U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) OF THE
SECURITIES ACT OF 1934
ENVIRONMENTAL PRODUCTS GROUP, INC.
(Name of Small Business Issuer as specified in its charter)
DELAWARE 22-3639092
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
5230 South Service Road
Burlington, Ontario L7L 5K2 Canada
(Address of Principal Executive Offices)
Issuer's Telephone Number, including area code: (905) 631-0235
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock, $.001/share par value
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
Alternative 2
This document contains forward-looking statements that involve risks and
uncertainties. Many factors, including those described below, may cause actual
results to differ significantly from anticipated results. Certain statements
contained in this document including without limitation statements containing
the words "believes," "anticipates," "expects" and words of similar import,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve unknown and known risks, uncertainties and other factors which may
cause the Company's actual results, performance or achievements, or industry
results, to be materially different from any future results, performance or
achievements, express or implied. Such factors include, among others:
1. If the economy enters a severe recessionary period with a concurrent
collapse of the new housing market, then the demand for molding and trim
products would be reduced.
2. If the commodity price for the raw material substrates (wood and wood
composite products) were to decrease the Company could experience margin and
profit pressure.
3. Pending U.S. / Canadian trade disputes relative to steel, plastics, etc.
could prevent the Company from being price competitive in the U.S. if the
Company manufactured only in Canada (as is the present case). Expansion into
the U.S. of its manufacturing capabilities would necessitate additional
financing and put pressure on the Company's profits and cash flows.
Given these circumstances, the reader should not place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained elsewhere in this document.
Description of the Business/Properties
Environmental Products Group, Inc. ("Company") was originally incorporated
December 1, 1976 as Axelson Advertising and Research, Inc. in the State of
Utah. The Company was merged into District Corporation, a Nevada corporation,
formed November 14, 1990 and was subsequently merged into Environmental
Satellite Corporation, a Delaware corporation, formed on September 26, 1990.
The Company's name was changed to Versatech Environment Group, Inc. on July 9,
1993 and changed to Environmental Products Group, Inc. on October 21, 1998.
1. Recent Consolidation
In November 1998 the Company, through a number of transactions, acquired
Formulated Mouldings (Canada) Inc. ("FMCI"), Environmental Shelter Corporation
Inc. ("ESC") and Environmental Fuel Technology, Inc. ("EFT"). In addition, the
Company also purchased a promissory note of FMCI from The Reclamation (US)
Corp. The terms and conditions of these transactions are as set forth below.
EFT owned all right, title and interest in and to proprietary information
concerning the production of fuel from scrap containerboard waste and other
material. The Company acquired that know-how by way of an agreement and plan of
reorganization (the "EFT Plan"). Under the terms of the EFT Plan, the Company
issued 544,500 shares of its voting common stock to the shareholders of EFT in
exchange for all of the outstanding shares of EFT common stock. Under the EFT
Plan, EFT is now a wholly owned subsidiary of the Company. Certain officers of
the Company were also officers and/or shareholders of EFT (see Item 11 herein
for further details).
ESC owned all right, title and interest in and to proprietary technology and
know-how regarding the production of extruded plastic sheeting from scrap
diaper and other materials. These materials were then designed to be used in
connection with plastic shelters. The Company acquired this technology by way
of an agreement and plan of reorganization (the "ESC Plan"). Under the ESC
Plan, the Company issued 665,000 voting common shares in exchange for all of
the outstanding common stock of ESC thereby causing ESC to become a wholly
owned subsidiary of the Company. Certain officers of the Company were also
officers and/or shareholders of ESC (see Item 11 herein for further details).
FMCI owned all right, title and interest in and to proprietary information
concerning the production of extruded plastic moldings from scrap diaper and
other material. The Company acquired that know-how by way of an agreement and
plan of reorganization (the "FMCI Plan"). Under the terms of the FMCI Plan, the
Company issued 7,180,426 shares of its voting common stock to the shareholders
of FMCI in exchange for all of the outstanding shares of FMCI common stock.
Under the FMCI Plan, FMCI is now a wholly owned subsidiary of the Company.
Certain officers of the Company were also officers and/or shareholders of FMCI
(see Item 11 herein for further details).
The Company also purchased a promissory note made by FMCI in the principal
amount of $885,636.12 (Canadian). FMCI borrowed this money from The Reclamation
(US) Corporation for a variety of purposes, including without limitation,
working capital and research and development of its extruded plastic molding
products. The Company issued 3,129,878 shares of its voting common stock to
purchase the promissory note and subsequently received this technology as
security for the note. As a result of the purchase, FMCI now owes the Company
the principal amount of the note. Certain officers of the Company were also
officers and/or shareholders of The Reclamation (US) Corporation.
As a result of the foregoing transactions, the Company now owns FMCI, EFT and
ESC. All of these companies are involved in the business of producing moldings,
fuel and shelter, respectively, from recycled plastic materials. Thus, the
Company is now in a position to further expand its abilities and technologies
in the use of recycled plastic materials.
2. Products
The subsidiary (FMCI) company produces a line of paint grade decorative trim
and molding products for the construction industry. The product is made from a
plastic compound (patent pending) utilizing an extrusion process. The plastics
are purchased as clean recycled material produced as scrap from other
manufacturers processes (diaper off-cuts, dental face masks off-cuts) as well
as from clean recovered traditional waste management sources.
The formulation is a proprietary mix of the plastics that has additives to
decrease the density, inhibit UV deterioration and to ensure paint adhesion.
The product contains no toxic elements and has been tested to demonstrate that
it meets the same inflammability standards as equivalent wood products. The
plastic is extruded using standard extrusion techniques and equipment.
The raw materials are readily available as commodity products in the industry
from numerous suppliers, with at least one supplier in Canada offering volumes
in excess of 80 times the quantity that the Company will require in the
foreseeable future.
The manufacturing extrusion lines are now modular in nature and can be quickly
replicated. The Company's financial plan for the next two years will produce
projected profits and revenues as set forth below.
Projected Results
Year Revenue Profit # Extrusion
Lines
1998 $5,000 $(360,000) Pilot Plant
1999 $4,153,000 $968,000 2
2000 $10,808,000 $2,226,143 4
2001 $22,027,000 $5,326,000 8
The current year loss represents the cost associated with the setup and
operation of the pilot plant in Burlington, Ontario. This plant allowed the
Company to perfect the formulation, dies/calibrators/sizers and the profiles.
The small sales volumes reflect the fact that with the current low volume pilot
plant extruder, the Company only began producing and selling product to the
industry after the November 1998 trade show.
In real terms, the output from one extrusion line laid end-to-end would reach
from the Earth to the Moon. While this seems like a large amount of product,
the second year revenue stream represents 0.3% of the total North American
markets for molding and trim products.
The Company currently employs 10 people on its staff (2 sales people, 3
executive people and 5 administrative staff). However, with the commencement of
full time production, the number of full time employees is expected climb to
15. With the installation of the second extrusion line the Company anticipates
adding another 6 employees for production and 1 additional sales person for a
total of 22 people.
The Company's product is available in the following industry standard profiles:
2 3/4" Colonial Casing
2 1/4"Colonial Casing
2" Colonial Casing
4" Crown Molding
2 3/4" Colonial Chair-rail
3/4" Quarter-round
3/4" Cove mounding
1 1/4" Colonial Door Stop
1 1/8"Lattice
4 1/8" Colonial Baseboard
3 1/8" Colonial Baseboard
The Company expects to add additional profiles as demand in the market
dictates. With its process the Company can duplicate any profile currently
supplied to the market for wood / wood composite materials. In the future, with
additional capital investment, the Company will also manufacture competitive
products for the form molded and injection molded trim market place (dental
crown molding, dental chair rail, etc.).
Product Attributes
The Company's product has a smooth surface clear of any imperfections (raised
grain, knots, furring). It will not crack, split or dent nor will not swell or
degrade when wet. The moldings can be applied with the same methods as used by
industry today for wood and wood composite products.
Sawable, nailed, screwed, drilled, milled and painted
The product is white and does not require a primer coat of paint. In many
applications one (1) finished coat of paint is all that is required. For the
home builders, installers and "Do-it-Yourself" users this means less time and
expense to complete a project.
3. Competition
The competition in the paint-grade, wood moldings industry is as follows:
Finger jointed pine
Finger Jointed Pine is the traditional trim and molding substrate and has wide
market acceptance. However, the market share for this commodity product is
slipping due in part to:
* Increasing cost for the substrate raw material
* Tendency to be labor intensive to finish (grain raising, knots, cracking,
warping, finger joint separation, etc.)
Medium Density Fiberboard (MDF)
MDF has become the substitute for traditional finger jointed pine due to the
lower cost to manufacture. However, the product has reluctant market acceptance
and has experienced a difficult market introduction due in part to:
* The tendency for the product to be difficult to apply (nailing and screwing)
* The product furs-out when painted
* The product swells and degrades when wet
* The product is much heavier than traditional wood
Vinyl wrap wood products
Vinyl wrap wood composite products are another attempt by the manufacturers to
offer a low cost alternative. However, this product has difficulties due in
part to the following factors:
* These products do not wear well (dent, scratch, chip)
* The products are typically not well manufactured
* The process to produce the products is time consuming and capital intensive;
this results in generally lower margins
* The product has not gained wide market acceptance.
PVC and other plastic products
PVC/Plastic suppliers have attempted to make inroads in this market. Its
attributes include:
* High cost to manufacture
* Difficult / different application methodologies
* Limited non-industry standard profiles
* Toxic fumes
* The product has gained limited market share due to the low quality of the
product.
4. Pricing
The Company's (FMCI) products are being sold in the market at prices at least
40% less than Finger Jointed Pine, 25% less than PVC and on a par with MDF and
vinyl wrapped wood. The Company's customers are purchasing the product at these
prices to the full extent of its production capacity.
5. Marketing
The Company has chosen to segregate the market. The Company utilizes both the
traditional distribution channels for construction materials as well as direct
sales to our key identified accounts.
National Accounts
The large national accounts that the Company has chosen to service directly are
concentrated in the:
1. Supply and Install (Subcontractors to the large home/tract builders)
2. Specialty products VAR (Door / Window / Trim)
3. Large Wholesale Lumber Yards
4.
Distribution Channel
The Distribution Channel will be focused on servicing the Small lumberyards,
Single Home Builders and the "Do-it-Yourself" market.
This market is dominated by a small number of Retail Chain stores in the United
States and Canada -
* U.S. -- Home Depot, Menard, True Value, Etc.
* Canada -- Home Depot, Lansing & Revelstoke, Cashway, Home Centre, Beaver
Lumber, Etc.
6. Manufacturing
The current Manufacturing Operation is located in a 10,000 sq.ft. facility that
will handle two complete extrusion lines.
The Company has recently recruited a tool and die maker who will design and
manufacture all of its dies/calibrators/sizers internally. The Company has
acquired a milling machine for this segment of manufacturing. This internal
capability will enable the Company to respond rapidly to the market
requirements for different or additional profiles.
The Company's projections will require relocation to a 100,000 sq.ft. facility.
The Company has acquired the following equipment for the extrusion lines, 1
twin screw extruder, 6 cooling tanks, 4 pullers, 1 cut-offsaw, 4 dump tables
and a complete wood graining system.
The Company plans to acquire a raw material supply company that has exclusive
contracts for the Company' s raw materials. This projected step will enable the
Company to maintain its costs and supply of raw materials.
The Company does not anticipate any difficulties or adverse financial impact if
raw materials are disrupted from one supplier. As previously mentioned, the
Company's raw materials are readily available throughout Canada and the United
States from a wide variety of sources.
Description of Properties
The Company's executive offices are located at 5230 South Service Road,
Burlington, Ontario, Canada. The executive offices are comprised of 11 rooms
covering 2,300 sq.ft. All general, sales and administrative oversight of the
Company is conducted out of these offices. The offices are leased on a
month-to-month basis. Rent is $1,271.00 (US) per month.
The Company also maintains production facilities (FMCI wholly-owned Subsidiary)
for its products at 5430 Harvester Road, Unit A, Burlington, Ontario, Canada.
These production facilities are leased with the current lease due to expire on
February 11, 2002. Rent is $4,290.00(US) per month. At these facilities the
Company maintains all of its production and shipping materials. The Company
also stores its raw materials at these facilities.
Directors, Executive Officers and Significant Employees
The following table sets forth the identity of all officers and directors of
the Company, their titles and when their term as directors, if any, expires.
Name Title as Director Title as Officer Term as
Director
Expi
res
Blaine C.
Froats Chairman of the Board CEO 5/31/99
Sean Froats Director Secy/Treasurer 5/31/99
The following table sets forth the identity of all key personnel who are not
officers or directors of the Company and their titles.
Name/Address/Occupation Title
William McMurdy Plant Manager - FMCI
Glen Law Sales Manager - FMCI
Business Experience of Directors, Officers and Significant Employees
Sean Froats - Sean Froats, Secretary/Treasurer of the Company was born on
February 26, 1971 in Canada. Mr. Froats began his employment career in 1989
with Price Club (Canada) in sales and marketing. In December 1994 Sean Froats
began working for Canadian Imperial Bank of Commerce ("CIBC") as a customer
service representative. His primary duties at CIBC involved collection
matters. From June 1995 to the present, Mr. Froats worked for EFT, ESC and
FMCI. His primary duties at these companies included day-to-day oversight of
marketing and sales. Now Mr. Froats' principal responsibilities are as
administrative assistant to the Chairman and the President. Mr. Froats has a
wife and one child.
Blaine Froats - Blaine Froats, Chairman and CEO of the Company was born May 16,
1937. Over the past ten years Mr. Froats has devoted his full time to
developing the process and technological know-how which forms the basis of the
Company's business. He accomplished this while CEO of ESC, EFT, FMCI and
Environmental Plastics Corporation. Mr. Froats is responsible for general
administrative matters at the Company and significantly involved in the
planning and development for the Company and its products. Blaine and his wife
reside in Ontario.
William McMurdy - William McMurdy, Plant Manager for FMCI is 35 years old and
has been employed at FMCI since November 1998. Prior to working at FMCI Bill
worked for Master Shield for 15 1/2 years. Mr. McMurdy has been a plant
manager in the plastics extrusion field for approximately sixteen years. His
experience also includes research and development and die design.
Glen Law - Glen Law, Sales Manager at FMCI was born on November 6, 1962 and has
been working for FMCI since July 1998. Mr. Law has been a sales representative
in the construction trim/molding industry for approximately thirteen years.
Before coming to FMCI, Glen was employed by Plywood & Tent for one year.
Involvement in Certain Legal Proceedings
No officer or director of the Company has been the subject of any order,
judgment or decree of any court of competent jurisdiction or any regulatory
agency enjoining him or her from acting as an investment advisor, underwriter,
broker or dealer in the securities industry or as an affiliated person,
director, or employee of an investment company, bank, savings and loan
association or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase and sale of any securities. Nor has any such person been the subject
of any order of a state authority barring or suspending for more than sixty
(60) days, the right of such person to be engaged in such activities or to be
associated with such activities.
During the past five years no present or former officer, director or person
nominated to become a director or officer of the Company:
1. was a general partner or officer of any business against which any
bankruptcy petition was filed, either at the time of the bankruptcy or two
years prior to that time;
2. was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
3. was subject to any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
4. or was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission of the Commodities Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.
Family Relationships
There are no family relationships between the directors or officers of the
Company, either by blood or marriage, except as follows: Sean Froats is an
officer and director of the Company. Sean Froats is Blaine Froats', an officer
and director of the Company, son.
Remuneration of Directors and Officers
1. Compensation.
No officer or director or key personnel of the Company has had aggregate
compensation exceeding $50,000 (US) per year over the past 10 years.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the Company in the event of retirement at
normal retirement date pursuant to any existing plan provided or contributed to
by the Company or any of its subsidiaries.
No remuneration, other than as set forth above, is expected to be paid in the
future, either directly or indirectly, by the Company to any officer, director
or key person under any plan presently existing.
The Company does not have written employment agreements with any of its
officers or employees. Neither does the Company have a bonus plan. However, the
Company intends to enter into written employment agreements with its officers
and key employees in the future. Also, the Company intends to implement a stock
bonus plan in the future. The terms and conditions of such plan and employment
agreements are subject to the approval of the Company's board of directors in
their sole discretion.
Security Ownership of Management and Certain Security Holders
Principal owners of the Company (those who beneficially own directly or
indirectly 10% or more of the common stock presently outstanding) starting with
the largest common stockholder, as of April 1, 1999 are:
Name # of Shares Now Held* % of Total Class of Shares
Blaine C. Froats 4,029,000** 33.138% Common
1901 Pilgrims Way, #905,
Oakville, Ontario L6J 2S2
** -- Both Blaine Froats and Sean Froats are shareholders in the Froats family
holding company being First Flotilla (BWI) Inc. which is the record owner of
4,000,000 common shares. Blaine Froats owns directly 29,000 common shares
separate of the family holding company.
* -- Does not include shares purchasable under common stock options (see table
below).
The number of shares beneficially owned by officers and directors, both
individually and as a group, as of April 1, 1999 is:
Name # of Shares Now Held* % of Total Class of Shares
Sean Froats -0-** 0% Common
530 Falgarwood Dr., #15
Oakville, Ontario L6H 1N3
Blaine C. Froats 4,029,000** 33.138% Common
1901 Pilgrims Way, #905,
Oakville, Ontario L6J 2S2
All officers and
directors 4,029,000 33.138% Common
as a group (2 persons)
** -- Both Blaine Frosts and Sean Froats are shareholders in the Froats family
holding company - First Flotilla (BWI) Inc. which is the record owner of
4,000,000 common shares. Blaine Froats owns directly 29,000 common shares
separate of the family holding company.
* -- Does not include shares purchasable under common stock options (see table
below).
The number of common shares purchasable by option, warrant or rights by
officers and directors, both individually and as a group, and by persons owning
10% or more of the common stock as of February 26, 1999 is:
Name of Holder Title/Amount of Exercise Date of Date of
Securities Called Price Exercise Expiration
For by Options, of Option,
Warrants or Rights Warrants,
Rights
Sean Froats 200,000 Common* $.50/share NA 11/30/99
Blaine C. Froats 200,000 Common* $.50/share NA 11/30/99
All officers and
directors as a
group (2 persons) 400,000 Common $.50/share NA 11/30/99
* -- Both Blaine Frosts and Sean Froats are shareholders in the Froats family
holding company - First Flotilla (BWI) Inc. which is the record owner of
4,000,000 common shares. Blaine Froats owns directly 29,000 common shares
separate of the family holding company.
Interest of Management and Others in Certain Transactions
Blaine Froats, an officer and director of the Company and owner of 29,000
common shares, was also a founder of FMCI, EFT and ESC. The Company recently
acquired each of these companies on terms established by Blaine Froats. While
management believes that the terms of acquisition were fair, no independent
valuation was performed by or on behalf of the Company. Mr. Froats and his
family through their private holding company First Flotilla (BWI) Inc. received
control over 4,000,000 shares of common stock of the Company as a result of the
acquisitions.
Securities Being Offered
The Company's authorized capital stock consists of 20,000,000 shares of common
stock, par value $.001 per share. As of April 1, 1999, 12,161,586 shares of
common stock were issued and outstanding.
Each share of common stock entitles the holder to one vote on all matters
submitted to a vote of the stockholders. The common stock does not have
cumulative voting rights, which means that the holders of a majority of the
outstanding shares of common stock voting for the election of directors can
elect all members of the board of directors. A majority vote is also sufficient
for other actions that require the vote or concurrence of the stockholders
(except in matters in which more than a simple majority is required by law).
Holders of common stock are entitled to receive dividends, when, as and if
declared by the board of directors, in its discretion, from funds legally
available therefore. Upon liquidation, dissolution or winding up of the
Company, after payment to creditors, the holders of common stock are entitled
to share ratably in the assets of the Company, if any. The bylaws of the
Company require that only a majority of the issued and outstanding shares of
common stock of the Company need be represented to constitute a quorum and to
transact business at a stockholders' meeting.
The common stock has no preemptive rights or subscription, redemption or
conversion privileges. All of the outstanding shares of common stock are fully
paid and nonassessable.
