective terms.
Section 7.02 ENTIRE AGREEMENT. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
Section 7.03 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
Section 7.04 GOVERNING LAW. The validity and enforceability of this
Agreement shall be governed by and construed in accordance with the corporate
law of the State of Delaware, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
Section 7.05 DESCRIPTIVE HEADINGS. The descriptive headings and captions
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 7.06 COUNTERPARTS. This Agreement may be executed in two or more
counterparts (including by means of telecopied signature pages), each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
Section 7.07 CERTAIN DEFINITIONS. As used in this Agreement:
(a) the term "Person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); and
(b) the term "Subsidiary," "Subsidiaries" or "subsidiaries" means, with
respect to Zemex, Mergeco, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Zemex, Mergeco,
the Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
Section 7.08 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to nor shall confer upon any Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, and no Person shall be deemed a third party beneficiary under
or by reason of this Agreement.
A-11
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
<TABLE>
<S> <C> <C>
ZEMEX CORPORATION
By: /s/ RICHARD L. LISTER
-----------------------------------------
Name: Richard L. Lister
Title: President and Chief Executive
Officer
ZEMEX CANADA CORPORATION
By: /s/ RICHARD L. LISTER
-----------------------------------------
Name: Richard L. Lister
Title: President and Chief Executive
Officer
ZEMEX ACQUISITION CORPORATION
By: /s/ RICHARD L. LISTER
-----------------------------------------
Name: Richard L. Lister
Title: President
</TABLE>
A-12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
STATUTE. Under the Canada Business Corporations Act, Zemex Canada may
indemnify a present or former director or officer of Zemex Canada or of another
corporation of which Zemex Canada is a stockholder or creditor against amounts
paid to settle civil, criminal or administrative actions or judgments and
expenses in connection therewith, where the director or officer was made a party
by reason of his position with Zemex Canada or such other corporation and
provided that the director or officer acted honestly and in good faith with a
view to the best interests of Zemex Canada and, in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, had
reasonable grounds for believing that his conduct was lawful. Such
indemnification may be made in connection with a derivative action only with
court approval. A director or officer is entitled to indemnification from Zemex
Canada as a matter of right if he was substantially successful on the merits and
fulfilled the conditions set forth above.
BYLAWS. The Bylaws of Zemex Canada provide that, subject to limitations
contained in the Canada Business Corporations Act, Zemex Canada shall indemnify
a director or officer of Zemex Canada, a former director or officer of Zemex
Canada or a person who acts or acted at Zemex Canada's request as a director or
officer of a body corporate of which Zemex Canada is or was a shareholder or
creditor against all costs, charges and expenses reasonably incurred in respect
of any 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 Zemex Canada or such body corporate if such director or officer (a) acted
honestly and in good faith with a view to the best interests of Zemex Canada and
(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, had reasonable grounds for believing that his or
her conduct was lawful. Notwithstanding the foregoing, Zemex Canada shall
indemnify any person referred to above in such other circumstances as the Canada
Business Corporations Act permits or requires.