The transfer agent for the Company's common stock is United Stock Transfer,
Englewood, Colorado.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON STOCK AND
OTHER SHAREHOLDER MATTERS
A. Market Information: The Company's common stock is not presently
trading in any recognized public market. The Company intends to seek
sponsorship of one or more NASD member registered securities dealers and a
quotation on the NASDAQ Quotation System on either the OTC Bulletin Board,
Small Cap or National Market. No shares of the Company's common stock have
been registered with the Securities and Exchange Commission or any state
securities agency or authority (other than any state registration, if any, that
may have been required with respect to private placements of Company
securities).
B. Holders: The number of record holders of shares of the Company's
common stock as of April 1, 1999 is 403. The aggregate number of shares of the
Company's common stock issued and outstanding as of April 1, 1999 was
12,161,586.
C. Dividends: The Company has not paid or declared any dividends on its
common stock since its inception. Due to its present financial status it is
not contemplated that any dividends will be declared or paid on the Company's
common stock in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not involved and has not been involved in any litigation and, to
the best of its knowledge, is not aware of any facts that would likely lead to
litigation. Further, management is not aware of any threatened litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company's accountant and auditor is Gerald R. Hinshaw, CPA. The Company
has no present intention to change accountants. At no time have there been any
disagreements with such accountant regarding any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In November 1998 the Company, through a number of transactions, acquired
Formulated Mouldings (Canada) Inc. ("FMCI"), Environmental Shelter Corporation
Inc. ("ESC") and Environmental Fuel Technology, Inc. ("EFT"). In addition, the
Company also purchased a promissory note of FMCI from The Reclamation (US)
Corporation and also issued common stock to FMCI employees. The terms and
conditions of these transactions are as set forth below.
EFT owned all right, title and interest in and to proprietary information
concerning the production of fuel from scrap containerboard waste and other
material. The Company acquired that know-how by way of an agreement and plan of
reorganization (the "EFT Plan"). Under the terms of the EFT Plan, the Company
issued 544,500 shares of its voting common stock to the shareholders of EFT in
exchange for all of the outstanding shares of EFT common stock. The book value
of EFT was $544.50. The shares were issued based upon Rule 504 promulgated
under the Securities Act of 1933 as amended as well as Section 4(2) of said act.
ESC owned all right, title and interest in and to proprietary technology and
know-how regarding the production of extruded plastic sheeting from scrap
diaper and other materials. These materials were then designed to be used in
connection with plastic shelters. The Company acquired this technology by way
of an agreement and plan of reorganization (the "ESC Plan"). Under the ESC
Plan, the Company issued 665,000 voting common shares in exchange for all of
the outstanding common stock of ESC. The book value of ESC was $665.00. The
shares were issued based upon Rule 504 promulgated under the Securities Act of
1933 as amended as well as Section 4(2) of said act.
FMCI owned all right, title and interest in and to proprietary information
concerning the production of extruded plastic moldings from scrap diaper and
other material. The Company acquired that know-how by way of an agreement and
plan of reorganization (the "FMCI Plan"). Under the terms of the FMCI Plan, the
Company issued 7,180,426 shares of its voting common stock to the shareholders
of FMCI in exchange for all of the outstanding shares of FMCI common stock. The
book value of FMCI was $324,281.25 Canadian or $214,025.63 (US). The shares
were issued based upon Rule 504 promulgated under the Securities Act of 1933 as
amended as well as Section 4(2) of said act.
The Company also purchased a promissory note made by FMCI in the principal
amount of $885,636.12 (Canadian) ($584,519.76 (US)). FMCI borrowed this money
from The Reclamation (US) Corporation for a variety of purposes, including
without limitation, working capital and research and development of its
extruded plastic molding products. The Company issued 3,129,878 shares of its
voting common stock to purchase the promissory note and later received a lien
on the technology from FMCI as security for the note. The shares were issued
based upon Rule 504 promulgated under the Securities Act of 1933 as amended as
well as Section 4(2) of said act.
Finally, the Company issued 581,000 shares of common stock to fourteen
employees of FMCI. These shares were issued to acknowledge loyal, good and
faithful service on the part of those employees. The shares were issued based
upon Rule 504 promulgated under the Securities Act of 1933 as amended as well
as Section 4(2) of said act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law (8 Del. Code Section 145) under certain circumstances provides for
the indemnification of the Company's officers, directors and agents against
liabilities that they may incur in such capacities. The Company's Certificate
of Incorporation, as amended, provides indemnification to the fullest extent
allowed by Delaware law. A summary of the circumstances under which such
indemnification is provided is set forth herein.
In general, any officer, director, employee or agent may be indemnified against
expenses, fines, settlements or judgments arising in connection with a legal
proceeding to which such person is or was a party, as a result of such
relationship, if that person's actions were in good faith, were believed to be
in the Company's best interest and were not unlawful. Unless such person is
successful upon the merits in such action, indemnification may be awarded only
after a determination by independent decision of the board of directors, by
legal counsel or by a vote of the shareholders that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in connection with an
action brought by or on behalf of the Company are generally the same as set
forth above; however, with respect to such actions, indemnification is granted
only with respect to expenses actually incurred in connection with the defense
or settlement of the action. In such actions, the person to be indemnified must
have acted in good faith, in a manner believed to have been in the Company's
best interest and with respect to which such person was not adjudged liable for
negligence or misconduct.
Indemnification may also be granted pursuant to the terms of agreements that
may be entered into in the future or pursuant to a vote of shareholders or
directors. The law also grants the Company the power to purchase and maintain
insurance which protects its officers and directors against liabilities
incurred in connection with their service in such position.
PART F/S
The financial statements for the Company for the years ended May 31, 1996
through May 31, 1998, inclusive, have been examined to the extent indicated in
reports by Gerald R. Hinshaw, independent certified public accountant.
VERSATECH ENVIRONMENT GROUP, INC.
(FORMERLY ENVIRONMENTAL SATELLITE CORPORATION)
AUDITED
FINANCIAL STATEMENTS
MAY 31, 1998, 1997 AND 1996
GERALD R. HINSHAW CERTIFIED PUBLIC ACCOUNTANT
113 DEERPATH DR., P.O. BOX 250 MINOOKA, ILLINOIS 60447
PHONE: (815) 467-2111 FAX: (815) 467-2116
VERSATECH ENVIRONMENT GROUP INC
(FORMERLY ENVIRONMENTAL SATELLITE CORPORATION)
TABLE OF CONTENTS Page Number
ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
STATEMENT 1 - BALANCE SHEETS 2
2 - INCOME STATEMENTS 3
3 - STATEMENTS OF CHANCES IN SHAREHOLDERS'
EQUITY 4-5
4 - STATEMENTS OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7-9
GERALD R. HINSHAW
CERTIFIED PUBLlC ACCOUNTANT 113 DEERPATH DRIVE P.O. BOX 250 MINOOKA IL 60441
BUSINESS NUMBER (815) 467-2111 FAX NUMBER(815)467-2116
INDEPENDENT AUDITORS REPORT
The Board of Directors and Stockholders
Versatech Environment Group Inc.
(Formerly Environmental Satellite Corporation)
5310 Harvester Rd., Unit A Burlington, Ontario, Canada L7L5N5
I have audited the balance sheets of Versatech Environment Group, Inc. (a
Delaware Corporation) (Formerly Environmental Satellite Corporation) as of May
31, 1998, 1997 and 1996 and the related statements of income and shareholders'
equity and of cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based upon my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance that 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. I believe
that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of VERSATECH ENVIRONMENT GROUP,
INC. as of May 31, 1998, 1997 and 1996, and the results of its operations and
of cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/GERALD R. HINSHAW Certified Public Accountant
Minooka, Illinois
November 24, 1998
VERSATECH ENVIRONMENT GROUP INC (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
BALANCE SHEETS May 31, 1998, 1997 and 1996
ASSETS 1998 1997 1996
CURRENT ASSETS
Cash in Bank $ -0- $ -0- $ -0-
OTHER ASSETS
Organization Costs
(Note 3) $ 86,094 $ 79,594 $ 77,594
TOTAL ASSETS $ 86,094 $ 79,594 $ 77,594
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts Payable/
Accruals(Note 4) $ 21,464 $ 18,964 $ 16,964
OTHER LIABILITIES
Loans/Advances due
Shareholders(Note 5) $ 21,050 $ 17,050 $ 17,050
TOTAL LIABILITIES $ 42,514 $ 36,014 $ 34,014
STOCKHOLDERS' EQUITY (See NOTE 8 - SUBSEQUENT EVENTS)
CAPITAL STOCK
Preferred Stock-
5,000,000 Shares $ -0- $ -0- $ -0-
Authorized at $.01
(0) shares issued
and outstanding.
Common Stock -
100,000,000 Shares $ 608 $ 608 $ 608
authorized at $.001
per share, 607,817
shares issued and
outstanding at $.001
per share at May 31,
1998, 1997 and 1996.
ADDITIONAL PAID-IN
CAPITAL $ 42,972 $ 42,972 $ 42,972
TOTAL STOCKHOLDERS'
EQUITY $ 43,580 $ 43,580 $ 43,580
TOTAL LIABILITIES AND
STOCKHOLDERS' $ 86,094 $ 79,594 $ 77,594
EQUITY
"SEE ACCOUNTANTS REPORT AND ACCOMPANYING NOTES"
VERSATECH ENVIRONMENT GROUP. INC. (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
STATEMENTS OF INCOME For the Years Ending May 31, 1998, 1997 and 1996
1998 1997 1996
REVENUES $ -0- $ -0- $ -0-
EXPENSES $ -0- $ -0- $ -0-
NET INCOME (LOSS) $ -0- $ -0- $ -0-
"SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES"
VERSATECH ENVIRONMENT GROUP, INC. (FORMERLY ENVIRONMENTAL SATELLITE CORPORATION)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED MAY 31, 1998,
1997 AND 1996 (1988 to 1995 shown for informational purposes only)
PREFERRED STOCK No (O) Shares issued and outstanding out of 5,000,000 shares
authorized.
COMMON STOCK ONLY
Common Stock Additional Total
No. of Shares Amount Paid In Capital
Balances forwarded from Page 5 (Environmental Satellite Corporation)
May 31, 1991 5,000,000 $ 5,000 $ (1,100) $ 3,900
Write off of Licensing Cost on
5/31/92 -0- -0- (2,900) (2,900)
Waiver of Shareholder
Loans on 5/31/92 -0- -0- 42,580 42,580
Totals as of (Environmental Satellite Corporation)
May 31, 1992 5,000,000 $ 5,000 $ 38,580 $ 43,580
Stock issued 7/1/92
for services
rendered 341,667 342 (342) -0-
Totals as of (Environmental Satellite Corporation)
May 31, 1993 5,341,667 $ 5,342 $ 38,238 $ 43,580
NAME CHANGED TO VERSATECH ENVIRONMENT GROUP, INC. (JUNE 12, 1993)
Stock issued for
debenture cancellation
on June 14, 1993 70,000 70 (70) -0-
Stock issued for consulting
agreements canceled (2)
on June 23, 1993 (1) 162,500 163 (163) -0-
(2) 62,500 62 (62) -0-
New Totals at
6/23/93 5,636,667 $ 5,637 $ 37,943 $ 43,580
(Before Reverse Stock Split)
New Totals after Board
Approved Reverse Stock
Split (1 for 10) Effective
6/30/93 563,667 $ 564 $43,016 $ 43,580
Stock issued 7/29/93
for services rendered 44,150 44 (44) -0-
(Third St. Funding)
Totals as of May 31,
1994, 1995, 1996,
1997, 1998 607,817 $ 608 $ 42,972 $43,580
"SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES"
VERSATECH ENVIRONMENT GROUP, INC. (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED MAY 31, 1998,
1997 AND 1996 (1988 to 1995 shown for informational purposes only)
PREFERRED STOCK - No (O) Shares issued and outstanding out of 5,000,000 shares
authorized.
COMMON STOCK ONLY
Common Stock Additional Total
No. of Shares Amount Paid In Capital
Axelsen Advertising
and Research, Inc.
December 31, 1987,
1988 and 1989 6,000 $ 6 $ 994 $ 1,000
On November 14, 1990 the shareholders of Axelsen Advertising and Research, Inc.
exchanged all 6,000 shares of common stock for all 20,000 shares of common
stock of District Corporation, with District Corporation being the surviving
corporation.
District Corp. 20,000 $ 200 $ 800 $ 1,000
District Corporation
105 to 1 Share
Stock Split
(November 19,
1990) 2,100,000# $ 2,100 $ (1,100) $ 1,000
Stock Issuance for
License
(November 19, 1990)
2,900,000+ $ 2,900 $ -0- $2,900
Totals -
11/19/90 5,000,000* $ 5,000 $ (1,100) $3,900
Totals as of December
31, 1990 and May 31, 1991
Environmental Satellite
Corporation 5,000,000 * $ 5,000 $ (1,100) $3,900
# Action by the Board of Directors of District Corporation on November 19, 1990
forward split the common stock on a 105 to 1 basis; maintained par value at
$.001 per share after the stock split; increased authorized common shares from
1,000,000 to 100,000,000.
+ Action by the Board of Directors of District Corporation on November 19, 1990
acquired an exclusive license agreement (SEE NOTE 3) in exchange for 2,900,000
shares of common stock.
* On November 19, 1990 the Company, Environmental Satellite Corporation, merged
with District Corporation in a share for share common stock exchange wherein
the stockholders of District Corporation exchanged their shares of stock for
those of Environmental Satellite Corporation, leaving Environmental Satellite
as the surviving Corporation. District Corporation originally merged with
Axelsen Advertising and Research, Inc., a Utah corporation incorporated on
December 1, 1976, on November 14, 1990, leaving District Corporation as the
surviving corporation. (SEE COMMENT ABOVE)
"SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES"
VERSATECH ENVIRONMENTAL GROUP INC (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
STATEMENT OF CASE FLOWS
FOR THE YEARS ENDING MAY 31, 1998, 1997 AND 1996
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES $-0- $-0- $-0-
Net Income (Loss) $-0- $-0- $-0-
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES $-0- $-0- $-0-
CASH FLOWS FROM INVESTING
ACTIVITIES
Decrease in Accounts Payable $(4,000) $-0- $-0-
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES $(4,000) $-0- $-0-
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from:
Shareholder $4,000 $-0- $-0-
NET CASH PROVIDED (USED) FROM
FINANCING ACTIVITIES $4,000 $-0- $-0-
NET INCREASE (DECREASE) IN CASH $-0- $-0- $-0-
CASH BEGINNING OF YEAR $-0- $-0- $-0-
CASH END OF PERIOD $-0- $-0- $-0-
"SEE ACCOUNTANTS' REPORT AND ACCOMPANYING NOTES"
VERSATECH ENVIRONWENT GROUP INC (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
NOTES TO FINANCIAL STATEMENTS
MAY 31 1998 1997 AND 1996
1. ORGANIZATION
The Company was incorporated on September 26, 1990 under the laws of the State
of Delaware. On November 19, 1990, the Company merged with District
Corporation, a company incorporated under the laws of the State of Nevada, in a
share for share stock exchange wherein the shareholders of District
Corporation, exchanged their shares of stock for those of Environmental
Satellite Corporation, leaving Environmental Satellite Corporation as the
surviving corporation. This exchange was accounted for as a tax-free
reorganization under Section 368 (a) (1) (c), or 338H-10, the Internal Revenue
Service Code, 1986, as amended. This method provides for a tax-free exchange
of assets, subject to liabilities, for common stock. District Corporation
originally merged with Axelsen Advertising and Research, Inc., a Utah
corporation incorporated on December 1, 1976, on November 14, 1990.
On June 12, 1993, the shareholders consented to changing the Company's name to
VERSATECH ENVIRONMENT GROUP, IWC. The Company also decided that it will be in
the business of the manufacture and sales of more environmentally friendly
products for the construction and automobile industries.
On October 21, 1998 the Company the Company changed its name to ENVIRONWENTAL
PRODUCTS GROUP, INC.(See Note 8 - Subsequent Events)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. The accrual method of accounting is employed to meet generally accepted
accounting principles (GAAP).
B. Organization Coats (See Note 3) - Organization costs will be amortized over
sixty (60) months using the straight line method of amortization, upon
commencement of operations.
C. Income Taxes - No provision for income taxes has been made because the
Company had not commenced operations as of May 31, 1998.
D. Accounts Payable/Accruals (See Note 4)
E. Loans/Advances due Shareholders (See Note 5)
F. Capital Stock/Additional Paid-In Capital (See Statement of Changes in
Stockholders Equity - Pages 4, 5 and Note 8)
G. Contingencies(See Note 6)
H. Commitments (See Note 7)
I. Litigation - There is no pending litigation as represented by the
corporation's management.
J. Subsequent Events (See Note 8)
VERSATECH ENNIRONMENT GROUP INC (FORMERLY ENVIRONMENTAL SATELLITE CORPORATION)
NOTES TO FINANCIAL STATEMENTS MAY 31, 1998, 1997 AND 1996
3. ORGANIZATION COSTS
Organization costs are made up of the following items:
1998 1997 1996
Incorporation, filings, etc. $19,000 $17,000 $15,800
FCN Financial Services, Inc.
- - - Merger Fees 36,000 36,000 36,000
United Stock Transfer - Transfer
Agent 4,514 4,514 4,514
Audit and accounting fees 21,500 17,000 17,000
Standard and Poor's - Listing Fees 2,080 2,080 2,080
Consulting Fees 2,750 2,750 2,750
Miscellaneous Costs 250 250 250
Total - Organization Costs $86,094 $79,594 $77,594
4, ACCOUNTS PAYABLE/ACCRUALS
Accounts payable/accruals are made up of the following items:
1998 1997 1996
Accounting/Audit Fees $ 4,500 $ 4,000 $ 4,000
Legal Fees 2,000 1,000 -0-
Filing Fees 11,200 10,200 9,200
Stock Transfer Agent Fees 3,764 3,764 3,764
Total - Accounts Payable/Accruals $21,464 $18,964 $16,964
5. LOANS/ADVANCES DUE SHAREHOLDERS
A shareholder advanced payment of $17,050.00 in late 1993 on behalf of the
corporation in payment of the accounts payable by the corporation at May 31,
1993. In October, 1997, the same shareholder loaned $4,000.00 to the Company
to pay audit fees payable. No terms of repayment or interest has been
established as of the report date. The amount of $21,050.00 was still owed the
shareholder on May 31, 1998.
VERSATECH ENVIRONMENT GROUP, INC. (FORMERLY ENVIRONMENTAL SATELLITE
CORPORATION)
NOTES TO FINANCIAL STATEMENTS MAY 31 1998, 1997 AND 1996
6. CONTINGENCIES
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern. The ability of the Company to
continue is dependent on its ability to raise working capital and realize
profitable operations.
7. COMMITMENTS
Stock options for 275,000 shares of common stock, held by shareholders and
directors, excercisable at $.10 (ten cents) per share, expired on October 11,
1994. All restricted common stock issued has expired except for the 44,150
common shares issued on July 29, 1993 and those restricted shares expired on
July 29, 1995, during the fiscal year ending May 31, 1996,
The Company had no other commitments as of the report date.
8. SUBSEQUENT EVENTS
On October 2l, 1998, the State of Delaware approved a name change for the
Company to ENVIRONMENTAL PRODUCTS GROUP, INC. Additionally, the State of
Delaware approved the changing of the authorized common shares from 100,000,000
shares to 20,000,000 shares at the same $0.001 par value; the elimination of
the authorized 5,000,000 shares of preferred stock; and the each share having
one vote on all matters to which they are entitled to vote, without any right
to cumulative voting.
On October 23, 1998, the Board of Directors and controlling shareholder
approved a reverse stock split of 1 for 10 shares of common stock, effective on
that date.
On November 20, 1998, the Company purchased three (3) Canadian companies;
namely (1) Formulated Mouldings (Canada), Inc.; (2) Environmental Fuel
Technology, Inc.; and (3) Environmental Shelter Corporation. These companies
were purchased for a note for $885,636.12 Canadian and 12,100,804 common voting
shares.
Financial Statements of
FORMULATED MOULDINGS (CANADA) INC.
For the year ended May 31, 1998 (All figures in Canadian Dollars)
AUDITORS' REPORT
To the Shareholders of
FORMULATED MOULDINGS (CANADA) INC.
We have audited the balance sheet of Formulated Mouldings (Canada) Inc. as at
May 31, 1998, and the statement of income and retained earnings, and changes in
financial position for the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at May 31, 1998, and the
results of its operations and the changes in its financial position for the
year then ended in accordance with generally accepted accounting principles.
TORONTO, Ontario
/s/Tinkham & Associates
June 30, 1998 CHARTERED ACCOUNTANTS
Balance Sheet
As at May 31, 1998, with comparative figures for May 31, 1997
1998 1997
Assets
Current assets
Bank $ 6,308 $ 705
Accounts receivable 12,446 -
Due from related party (note 2) 9,499 6,276
Inventory 45,585 -
Prepaid expenses 5,168 6,779
79,006 13,760
Capital assets (note 3) 230,868 5,284
$ 309,874 $19,044
Liabilities
Current liabilities
Accounts payable and accrued liabilities $81,873 $ -
Note payable - related party (note 4) 576,520 30,840
658,393 30,840
Shareholders' Equity
Common shares (note 5) 1 1
Retained earnings (348,520) (11,797)
$ 309,874 $ 19,044
Statement of Income and Retained Earnings
Year ended May 31, 1998, with comparative figures for period ended May 31, 1997
1998 1997
Sales $ 2,082 $ -
Expenses
Advertising and promotion 570 -
Amortization 21,603 -
Automobile 113 -
Bank Charges 493 67
Building maintenance 1,625 -
Casual labour 34,653 1,250
Consulting fees 24,825 -
Dues and subscriptions 80 -
Equipment rental 2,577 206
Forklift lease 9,831 -
Insurance 1,860 -
Miscellaneous 3,479 251
Office supplies 8,232 797
Plant supplies 15,619 783
Postage and delivery 448 -
Printing & reproductions 887 -
Professional services 13,586 -
Rent 48,576 6,529
Repairs and maintenance 1,041 -
Research and development 4,049 -
Security 1,919 -
Shipping and receiving 2,683 160
Telephone 9,756 944
Travel and entertainment 1,063 410
Utilities 11,849 400
Wages and benefits 117,388 -
338,805 11,797
Net (loss) for the year (336,723) (11,797)
Retained earnings (deficit), June 1 (11,797) -
Retained earnings (deficit), May 31 $ (348,520) $(11,797)
Statement of Changes in Financial Position
Year ended May 31, 1998, with comparative figures for period ended May 31, 1997
1998 1997
Operating activities
Cash provided (used) by operations
Net (loss) for the year $ (336,723) $(11,797)
Charges to income not involving cash
Amortization of capital assets 21,603 -
(315,120) (11,797)
Changes in non-cash working capital components
Accounts receivable (12,446) -
Due to related party (3,223) (6,276)
Inventories (45,585) -
Prepaid expenses 1,611 (6,779)
Accounts payable and accrued liabilities 81,872 -
Note payable - related party 545,680 30,840
567,909 17,785
Increase in cash from operating
Activities 252,789 5,988
Financing activities
Issue of common share - 1
Investing activities
Purchase of capital assets (net) (247,186) (5,284)
Increase in cash 5,603 705
Cash, June 1 705 -
Cash, May 31 $ 6,308 $ 705
Notes to Financial Statements
May 31, 1998
1. Accounting policies
The financial statements have been prepared by management in accordance with
generally accepted accounting principles. The preparation of Formulated
Mouldings (Canada) Inc. financial statements in conformance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the balance sheet date and
the reported amounts of revenue and expense during the reporting period.
Actual results could differ from such estimates.
Significant accounting policies are:
(a) Inventory
Inventory is valued at the lower of cost and estimated net realizable value,
with cost being determined on a first-in, first-out basis.
(b) Capital assets, and amortization
Capital assets are valued at historical cost. Amortization is calculated using
the straight-line balance method based on the following annual rates:
Furniture and equipment 20%
Computer equipment 25%
Leasehold improvements 20%
Machine and equipment 10%
Dies 20%
2. Due from related party
Amounts due from related party are non-interest bearing and without specific
terms of repayment.
3. Capital assets
1998 1997
Accum. Net Book Net Book
Cost Amort. Value Value
Furniture and equipment $23,225 $2,323 $20,902 $3,164
Computer equipment 66,251 8,281 57,970 1,105
Leasehold improvements 12,920 2,584 10,336 1,015
Machinery and equipment 131,855 6,593 125,262 -
Dies 18,220 1,822 16,398 -
$252,471 $21,603 $230,868 $5,284
4. Note payable - related party
The note payable to a related party is non-interest bearing and has no fixed
terms of repayment.
Notes to Financial Statements
May 31, 1998
5. Common shares
1998 1997
Authorized
Unlimited common shares
Issued
1 common share $ 1 $ 1
6. Lease commitments
The company has a lease commitment for its premises and requires payments as
follows:
Year Amount
1999 $ 41,790
2000 44,402
2001 46,641
2002 48,879
2003 8,209
Equipment lease commitments require monthly payments of $577 and expire June,
1999.
PART III
ITEM 1. INDEX TO EXHIBITS
The exhibits filed with this Form 10-SB are as follows:
2 (i)
A. Certificate of Incorporation of the Company, as amended
B. Certificate of Incorporation of FMCI, as amended
C. Certificate of Incorporation of EFT, as amended
D. Certificate of Incorporation of ESC, as amended
2. (ii)
E. Bylaws of the Company
F. Bylaws of FMCI
G. Bylaws of EFT
H. Bylaws of ESC
3.
I. Specimen Common Stock Certificate
6.
J. Lease Agreement dated May 1997 by and between Fairgate Centre Ltd. and The
Reclamation (US) Corporation.
K. Agreement and Plan of Reorganization between the Company and FMCI dated
November 20, 1998
L. Agreement and Plan of Reorganization between the Company and EFT dated
November 20, 1998
M. Agreement and Plan of Reorganization between the Company and ESC dated
November 20, 1998
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENVIRONMENTAL PRODUCTS GROUP, INC.
By:/s/ Blaine C. Froats, Chairman/CEO
April 28, 1999
Exhibit 2(i)A
CERTIFICATE OF INCORPORATION OF ENVIRONMENTAL SATELLITE CORPORATION
FIRST. The name of this Corporation is Environmental Satellite Corporation.
SECOND. Its registered office in the State of Delaware is to be located
at 32 Loockerman Square, Suite L-100, County of Kent, Dover, Delaware 19901.
The registered agent in charge thereof is United States Corporation Company at
32 Loockerman Square, Suite L-100, Kent County, Dover, Delaware 19901.
THIRD. The nature of the business and the objects and purposes proposed to
be transacted, promoted, and carried on are to do any or all the
things herein mentioned as fully and to the same extent as natural
persons might or could do and in any part of the world, viz:
"The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware."
FOURTH. The aggregate number of Common Shares that this Corporation shall
have the authority to issue is 100,000,000 Shares with a par value of $0.001
per Share. The Corporation shall also have the authority to issue 3,000,000
Shares of Preferred Stock with a par value of $0.01 per Share. The description
of the preferred Stock with the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, and qualifications
and rights thereof are as follows:
(A) Preferred Stock may be issued, from time to time, in one or more
Series, each of such Series to have such terms as are stated and expressed
herein and in the resolutions providing for the issue of such Series adopted by
the Board of Directors as hereinafter provided.
(B) The Board of Directors, subject to the provisions hereof, may classify
or reclassify any unissued Shares of Preferred Stock into one or more
Series of Preferred Stock by fixing or altering in any one or more respects,
from time to time, before issuance of such unissued Shares:
(i) The distinctive designation of such Series and the
number of Shares to constitute such Series;
(ii) The annual dividend rate on the Shares of such
Series, the time of payment, whether or not dividends thereon shall be
cumulative, and, if cumulative, the date or dates from which such dividends
shall be cumulative;
(iii) The price at and any terms and conditions on which Shares
may be redeemed;
(iv) The sinking fund provisions for the redemption or purchase of
Shares;
(v) The amount payable on the Shares of such Series in the event of
voluntary liquidation, dissolution, or winding up of the Corporation;
(vi) The amount payable on the Shares of such Series in the event
of involuntary liquidation;
(vii) Whether or not the Shares of such Series shall be
convertible into Shares of stock of any other class or classes, and
if so convertible, the terms and conditions of such conversion;
(viii) The limitations and restrictions, if any, to be
effective while any Shares of such Series are outstanding, upon the payment
of dividends or making of other distributions on the Common Stock or any other
class or classes of stock of the Corporation ranking junior to the Shares of
such Series;
(ix) The conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or any subsidiary and the
conditions or restrictions, if any, upon the issuance of any
additional stock (including additional Shares of such Series or of any other
Series) ranking on a parity with or prior to the Shares of such Series
as to dividends or upon Liquidation;
(x) Any right to vote with holders of Shares of any other Series
or class and any right to vote as a class, either generally or as a
condition to specified corporate action; and
(xi) Such other preferences, rights, restrictions, and
qualifications as shall not be inconsistent herewith.
(C) All Shares of any Series of Preferred Stock shall be identical with
each other in all respects, except that Shares of any one Series issued at
different times may differ as to the dates from which dividends thereon
shall be cumulative, if cumulative dividends have been designated for such
Series, and all Series shall tank equally and be identical in all respects,
except as permitted by the foregoing provisions of Section (2) hereof.
(D) The Preferred Stock is senior to the Common Stock, and the Common Stock
is subject to the rights and preferences of the Preferred Stock as herein set
forth.
(E)(i) The holders of Preferred Stock of each Series shall
be entitled to receive, and the Corporation shall be bound to pay, out of any
funds legally available for such purpose, which and as declared by the Board
of Directors, cash dividends thereon at such rate and payable at such times
as shall be fixed and determined for such Series as herein set forth,
Dividends with respect to each Series of Preferred Stock mall be
cumulative or non-cumulative, as determined by the Board of Directors, and
shall accrue from such date or dates as shall have been fixed and
determined with respect to such Series by the Board of Directors as
herein provided.
(ii) In no event, so long as any Preferred Stock shall
remain outstanding, shall any dividend whatsoever be declared or paid upon, or
any distribution be made or ordered in respect of, the Common Stock or any
other class of stock ranking junior to the Preferred Stock, or any moneys be
set aside for or applied to the purchase or redemption (through a sinking fund
or otherwise) of Shares of Common Stock or of any other such junior class of
stock, unless:
(a) Full cumulative dividends on the Preferred Stock of all Series
for all past dividend periods hall have been paid with respect to any
outstanding Preferred Shares having cumulative dividend rights, and the
full dividend on all outstanding Shares of Preferred Stock of al Series for
:he then current dividend period, if any, shall have been paid or declared and
set apart for payment; and
(b) The Corporation shall have set aside all amounts, if any, theretofore
required to be set aside as and for sinking funds, if any, for the Preferred
Stock of all Series for the then current year, and all defaults, if any,
in complying with any such sinking fund requirements in respect of
previous years shall have been made good.
(iii) Subject to the foregoing provisions respecting the Preferred
Stock, and not otherwise, dividends, payable in cash, stock, or
otherwise, as may be determined by the Board of Directors, may be declared and
paid upon the Common Stock, from time to time, out of any funds legally
available therefor, and no holder of any Shares of any Series of Preferred
Stock, as such, shall be entitled to participate in any such dividend.
(F) The Corporation, at the option of the Board of Directors,
may, at any rime permitted by the resolution or resolutions adopted by the
Board of Directors providing for the issuance of any Series of Preferred
Stock, and at the redemption price per Share fixed and determined for
such Series, redeem the whole or any of the Shares of such Series at
the time outstanding (the total sum so payable on any such redemption
being herein referred to as the "redemption price"). Notice of every
such redemption shall be mailed to the holders of record of the Shares
of such Series so to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation. Such notice shall be
mailed at least 30 days in advance of the date designated for such redemption
to the holders of record of Shares so to be redeemed In case of the
redemption of a part only of any Series at the time outstanding, the Shares of
such Series so to be redeemed shall be selected by lot or pro rate in such
manner as the Board of Directors may determine.
(G) If, on the redemption dare specified in such notice, the funds
necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro rata
benefit of the holders of the Shares so called for redemption, then,
notwithstanding that any certificates for shares of Preferred Stock so
called for redemption shall not have been surrendered for cancellation, the
Shares represented thereby shall no longer be deemed outstanding, the right
to receive dividends thereon, shall cease to accrue from and after the
date of redemption so designated, and all rights of holders of the Shares
of Preferred Stock so called for redemption shall forthwith, after
such redemption date, cease and terminate, excepting only the right of the
holders thereof to receive the redemption price therefor but without interest.
Any moneys so set aside by the Corporation and unclaimed at the end of six
years from the date designated for such redemption shall revert to the
general funds of the Corporation; after which reversion, the holders of such
Shares so called for redemption shall look only to the Corporation for
payment of the redemption price, and said Shares shall not still be deemed
to be outstanding.
(H) Upon any liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, the Preferred Stock of
each Series shall be entitled, before any distribution shall be made to the
Common Stock or to any other class of stock junior to the Preferred
Stock, to be paid the amount fixed and determined by the board of Directors
for such Series as herein provided, plus accrued and unpaid dividends
thereon to the date of distribution, but the Preferred Stock shall not
be entitled to any further payment, and any remaining net assets shall be
distributed ratably to the outstanding Common Stock. If, upon such
liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary, the net assets of the Corporation shall be
insufficient to permit the payment to all outstanding Shares of
Preferred Stock of all Series of the full preferential amounts to which
they are respectively entitled, then the entire net assets of the Corporation
shall be distributed ratably to all outstanding Shares of Preferred Stock of
all Series in proportion to the full preferential amount to which each Share is
entitled. Neither a consolidation nor a merger of the Corporation with
or into any other corporation or corporations, nor the sale of all or
substantially all of the assets of the Corporation, shall be
deemed to be a liquidation, dissolution, or winding up within the
meaning of this section.
(I) The Preferred Stock shall not be convertible, except
to the extent that any one or more Series thereof maybe issued with the
privilege of conversion as may be determined by the Board of
Directors prior to issuance of any Shares of such Series as herein set forth.
If the Shares of any Series are so issued with the privilege of
conversion, then, at the option of the respective holders thereof, the
Preferred Stock of such Series shall be convertible into a number of fully
paid and non-assessable Shares of the Common Stock or any other class
of stock of the Corporation at the conversion rate, or upon payment to the
Corporation of the conversion price, which is in effect for the Preferred Stock
of such Series at the time of such conversion. The initial conversion rate or
conversion price (including, in the latter case, the number of Shares of Common
Stock or other class of stock issuable upon conversion), and the terms
and conditions of conversion for each Series issued with the privilege of
conversion shall be fixed and determined by the Board of Directors as
hereinafter provided. Such conversion price or conversion rate, with
respect to any such Series, may be subject, from time to time, to adjustment by
virtue of issuance of securities or rights to purchase securities of the
Corporation, or upon any capital reorganization or reclassification of the
Common Stock of the Corporation, or the consolidation or merger of the
Corporation, or the sale, conveyance, lease, or other transfer by the
Corporation of all or substantially all of its property, or in other
circumstances, all to the extent and in the manner fixed and determined by the
Board of Directors as herein set forth.
(J) Shares of any Series of Preferred Stock which have been
issued and reacquired in any manner by the Corporation (including
Shares redeemed, Shares purchased and retired, and Shares which, if convertible
or exchangeable, have been converted into or exchanged for Shares of stock
of any other class, classes, or Series shall have the status of authorized and
unissued Shares of Preferred Stock and may be reissued as a part of the Series
of which they were originally a part, or may be reclassified and reissued as
part of a new Series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, or as part of any other Series of
Preferred Stock, ail subject to the conditions or restrictions on
issuance set forth in any resolution or resolutions adopted by the
Board of Directors provided for the issue of any Series of Preferred Stock.
(K) None of the holders of Preferred Stock of any Series shall have any
voting powers for any purpose, except as may be specifically required by law,
or except as any such right to vote may be fixed and determined by the Board of
Directors prior to issuance of any Shares of such Series as herein provided.
(L) In order the Board of Directors to establish a Series of
Preferred Stock, the Board of Directors shall adopt a resolution or
resolutions setting forth the designation and the number of Shares of such
Series and the relative rights and preferences thereof in respect of the
foregoing particulars. The Board of Directors may designate any Shares of any
Series theretofore established that have not been issued, or that have been
issued and retired, as Shares of some other Series, or change the
designation of outstanding shares where desired to prevent confusion.
(M) For the purposes hereof and of any resolution of the Board of
Directors providing for the classification or reclassification of any
Shares of Preferred Stock:
(i) The term "outstanding," when used in reference to Shares of
stock, shall mean issued Shares, excluding Shares held by the Corporation or a
subsidiary, and Shares called for redemption; funds for the redemption of
which shall have been deposited in trust
COMMON STOCK
Subject to the foregoing provisions, dividends may be declared on
the Common Stock, and each Share of Common Stock shall entitle the holder
thereof to one vote in all proceedings in which action shall be taken by
stockholders of the Corporation.
FIFTH. The name and mailing address of the incorporator is as follows:
William M. Aul, 525 "B" Street, Suite 303 San Diego, California 92101
SIXTH. The powers of the incorporator are to terminate upon filing of the
Certificate of Incorporation, and the name and mailing address of the person
who is to serve as Director until the first annual meeting of
stockholders or until his successor is elected and qualifies is as follows:
William M. Aul, 525 "B" Street, Suite 303, San Diego, California 92101.
SEVENTH. The Director shall have power to make and to alter or amend the
By-Laws, to fix the amount to be reserved as working capital, and
to authorize and cause to be executed mortgages and liens without limit as to
the amount upon the property and franchise of the Corporation.
With the consent in writing and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Director shall have
the authority to dispose, in any manner, of the whole property of this
Corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this Corporation or any of them shall be open to the inspection of the
stockholders, and no stockholders shall have any right of inspecting any
account, book, or document of this Corporation, except as conferred by the
law or the By-Laws or by resolution of the stockholders.
The stockholders and Director shall have power to hold their meetings and
keep the books, documents, and papers of the Corporation outside of the State
of Delaware at such places as may be, from time to time, designated by the
By-Laws or by resolution of the stockholders or Director, except as otherwise
required by the laws of Delaware.
It is the intention that the objects, purposes, and powers
specified in the third paragraph hereof shall, except where otherwise
specified in said paragraph, be nowise limited or restricted by reference to or
inference from the terms of any other clause or paragraph in this Certificate
of Incorporation, but that the objects, purposes, and powers specified in the
third paragraph and in each of the clauses or paragraphs of this charter shall
be regarded as independent objects, purposes, and powers.
EIGHTH:
Section 1
A Director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation law, or (iv) for any transaction from
which the Director derived an improper personal benefit. If the
Delaware General Corporation Law is amended after approval by the
shareholders of this article to authorize corporate action further eliminating
or limiting the personal liability of Directors, then the liability of a
Director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, so as amended.
Any repeal or modification of the foregoing paragraph by the shareholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
Section 2
(a) Right to Indemnification. Each person who was or is made a party
to, or is threatened to be made a party to, or is otherwise involved, in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a Director, Officer, or employee of the Corporation, or is or
was serving at the request of the Corporation as a Director, Officer,
employee, or agent of another corporation or of a partnership, joint
venture, trust, or other enterprise, including service with respect to
employee benefit plans (hereinafter an "indemnitee"), whether the basis
of such proceeding is alleged action in an official capacity as a Director,
Officer, employee, or agent or in any other capacity while serving as a
Director, Officer, employee, or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation, to provide prior to
such amendment), against all expense, liabilities and loss (including
attorneys' fees, judgments, fines, ERISA, excise taxes or penalties, and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith, and such indemnification shall continue as to an
indemnitee who has ceased to re a Director, Officer, employee, or agent and
shall inure to the benefit of the indemnitee's heirs, executors, and
administrators; provided, however, that, except as provided in paragraph (b)
hereof with respect : to proceedings to enforce rights to indemnification,
the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this section
shall be a contract right and shall include the right to be
reimbursed by the Corporation for expenses incurred in defending any
such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a Director of
Officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of
an undertaking, by or on behalf of such indemnitee, to repay all amounts
so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such indemnitee
is not entitled to be indemnified for such expenses under this section
or otherwise (hereinafter an "undertaking").