The Bylaws further provide that Zemex Canada may purchase and maintain
insurance for the benefit of any person referred to above as Zemex Canada's
board of directors may from time to time determine.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
(a) EXHIBITS
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger dated October 1, 1998 by and among Zemex
Canada Corporation, Zemex Acquisition Corporation and Zemex
Corporation.(a)
3.1 Articles of Continuance of Zemex Canada Corporation.(b)
3.2 Articles of Amendment to Articles of Continuance of Zemex Canada
Corporation.(b)
3.3 Bylaw No. 1 of Zemex Canada Corporation.(m)
5.1 Opinion of Stikeman Elliott.(b)
10.1 Key Executive Common Stock Purchase Plan.(e)
10.2 1993 Stock Option Plan.(c)
10.3 1995 Stock Option Plan.(n)
10.4 Employee Stock Purchase Plan.(o)
10.5 1999 Employee Stock Purchase Plan.(c)
10.6 1999 Stock Option Plan.(c)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.7 Consent to Assignment of Lease and to Agreement Sublease, and Permission
to Make Payments dated November 7, 1978, each from Joberta Enterprises,
Inc. to NL Industries, Inc. and The Feldspar Corporation.(q)
10.8 Additional Lease Agreement dated as of November 1, 1989 between Niagara
County Industrial Development Agency and Pyron Corporation.(d)
10.9 Subscription Agreement with Richard L. Lister dated November 26, 1991.(r)
10.10 Suzorite Mica Product Inc.'s Mining Lease dated August 25, 1975 between
the Province of Quebec and Marietta Resources International Ltd.(s)
10.11 Stockholders Agreement dated June 10, 1994 among Alumitech, Inc., Clarion
Capital Corporation, DCC Equities Limited and Moshe Dan Yerushalmi, John
Hocevar and Terrance Hogan and Zemex Corporation.(i)
10.12 Indenture of Trust dated as of November 1, 1989 between Niagara County
Industrial Development Agency and The Bank of New York as trustee for
Pyron Corporation.
10.13 Agency Mortgage and Security Agreement dated as of November 1, 1989 from
Pyron Corporation and Niagara County Industrial Development Agency to
The Bank of New York.(d)
10.14 Letter of Credit Reimbursement Agreement dated as of November 1, 1989
between Pyron Corporation and Chemical Bank.(d)
10.15 First Amendment to Letter of Credit Reimbursement Agreement dated as of
November 1, 1989 between Pyron Corporation and Chemical Bank.(d)
10.16 Second Amendment to Letter of Credit Reimbursement Agreement dated as of
March 15, 1995 between Pyron Corporation and Chemical Bank.(g)
10.17 Bank Mortgage and Security Agreement dated as of November 1, 1989 from
Pyron Corporation and Niagara County Industrial Development Agency to
Chemical Bank.(d)
10.18 Building Loan Agreement dated as of November 1, 1989 between Chemical Bank
and Pyron Corporation.(d)
10.19 Security Agreement dated as of November 1, 1989 between Pyron Corporation
and Chemical Bank.(d)
10.20 Corporate Guaranty dated as of November 1, 1989 from Zemex Corporation to
Chemical Bank.(d)
10.21 First Amendment to Corporate Guaranty dated as of November 1, 1989 of
Zemex Corporation to Chemical Bank.(d)
10.22 Second Amendment to Corporate Guaranty dated as of March 14, 1991 of Zemex
Corporation to Chemical Bank.(e)
10.23 Third Amendment to Corporate Guaranty dated as of February 25, 1992 of
Zemex Corporation to Chemical Bank.(f)
10.24 Fourth Amendment to Corporate Guaranty dated as of March 8, 1993 of Zemex
Corporation to Chemical Bank.(f)
10.25 Fifth Amendment to Corporate Guaranty dated as of March 15, 1995 of Zemex
Corporation to Chemical Bank.(g)
10.26 Loan and Security Agreement dated as of March 15, 1995 among Zemex
Corporation and The Feldspar Corporation and NationsBank of Tennessee,
N.A. and Chemical Bank and NationsBank of Tennessee, N.A., as Agent.(g)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.27 Amendment No. 1 dated as of March 12, 1997 to the Loan and Security
Agreement dated as of March 15, 1995 among Zemex Corporation and The
Feldspar Corporation and NationsBank of Tennessee, N.A. and Chemical
Bank and NationsBank of Tennessee, N.A., as Agent.(h)
10.28 Agreement between Zemex Corporation and Allen J. Palmiere, dated October
1, 1998.(p)
10.29 Agreement between Zemex Corporation and Richard L. Lister, dated October
1, 1998.(p)
10.30 Amendment No. 5 to Loan and Security Agreement among Zemex Corporation,
the Feldspar Corporation, NationsBank of Tennessee, N.A., The Chase
Manhattan Bank and NationsBank of Tennessee, N.A. as agent.(p)
13.1 Quarterly Report on Form 10-Q for the three months ended March 31,
1998.(j)
13.2 Quarterly Report on Form 10-Q for the three months ended June 30, 1998.(k)
13.3 Quarterly Report on Form 10-Q for the three months ended September 30,
1998.(p)
13.4 1997 Annual Report to Stockholders of Zemex Corporation.(h)
20.1 Current Report on Form 8-K dated May 19, 1998.(l)
21 Subsidiaries of the Registrant.(m)
23.1 Consent of Stikeman Elliott (Included in Exhibit (5)).(b)
23.2 Consent of Deloitte & Touche, Chartered Accountants, regarding Zemex
Canada Corporation.(b)
23.3 Consent of Deloitte & Touche, Chartered Accountants, regarding Zemex
Corporation.(b)
24.1 Power of Attorney--William J. vanden Heuvel(m)
24.2 Power of Attorney--R. Peter Gillin(m)
27 Financial Data Schedule(b)
</TABLE>
- ------------------------
(a) Annex A to the Proxy Statement/Prospectus included in this Registration
Statement.