(b) Right of Indemnitee to Bring Suit. If a claim under
paragraph (a) of this section is not paid in full by the Corporation within
sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may,
any time thereafter, bring suit against the Corporation to recover the
unpaid amount of the claim. If successful, in whole or in part, in any
such suit or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending
such suit. In any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses), it mall be a defense
that the indemnitee has not met the applicable standard of conduct set forth
in Delaware General Corporation Law. In any suit brought by the Corporation
to recover an advancement of expenses, pursuant to the terms of an undertaking,
the Corporation shall be entitled to recover such expenses upon a final
adjudication that the indemnitee has not met the applicable standard of
conduct set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) to have made a determination
prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has
met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such suit brought by the
indemnitee, by a defense to such suit. In any suit brought by the indemnitee
to enforce a right hereunder, or by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified or to such
advancement of expenses under this section or otherwise shall be on the
Corporation.
(c) Non-Exclusivity Of Rights. The rights to indemnification and
to the advancement of expenses conferred in this section shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, this Certificate of Incorporation, By-Law, agreement, vote
of shareholders or disinterested Directors, or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any Director, Officer, employee, or
agent of the Corporation or another corporation, partnership, joint venture,
trust, or Other enterprise against any expense, liability, or loss, whether
or not the Corporation would have the power to indemnify such person
against such expense, liability, or loss under the Delaware General Corporation
Law,
(e) Indemnification of Agents of the Corporation. The
Corporation may, to the extent authorized from lime to time by the Board of
Directors, grant rights to indemnification and to the advancement of
expenses to any agent of the Corporation to the fullest extent of the
provisions of this section with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
I, THE UNDERSIGNED, for the purpose of forming a corporation
under the laws of the State of Delaware, do make, file, and record this
Certificate and do certify that the facts herein are true, and I have
accordingly hereunto set my hand.
DATED AT: September 22, 1990
STATE OF: California
COUNTY OF: San Diego
/s/ William M. Aul
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF Environmental
Satellite Corporation
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Environmental Satellite Corporation.
2. The certificate of incorporation of the corporation is hereby amended by
striking out Article First thereof and by substituting in lieu of said Article
the following new Article:
"First: The name of this Corporation is Versatech Environment Group, Inc."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 and 242 of
the General Corporation Law of the State of Delaware.
Signed and attested to on July 9, 1993.
(Seal)
/s/Blaine Froats, President
Attest: Marilyn Froats, Secretary
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF Versatech
Environment Group,Inc.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Versatech Environment Group, Inc.
2. The certificate of incorporation of the corporation is hereby amended by
striking out Article First thereof and by substituting in lieu of said Article
the following new Article:
"First: The name of this Corporation is Environmental Products Group, Inc."
3. The certificate of incorporation of the corporation is hereby amended by
striking out Article Fourth tbereof any by substituting in lieu of said Article
the following new Article:
"Fourth: The aggregate number of Common Shares that this Corporation
shall have the authority to issue is 20,000,000 Shares with a par value of
$0.001 per Share. Each share shall have one vote per share on all matters to
which they are entitled to vote without any right to cumulative voting."
4. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 and 242 of
the General Corporation Law of the State of Delaware.
Signed and attested to on October 6, 1998.
(Seal)
/s/Blaine Froats, President
Attest: Marilyn Froats, Secretary
Exhibit 2(i)B
ARTICLES OF INCORPORATION - ONTARIO
1. The name of the corporation is: Formulated Mouldings (Canada) Inc.
2. The address of the registered office is: 5430 Harvester Road, Burlington,
Ontario L7L 5N5.
3. Number (or minimum and maximum number) of directors is: Two
4. The first director(s) is/are:
First name, Initials and last name Residence Address Resident
Canadian
Blaine Froats 200 North Service Rd W yes
Suite 212
Oakville, Ontario L6M 2S2
Sean Froats 200 North Service Rd W yes
Suite 212
Oakville, Ontario L6M 2S2
5. Restrictions, if any, on business the corporation may carry on or on powers
the corporation may exercise: Nil.
6. The classes and any maximum number of shares that the corporation is
authorized to issue: 10,000,000 common shares.
7. Rights, privileges, restrictions and conditions (if any) attaching to each
class of shares and directors authority with respect to any class of shares
which may be issued in series: Nil.
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows: Nil.
9. Other provisions, if any, are: Nil.
10. The names and addresses of the incorporators are:
Blaine Froats, 200 North Service Rd. W., Suite 212, Oakville, Ontario L6M 2S2.
These articles are signed in duplicate.
/s/ Blaine Froats
May 13, 1997
ARTICLES OF AMENDMENT - ONTARIO
1. The present name of the corporation is: Formulated Mouldings (Canada) Inc.
2. The name of the corporation is changed to (if applicable):
3. Date of incorporation/amalgamation: May 13, 1997
4. The articles of the corporation are amended as follows:
1. To provide for a minimum number of directors of one (1) and a maximum number
of ten (10).
2. To provide that the corporation is authorized to issue an unlimited number
of common shares.
3. To provide that the issue, transfer or ownership of the common shares is
restricted as follows:
i) No shares of the corporation shall be transferred without either:
a) the sanction of a majority of the directors of the corporation; or
b) sanction of a majority of the shareholders of the corporation.
ii) The corporation may not make a distribution to the public of any of its
securities.
iii) The number of shareholders is limited to fifty (50) not including persons
who are in the employment of the corporation or any persons, who having been
formerly in the employment of the corporation, were while in that employment,
and having continued after the termination of that employment, to the
shareholders of the corporation, two or more persons holding one or more shares
jointly being counted as a single shareholder.
iv) A holder of a fractional share shall be entitled to exercise voting rights
and to receive dividend in respect of the said fractional share.
v) The corporation shall have a lien on each share registered in the name of
the shareholder or his legal representative for debts of that shareholder to
the corporation.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Business Corporation Act.
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on: September 4, 1997
These articles are signed in duplicate.
Formulated Mouldings (Canada) Inc.
By: /s/ Blaine Froats, President
September 18, 1997
Exhibit 2(i)C
ARTICLES OF INCORPORATION - ONTARIO
1. The name of the corporation is: Environmental Fuel Technology Inc.
2. The address of the registered office is: 5430 Harvester Road, Unit "A",
Burlington, Ontario L7L 5N5.
3. Number (or minimum and maximum number) of directors is: Up to seven
4. The first director(s) is/are:
First name, Initials and last name Residence Address Resident
Canadian
Donald Froats 302-570 Eglington Ave. W. yes
Toronto, Ontario M5N 1B7
5. Restrictions, if any, on business the corporation may carry on or on powers
the corporation may exercise: None.
6. The classes and any maximum number of shares that the corporation is
authorized to issue: Common - Unlimited.
7. Rights, privileges, restrictions and conditions (if any) attaching to each
class of shares and directors authority with respect to any class of shares
which may be issued in series: Nil.
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows: Nil.
9. Other provisions, if any, are: Nil.
10. The names and addresses of the incorporators are:
Donald Froats, 302-570 Eglington Ave. W., Toronto, Ontario M5N 1B7.
These articles are signed in duplicate.
/s/ Donald Froats
September 10, 1997
Exhibit 2(i)D
ARTICLES OF INCORPORATION - ONTARIO
1. The name of the corporation is: Environmental Shelter Technology Inc.
2. The address of the registered office is: 5430 Harvester Road, Unit "A",
Burlington, Ontario L7L 5N5.
3. Number (or minimum and maximum number) of directors is: Maximum 3
4. The first director(s) is/are:
First name, Initials and last name Residence Address Resident
Canadian
Donald Ross Froats 302-570 Eglington Ave. W. yes
Toronto, Ontario M5N 1B7
5. Restrictions, if any, on business the corporation may carry on or on powers
the corporation may exercise: None.
6. The classes and any maximum number of shares that the corporation is
authorized to issue: Common - Unlimited.
7. Rights, privileges, restrictions and conditions (if any) attaching to each
class of shares and directors authority with respect to any class of shares
which may be issued in series: Nil.
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows: Nil.
9. Other provisions, if any, are: Nil.
10. The names and addresses of the incorporators are:
Donald R. Froats, 302-570 Eglington Ave. W., Toronto, Ontario M5N 1B7.
These articles are signed in duplicate.
/s/ Donald Froats
October 14, 1997
Exhibit 2(ii)E
BY-LAWS OF ENVIRONMENTAL SATELLITE CORPORATION
ARTICLE I OFFICES
SECTION 1.REGISTERED OFFICE. The registered office shall be established and
maintained at the office or the United States Corporation Company in the City
of Dover, in the County of Kent, in the State of Delaware, and said Corporation
shall be the registered agent of this Corporation in charge thereof.
SECTION 2.OTHER OFFICES. The Corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board
of Directors may, from time to time, appoint or the business of the Corporation
may require.
ARTICLE II MEETINGS OF STOCKHOLDERS
SECTION 1.ANNUAL MEETINGS. Annual meetings of stockholders for the
election of Directors and for such other business, as may be stated in the
notice of the meeting, shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. In
the event the Board of Directors fails to so determine the time, date, and
place of meeting, the annual meeting of stockholders shall be held at the
registered office of the Corporation in Delaware on the first Tuesday in
February following the close of the Company's most recent fiscal year.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors,
and they may transact such other corporate business as shall be stated in the
notice of the meeting.
SECTION 2.OTHER MEETINGS. Meetings of stockholders for any purpose other
than the election of Directors may be held at such time and place , within or
without the State of Delaware, as shall be stated in the notice of the meeting.
SECTION 3.VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and in accordance with the provisions
of these By-laws shall be entitled to one (1) vote, in person or by proxy, for
each share of stock entitled to vote held by such stockholder, but no proxy
shall be voted after three (3) years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for
Directors and the vote upon any question before the meeting shall be by ballot.
All elections for Directors shall be decided by plurality vote; all other
questions shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each and the
number of shares held by each shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
SECTION 4.QUORUM. Except as otherwise required by law, by the Certificate
of Incorporation or by these By-Laws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the Corporation entitled to
vote shall constitute a quorum at all meetings of the stockholders. In case a
quorum shall not be present at any meeting, a majority in interest of the
stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting, from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed, but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 5.SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the President or Secretary or by
resolution of the Directors.
SECTION 6.NOTICE OF MEETINGS. Written notice stating the place, date, and
time of the meeting and the general nature of the business to be considered
shall re given to each stockholder entitled to vote thereat at his address as
it appears on the records of the Corporation riot less than ten (10) nor more
than fifty (50) days before the date of the meeting. No business other than
that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 7.ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation , any action required to be taken at any annual or
special meeting of stockholders or any action which may be taken at any annual
or special meeting may be taken without a meeting, without prior notice, and
without a vote, if a consent in writing setting forth the action so taken shall
be signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing.
ARTICLE III DIRECTORS
SECTION 1.NUMBER AND TERM. The number of Directors shall be seven (7).
The Directors shall be elected at the annual meeting of the stockholders, and
each Director shall be elected to serve until his successor shall be elected
and shall qualify. Directors need not be stockholders.
SECTION 2.RESIGNATIONS. Any Director, member of a committee, or other
Officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, and if no time be specified,
at the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3.VACANCIES. If the office of any Director, member of a committee,
or other Officer becomes vacant, the remaining Directors in office, though less
than a quorum, by a majority vote, may appoint any qualified person to fill
such vacancy who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4.REMOVAL. Any Director or Directors may be removed, either for or
without cause, at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote at a special
meeting of the stockholders called for the purpose, and the vacancies thus
created may be filled at the meeting held for the purpose of removal by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5.INCREASE OF NUMBER. The number of Directors may be increased by
amendment of these By-Laws by the affirmative vote of a majority of the
Directors , though less than a quorum, or by the affirmative vote of a majority
in interest of the stockholders at the annual meeting or at a special meeting
called for that purpose, and by like vote, the additional Directors may be
chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6.POWERS. The Board of Directors shall exercise all of the powers
of the Corporation except such as are by law or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or
reserved to the stockholders.
SECTION 7.COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one (1) or more
committees, each committee to consist of two (2) or more of the Directors of
the Corporation. The Board may designate one (1) or more Directors as alternate
members of any committee who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors or in these By-Laws, shall have and may exercise all the power and
authority of the Board of Directors in the management o~ the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require it, but no such committee shall have
the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation , recommending
to the stockholders the sale, lease, or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
the By-Laws of the corporation, and, unless the resolution, these By-Laws, or
the Certificate of Incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock.
SECTION 8.MEETINGS. The newly elected Directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders, or
the time and place of such meeting may be fixed by consent in writing of all
the Directors.
Regular meetings of the Directors may be held without notice at such places
and times as shall be determined, from time to time, by resolution of the
Directors.
Special meetings of the Board may be called by the President or by the
Secretary on the written request of any two (2) Directors on at least two (2)
days' notice to each Director and shall be held at such place or places as may
be determined by the Directors, or as shall be stated in the call of the
meeting.
SECTION 9.QUORUM. A majority of the Directors shall constitute a quorum
for the transaction of business. If, at any meeting of the Board, there shall
be less than a quorum present, a majority of those present may adjourn the
meeting, from time to time, until a quorum is obtained, and no further notice
thereof need be given other than by announcement at the meeting which shall be
so adjourned.
SECTION 10.COMPENSATION. Directors shall not receive any stated salary for
their services as Directors or as members of committees, but by resolution of
the Board, a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity as an Officer ,
agent , or otherwise , and receiving compensation therefor.
SECTION 11.ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if, prior to such action, a written consent
thereto is signed by all members of the Board, or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board or committee.
ARTICLE IV OFFICERS
SECTION 1.OFFICERS. The Officers of the Corporation shall be a President, a
Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one (1)
or more Vice Presidents, and such Assistant Secretaries and Assistant
Treasurers as they may deem proper. None of the Officers of the Corporation
need be Directors. The Officers shall be elected at the first meeting of the
Board of Directors after each annual meeting . More than two (2) offices may
be held by the same person.
SECTION 2.OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such
other Officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined, from time to time , by the Board of Directors.
SECTION 3.CHAIRMAN. The Chairman of the Board of Directors, if one
be elected, shall preside at all meetings of the Board of Directors, and he
shall have and perform such other duties as, from time to time, may be assigned
to him by the Board of Directors.
SECTION 4.PRESIDENT. The President shall be the Chief Executive Officer of
the Corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors , and shall have general supervision,
direction, and control of the business of the Corporation, Except as the Board
of Directors shall authorize the execution thereof in some other manner he
shall execute bonds, mortgages, and other contracts on behalf of the Corporation
and shall cause the seal to be affixed to any instrument requiring it, and when
so affixed, the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5.VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the Directors.
SECTION G.TREASURER. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He shall deposit all
moneys and other valuables in the name and to the credit of the Corporation
in such depositaries as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation . If required by the Board of Directors, he shall
give the Corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the Board shall prescribe.
SECTION 7.SECRETARY. The Secretary shail give, or cause to be given, notice
of all meetings of stockholders and Directors and all other notices required by
law or by these By-Laws, and in case of his absence or refusal or neglect to do
so, any such notice may be given by any person thereunto directed by the
President or by the Directors or stockholders, upon whose requisition the
meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the Corporation and of the Directors in a book
to be kept for that purpose and shall perform such other duties as may be
assigned to him by the Directors or the President. He shall have the custody
of the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the Directors or the President, and
attest the same.
SECTION 8.ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Directors.
ARTICLE V MISCELLANEOUS
SECTION 1.CERTIFICATES OF STOCK. A certificate of stock, signed by the
Chairman or Vice Chairman of the Board of Directors, if they be elected,
President or Vice President, and the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the Corporation. When such
certificates are countersigned (1) by a transfer agent other than the
Corporation or its employee, or (2) by a registrar other than the Corporation
or its employee, the signatures of such Officers may be facsimiles.
SECTION 2.LOST CERTIFICATES. A new certificate of stock may .be issued in
the place of any certificate theretofore issued by the Corporation alleged to
have been lost or destroyed, and the Directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a tend, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate or the issuance of any such new
certificate.
SECTION 3.TRANSFER OF SHARES. The shares of stock of the Corporation shall
be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such
transfer, the old certificates shall be surrendered to the Corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer, and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4.STOCKHOLDERS RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date which shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting, nor more than sixty (60)
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting, provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
SECTION 5.DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends, such sum or sums as the Directors, from time to time, in their
discretlion, deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Directors shall deem conducive to the interests of the Corporation.
SECTION 6.SEAL. The corporate seal shall be circular in form and shall
contain the name of the Corporation, the year of its creation, and the words
"CORPORATE SEAL DELAWARE" Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7.FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8.CHECKS. All checks, drafts, or other orders for the payment of
money , notes , or other evidences or indebtedness issued in the name of
the Corporation shall be signed by such Officer or Officers, agent or agents of
the Corporation and in such manner as shall be determined, from time to time,
by resolution of the Board of Directors.
SECTION 9;NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States Mail, postage prepaid , addressed to
the person entitled thereto at his address as it appears on the records of the
Corporation, and such notice shall be deemed to have been given on the day of
such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of any meetings except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions of
any law, or under the provisions of the Certificate of Incorporation of the
Corporation, or these ByLaws, a waiver thereof in writing signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI AMENDMENTS
These By-Laws may be altered or repealed, and By-Laws may be made at any
annual meeting of the stock~iolders or at any special meeting thereof if notice
of the proposed alteration or repeal or By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or
by the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws
to be made be contained in the notice of such special meeting.
Exhibit 2(ii)F
BY-LAW NO. 1 a by-law relating generally to the conduct of the affairs of
Formulated Mouldings (Canada) Inc.(the "Corporation")
ARTICLE 1 INTERPRETATION
In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
"Act" means the Business Corporations Act, as from time to time amended and
every statute that may be substituted therefore;
"Regulations" means the Regulations made under the Act from time to time
amended and every regulation that may be substituted therefore; "Board" means
the board of directors of the Corporation; all terms which are used in this or
any other by-law of the Corporation and which are defined in the Act or the
Regulations shall have the meanings given to them in the Act or the
Regulations; (v) words importing the singular number include the plural and
vice versa; (vi) words importing the masculine gender include the feminine and
neuter genders; and (vii) the word "person" includes individuals, bodies
corporate, corporations, companies, partnerships, syndicates, trusts and
unincorporated organizations.
ARTICLE 2 SEAL, REGISTERED OFFICE AND FINANCIAL YEAR
2.01 SEAL - The Corporation may but need not have a corporate seal. Any
corporate seal adopted for the Corporation shall be such as the board of
directors may from time to time approve by resolution.
2.02 REGISTERED OFFICE - The shareholders may from time to time by special
resolution fix the municipality or geographic township in Ontario in which the
Corporation's registered office is located. The directors may from time to time
by resolution fix the location of the registered office within such
municipality or geographic township.
2.03 FINANCIAL YEAR - The financial year of the Corporation shall terminate
on such date in each year as the directors may from time to time by resolution
determine.
ARTICLE 3 DIRECTORS
3.01 POWER OF DIRECTORS - Subject to any unanimous shareholder agreement,
the directors shall manage or supervise the management of the business and
affairs of the Corporation.
3.02 NUMBER AND QUORUM - The board of directors shall consist of the number
of directors set out in the articles of the Corporation or, where a minimum and
maximum number is provided for in the articles, such number of directors as
shall be determined from time to time by special resolution or, if the special
resolution empowers the directors to determine the number, by resolution of the
directors. At any meeting of directors, of the authorized number of directors
shall constitute a quorum for the transaction of business.
3.03 QUALIFICATION - Each director shall be eighteen (18) or more years of
age and no person who is not an individual, who has the status of a bankrupt or
who is of unsound mind and has been so found by a court in Canada or elsewhere
shall be a director. A director need not be a shareholder.
3.04 RESIDENT CANADIANS - A majority of the directors shall be resident
Canadians, but where the Corporation has only one or two directors, that
director or one of the two directors, as the case may be, shall be a resident
Canadian.
3.05 ELECTION AND TERM - The election of directors shall take place at each
annual meeting of shareholders and all the directors then in office shall
retire but, if qualified, shall be eligible for re-election. The number of
directors to be elected at any such meeting shall be the number of directors
then in office unless the directors or shareholders shall have otherwise
determined in accordance with the Act. If an election of directors is not held
at the proper time, the incumbent directors shall continue in office until
their successors are elected.
3.06 REMOVAL OF DIRECTORS - The shareholders may by ordinary resolution
passed at an annual or special meeting of shareholders, remove any director or
directors from office before the expiration of his term of office, and may by a
majority of votes cast at the meeting elect anv person in his stead for the
remainder of his term.
3.07 VACANCIES - Vacancies among the directors shall be filled in
compliance with the Act.
3.08 VACATION OF OFFICE - The office of a director shall ipso facto be
vacated: (a) if he dies; (b) if he becomes bankrupt or suspends payment of his
debts generally or compounds with his creditors or makes an authorized
assignment or is declared insolvent; (c) if he is found to be of unsound mind
or a mentally incompetent person; or (d) subject to the provisions of the Act
if by notice in writing to the Corporation he resigns his office. Any such
resignation shall be effective at the time it is sent to the Corporation or at
the time specified in the notice, whichever is later.
3.09 COMMITTEE OF DIRECTORS - The directors may appoint from among their
number a committee of directors and, subject to Section 127 of the Act, may
delegate to such committee any of the powers of the directors. A majority of
the directors of any such committee must be resident Canadians.
3.10 REMUNERATION OF DIRECTORS - The remuneration to be paid to the
directors shall be such as the Board shall from time to time determine and such
remuneration shall be in addition to the salary paid to any officer or employee
of the Corporation who is also a member of the Board. The directors may also
award special remuneration to any director undertaking any special services on
the Corporation's behalf other than the routine work ordinarily required of a
director by the Corporation and the confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their travelling and other expenses properly incurred by
them in connection with the affairs of the Corporation.
3.11 DISCLOSURE OF INTEREST - Every director or officer of the Corporation
who is a party to a material contract or a proposed material contract for the
Corporation or who is the director or an officer of, or has a material interest
in, any person who is party to a material contract, or a proposed material
contract, with the Corporation shall disclose the nature and extent of his
interest at the time and in the manner provided by the Act.
ARTICLE 4 MEETINGS OF DIRECTORS
4.01 NOTICE OF MEETING - Meetings of the Board shall be held from time to
time at such place, at such time and on such day as the Chairman of the Board,
if any, the President or any two directors may determine, and the Secretary
shall call meetings when so directed or so authorized. Notice of every meeting
so called shall be delivered or mailed or sent by telegram, telex, facsimile or
other electronic means to each director not less than forty-eight (48) hours
(excluding any part of a Saturday or a holiday as defined by the Interpretation
Act of Canada for the time being in force) before the time when the meeting is
to be held. No notice of a meeting shall be necessary if all the directors are
present or if those absent have waived notice of or have otherwise signified
their consent to the holding of such meeting.
4.02 FIRST MEETING OF NEW BOARD - For the first meeting of the Board to be
held immediately following the election of directors by the shareholders or for
a meeting of the Board at which a director is appointed to fill a vacancy in
the Board, no notice of such meeting shall be necessary to the newly elected or
appointed director or directors in order to legally constitute the meeting,
provided that a quorum of the directors is present.
4.03 PLACE OF MEETING - Meetings of the Board and of a committee of
directors may be held at any place within or outside of Ontario and in any
financial year of the Corporation a majority of the meetings of the board of
directors of the Corporation are not required to be held at a place within
Canada.
4.04 MEETINGS BY TELEPHONE - If all the directors present at or
participating in a meeting consent, a meeting of the directors or of a
committee of directors may be held by means of such telephone, electronic or
other communication facilities as permit all persons participating in the
meeting to communicate with each other simultaneously and instantaneously, and
a director participating in such a meeting by such means shall be deemed to be
present at the meeting. Any such consent shall be effective whether given
before or after the meeting to which it relates.
4.05 VOTING - At all meetings of the Board, every question shall be decided
by a majority of the votes cast. In case of an equality of votes the chairman
of the meeting shall not be entitled to a second or casting vote in addition to
his original vote.
4.06 CHAIRMAN - The Chairman of the Board, if elected and present, and
otherwise the President, shall be chairman of any meeting of the Board. If no
such officer is present the directors present shall choose one of their members
to be chairman.
4.07 TRANSACTION OF BUSINESS BY SIGNATURE - A resolution in writing signed
by all the directors entitled to vote on that resolution at a meeting of
directors or a committee of directors is as valid as if it had been passed at a
meeting of directors or a committee of directors.
ARTICLE 5 OFFICERS
5.01 APPOINTMENT - The Board shall annually or more often as may be
necessary, appoint a President and a Secretary and, if deemed advisable, may
annually or more often as may be necessary, appoint a Chairman of the Board, a
Managing Director (who shall be a resident Canadian), one or more
Vice-Presidents, a Treasurer and such other officers as the Board may determine
including one or more assistants to any of the officers so appointed. None of
the said officers, except the Chairman of the Board and the Managing Director,
need be a director. Any two of the said offices may be held by the same person.
If the same person holds the office of Secretary and Treasurer, he may, but
need not, be known as the Secretary-Treasurer The Board may from time to time
appoint such other officers and agents as it shall deem necessary who shall
have such authority and shall perform such duties as may from time to time be
determined by the Board.
5.02 REMUNERATION AND REMOVAL - The terms of employment and remuneration of
all officers appointed by the Board (including the President) shall be
determined, or the manner of determination thereof provided for, from time to
time by resolution of the Board. The fact that any officer or employee is a
director or shareholder of the Corporation shall not disqualify him from
receiving such remuneration as may be determined. All officers, in the absence
of agreement to the contrary, shall be subject to removal by resolution of the
Board at any time, with or without cause.
5.03 CHAIRMAN OF THE BOARD - From time to time the Board may appoint a
Chairman of the Board who shall be a director. If so appointed, the Chairman of
the Board shall, if present, preside at all meetings of the Board and at all
meetings of shareholders. In addition, the Board may assign to him any of the
powers and duties that are by any provisions of this by-law assigned to the
President, and he shall have such other powers and duties as the Board may
prescribe. During the absence or disability of the Chairman of the Board, the
President shall assume all his powers and duties.
5.04 MANAGING DIRECTOR - The Managing Director shall, if appointed, be a
resident Canadian and shall exercise such powers and have such authority as may
be delegated to him by the Board in accordance with the provisions of Section
127 of the Act.
5.05 PRESIDENT - The President shall be the chief executive officer of the
Corporation unless otherwise determined by resolution of the Board and shall
have responsibility for the general management and direction of the business
and affairs of the Corporation, subject to the authority of the Board. When no
chairman of the Board is elected or during the absence or inability to act of
the Chairman of the Board, the President shall, when present, preside at all
meetings of shareholders, and if he is a director at all meetings of the Board.
5.06 VICE-PRESIDENT - During the absence or inability of the President, his
duties may be performed and his powers may be exercised by the Vice-President,
or if there are more than one, by the Vice-Presidents in order of seniority (as
determined by the Board) save that no Vice-President shall preside at a meeting
of the Board or at a meeting of shareholders who is not qualified to attend the
meeting as a director or shareholder, as the case may be. A Vice-President
shall also perform such duties and exercise such powers as the President may
from time to time delegate to him or as the Board may prescribe.
5.07 GENERAL MANAGER - The General Manager, if one be appointed, shall have
responsibility for the general management and direction, subject to the
authority of the Board and the supervision of the President, of the
Corporation's business and affairs and shall have the authority to appoint and
remove any and all officers, employees and agents of the Corporation not
elected or appointed directly by the Board and to settle the terms of their
employment and remuneration.
5.08 SECRETARY - The Secretary shall give, or cause to be given, all
notices required to be given to shareholders, directors, auditors and members
of committees. He shall attend all meetings of the directors and of the
shareholders and shall enter or cause to be entered in books kept for that
purpose, minutes of all proceedings at such meetings. He shall be the custodian
of all books, papers, records, documents and other instruments belonging to the
Corporation and shall prepare and maintain all records (other than accounting
records) referred to in Section 140 of the Act. He shall perform such other
duties as may from time to time be prescribed by the Board.
5.09 TREASURER - The Treasurer shall ensure that adequate accounting records
are prepared and maintained and shall keep, or cause to be kept, full and
accurate books of account in which shall be recorded all receipts and
disbursements of the Corporation and, subject to the direction of the Board,
shall control the deposit of money, the safekeeping of securities and the
disbursement of funds of the Corporation. He shall provide to the Board
whenever required of him an account of all his transactions as Treasurer and of
the financial position of the Corporation and he shall perform such other
duties as may from time to time be prescribed by the Board.
5.10 OTHER OFFICERS - The duties of all other officers of the Corporation
shall be such as the terms of their engagement call for or the Board requires
of them. Any of the powers and duties of an officer to whom an assistant has
been appointed may be exercised and performed by such assistant, unless the
Board otherwise directs.
5.11 VACANCIES - If the office of the Chairman of the Board, Managing
Director, President, Vice-President, Secretary, Assistant Secretary, Treasurer,
Assistant Treasurer, or any one of such offices, or any other office shall be
or become vacant by reason of death, resignation, disqualification or otherwise
the directors by resolution shall in the case of the President or Secretary and
may in the case of any other office appoint a person to fill such vacancy.
ARTICLE 6 PROTECTION OF DIRECTORS AND OFFICERS
6.01 LIMITATION OF LIABILITY - Except as otherwise provided in the Act, no
director or officer for the time being of the Corporation shall be liable for
the acts, receipts, neglects or defaults of any other director or officer or
employee or for joining in any receipt or act for conformity or for any loss,
damage or expense happening to the Corporation through the insufficiency or
deficiency of title to any property acquired by the Corporation of for or on
behalf of the Corporation or for the insufficiency or deficiency of any
security in or upon which any of the moneys of or belonging to the Corporation
shall be invested or for any loss or damage arising from bankruptcy, insolvency
or tortious acts of any person with whom any of the moneys, securities or
effects of the Corporation shall be deposited or for any loss occasioned by any
error of judgement or oversight on his part or for any other loss, damage or
misfortune which may happen in the execution of the duties of his office or in
relation thereto; provided that nothing herein shall relieve any director or
officer from the duty to act in accordance with the Act and Regulations or from
liability for any breach thereof.
6.02 INDEMNITIES TO DIRECTORS AND OFFICERS - Subject to Section 136 of the
Act, every director and officer of the Corporation and his heirs, executors,
administrators and other legal personal representatives, shall from time to
time be indemnified and saved harmless by the Corporation from and against, any
liability and all costs, charges and expenses that he sustains or incurs in
respect of any action, suit or proceeding that is proposed or commenced against
him for or in respect of anything done or permitted by him in respect of the
execution of the duties of his office; and all other costs, charges and
expenses that he sustains or incurs in respect of the affairs of the
Corporation.
6.03 SUBMISSION OF CONTRACTS TO SHAREHOLDERS FOR APPROVAL - The Board in
its discretion may submit any contract, act or transaction for approval or
ratification at any annual meeting of the shareholders (or at any special
meeting of the shareholders) called for the purpose of considering the same
and, subject to the provisions of Section 132 of the Act, any such contract,
act or transaction that shall be approved or ratified or confirmed by a
resolution passed by a majority of the votes cast at any such meeting (unless
any different or additional requirement is imposed by the Act or by the
Corporation's articles or any other by-law) shall be as valid and as binding
upon the Corporation and upon all the shareholders as though it had been
approved, ratified or confirmed by every shareholder of the Corporation.
ARTICLE 7 MEETINGS OF SHAREHOLDERS
7.01 ANNUAL MEETING - Subject to the provisions of Section 94 of the Act,
the annual meeting of shareholders shall be held on such day in each year and
at such time and place in or outside Ontario as the directors may determine for
the purpose of hearing and receiving the reports and statements required by the
Act to be read and laid before the shareholders at any annual meeting, electing
directors, appointing, if necessary, an auditor and fixing or authorizing the
board of directors to fix his remuneration and for the transaction of such
other business as may properly be brought before the meeting.
7.02 SPECIAL MEETINGS - The Board, the Chairman of the Board, the Managing
Director, the President or a Vice-President who is a director shall have the
power at any time to call a special meeting of the shareholders of the
Corporation to be held at any time and place in or outside Ontario. The phrase
"meeting of shareholders " wherever it occurs in this by-law shall mean and
include an annual meeting of shareholders, a special meeting of shareholders
and any meeting of any class or classes of shareholders.
7.03 NOTICE - Notice of the time and place of each meeting of shareholders
shall be given not less than ten (10) days or if the Corporation is an offering
corporation not less than twenty-one (21) days but in either case not more than
fifty (50 ) days before the day on which the meeting is to be held, to the
auditor, if any, the directors and to each shareholder entitled to vote at the
meeting. Notice of a special meeting of shareholders shall state the nature of
the business to be transacted in sufficient detail to permit the shareholders
to form a reasoned judgement thereon together with the text of any special
resolution or by-law to be submitted to the meeting.. A meeting of shareholders
may be held at any time without notice if all the shareholders entitled to vote
thereat are present or represented by proxy and do not object to the holding of
the meeting or those not so present or represented by proxy have waived notice,
if all the directors are present or have waived notice of or otherwise consent
to the meeting and if the auditor, if any, is present or has waived notice of
or otherwise consents to the meeting.
7.04 OMISSION OF NOTICE - The accidental omission to give notice of any
meeting or the non-receipt of any notice by any shareholder or shareholders or
by the auditor of the Corporation shall not invalidate any resolution passed or
any proceedings taken at any meeting of shareholders.
7.05 PERSONS ENTITLED TO BE PRESENT - The only persons entitled to attend a
meeting of shareholders shall be those entitled to vote thereat, the directors
of the Corporation, the auditor, if any, of the Corporation and others who
although not entitled to vote are entitled or required under the provisions of
the Act or by-laws of the Corporation to be present at the meeting. Any other
person may be admitted only on the invitation of the Chairman of the meeting or
with the consent of the meeting.
7.06 QUORUM - A quorum at any meeting of shareholders (unless a greater
number of persons are required to be present or a greater number of shares are
required to be represented by the Act or by the articles or any other by-law)
shall be persons present not being less than two in number and holding or
representing not less than twenty percent (20~0) of the total number of the
issued shares of the Corporation for the time being enjoying voting rights at
such meeting. No business shall be transacted at any meeting unless the
requisite quorum be present at the time of the transaction of such business. If
a quorum is not present at the opening of a meeting of shareholders, the
persons present and entitled to vote may adjourn the meeting to a fixed time
and place but may not transact any other business and the provisions of
paragraph 7.14 with regard to notice shall apply to such adjournment.
Notwithstanding the foregoing, if the Corporation has only one shareholder or
only one holder of any class of shares or series of shares entitled to be
present at a meeting of shareholders, that shareholder present in person or by
proxy shall constitute a meeting.
7.07 RIGHT TO VOTE - At each meeting of shareholders every shareholder
shall be entitled to vote who is entered on the books of the Corporation as a
holder of one (1) or more shares carrying the right to vote at such meeting or
where a record date has been fixed, satisfactory evidence is produced not rater
than ten (10) days before the meeting that such person owns shares in the
Corporation and demands that his name be included on the list of shareholders
entitled to vote at the meeting; save that, if the share or shares in question
have been mortgaged or hypothecated, the person who mortgaged or hypothecated
such share or shares (or his proxy) may nevertheless represent the shares at
the meetings and vote in respect thereof unless in the instrument creating the
mortgage or hypothecation he has expressly empowered the holder of such
mortgage or hypothecation to vote thereon, in which case such holder (or his
proxy) may attend meetings to vote in respect of such shares upon filing with
the secretary of the meeting sufficient proof of the terms of such instrument.
7.08 REPRESENTATIVES - An executor, administrator, committee of a mentally
incompetent person, guardian or trustee and where a corporation is such
executor, administrator, committee of a mentally incompetent person, guardian
or trustee, any person duly appointed a proxy for such corporation, upon filing
with the secretary of the meeting sufficient proof of his appointment, shall
represent the shares in his or its hands at all meetings of the shareholders of
the Corporation and may vote accordingly as a shareholder in the same manner
and to the same extent as the shareholder of record. Where two or more persons
hold the same share or shares jointly, any one of such persons present at a
meeting of shareholders has the right, in the absence of the other or others,
to vote in respect of such share or shares but if more than one of such persons
are present or represented by proxy and vote, they shall vote together as one
on the share or shares jointly held by them.
7.09 PROXIES - Votes at meetings of shareholders may be given either
personally or by proxy or, in the case of a shareholder who is a body corporate
or association, by an individual authorized by a resolution of the directors or
governing body of the body corporate or association to represent it at meetings
of shareholders of the Corporation. At every meeting at which he is entitled to
vote, every shareholder and/or person appointed by proxy and/or individual so
authorized to represent a shareholder who is present in person shall have one
vote on a show of hands. Upon a ballot at which he is entitled to vote, every
shareholder present in person or represented by proxy or by an individual so
authorized shall (subject to the provisions, if any, of the articles of the
Corporation) have one vote for every share held by him.
A proxy shall be executed by the shareholder or his attorney
authorized in writing and is valid only at the meeting in respect of which it
is given or any adjournment thereof. A person appointed by proxy need not be a
shareholder. Subject to the Regulations, a proxy may be in the following form:
The undersigned shareholder of [name of corporation] hereby appoints of
, or failing him, of
as the nominee of the undersigned to attend and act for the
undersigned and on behalf of the undersigned at the meeting of
the shareholders of the said Corporation to be held on the day of
, 19 and at any adjournment or adjournments thereof in the same manner,
to the same extent and with the same power as if the undersigned were present
at the said meeting or such adjournment or adjournments thereof.
DATED this day of , 19
Signature of
Shareholder.
The directors may from time to time make regulations regarding the lodging of
proxies at some place or places other than the place at which a meeting or
adjourned meeting of shareholders is to be held and for particulars of such
proxies to be cabled or telegraphed or sent by telex, or facsimile or in
writing before the meeting or adjourned meeting to the Corporation or any agent
of the Corporation for the purpose of receiving such particulars and providing
that proxies so lodged may be voted upon as though the proxies themselves were
produced at the meeting or adjourned meeting and votes given in accordance with
such regulations shall be valid and shall be counted. The chairman of any
meeting of shareholders may, subject to any regulations made as aforesaid, in
his discretion accept telegraphic or cable or telex, or facsimile or written
communication as to the authority of any person claiming to vote on behalf of
and to represent a shareholder notwithstanding that no proxy conferring such
authority has been lodged with the Corporation, and any votes given in
accordance with such telegraphic or cable or telex, or facsimile or written
communication accepted by the chairman of the meeting shall be valid and shall
be counted.
7.10 CHAIRMAN, SECRETARY AND SCRUTINEERS - The Chairman of the Board, if
such an officer has been elected and is present, otherwise the President shall
be chairman of any meeting of shareholders. If no such officer is present
within fifteen minutes from the time fixed for holding the meeting, then the
persons present and entitled to vote shall choose one of their number to be
chairman. If the Secretary of the Corporation is absent the Chairman shall
appoint some person, who need not be a shareholder, to act as secretary of the
meeting. If desired, one or more scrutineers, who need not be shareholders, may
be appointed by resolution or by the chairman with the consent of the meeting.
7.11 VOTES TO GOVERN - At all meetings of shareholders every question shall
be determined by a majority of the votes cast on the question, unless otherwise
required by the articles or by-laws or by the Act. In the case of an equality
of votes at any meeting of shareholders, either upon a show of hands or upon a
poll, the chairman of the meeting shall be entitled to a second or casting vote
in addition to the vote or votes to which he may be entitled as a shareholder.
7.12 SHOW OF HANDS - Subject to the provisions of the Act, any question at
a meeting of shareholders shall be decided by a show of hands unless a poll
thereon is required or demanded. Upon a show of hands, every shareholder
present in person or represented by proxy and entitled' to vote shall have one
vote. Whenever the vote by show of hands shall have been taken upon a question,
a declaration by the chairman of the meeting that the vote upon the question
has been carried or carried by a particular majority or not carried and an
entry to that effect in the minutes of the meeting shall be prima facie
evidence of the fact without proof of the number or proportion of the votes
recorded in favour of or against any resolution or other proceedings in respect
of the question.
7.13 POLLS - If a poll is required by the chairman of the meeting, or is
demanded by any shareholder who is present in person or represented by proxy
and entitled to vote on the question (whether the poll is required or demanded
either before or after a vote has been taken upon the question by a show of
hands), and such requirement or demand is not withdrawn, a poll upon the
question shall be taken by ballot or in such other manner as the chairman of
the meeting may direct. Upon a poll, each shareholder who is present or
represented by proxy shall (subject to the provisions, if any, of the articles
of the Corporation) be entitled to one vote for each share in respect of which
he is entitled to vote on the question. A demand for a poll may be withdrawn.