(b) Filed herewith.
(c) To be filed by amendment.
(d) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1990.
(e) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1991.
(f) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1993.
(g) Incorporated by reference from Zemex Corporation's Form 10-K filed March 30,
1995.
(h) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1998.
(i) Incorporated by reference from Zemex Corporation's Registration Statement on
Form S-1, Registration No. 33-82638, filed on August 22, 1994.
(j) Incorporated by reference from Zemex Corporation's Form 10-Q filed April 24,
1998.
(k) Incorporated by reference from Zemex Corporation's Form 10-Q filed August 6,
1998.
(l) Incorporated by reference from Zemex Corporation's Form 8-K filed May 20,
1998.
(m) Filed previously.
(n) Incorporated by reference from Zemex Corporation's 1995 Proxy Statement
filed March 29, 1995.
(o) Incorporated by reference from the Zemex Corporation Proxy Statement filed
May 6, 1994.
II-3
<PAGE>
(p) Incorporated by reference from Zemex Corporation's Form 10-Q filed November
13, 1998.
(q) Incorporated by reference from Zemex Corporation's Registration Statement on
Form S-2, Registration No. 33-7774, filed August 5, 1986).
(r) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1992.
(s) Incorporated by reference from Zemex Corporation's Form 10-K filed March 31,
1994.
(b) FINANCIAL STATEMENT SCHEDULES
None
(c) REPORT ON APPRAISAL
None
ITEM 22. UNDERTAKINGS
(a) 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(a)
or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
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) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(c) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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) Insofar as indemnification for liabilities arising under the Securities
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 of 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.
(e) The undersigned registrant hereby undertakes 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
II-4
<PAGE>
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(f) 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.
(g) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Toronto on
the 14th day of November, 1998.
<TABLE>
<S> <C> <C>
ZEMEX CANADA CORPORATION
By: /s/ RICHARD L. LISTER*
-----------------------------------------
Richard L. Lister
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ PETER LAWSON-JOHNSTON*
- ------------------------------ Chairman of the Board November 14, 1998
Peter Lawson-Johnston
President, Chief Executive
/s/ RICHARD L. LISTER* Officer and Director
- ------------------------------ (Principal Executive November 14, 1998
Richard L. Lister Officer)
Vice President and Chief
/s/ ALLEN J. PALMIERE* Financial Officer
- ------------------------------ (Principal Financial and November 14, 1998
Allen J. Palmiere Accounting Officer)
/s/ PAUL A. CARROLL*
- ------------------------------ Director November 14, 1998
Paul A. Carroll
/s/ MORTON A. COHEN*
- ------------------------------ Director November 14, 1998
Morton A. Cohen
/s/ JOHN M. DONOVAN*
- ------------------------------ Director November 14, 1998
John M. Donovan
/s/ THOMAS B. EVANS*
- ------------------------------ Director November 14, 1998
Thomas B. Evans
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GARTH A.C. MACRAE*
- ------------------------------ Director November 14, 1998
Garth A.C. MacRae
/s/ PATRICK H. O'NEILL*
- ------------------------------ Director November 14, 1998
Patrick H. O'Neill
/s/ WILLIAM J. VANDEN
HEUVEL*
- ------------------------------ Director November 14, 1998
William J. vanden Heuvel
/s/ R. PETER GILLIN*
- ------------------------------ Director November 14, 1998
R. Peter Gillin
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ RONALD R. LEVINE,
II
-------------------------
Ronald R. Levine, II
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE NO.