7.14 ADJOURNMENT - The Chairman at a meeting of the shareholders may, with
the consent of the meeting and subject to such conditions as the meeting may
decide, adjourn the meeting from time to time to a fixed time and place. If a
meeting of shareholders is adjourned for less than thirty (30) days no notice
of the adjourned meeting need be given to the shareholders. Subject to the Act,
if a meeting of shareholders is adjourned for thirty (30) days or more, notice
of the adjourned meeting shall be given as for an original meeting.
7.15 RESOLUTION IN WRITING - Subject to the provisions of the Act, a
resolution in writing signed by all the shareholders entitled to vote on that
resolution at a meeting of shareholders is as valid and effective as if passed
at a meeting of the shareholders duly called, constituted and held for that
purpose.
ARTICLE 8 SHARES AND TR4NSFERS
8.01 ALLOTMENT AND ISSUE - Subject to the provisions of Section 23 of the
Act, shares in the capital of the Corporation may be allotted and issued by
resolution of the Board at such times and on such terms and conditions and to
such persons or class of persons as the Board determines.
8.02 CERTIFICATES - Share certificates and the form of stock transfer power
on the reverse side thereof shall (subject to Section 56 of the Act) be in such
form as the Board may by resolution approve and such certificates shall be
signed by the Chairman of the Board or the President or a Vice-President and
the Secretary or an Assistant Secretary holding office at the time of signing.
The signature of the Chairman of the Board, the Vice-Chairman of the Board, the
President or a Vice-President may be printed, engraved, lithographed or
otherwise mechanically reproduced upon certificates for shares of the
Corporation. Certificates so signed shall be deemed to have been manually
signed by the Chairman of the Board, the Vice-Chairman of the Board, the
President or the Vice-President whose signature is so printed, engraved,
lithographed or otherwise mechanically reproduced thereon and shall be as valid
to all intents and purposes as if they had been signed manually. While the
Corporation has appointed a trustee, registrar, transfer agent, branch transfer
agent or other authenticating agent for the shares (or for the shares of any
class or classes) of the Corporation the signature of the Secretary or
Assistant Secretary may also be printed, engraved, lithographed or otherwise
mechanically reproduced on certificates representing the shares (Or the shares
of the class or classes in respect of which any such appointment has been made)
of the Corporation and when countersigned by or on behalf of a trustee,
registrar. transfer agent, branch transfer agent or other authenticating agent
such certificates so signed shall be as valid to all intents and purposes as if
they had been signed manually. A share certificate containing the signature of
a person which is printed, engraved, lithographed or otherwise mechanically
reproduced thereon may be issued notwithstanding that the person has ceased to
be an officer of the Corporation and shall be as valid as if he were an officer
at the date of its issue.
8.03 PAYMENT OF COMMISSIONS - The Board may authorize the Corporation to
pay reasonable commissions to persons in consideration of their purchasing or
agreeing to purchase shares of the Corporation, or procuring or agreeing to
procure purchasers for such shares.
8.04 TRANSFER AGENT AND REGISTRAR - The directors may from time to time by
resolution appoint or remove one or more transfer agents and/or branch transfer
agents and/or registrars and/or branch registrars (which may or may not be the
same individual or body corporate) for the securities issued by the Corporation
in registered form (or for such securities of any class or classes) and may
provide for the registration of transfers of such securities (or such
securities of any class or classes) in one or more places and such transfer
agents and/or branch transfer agents and/or registrars and/or branch registrars
shall keep all necessary books and registers of the Corporation for the
registering of such securities (or such securities of the class or classes in
respect of which any such appointment has been made). In the event of any such
appointment in respect of the shares (or the shares of any class or classes) of
the Corporation, all share certificates issued by the Corporation in respect of
the shares (or the shares of the class or classes in respect of which any such
appointment has been made) of the Corporation shall be countersigned by or on
behalf of one of the said transfer agents and/or branch transfer agents and by
or on behalf of one of the said registrars and/or branch registrars, if any.
8.05 SECURITIES REGISTERS - A securities register and the register of
transfers of the Corporation shall be kept at the registered office of the
Corporation or at such other office or place in Ontario as may from time to
time be designated by resolution of the Board and a branch securities register
or registers of transfers may be kept at such office or offices of the
Corporation or other place or places, either in or outside Ontario, as may from
time to time be designated by resolution of the Board.
8.06 SURRENDER OF CERTIFICATES - No transfer of shares shall be recorded or
registered unless or until the certificate representing the shares to be
transferred has been surrendered and cancelled.
8.07 LIEN FOR INDEBTEDNESS - The Corporation has a lien on a share
registered in the name of a shareholder or his legal representative for a debt
of that shareholder to the Corporation. By way of enforcement of such lien the
directors may refuse to permit the registration of a transfer ofsuch share.
8.08 NON-RECOGNITION OF TRUSTS - The Corporation shall be entitled to treat
the registered holder of any share as the absolute owner thereof and
accordingly shall not, except as ordered by a court of competent jurisdiction
or as required by statute, be bound to see to the execution of any trust,
whether express, implied or constructive, in respect of any share or to
recognize any such claim to or interest in such share on the part of any person
other than the registered holder thereof.
8.09 LOST CERTIFICATES - The Board or any officer or agent designated by
the Board may in its or his discretion direct the issue of a new share
certificate in lieu of and upon cancellation of a share certificate that has
been mutilated or in substitution for a share certificate that has been lost,
apparently destroyed or wrongfully taken on payment of such fee, not exceeding
$3.00, and on such terms as to indemnity, reimbursement of expenses and
evidence of loss and of title as the Board may from time to time prescribe,
whether generally or in any particular case.
8.10 JOINT SHAREHOLDERS - If two or more persons are registered as joint
holders of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons
may give effectual receipts for the certificate issued in respect thereof or
for any dividend, bonus, return of capital or other money payable or warrant
issuable in respect of such share.
8.11 DECEASED SHAREHOLDERS - In the event of the death of a holder of any
share, the Corporation shall not be required to make any entry in the register
of shareholders in respect thereof or to make payment of any dividends thereon
except upon production of all such documents as may be required by law and upon
compliance with the reasonable requirements of the Corporation and its transfer
agent. Where shares are issued to joint holders, upon satisfactory proof of
death of one joint holder, the Corporation may treat the surviving joint holder
or holders as the issuer of the shares.
ARTICLE 9 VOTING SHARES IN OTHER COMPANIES
9.01 All of the shares or other securities carrying voting rights of any
other body corporate held from time to time by the Corporation may be voted at
any and ail meetings of shareholders, bondholders, debenture holders or holders
of other securities (as the case may be) of such other body corporate and in
such manner and by such person or persons as the Board shall from time to time
determine. The proper signing officers of the Corporation may also from time to
time executive and deliver for and on behalf of the Corporation proxies and/or
arrange for the issuance of voting certificates and/or other evidence of the
right to vote in such names as they may determine without the necessity of a
resolution or other action by the Board.
ARTICLE 10 INFORMATION AVAILABLE TO SHAREHOLDERS
10.01 DISCOVERY OF INFORMATION - Except as provided by the Act, no
shareholder shall be entitled to discovery of any information respecting any
details of conduct of the Corporation's business which in the opinion of the
directors it would be inexpedient in the interests of the Corporation to
communicate to the public.
10.02 INSPECTION OF RECORDS - The directors may from time to time, subject
to rights conferred by the Act, determine whether and to what extent and at
what time and place and under what conditions or regulations the documents,
books and registers and accounting records of the Corporation or any of them
shall be open to the inspection of shareholders and no shareholder shall have
any right to inspect any document or book or register or accounting record of
the Corporation except as conferred by statute or authorized by the Board or by
a resolution of the shareholders.
ARTICLE 11 DIVIDENDS
11.01 DECLARATION - Subject to the Act and articles of the Corporation, the
Board may from time to time by resolution declare dividends payable on the
issued and outstanding shares of the Corporation.
11.02 PAYMENT - A dividend payable in cash shall be paid by check drawn on
the Corporation's bankers or one of them to the order of each registered holder
of shares of the class in respect of which it has been declared, and delivered
or mailed by ordinary mail postage prepaid to such registered holder at his
last address appearing on the records of the Corporation. In the case of joint
holders the cheque shall, unless such joint holders otherwise direct, be made
payable to the order of all of such joint holders and if more than one address
appears on the books of the Corporation in respect of such joint holding the
cheque shall be mailed to the first address so appearing. The mailing of such
cheque as aforesaid shall satisfy and discharge all liability for the dividend
to the extent of the sum represented thereby, unless such check is not paid on
presentation.
ARTICLE 12 NOTICES
12.01 SERVICE - Any notice or other document required by the Act, the
Regulations, the articles or the by-laws of the Corporation to be sent to any
shareholder or director or to the auditor shall be delivered personally or sent
by prepaid mail or by telegram or cable or telex, or facsimile to any such
shareholder or director at his latest address as shown in the records of the
Corporation or its transfer agent, whichever is the more current, and to the
auditor at his business address; provided always that notice may be waived or
the time for the notice may be waived or abridged at any time with the consent
in writing of the person entitled thereto. If a notice or document is sent to a
shareholder by prepaid mail in accordance with this paragraph and the notice or
document is returned on three consecutive occasions because the shareholder
cannot be found, it shall not be necessary to send any further notices or
documents to the shareholder until he informs the Corporation in writing of his
new address.
12.02 SHARES REGISTERED IN SEVERAL NAMES - All notices or other documents
with respect to any shares registered in more than one name shall be given to
whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice to all the
holders of such shares.
12.03 ENTITLEMENT BY OPERATION OF LAW - Subject to Section 67 of the Act,
every person who by operation of law, transfer or by any other means whatsoever
shall become entitled to any share or shares shall be bound by every notice or
other document in respect of such share or shares which previous to his name
and address being entered on the books of the Corporation shall be duly given
to the person or persons from whom he derives his title to such share or shares.
12.04 NOTICE TO DECEASED SHAREHOLDERS - Any notice or other document
delivered or sent by post or left at the address of any shareholder as the same
appears in the records of the Corporation shall, notwithstanding that such
shareholder be then deceased, and whether or not the Corporation has notice of
his decease, be deemed to have been duly served in respect of the shares held
by such shareholder (whether held solely or with any other person or persons)
until some other person be entered in his stead in the records of the
Corporation as the holder or one of the holders thereof and such service shall
for all purposes be deemed a sufficient service of such notice or document on
his heirs, executors or administrators and on all persons, if any, interested
through him or with him in such shares.
12.05 SIGNATURE TO NOTICES - The signature of any director or officer of the
Cotporation to any notice or document to be given by the Corporation may be
written, stamped, typewritten or printed or partly written, stamped,
typewritten or printed.
12.06 COMPUTATION OF TIME - Where a given number of days' notice or notice
extending over a period is required to be given under any provisions of the
articles or by-laws of the Corporation the day of service or posting of the
notice or document shall unless it is otherwise provided be counted in such
number of days or other period.
12.07 PROOF OF SERVICE - With respect to every notice or other document sent
by post it shall be sufficient to prove that the envelope or wrapper containing
the notice or other document was properly addressed as provided in this by-law
and put into a Post Office or into a public letter box. A certificate of an
officer of the Corporation in office at the time of the making of the
certificate or a transfer officer of any transfer agent or branch transfer
agent of shares of any class of the Corporation as to the facts in relation to
the mailing or delivery of any notice or other document to any shareholder,
director, officer or auditor or publication of any notice or other document
shall be conclusive evidence thereof and shall be binding on every shareholder,
director, officer or auditor of the Corporation as the case may be.
ARTICLE 13 CUSTODY OF SECURITIES
13.01 SAFEKEEPING - All shares and securities owned by the Corporation shall
be lodged (in the name of the Corporation) with a chartered bank or a trust
company or in a safety deposit box or, if so authorized by resolution of the
Board, with such other depositories or in such other manner as may be
determined from time to time by the Board.
13.02 NOMINEES - All share certificates, bonds, debentures, notes or other
obligations or securities belonging to the Corporation may be issued or held in
the name of a nominee or nominees of the Corporation (and if issued or held in
the names of more than one nominee shall be held in the names of the nominees
jointly with the right of survivorship) and shall be endorsed in blank with
endorsement guaranteed in order to enable transfer to be completed and
registration to be effected.
ARTICLE 14 EXECUTION OF INSTRUMENTS
14.01 CHEQUES, DRAFTS AND NOTES - All cheques, drafts or orders for the
payment of money and all notes and acceptances and bills of exchange shall be
signed by such officer or officers or person or persons, whether or not
officers of the Corporation, and in such manner as the Board may from time to
time designate by resolution.
14.02 CONTRACTS, DOCUMENTS OR OTHER INSTRUMENTS - Contracts, documents or
instruments in writing requiring the signature of the Corporation may be signed
by (a) the Chairman of the Board, if any, or the President or a Vice-President
and the Secretary or the Treasurer or (b) any two directors and all contracts,
documents and instruments in writing so signed shall be binding upon the
Corporation without any further authorization or formality. The Board shall
have power from time to time by resolution to appoint any officer or officers
or any person or persons on behalf of the Corporation either to sign contracts,
documents and instruments in writing generally or to sign specific contracts,
documents or instruments in writing.
In particular, without limiting the generality of the foregoing, the officer or
officers or the person or persons hereinbefore set out shall have authority to
sell, assign, transfer, exchange, convert or convey any and all shares, stocks,
bonds, debentures, rights, warrants or other securities owned by or registered
in the name of the Corporation and to sign and execute (under the seal of the
Corporation or otherwise) all assignments, transfers, conveyances, powers of
attorney and other instruments that may be necessary for the purpose of
selling, assigning, transferring, exchanging, converting or conveying any such
shares, stocks, bonds, debentures, rights, warrants or other securities .
The term "contracts, documents or instruments in writing" as used in this
by-law shall include deeds, mortgages, hypothecates, charges, conveyances,
transfers and assignments of property, real or personal, immovable or movable,
agreements, releases, receipts and discharges for the payment of money or other
obligations, conveyances, transfers and assignments of shares, share warrants,
stocks, bonds, debentures or other securities and all paper writings.
14.03 SEALING OF CONTRACTS - The seal (if any) of the Corporation may when
required be affixed to contracts, documents and instruments in writing signed
as aforesaid or by any officer or officers, person or persons, appointed as
aforesaid by resolution by the Board.
Enacted the 13th day of May 1997
/s/ Donald Froats, Pres.
/s/ Blaine Froats, Secy.
BY-LAW NO. 2
A by-law respecting the borrowing of money by the Corporation.
1. In addition to, and without limiting such other powers which the Corporation
may by law possess, the directors of the Corporation may without authorization
of the shareholders,
a) borrow money upon the credit of the Corporation;
b) issue, reissue, sell or pledge debt obligations of the Corporation; and
c) mortgage, hypothecate, pledge or otherwise create a security interest in all
or any property of the Corporation, owned or subsequently acquired, to secure
any obligation of the Corporation.
The words "debt obligation" as used in this paragraph mean a bond, debenture,
note or other similar obligation or guarantee of such an obligation of the
Corporation, whether secured or unsecured.
2. The directors may from time to time by resolution delegate the powers
conferred on them by paragraph 1 of this by-law to a director, a committee of
directors or an officer of the Corporation.
3. The powers hereby conferred shall be deemed to be in supplement of and not
in substitution for any powers to borrow money for the purposes of the
Corporation possessed by its directors or officers independently of a borrowing
by-law.
Enacted the 13th day of May 1997
/s/ Donald Froats, Pres.
/s/ Blaine Froats, Secy.
Exhibit 2(ii)G
BY-LAW NO. 1 a by-law relating generally to the conduct of the affairs of
Environmental Fuel Technology Inc. (the "Corporation")
ARTICLE 1 INTERPRETATION
In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
"Act" means the Business Corporations Act, as from time to time amended and
every statute that may be substituted therefore;
"Regulations" means the Regulations made under the Act from time to time
amended and every regulation that may be substituted therefore; "Board" means
the board of directors of the Corporation; all terms which are used in this or
any other by-law of the Corporation and which are defined in the Act or the
Regulations shall have the meanings given to them in the Act or the
Regulations; (v) words importing the singular number include the plural and
vice versa; (vi) words importing the masculine gender include the feminine and
neuter genders; and (vii) the word "person" includes individuals, bodies
corporate, corporations, companies, partnerships, syndicates, trusts and
unincorporated organizations.
ARTICLE 2 SEAL, REGISTERED OFFICE AND FINANCIAL YEAR
2.01 SEAL - The Corporation may but need not have a corporate seal. Any
corporate seal adopted for the Corporation shall be such as the board of
directors may from time to time approve by resolution.
2.02 REGISTERED OFFICE - The shareholders may from time to time by special
resolution fix the municipality or geographic township in Ontario in which the
Corporation's registered office is located. The directors may from time to time
by resolution fix the location of the registered office within such
municipality or geographic township.
2.03 FINANCIAL YEAR - The financial year of the Corporation shall terminate
on such date in each year as the directors may from time to time by resolution
determine.
ARTICLE 3 DIRECTORS
3.01 POWER OF DIRECTORS - Subject to any unanimous shareholder agreement,
the directors shall manage or supervise the management of the business and
affairs of the Corporation.
3.02 NUMBER AND QUORUM - The board of directors shall consist of the number
of directors set out in the articles of the Corporation or, where a minimum and
maximum number is provided for in the articles, such number of directors as
shall be determined from time to time by special resolution or, if the special
resolution empowers the directors to determine the number, by resolution of the
directors. At any meeting of directors, of the authorized number of directors
shall constitute a quorum for the transaction of business.
3.03 QUALIFICATION - Each director shall be eighteen (18) or more years of
age and no person who is not an individual, who has the status of a bankrupt or
who is of unsound mind and has been so found by a court in Canada or elsewhere
shall be a director. A director need not be a shareholder.
3.04 RESIDENT CANADIANS - A majority of the directors shall be resident
Canadians, but where the Corporation has only one or two directors, that
director or one of the two directors, as the case may be, shall be a resident
Canadian.
3.05 ELECTION AND TERM - The election of directors shall take place at each
annual meeting of shareholders and all the directors then in office shall
retire but, if qualified, shall be eligible for re-election. The number of
directors to be elected at any such meeting shall be the number of directors
then in office unless the directors or shareholders shall have otherwise
determined in accordance with the Act. If an election of directors is not held
at the proper time, the incumbent directors shall continue in office until
their successors are elected.
3.06 REMOVAL OF DIRECTORS - The shareholders may by ordinary resolution
passed at an annual or special meeting of shareholders, remove any director or
directors from office before the expiration of his term of office, and may by a
majority of votes cast at the meeting elect anv person in his stead for the
remainder of his term.
3.07 VACANCIES - Vacancies among the directors shall be filled in
compliance with the Act.
3.08 VACATION OF OFFICE - The office of a director shall ipso facto be
vacated: (a) if he dies; (b) if he becomes bankrupt or suspends payment of his
debts generally or compounds with his creditors or makes an authorized
assignment or is declared insolvent; (c) if he is found to be of unsound mind
or a mentally incompetent person; or (d) subject to the provisions of the Act
if by notice in writing to the Corporation he resigns his office. Any such
resignation shall be effective at the time it is sent to the Corporation or at
the time specified in the notice, whichever is later.
3.09 COMMITTEE OF DIRECTORS - The directors may appoint from among their
number a committee of directors and, subject to Section 127 of the Act, may
delegate to such committee any of the powers of the directors. A majority of
the directors of any such committee must be resident Canadians.
3.10 REMUNERATION OF DIRECTORS - The remuneration to be paid to the
directors shall be such as the Board shall from time to time determine and such
remuneration shall be in addition to the salary paid to any officer or employee
of the Corporation who is also a member of the Board. The directors may also
award special remuneration to any director undertaking any special services on
the Corporation's behalf other than the routine work ordinarily required of a
director by the Corporation and the confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their travelling and other expenses properly incurred by
them in connection with the affairs of the Corporation.
3.11 DISCLOSURE OF INTEREST - Every director or officer of the Corporation
who is a party to a material contract or a proposed material contract for the
Corporation or who is the director or an officer of, or has a material interest
in, any person who is party to a material contract, or a proposed material
contract, with the Corporation shall disclose the nature and extent of his
interest at the time and in the manner provided by the Act.
ARTICLE 4 MEETINGS OF DIRECTORS
4.01 NOTICE OF MEETING - Meetings of the Board shall be held from time to
time at such place, at such time and on such day as the Chairman of the Board,
if any, the President or any two directors may determine, and the Secretary
shall call meetings when so directed or so authorized. Notice of every meeting
so called shall be delivered or mailed or sent by telegram, telex, facsimile or
other electronic means to each director not less than forty-eight (48) hours
(excluding any part of a Saturday or a holiday as defined by the Interpretation
Act of Canada for the time being in force) before the time when the meeting is
to be held. No notice of a meeting shall be necessary if all the directors are
present or if those absent have waived notice of or have otherwise signified
their consent to the holding of such meeting.
4.02 FIRST MEETING OF NEW BOARD - For the first meeting of the Board to be
held immediately following the election of directors by the shareholders or for
a meeting of the Board at which a director is appointed to fill a vacancy in
the Board, no notice of such meeting shall be necessary to the newly elected or
appointed director or directors in order to legally constitute the meeting,
provided that a quorum of the directors is present.
4.03 PLACE OF MEETING - Meetings of the Board and of a committee of
directors may be held at any place within or outside of Ontario and in any
financial year of the Corporation a majority of the meetings of the board of
directors of the Corporation are not required to be held at a place within
Canada.
4.04 MEETINGS BY TELEPHONE - If all the directors present at or
participating in a meeting consent, a meeting of the directors or of a
committee of directors may be held by means of such telephone, electronic or
other communication facilities as permit all persons participating in the
meeting to communicate with each other simultaneously and instantaneously, and
a director participating in such a meeting by such means shall be deemed to be
present at the meeting. Any such consent shall be effective whether given
before or after the meeting to which it relates.
4.05 VOTING - At all meetings of the Board, every question shall be decided
by a majority of the votes cast. In case of an equality of votes the chairman
of the meeting shall not be entitled to a second or casting vote in addition to
his original vote.
4.06 CHAIRMAN - The Chairman of the Board, if elected and present, and
otherwise the President, shall be chairman of any meeting of the Board. If no
such officer is present the directors present shall choose one of their members
to be chairman.
4.07 TRANSACTION OF BUSINESS BY SIGNATURE - A resolution in writing signed
by all the directors entitled to vote on that resolution at a meeting of
directors or a committee of directors is as valid as if it had been passed at a
meeting of directors or a committee of directors.
ARTICLE 5 OFFICERS
5.01 APPOINTMENT - The Board shall annually or more often as may be
necessary, appoint a President and a Secretary and, if deemed advisable, may
annually or more often as may be necessary, appoint a Chairman of the Board, a
Managing Director (who shall be a resident Canadian), one or more
Vice-Presidents, a Treasurer and such other officers as the Board may determine
including one or more assistants to any of the officers so appointed. None of
the said officers, except the Chairman of the Board and the Managing Director,
need be a director. Any two of the said offices may be held by the same person.
If the same person holds the office of Secretary and Treasurer, he may, but
need not, be known as the Secretary-Treasurer The Board may from time to time
appoint such other officers and agents as it shall deem necessary who shall
have such authority and shall perform such duties as may from time to time be
determined by the Board.
5.02 REMUNERATION AND REMOVAL - The terms of employment and remuneration of
all officers appointed by the Board (including the President) shall be
determined, or the manner of determination thereof provided for, from time to
time by resolution of the Board. The fact that any officer or employee is a
director or shareholder of the Corporation shall not disqualify him from
receiving such remuneration as may be determined. All officers, in the absence
of agreement to the contrary, shall be subject to removal by resolution of the
Board at any time, with or without cause.
5.03 CHAIRMAN OF THE BOARD - From time to time the Board may appoint a
Chairman of the Board who shall be a director. If so appointed, the Chairman of
the Board shall, if present, preside at all meetings of the Board and at all
meetings of shareholders. In addition, the Board may assign to him any of the
powers and duties that are by any provisions of this by-law assigned to the
President, and he shall have such other powers and duties as the Board may
prescribe. During the absence or disability of the Chairman of the Board, the
President shall assume all his powers and duties.
5.04 MANAGING DIRECTOR - The Managing Director shall, if appointed, be a
resident Canadian and shall exercise such powers and have such authority as may
be delegated to him by the Board in accordance with the provisions of Section
127 of the Act.
5.05 PRESIDENT - The President shall be the chief executive officer of the
Corporation unless otherwise determined by resolution of the Board and shall
have responsibility for the general management and direction of the business
and affairs of the Corporation, subject to the authority of the Board. When no
chairman of the Board is elected or during the absence or inability to act of
the Chairman of the Board, the President shall, when present, preside at all
meetings of shareholders, and if he is a director at all meetings of the Board.
5.06 VICE-PRESIDENT - During the absence or inability of the President, his
duties may be performed and his powers may be exercised by the Vice-President,
or if there are more than one, by the Vice-Presidents in order of seniority (as
determined by the Board) save that no Vice-President shall preside at a meeting
of the Board or at a meeting of shareholders who is not qualified to attend the
meeting as a director or shareholder, as the case may be. A Vice-President
shall also perform such duties and exercise such powers as the President may
from time to time delegate to him or as the Board may prescribe.
5.07 GENERAL MANAGER - The General Manager, if one be appointed, shall have
responsibility for the general management and direction, subject to the
authority of the Board and the supervision of the President, of the
Corporation's business and affairs and shall have the authority to appoint and
remove any and all officers, employees and agents of the Corporation not
elected or appointed directly by the Board and to settle the terms of their
employment and remuneration.
5.08 SECRETARY - The Secretary shall give, or cause to be given, all
notices required to be given to shareholders, directors, auditors and members
of committees. He shall attend all meetings of the directors and of the
shareholders and shall enter or cause to be entered in books kept for that
purpose, minutes of all proceedings at such meetings. He shall be the custodian
of all books, papers, records, documents and other instruments belonging to the
Corporation and shall prepare and maintain all records (other than accounting
records) referred to in Section 140 of the Act. He shall perform such other
duties as may from time to time be prescribed by the Board.
5.09 TREASURER - The Treasurer shall ensure that adequate accounting records
are prepared and maintained and shall keep, or cause to be kept, full and
accurate books of account in which shall be recorded all receipts and
disbursements of the Corporation and, subject to the direction of the Board,
shall control the deposit of money, the safekeeping of securities and the
disbursement of funds of the Corporation. He shall provide to the Board
whenever required of him an account of all his transactions as Treasurer and of
the financial position of the Corporation and he shall perform such other
duties as may from time to time be prescribed by the Board.
5.10 OTHER OFFICERS - The duties of all other officers of the Corporation
shall be such as the terms of their engagement call for or the Board requires
of them. Any of the powers and duties of an officer to whom an assistant has
been appointed may be exercised and performed by such assistant, unless the
Board otherwise directs.
5.11 VACANCIES - If the office of the Chairman of the Board, Managing
Director, President, Vice-President, Secretary, Assistant Secretary, Treasurer,
Assistant Treasurer, or any one of such offices, or any other office shall be
or become vacant by reason of death, resignation, disqualification or otherwise
the directors by resolution shall in the case of the President or Secretary and
may in the case of any other office appoint a person to fill such vacancy.
ARTICLE 6 PROTECTION OF DIRECTORS AND OFFICERS
6.01 LIMITATION OF LIABILITY - Except as otherwise provided in the Act, no
director or officer for the time being of the Corporation shall be liable for
the acts, receipts, neglects or defaults of any other director or officer or
employee or for joining in any receipt or act for conformity or for any loss,
damage or expense happening to the Corporation through the insufficiency or
deficiency of title to any property acquired by the Corporation of for or on
behalf of the Corporation or for the insufficiency or deficiency of any
security in or upon which any of the moneys of or belonging to the Corporation
shall be invested or for any loss or damage arising from bankruptcy, insolvency
or tortious acts of any person with whom any of the moneys, securities or
effects of the Corporation shall be deposited or for any loss occasioned by any
error of judgement or oversight on his part or for any other loss, damage or
misfortune which may happen in the execution of the duties of his office or in
relation thereto; provided that nothing herein shall relieve any director or
officer from the duty to act in accordance with the Act and Regulations or from
liability for any breach thereof.
6.02 INDEMNITIES TO DIRECTORS AND OFFICERS - Subject to Section 136 of the
Act, every director and officer of the Corporation and his heirs, executors,
administrators and other legal personal representatives, shall from time to
time be indemnified and saved harmless by the Corporation from and against, any
liability and all costs, charges and expenses that he sustains or incurs in
respect of any action, suit or proceeding that is proposed or commenced against
him for or in respect of anything done or permitted by him in respect of the
execution of the duties of his office; and all other costs, charges and
expenses that he sustains or incurs in respect of the affairs of the
Corporation.
6.03 SUBMISSION OF CONTRACTS TO SHAREHOLDERS FOR APPROVAL - The Board in
its discretion may submit any contract, act or transaction for approval or
ratification at any annual meeting of the shareholders (or at any special
meeting of the shareholders) called for the purpose of considering the same
and, subject to the provisions of Section 132 of the Act, any such contract,
act or transaction that shall be approved or ratified or confirmed by a
resolution passed by a majority of the votes cast at any such meeting (unless
any different or additional requirement is imposed by the Act or by the
Corporation's articles or any other by-law) shall be as valid and as binding
upon the Corporation and upon all the shareholders as though it had been
approved, ratified or confirmed by every shareholder of the Corporation.
ARTICLE 7 MEETINGS OF SHAREHOLDERS
7.01 ANNUAL MEETING - Subject to the provisions of Section 94 of the Act,
the annual meeting of shareholders shall be held on such day in each year and
at such time and place in or outside Ontario as the directors may determine for
the purpose of hearing and receiving the reports and statements required by the
Act to be read and laid before the shareholders at any annual meeting, electing
directors, appointing, if necessary, an auditor and fixing or authorizing the
board of directors to fix his remuneration and for the transaction of such
other business as may properly be brought before the meeting.
7.02 SPECIAL MEETINGS - The Board, the Chairman of the Board, the Managing
Director, the President or a Vice-President who is a director shall have the
power at any time to call a special meeting of the shareholders of the
Corporation to be held at any time and place in or outside Ontario. The phrase
"meeting of shareholders " wherever it occurs in this by-law shall mean and
include an annual meeting of shareholders, a special meeting of shareholders
and any meeting of any class or classes of shareholders.
7.03 NOTICE - Notice of the time and place of each meeting of shareholders
shall be given not less than ten (10) days or if the Corporation is an offering
corporation not less than twenty-one (21) days but in either case not more than
fifty (50 ) days before the day on which the meeting is to be held, to the
auditor, if any, the directors and to each shareholder entitled to vote at the
meeting. Notice of a special meeting of shareholders shall state the nature of
the business to be transacted in sufficient detail to permit the shareholders
to form a reasoned judgement thereon together with the text of any special
resolution or by-law to be submitted to the meeting.. A meeting of shareholders
may be held at any time without notice if all the shareholders entitled to vote
thereat are present or represented by proxy and do not object to the holding of
the meeting or those not so present or represented by proxy have waived notice,
if all the directors are present or have waived notice of or otherwise consent
to the meeting and if the auditor, if any, is present or has waived notice of
or otherwise consents to the meeting.
7.04 OMISSION OF NOTICE - The accidental omission to give notice of any
meeting or the non-receipt of any notice by any shareholder or shareholders or
by the auditor of the Corporation shall not invalidate any resolution passed or
any proceedings taken at any meeting of shareholders.
7.05 PERSONS ENTITLED TO BE PRESENT - The only persons entitled to attend a
meeting of shareholders shall be those entitled to vote thereat, the directors
of the Corporation, the auditor, if any, of the Corporation and others who
although not entitled to vote are entitled or required under the provisions of
the Act or by-laws of the Corporation to be present at the meeting. Any other
person may be admitted only on the invitation of the Chairman of the meeting or
with the consent of the meeting.
7.06 QUORUM - A quorum at any meeting of shareholders (unless a greater
number of persons are required to be present or a greater number of shares are
required to be represented by the Act or by the articles or any other by-law)
shall be persons present not being less than two in number and holding or
representing not less than twenty percent (20~0) of the total number of the
issued shares of the Corporation for the time being enjoying voting rights at
such meeting. No business shall be transacted at any meeting unless the
requisite quorum be present at the time of the transaction of such business. If
a quorum is not present at the opening of a meeting of shareholders, the
persons present and entitled to vote may adjourn the meeting to a fixed time
and place but may not transact any other business and the provisions of
paragraph 7.14 with regard to notice shall apply to such adjournment.
Notwithstanding the foregoing, if the Corporation has only one shareholder or
only one holder of any class of shares or series of shares entitled to be
present at a meeting of shareholders, that shareholder present in person or by
proxy shall constitute a meeting.
7.07 RIGHT TO VOTE - At each meeting of shareholders every shareholder
shall be entitled to vote who is entered on the books of the Corporation as a
holder of one (1) or more shares carrying the right to vote at such meeting or
where a record date has been fixed, satisfactory evidence is produced not rater
than ten (10) days before the meeting that such person owns shares in the
Corporation and demands that his name be included on the list of shareholders
entitled to vote at the meeting; save that, if the share or shares in question
have been mortgaged or hypothecated, the person who mortgaged or hypothecated
such share or shares (or his proxy) may nevertheless represent the shares at
the meetings and vote in respect thereof unless in the instrument creating the
mortgage or hypothecation he has expressly empowered the holder of such
mortgage or hypothecation to vote thereon, in which case such holder (or his
proxy) may attend meetings to vote in respect of such shares upon filing with
the secretary of the meeting sufficient proof of the terms of such instrument.
7.08 REPRESENTATIVES - An executor, administrator, committee of a mentally
incompetent person, guardian or trustee and where a corporation is such
executor, administrator, committee of a mentally incompetent person, guardian
or trustee, any person duly appointed a proxy for such corporation, upon filing
with the secretary of the meeting sufficient proof of his appointment, shall
represent the shares in his or its hands at all meetings of the shareholders of
the Corporation and may vote accordingly as a shareholder in the same manner
and to the same extent as the shareholder of record. Where two or more persons
hold the same share or shares jointly, any one of such persons present at a
meeting of shareholders has the right, in the absence of the other or others,
to vote in respect of such share or shares but if more than one of such persons
are present or represented by proxy and vote, they shall vote together as one
on the share or shares jointly held by them.
7.09 PROXIES - Votes at meetings of shareholders may be given either
personally or by proxy or, in the case of a shareholder who is a body corporate
or association, by an individual authorized by a resolution of the directors or
governing body of the body corporate or association to represent it at meetings
of shareholders of the Corporation. At every meeting at which he is entitled to
vote, every shareholder and/or person appointed by proxy and/or individual so
authorized to represent a shareholder who is present in person shall have one
vote on a show of hands. Upon a ballot at which he is entitled to vote, every
shareholder present in person or represented by proxy or by an individual so
authorized shall (subject to the provisions, if any, of the articles of the
Corporation) have one vote for every share held by him.
A proxy shall be executed by the shareholder or his attorney
authorized in writing and is valid only at the meeting in respect of which it
is given or any adjournment thereof. A person appointed by proxy need not be a
shareholder. Subject to the Regulations, a proxy may be in the following form:
The undersigned shareholder of [name of corporation] hereby appoints of
, or failing him, of
as the nominee of the undersigned to attend and act for the
undersigned and on behalf of the undersigned at the meeting of
the shareholders of the said Corporation to be held on the day of
, 19 and at any adjournment or adjournments thereof in the same manner,
to the same extent and with the same power as if the undersigned were present
at the said meeting or such adjournment or adjournments thereof.
DATED this day of , 19
Signature of
Shareholder.
The directors may from time to time make regulations regarding the lodging of
proxies at some place or places other than the place at which a meeting or
adjourned meeting of shareholders is to be held and for particulars of such
proxies to be cabled or telegraphed or sent by telex, or facsimile or in
writing before the meeting or adjourned meeting to the Corporation or any agent
of the Corporation for the purpose of receiving such particulars and providing
that proxies so lodged may be voted upon as though the proxies themselves were
produced at the meeting or adjourned meeting and votes given in accordance with
such regulations shall be valid and shall be counted. The chairman of any
meeting of shareholders may, subject to any regulations made as aforesaid, in
his discretion accept telegraphic or cable or telex, or facsimile or written
communication as to the authority of any person claiming to vote on behalf of
and to represent a shareholder notwithstanding that no proxy conferring such
authority has been lodged with the Corporation, and any votes given in
accordance with such telegraphic or cable or telex, or facsimile or written
communication accepted by the chairman of the meeting shall be valid and shall
be counted.
7.10 CHAIRMAN, SECRETARY AND SCRUTINEERS - The Chairman of the Board, if
such an officer has been elected and is present, otherwise the President shall
be chairman of any meeting of shareholders. If no such officer is present
within fifteen minutes from the time fixed for holding the meeting, then the
persons present and entitled to vote shall choose one of their number to be
chairman. If the Secretary of the Corporation is absent the Chairman shall
appoint some person, who need not be a shareholder, to act as secretary of the
meeting. If desired, one or more scrutineers, who need not be shareholders, may
be appointed by resolution or by the chairman with the consent of the meeting.
7.11 VOTES TO GOVERN - At all meetings of shareholders every question shall
be determined by a majority of the votes cast on the question, unless otherwise
required by the articles or by-laws or by the Act. In the case of an equality
of votes at any meeting of shareholders, either upon a show of hands or upon a
poll, the chairman of the meeting shall be entitled to a second or casting vote
in addition to the vote or votes to which he may be entitled as a shareholder.
7.12 SHOW OF HANDS - Subject to the provisions of the Act, any question at
a meeting of shareholders shall be decided by a show of hands unless a poll
thereon is required or demanded. Upon a show of hands, every shareholder
present in person or represented by proxy and entitled' to vote shall have one
vote. Whenever the vote by show of hands shall have been taken upon a question,
a declaration by the chairman of the meeting that the vote upon the question
has been carried or carried by a particular majority or not carried and an
entry to that effect in the minutes of the meeting shall be prima facie
evidence of the fact without proof of the number or proportion of the votes
recorded in favour of or against any resolution or other proceedings in respect
of the question.
7.13 POLLS - If a poll is required by the chairman of the meeting, or is
demanded by any shareholder who is present in person or represented by proxy
and entitled to vote on the question (whether the poll is required or demanded
either before or after a vote has been taken upon the question by a show of
hands), and such requirement or demand is not withdrawn, a poll upon the
question shall be taken by ballot or in such other manner as the chairman of
the meeting may direct. Upon a poll, each shareholder who is present or
represented by proxy shall (subject to the provisions, if any, of the articles
of the Corporation) be entitled to one vote for each share in respect of which
he is entitled to vote on the question. A demand for a poll may be withdrawn.
7.14 ADJOURNMENT - The Chairman at a meeting of the shareholders may, with
the consent of the meeting and subject to such conditions as the meeting may
decide, adjourn the meeting from time to time to a fixed time and place. If a
meeting of shareholders is adjourned for less than thirty (30) days no notice
of the adjourned meeting need be given to the shareholders. Subject to the Act,
if a meeting of shareholders is adjourned for thirty (30) days or more, notice
of the adjourned meeting shall be given as for an original meeting.
7.15 RESOLUTION IN WRITING - Subject to the provisions of the Act, a
resolution in writing signed by all the shareholders entitled to vote on that
resolution at a meeting of shareholders is as valid and effective as if passed
at a meeting of the shareholders duly called, constituted and held for that
purpose.
ARTICLE 8 SHARES AND TR4NSFERS
8.01 ALLOTMENT AND ISSUE - Subject to the provisions of Section 23 of the
Act, shares in the capital of the Corporation may be allotted and issued by
resolution of the Board at such times and on such terms and conditions and to
such persons or class of persons as the Board determines.
8.02 CERTIFICATES - Share certificates and the form of stock transfer power
on the reverse side thereof shall (subject to Section 56 of the Act) be in such
form as the Board may by resolution approve and such certificates shall be
signed by the Chairman of the Board or the President or a Vice-President and
the Secretary or an Assistant Secretary holding office at the time of signing.