- ----------- ---------
<C> <S> <C>
(a) EXHIBITS
3.1 Articles of Continuance of Zemex Canada Corporation.(b)
3.2 Articles of Amendment to Articles of Continuance of Zemex Canada Corporation.(b)
5.1 Opinion of Stikemen Elliott.(b)
23.1 Consent of Stikemen Elliott (included in Exhibit 5.1).(b)
23.2 Consent of Deloitte & Touche, Chartered Accountants, regarding Zemex Canada Corporation.(b)
23.3 Consent of Deloitte & Touche, Chartered Accountants, regarding Zemex Corporation.(b)
27 Financial Data Schedule.(b)
</TABLE>
- ------------------------
(b) Filed herewith.
<PAGE>
[LETTERHEAD]
CERTIFICATE CERTIFICAT
OF CONTINUANCE DE PROROGATION
CANADA BUSINESS LOI CANADIENNE SUR
CORPORATIONS ACT LES SOCIETES PAR ACTIONS
- --------------------------------------------------------------------------------
ZEMEX CANADA CORPORATION 350139-6
- ------------------------------ ------------------------------
Name of corporation- Corporation number-
Denomination de la societe Numero de la societe
I hereby certify that the above- Je certifie que la societe susmentionnee a
named corporation was continued ete prorogee en vertu de l'article 187 de
under section 187 of the CANADA la LOI CANADIENNE SUR LES SOCIETES PAR
BUSINESS CORPORATIONS ACT, as ACTIONS, tel qu'il est indique dans les
set out in the attached articles clauses de prorogation ci-jointes.
of continuation.
/s/ [ILLEGIBLE]
JUNE 5, 1998/LE 5 JUIN 1998
Director - Directeur Date of Continuance -
Date de la prorogation
- --------------------------------------------------------------------------------
<PAGE>
FORM 11 FORMULE 11
ARTICLES OF CONTINUANCE CLAUSES DE PROROGATION
(SECTION 187) (ARTICLE 187)
CANADA BUSINESS LOI REGISTRANT LES SOCIETES
CORPORATIONS ACT PAR ACTIONS DE REGIME FEDERAL
- --------------------------------------------------------------------------------
1 -- Name of Corporation Denomination de la societe
ZEMEX CANADA CORPORATION
- --------------------------------------------------------------------------------
2 -- The place in Canada where the Lieu au Canada ou doit etre
registered office is to be aitue le siege social
situated
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703, Toronto, Ontario, M5J 2S1
- --------------------------------------------------------------------------------
3 -- The classes and any maximum Categories et tout nombre maximal
of shares that the d'actions que la societe est autorisee
corporation is authorized a emettre
to issue
The Corporation is authorized to issue:
(a) an unlimited number of common shares; and
(b) an unlimited number of first preference shares, issuable in series
- --------------------------------------------------------------------------------
4 -- Restrictions if any on share Restrictions sur le transfert des
transfers actions, a'il y a lieu
The transfer of shares of the Corporation is not restricted.
- --------------------------------------------------------------------------------
5 -- Number (or minimum and maximum Nombre (ou nombre minimum et maximum)
number) of directors d'administrateurs
minimum of three (3) and a maximum of fifteen (15)
- --------------------------------------------------------------------------------
6 -- Restrictions if any on business Limites imposees quant aux activites que
the corporation may carry on la societe peut exploiter, s'il y a lieu
The Corporation is not restricted from carrying on any business or
businesses or from exercising any power or powers.
- --------------------------------------------------------------------------------
7 -- (1) If change of name effected, (2) Details of incorporation
previous name
(1) Si changement de (2) Details de la constitution
denomination, denomination
anterieure
N/A
- --------------------------------------------------------------------------------
8 -- Other provisions if any Autres dispositions s'il y a lieu
There are no other provisions.
- --------------------------------------------------------------------------------
Date Signature Description of office -- Description du poste
/s/ Jay C. Kellerman
June 4, 1998 Jay C. Kellerman Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY -- A L'USAGE DU MINISTERE SEULEMENT
Corporation No. -- N' de la societe
350 134-6
Filed -- Deprede
June 15, 1998
<PAGE>
[LETTERHEAD]
CERTIFICATE CERTIFICAT
OF AMENDMENT DE MODIFICATION
CANADA BUSINESS LOI CANADIENNE SUR
CORPORATIONS ACT LES SOCIETES PAR ACTIONS
- --------------------------------------------------------------------------------
ZEMEX CANADA CORPORATION 350139-6
- ------------------------------ ------------------------------
Name of corporation- Corporation number-
Denomination de la societe Numero de la societe
I hereby certify that the articles Je certifie que les statuts de la
of the above-named corporation were societe susmentionnee ont ete
amended modifies:
(a) under section 13 of the CANADA a) en vertu de l'article 13 de la
BUSINESS CORPORATIONS ACT in / / LOI CANADIENNE SUR LES SOCIETES PAR
accordance with the attached ACTIONS, conformement a l'avis
notice; ci-joint;
(b) under section 27 of the CANADA b) en vertu de l'article 27 de la
BUSINESS CORPORATIONS ACT as set / / LOI CANADIENNE SUR LES SOCIETES PAR
out in the attached articles of ACTIONS, tel qu'il est indique dans
amendment designating a les clauses modificatrices
series of shares; ci-jointes designant une serie
d'actions;
(c) under section 179 of the CANADA c) en vertu de l'article 179 de la
BUSINESS CORPORATIONS ACT as set /X/ LOI CANADIENNE SUR LES SOCIETES PAR
out in the attached articles ACTIONS, tel qu'il est indique dans
of amendment; les clauses modificatrices
ci-jointes;
(d) under section 191 of the CANADA d) en vertu de l'article 191 de la
BUSINESS CORPORATIONS ACT as set / / LOI CANADIENNE SUR LES SOCIETES PAR
out in the attached articles of ACTIONS, tel qu'il est indique dans
reorganization. les clauses de reorganisation
ci-jointes.
/s/ [ILLEGIBLE]
OCTOBER 5, 1998/LE 5 OCTOBRE 1998
Director - Directeur Date of Amendment -
Date de modification
- --------------------------------------------------------------------------------
<PAGE>
CANADA BUSINESS CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)
1. Name of Corporation: 2: Corporation No.:
ZEMEX CANADA CORPORATION 350139-6
3. The articles of the above-named corporation are amended as follows:
(a) To amend Section (8) of the Articles of Continuance by adding the
following provision:
The directors may appoint one or more directors, who shall hold
office for a term expiring not later than the close of the next
annual meeting of shareholders, but the total number of directors so
appointed may not exceed one third of the number of directors
elected at the previous annual meeting of shareholders; and
(b) To amend Section (3) of the Articles of Continuance by adding the
following:
The rights, privileges, restrictions and conditions attaching to
each class of shares of the Corporation are set out in Schedule "A"
attached hereto.
- --------------------------------------------------------------------------------
Date: Signature: Title:
OCTOBER 1/98 /s/ Patricia K. Moran CORPORATE SECRETARY
&
ASSISTANT TREASURER
- --------------------------------------------------------------------------------
FOR DEPARTMENT USE ONLY
Filed:
OCT 5 1998
<PAGE>
SCHEDULE "A"
3.1 COMMON SHARES: The common shares shall have attached thereto the
following rights, privileges, restrictions and conditions:
(a) VOTING: Holders of common shares shall be entitled to receive
notice of, and to attend, all meetings of shareholders of the
Corporation, except meetings at which only holders of another
specified class or series of shares are entitled to vote. Holders
of common shares shall be entitled to one vote for each one common
share held on all ballots taken at such meetings.
(b) DIVIDENDS: Subject to the prior rights, privileges, restrictions
and conditions attaching to the first preference shares, or any
series thereof, and the shares of any other class ranking senior to
the common shares, holders of common shares shall be entitled to
receive dividends in such amounts and as and when declared by the
directors of the Corporation.
(c) LIQUIDATION: In the event of the liquidation, dissolution or
winding-up of the Corporation or other distribution of the property
and assets of the Corporation for the purpose of winding up the
affairs of the Corporation, holders of common shares shall, after
payment to the holders of first preference shares and shares of any
other class ranking senior to the common shares of the amount
payable to them, be entitled to receive the remaining property and
assets of the Corporation.
(d) LIMITATION: Subject to the provisions of the CANADA BUSINESS
CORPORATIONS ACT as such statute the same may from time to time be
in force or any successor statute thereto, holders of common shares
shall not be entitled to vote separately on, or to dissent in
respect of, any proposal to amend the articles of the Corporation
to:
(i) increase or decrease any maximum number of authorized common
shares or increase any maximum number of authorized shares
of a class or series having rights or privileges equal to or
superior to the common shares;
(ii) effect an exchange, reclassification or cancellation or all
or part of the common shares; or
(iii) create a new class or series of shares equal or superior to
the common shares.
<PAGE>
- 2 -
3.2 FIRST PREFERENCE SHARES: The first preference shares as a class shall
have attached thereto the following rights, privileges, restrictions and
conditions:
(a) DIRECTORS' RIGHT TO ISSUE IN ONE OR MORE SERIES: The first
preference shares may at any time and from time to time be issued
in one or more series. Prior to the issue of the shares of any
such series, the directors of the Corporation shall, subject to the
limitations set out in the articles of the Corporation, fix the
number of shares in, and determine the designation, rights,
privileges, restrictions and conditions attaching to the shares of,
such series including, without limitation:
(i) the rate, amount or method of calculation of dividends and
whether such dividends are subject to adjustment and whether
such dividends are cumulative, partly cumulative or
non-cumulative;
(ii) the dates, manner and currency of payment of dividends and
the date from which dividends accrue or become payable;
(iii) if redeemable or purchasable (whether at the option of the
Corporation or holder or otherwise), the redemption or
purchase prices and the currency or currencies thereof and
the terms and conditions of redemption or purchase, with or
without provisions for sinking or similar funds;
(iv) any voting rights attached thereto;
(v) any conversion, exchange or reclassification rights; and
(vi) any other terms not inconsistent with these provisions;
the whole subject to receipt by the Director appointed pursuant to
the CANADA BUSINESS CORPORATIONS ACT as such statute may from time
to time be in force or any successor statute thereto of articles of
amendment designating and fixing the number of first preference
shares in such series and setting forth the designation, rights,
privileges, restrictions and conditions attaching thereto and the
endorsement of a certificate on such articles of amendment.
(b) RANKING OF FIRST PREFERENCE SHARES OF EACH SERIES: The first
preference shares of each series shall, with respect to the payment
of dividends and the distribution of property and assets in the
event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other
distribution of the property and
<PAGE>
- 3 -
assets of the Corporation for the purpose of winding-up its
affairs, rank:
(i) junior to the shares of any class ranking senior to the
first preference shares;
(ii) on a parity with the first preference shares of every other
series; and
(iii) senior to and shall be entitled to preference over the
common shares and the shares of any other class ranking
junior to the first preference shares.
The first preference shares of any series shall also be entitled to
such other preferences, not inconsistent with these provisions,
over the common shares and the shares of the any other class
ranking junior to the first preference shares as may be fixed in
accordance with subsection (a) of this section 3.2.
(c) VOTING RIGHTS: Except as hereinafter specifically provided, as
required by the CANADA BUSINESS CORPORATIONS ACT as such statute
may from time to time be in force or any successor statute thereto
or in accordance with any voting rights which may be attached to
any series of first preference shares, holders of first preference
shares shall not be entitled as such to receive notice of, or to
attend, at any meeting of the shareholders of the Corporation and
shall not be entitled to vote at any such meeting; provided however
that holders of first preference shares shall be entitled to notice
of meetings of the shareholders of the Corporation called for the
purpose of authorizing the dissolution of the Corporation or the
sale, lease or exchange of all or substantially all of the property
of the Corporation other than in the ordinary course of business of
the Corporation.
(d) AMENDMENT WITH APPROVAL OF HOLDERS OF FIRST PREFERENCE SHARES: The
rights, privileges, restrictions and conditions attached to the
first preference shares as a class may be added to, removed or
changed only with the approval of holders of first preference
shares given in accordance with the requirements of the CANADA
BUSINESS CORPORATIONS ACT as such statute may from time to time be
in force or any successor statute thereto and the minimum
requirement provided in subsection (e) of this section 3.2.
<PAGE>
- 4 -
(e) APPROVAL OF HOLDERS OF FIRST PREFERENCE SHARES: The approval of
holders of first preference shares as a class to any matter
referred to in these provisions may be given as specified below:
(i) APPROVAL AND QUORUM: Any approval required to be given by
holders of first preference shares shall be deemed to have
been sufficiently given if it shall have been given by a
resolution signed by all of the holders of first preference
shares or by a resolution passed by the affirmative vote of
not less than 66 2/3% of the votes cast by holders of first
preference shares thereon at a meeting of the holders of
first preference shares called and held for such purpose in
accordance with the by-laws of the Corporation at which the
holders of not less than 20% of the then outstanding first
preference shares are present in person or represented by
proxy; provided that, if at any such meeting a quorum is not
present within one-half hour after the time appointed for
such meeting, the meeting shall be adjourned to the same day
in the next week at the same time and to such place as the
chairman of the meeting may determine and, subject to the
provisions of the CANADA BUSINESS CORPORATIONS ACT as such
statute may from time to time be in force or any successor
statute thereto, it shall not be necessary to give notice of
such adjourned meeting. At such adjourned meeting holders
of first preference shares present in person or represented
by proxy shall constitute a quorum and may transact the
business for which the meeting was originally called and a
resolution passed thereat by the affirmative vote of not
less than 66 2/3% of the votes cast by holders of first
preference shares thereon at such meeting shall constitute
the approval of holders of first preference shares.
(ii) VOTES: On every ballot taken at any such meeting each
holder of first preference shares shall be entitled to one
vote in respect of the greater of (i) each $1.00 of stated
capital added to the stated capital account of the
Corporation for the first preference shares in respect of
the issue of each such share, and (ii) each $1.00 of the
liquidation preference or redemption preference (excluding
any amount payable in respect of declared but unpaid
dividends) attached to each such first preference (and if
the liquidation preference and redemption preference are not
the same at the applicable time, then the greater of the
two). Subject to the foregoing, the formalities to be
observed with respect to proxies, the giving or waiving
of notice of any such meeting and
<PAGE>
- 5 -
the conduct thereof shall be those from time to time
prescribed in the CANADA BUSINESS CORPORATIONS ACT as such
statute may from time to time be in force or any successor
statute thereto and the by-laws of the Corporation with
respect to meetings of shareholders.
(f) SHARES ISSUED IN SERIES WITH IDENTICAL RIGHTS: Where first
preference shares are issued in more than one series with identical
designations, rights, privileges, restrictions and conditions
attached thereto, all such series of first preference shares shall
rank pari passu and participate equally and proportionately without
discrimination or preference as if all such series of first
preference shares had been issued simultaneously and all such series
of first preference shares may be designated as one and the same
series.
(g) LIMITATION: Subject to the provisions of THE CANADA BUSINESS
CORPORATIONS ACT as such statute may from time to time be in force
or any successor statute thereto, holders of first preference
shares or any series thereof shall not, unless the rights,
privileges, restrictions and conditions attached to the first
preference shares as a class or to any particular series thereof
provide to the contrary, be entitled to vote separately as a class
or series on, or to dissent in respect of, any proposal to amend
the articles of the Corporation to:
(i) increase or decrease any maximum number of authorized first
preference shares or any series thereof, or increase any
maximum number of authorized shares of a class or series
having rights or privileges equal or superior to the first
preference shares or any series thereof;
(ii) effect an exchange, reclassification or cancellation of all
or part of the first preference shares or any series
thereof; or
(iii) create a new class or series equal or superior to the first
preference shares or any series thereof.
<PAGE>
Exhibit 5.1
[LETTERHEAD OF STIKEMAN, ELLIOTT]
Zemex Canada Corporation
Canada Trust Tower
BCE Place
Suite 3750
161 Bay Street
Toronto, Ontario
M5J 2S1
Dear Sirs/Mesdames:
Re: Zemex Canada Corporation
------------------------------
We refer to the registration statement of Zemex Canada Corporation (the
"Company") No. 333-65307 on Form S-4 (the "Registration Statement") and filed
with the Securities and Exchange Commission. You have requested our opinion on
the legality of the securities of the Company being registered pursuant to the
Registration Statement (the "Company Common Shares").
We have examined originals or copies, certified or otherwise identified to our
satisfaction, of the articles and by-laws of the Company. We have also examined
an executed copy of the Agreement and Plan of Merger dated as of October 1, 1998
by and among the Company, Zemex Acquisition Corporation and Zemex Corporation
(the "Merger Agreement") and such statutes, corporate records and documents as
we have considered necessary to enable us to express the opinions set forth in
this opinion letter. In such examinations, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
certified, conformed or photostatic copies or facsimiles.
On the basis of the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated and validly existing
under the laws of Canada;
2. The issuance of the Company Common Shares has been duly authorized;
and
3. Upon issuance in accordance with the terms of the Merger Agreement,
including the receipt of the consideration therefor, the Company Common Shares
will be validly issued and outstanding as fully paid and non-assessable shares
of the Company.
We hereby consent to the filing of this option as an exhibit to the Registration
Statement and to the use of this firm's name under the caption "Legal Matters"
in the Proxy Statement/Prospectus forming a part of the Registration Statement.
Yours very truly,
/s/ Stikeman Elliot
<PAGE>
Exhibit 23.2
The Board of Directors,
Zemex Canada Corporation
Dear Sirs:
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the use in Amendment No. 1 to the Registration Statement on
Form S-4 of Zemex Canada Corporation No. 333-65307 (the "Registration
Statement") of our Auditors' Report dated November 13, 1998 on the Balance Sheet
of Zemex Canada Corporation as at September 30, 1998.
We hereby further consent to the reference to our firm under the caption
"Experts" in the Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche
Chartered Accountants
November 13, 1998
<PAGE>
Exhibit 23.3
The Board of Directors,
Zemex Canada Corporation
Dear Sirs:
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement on Form S-4 of Zemex Canada Corporation No. 333-65307
(the "Registration Statement") of our Auditors' Reports acknowledged in
Exhibit 24(a) of the Zemex Corporation Form 10-K for the fiscal year ended
December 31, 1997.
We hereby further consent to the reference to our firm under the caption
"Experts" in the Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche
Chartered Accountants
November 13, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
BALANCE SHEET OF ZEMEX CANADA CORPORATION AS OF SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