The signature of the Chairman of the Board, the Vice-Chairman of the Board, the
President or a Vice-President may be printed, engraved, lithographed or
otherwise mechanically reproduced upon certificates for shares of the
Corporation. Certificates so signed shall be deemed to have been manually
signed by the Chairman of the Board, the Vice-Chairman of the Board, the
President or the Vice-President whose signature is so printed, engraved,
lithographed or otherwise mechanically reproduced thereon and shall be as valid
to all intents and purposes as if they had been signed manually. While the
Corporation has appointed a trustee, registrar, transfer agent, branch transfer
agent or other authenticating agent for the shares (or for the shares of any
class or classes) of the Corporation the signature of the Secretary or
Assistant Secretary may also be printed, engraved, lithographed or otherwise
mechanically reproduced on certificates representing the shares (Or the shares
of the class or classes in respect of which any such appointment has been made)
of the Corporation and when countersigned by or on behalf of a trustee,
registrar. transfer agent, branch transfer agent or other authenticating agent
such certificates so signed shall be as valid to all intents and purposes as if
they had been signed manually. A share certificate containing the signature of
a person which is printed, engraved, lithographed or otherwise mechanically
reproduced thereon may be issued notwithstanding that the person has ceased to
be an officer of the Corporation and shall be as valid as if he were an officer
at the date of its issue.
8.03 PAYMENT OF COMMISSIONS - The Board may authorize the Corporation to
pay reasonable commissions to persons in consideration of their purchasing or
agreeing to purchase shares of the Corporation, or procuring or agreeing to
procure purchasers for such shares.
8.04 TRANSFER AGENT AND REGISTRAR - The directors may from time to time by
resolution appoint or remove one or more transfer agents and/or branch transfer
agents and/or registrars and/or branch registrars (which may or may not be the
same individual or body corporate) for the securities issued by the Corporation
in registered form (or for such securities of any class or classes) and may
provide for the registration of transfers of such securities (or such
securities of any class or classes) in one or more places and such transfer
agents and/or branch transfer agents and/or registrars and/or branch registrars
shall keep all necessary books and registers of the Corporation for the
registering of such securities (or such securities of the class or classes in
respect of which any such appointment has been made). In the event of any such
appointment in respect of the shares (or the shares of any class or classes) of
the Corporation, all share certificates issued by the Corporation in respect of
the shares (or the shares of the class or classes in respect of which any such
appointment has been made) of the Corporation shall be countersigned by or on
behalf of one of the said transfer agents and/or branch transfer agents and by
or on behalf of one of the said registrars and/or branch registrars, if any.
8.05 SECURITIES REGISTERS - A securities register and the register of
transfers of the Corporation shall be kept at the registered office of the
Corporation or at such other office or place in Ontario as may from time to
time be designated by resolution of the Board and a branch securities register
or registers of transfers may be kept at such office or offices of the
Corporation or other place or places, either in or outside Ontario, as may from
time to time be designated by resolution of the Board.
8.06 SURRENDER OF CERTIFICATES - No transfer of shares shall be recorded or
registered unless or until the certificate representing the shares to be
transferred has been surrendered and cancelled.
8.07 LIEN FOR INDEBTEDNESS - The Corporation has a lien on a share
registered in the name of a shareholder or his legal representative for a debt
of that shareholder to the Corporation. By way of enforcement of such lien the
directors may refuse to permit the registration of a transfer ofsuch share.
8.08 NON-RECOGNITION OF TRUSTS - The Corporation shall be entitled to treat
the registered holder of any share as the absolute owner thereof and
accordingly shall not, except as ordered by a court of competent jurisdiction
or as required by statute, be bound to see to the execution of any trust,
whether express, implied or constructive, in respect of any share or to
recognize any such claim to or interest in such share on the part of any person
other than the registered holder thereof.
8.09 LOST CERTIFICATES - The Board or any officer or agent designated by
the Board may in its or his discretion direct the issue of a new share
certificate in lieu of and upon cancellation of a share certificate that has
been mutilated or in substitution for a share certificate that has been lost,
apparently destroyed or wrongfully taken on payment of such fee, not exceeding
$3.00, and on such terms as to indemnity, reimbursement of expenses and
evidence of loss and of title as the Board may from time to time prescribe,
whether generally or in any particular case.
8.10 JOINT SHAREHOLDERS - If two or more persons are registered as joint
holders of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons
may give effectual receipts for the certificate issued in respect thereof or
for any dividend, bonus, return of capital or other money payable or warrant
issuable in respect of such share.
8.11 DECEASED SHAREHOLDERS - In the event of the death of a holder of any
share, the Corporation shall not be required to make any entry in the register
of shareholders in respect thereof or to make payment of any dividends thereon
except upon production of all such documents as may be required by law and upon
compliance with the reasonable requirements of the Corporation and its transfer
agent. Where shares are issued to joint holders, upon satisfactory proof of
death of one joint holder, the Corporation may treat the surviving joint holder
or holders as the issuer of the shares.
ARTICLE 9 VOTING SHARES IN OTHER COMPANIES
9.01 All of the shares or other securities carrying voting rights of any
other body corporate held from time to time by the Corporation may be voted at
any and ail meetings of shareholders, bondholders, debenture holders or holders
of other securities (as the case may be) of such other body corporate and in
such manner and by such person or persons as the Board shall from time to time
determine. The proper signing officers of the Corporation may also from time to
time executive and deliver for and on behalf of the Corporation proxies and/or
arrange for the issuance of voting certificates and/or other evidence of the
right to vote in such names as they may determine without the necessity of a
resolution or other action by the Board.
ARTICLE 10 INFORMATION AVAILABLE TO SHAREHOLDERS
10.01 DISCOVERY OF INFORMATION - Except as provided by the Act, no
shareholder shall be entitled to discovery of any information respecting any
details of conduct of the Corporation's business which in the opinion of the
directors it would be inexpedient in the interests of the Corporation to
communicate to the public.
10.02 INSPECTION OF RECORDS - The directors may from time to time, subject
to rights conferred by the Act, determine whether and to what extent and at
what time and place and under what conditions or regulations the documents,
books and registers and accounting records of the Corporation or any of them
shall be open to the inspection of shareholders and no shareholder shall have
any right to inspect any document or book or register or accounting record of
the Corporation except as conferred by statute or authorized by the Board or by
a resolution of the shareholders.
ARTICLE 11 DIVIDENDS
11.01 DECLARATION - Subject to the Act and articles of the Corporation, the
Board may from time to time by resolution declare dividends payable on the
issued and outstanding shares of the Corporation.
11.02 PAYMENT - A dividend payable in cash shall be paid by check drawn on
the Corporation's bankers or one of them to the order of each registered holder
of shares of the class in respect of which it has been declared, and delivered
or mailed by ordinary mail postage prepaid to such registered holder at his
last address appearing on the records of the Corporation. In the case of joint
holders the cheque shall, unless such joint holders otherwise direct, be made
payable to the order of all of such joint holders and if more than one address
appears on the books of the Corporation in respect of such joint holding the
cheque shall be mailed to the first address so appearing. The mailing of such
cheque as aforesaid shall satisfy and discharge all liability for the dividend
to the extent of the sum represented thereby, unless such check is not paid on
presentation.
ARTICLE 12 NOTICES
12.01 SERVICE - Any notice or other document required by the Act, the
Regulations, the articles or the by-laws of the Corporation to be sent to any
shareholder or director or to the auditor shall be delivered personally or sent
by prepaid mail or by telegram or cable or telex, or facsimile to any such
shareholder or director at his latest address as shown in the records of the
Corporation or its transfer agent, whichever is the more current, and to the
auditor at his business address; provided always that notice may be waived or
the time for the notice may be waived or abridged at any time with the consent
in writing of the person entitled thereto. If a notice or document is sent to a
shareholder by prepaid mail in accordance with this paragraph and the notice or
document is returned on three consecutive occasions because the shareholder
cannot be found, it shall not be necessary to send any further notices or
documents to the shareholder until he informs the Corporation in writing of his
new address.
12.02 SHARES REGISTERED IN SEVERAL NAMES - All notices or other documents
with respect to any shares registered in more than one name shall be given to
whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice to all the
holders of such shares.
12.03 ENTITLEMENT BY OPERATION OF LAW - Subject to Section 67 of the Act,
every person who by operation of law, transfer or by any other means whatsoever
shall become entitled to any share or shares shall be bound by every notice or
other document in respect of such share or shares which previous to his name
and address being entered on the books of the Corporation shall be duly given
to the person or persons from whom he derives his title to such share or shares.
12.04 NOTICE TO DECEASED SHAREHOLDERS - Any notice or other document
delivered or sent by post or left at the address of any shareholder as the same
appears in the records of the Corporation shall, notwithstanding that such
shareholder be then deceased, and whether or not the Corporation has notice of
his decease, be deemed to have been duly served in respect of the shares held
by such shareholder (whether held solely or with any other person or persons)
until some other person be entered in his stead in the records of the
Corporation as the holder or one of the holders thereof and such service shall
for all purposes be deemed a sufficient service of such notice or document on
his heirs, executors or administrators and on all persons, if any, interested
through him or with him in such shares.
12.05 SIGNATURE TO NOTICES - The signature of any director or officer of the
Cotporation to any notice or document to be given by the Corporation may be
written, stamped, typewritten or printed or partly written, stamped,
typewritten or printed.
12.06 COMPUTATION OF TIME - Where a given number of days' notice or notice
extending over a period is required to be given under any provisions of the
articles or by-laws of the Corporation the day of service or posting of the
notice or document shall unless it is otherwise provided be counted in such
number of days or other period.
12.07 PROOF OF SERVICE - With respect to every notice or other document sent
by post it shall be sufficient to prove that the envelope or wrapper containing
the notice or other document was properly addressed as provided in this by-law
and put into a Post Office or into a public letter box. A certificate of an
officer of the Corporation in office at the time of the making of the
certificate or a transfer officer of any transfer agent or branch transfer
agent of shares of any class of the Corporation as to the facts in relation to
the mailing or delivery of any notice or other document to any shareholder,
director, officer or auditor or publication of any notice or other document
shall be conclusive evidence thereof and shall be binding on every shareholder,
director, officer or auditor of the Corporation as the case may be.
ARTICLE 13 CUSTODY OF SECURITIES
13.01 SAFEKEEPING - All shares and securities owned by the Corporation shall
be lodged (in the name of the Corporation) with a chartered bank or a trust
company or in a safety deposit box or, if so authorized by resolution of the
Board, with such other depositories or in such other manner as may be
determined from time to time by the Board.
13.02 NOMINEES - All share certificates, bonds, debentures, notes or other
obligations or securities belonging to the Corporation may be issued or held in
the name of a nominee or nominees of the Corporation (and if issued or held in
the names of more than one nominee shall be held in the names of the nominees
jointly with the right of survivorship) and shall be endorsed in blank with
endorsement guaranteed in order to enable transfer to be completed and
registration to be effected.
ARTICLE 14 EXECUTION OF INSTRUMENTS
14.01 CHEQUES, DRAFTS AND NOTES - All cheques, drafts or orders for the
payment of money and all notes and acceptances and bills of exchange shall be
signed by such officer or officers or person or persons, whether or not
officers of the Corporation, and in such manner as the Board may from time to
time designate by resolution.
14.02 CONTRACTS, DOCUMENTS OR OTHER INSTRUMENTS - Contracts, documents or
instruments in writing requiring the signature of the Corporation may be signed
by (a) the Chairman of the Board, if any, or the President or a Vice-President
and the Secretary or the Treasurer or (b) any two directors and all contracts,
documents and instruments in writing so signed shall be binding upon the
Corporation without any further authorization or formality. The Board shall
have power from time to time by resolution to appoint any officer or officers
or any person or persons on behalf of the Corporation either to sign contracts,
documents and instruments in writing generally or to sign specific contracts,
documents or instruments in writing.
In particular, without limiting the generality of the foregoing, the officer or
officers or the person or persons hereinbefore set out shall have authority to
sell, assign, transfer, exchange, convert or convey any and all shares, stocks,
bonds, debentures, rights, warrants or other securities owned by or registered
in the name of the Corporation and to sign and execute (under the seal of the
Corporation or otherwise) all assignments, transfers, conveyances, powers of
attorney and other instruments that may be necessary for the purpose of
selling, assigning, transferring, exchanging, converting or conveying any such
shares, stocks, bonds, debentures, rights, warrants or other securities .
The term "contracts, documents or instruments in writing" as used in this
by-law shall include deeds, mortgages, hypothecates, charges, conveyances,
transfers and assignments of property, real or personal, immovable or movable,
agreements, releases, receipts and discharges for the payment of money or other
obligations, conveyances, transfers and assignments of shares, share warrants,
stocks, bonds, debentures or other securities and all paper writings.
14.03 SEALING OF CONTRACTS - The seal (if any) of the Corporation may when
required be affixed to contracts, documents and instruments in writing signed
as aforesaid or by any officer or officers, person or persons, appointed as
aforesaid by resolution by the Board.
Enacted the 16th day of Nov. 1997
/s/ James Guest, Pres.
/s/ Blaine Froats, Secy.
BY-LAW NO. 2
A by-law respecting the borrowing of money by the Corporation.
1. In addition to, and without limiting such other powers which the Corporation
may by law possess, the directors of the Corporation may without authorization
of the shareholders,
a) borrow money upon the credit of the Corporation;
b) issue, reissue, sell or pledge debt obligations of the Corporation; and
c) mortgage, hypothecate, pledge or otherwise create a security interest in all
or any property of the Corporation, owned or subsequently acquired, to secure
any obligation of the Corporation.
The words "debt obligation" as used in this paragraph mean a bond, debenture,
note or other similar obligation or guarantee of such an obligation of the
Corporation, whether secured or unsecured.
2. The directors may from time to time by resolution delegate the powers
conferred on them by paragraph 1 of this by-law to a director, a committee of
directors or an officer of the Corporation.
3. The powers hereby conferred shall be deemed to be in supplement of and not
in substitution for any powers to borrow money for the purposes of the
Corporation possessed by its directors or officers independently of a borrowing
by-law.
Enacted the 16th day of Nov. 1997
/s/ James Guest, Pres.
/s/ Blaine Froats, Secy.
Exhibit 2(ii)H
BY-LAW NO. 1 a by-law relating generally to the conduct of the affairs of
Environmental Shelter Corporation (the "Corporation")
ARTICLE 1 INTERPRETATION
In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
"Act" means the Business Corporations Act, as from time to time amended and
every statute that may be substituted therefore;
"Regulations" means the Regulations made under the Act from time to time
amended and every regulation that may be substituted therefore; "Board" means
the board of directors of the Corporation; all terms which are used in this or
any other by-law of the Corporation and which are defined in the Act or the
Regulations shall have the meanings given to them in the Act or the
Regulations; (v) words importing the singular number include the plural and
vice versa; (vi) words importing the masculine gender include the feminine and
neuter genders; and (vii) the word "person" includes individuals, bodies
corporate, corporations, companies, partnerships, syndicates, trusts and
unincorporated organizations.
ARTICLE 2 SEAL, REGISTERED OFFICE AND FINANCIAL YEAR
2.01 SEAL - The Corporation may but need not have a corporate seal. Any
corporate seal adopted for the Corporation shall be such as the board of
directors may from time to time approve by resolution.
2.02 REGISTERED OFFICE - The shareholders may from time to time by special
resolution fix the municipality or geographic township in Ontario in which the
Corporation's registered office is located. The directors may from time to time
by resolution fix the location of the registered office within such
municipality or geographic township.
2.03 FINANCIAL YEAR - The financial year of the Corporation shall terminate
on such date in each year as the directors may from time to time by resolution
determine.
ARTICLE 3 DIRECTORS
3.01 POWER OF DIRECTORS - Subject to any unanimous shareholder agreement,
the directors shall manage or supervise the management of the business and
affairs of the Corporation.
3.02 NUMBER AND QUORUM - The board of directors shall consist of the number
of directors set out in the articles of the Corporation or, where a minimum and
maximum number is provided for in the articles, such number of directors as
shall be determined from time to time by special resolution or, if the special
resolution empowers the directors to determine the number, by resolution of the
directors. At any meeting of directors, of the authorized number of directors
shall constitute a quorum for the transaction of business.
3.03 QUALIFICATION - Each director shall be eighteen (18) or more years of
age and no person who is not an individual, who has the status of a bankrupt or
who is of unsound mind and has been so found by a court in Canada or elsewhere
shall be a director. A director need not be a shareholder.
3.04 RESIDENT CANADIANS - A majority of the directors shall be resident
Canadians, but where the Corporation has only one or two directors, that
director or one of the two directors, as the case may be, shall be a resident
Canadian.
3.05 ELECTION AND TERM - The election of directors shall take place at each
annual meeting of shareholders and all the directors then in office shall
retire but, if qualified, shall be eligible for re-election. The number of
directors to be elected at any such meeting shall be the number of directors
then in office unless the directors or shareholders shall have otherwise
determined in accordance with the Act. If an election of directors is not held
at the proper time, the incumbent directors shall continue in office until
their successors are elected.
3.06 REMOVAL OF DIRECTORS - The shareholders may by ordinary resolution
passed at an annual or special meeting of shareholders, remove any director or
directors from office before the expiration of his term of office, and may by a
majority of votes cast at the meeting elect anv person in his stead for the
remainder of his term.
3.07 VACANCIES - Vacancies among the directors shall be filled in
compliance with the Act.
3.08 VACATION OF OFFICE - The office of a director shall ipso facto be
vacated: (a) if he dies; (b) if he becomes bankrupt or suspends payment of his
debts generally or compounds with his creditors or makes an authorized
assignment or is declared insolvent; (c) if he is found to be of unsound mind
or a mentally incompetent person; or (d) subject to the provisions of the Act
if by notice in writing to the Corporation he resigns his office. Any such
resignation shall be effective at the time it is sent to the Corporation or at
the time specified in the notice, whichever is later.
3.09 COMMITTEE OF DIRECTORS - The directors may appoint from among their
number a committee of directors and, subject to Section 127 of the Act, may
delegate to such committee any of the powers of the directors. A majority of
the directors of any such committee must be resident Canadians.
3.10 REMUNERATION OF DIRECTORS - The remuneration to be paid to the
directors shall be such as the Board shall from time to time determine and such
remuneration shall be in addition to the salary paid to any officer or employee
of the Corporation who is also a member of the Board. The directors may also
award special remuneration to any director undertaking any special services on
the Corporation's behalf other than the routine work ordinarily required of a
director by the Corporation and the confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their travelling and other expenses properly incurred by
them in connection with the affairs of the Corporation.
3.11 DISCLOSURE OF INTEREST - Every director or officer of the Corporation
who is a party to a material contract or a proposed material contract for the
Corporation or who is the director or an officer of, or has a material interest
in, any person who is party to a material contract, or a proposed material
contract, with the Corporation shall disclose the nature and extent of his
interest at the time and in the manner provided by the Act.
ARTICLE 4 MEETINGS OF DIRECTORS
4.01 NOTICE OF MEETING - Meetings of the Board shall be held from time to
time at such place, at such time and on such day as the Chairman of the Board,
if any, the President or any two directors may determine, and the Secretary
shall call meetings when so directed or so authorized. Notice of every meeting
so called shall be delivered or mailed or sent by telegram, telex, facsimile or
other electronic means to each director not less than forty-eight (48) hours
(excluding any part of a Saturday or a holiday as defined by the Interpretation
Act of Canada for the time being in force) before the time when the meeting is
to be held. No notice of a meeting shall be necessary if all the directors are
present or if those absent have waived notice of or have otherwise signified
their consent to the holding of such meeting.
4.02 FIRST MEETING OF NEW BOARD - For the first meeting of the Board to be
held immediately following the election of directors by the shareholders or for
a meeting of the Board at which a director is appointed to fill a vacancy in
the Board, no notice of such meeting shall be necessary to the newly elected or
appointed director or directors in order to legally constitute the meeting,
provided that a quorum of the directors is present.
4.03 PLACE OF MEETING - Meetings of the Board and of a committee of
directors may be held at any place within or outside of Ontario and in any
financial year of the Corporation a majority of the meetings of the board of
directors of the Corporation are not required to be held at a place within
Canada.
4.04 MEETINGS BY TELEPHONE - If all the directors present at or
participating in a meeting consent, a meeting of the directors or of a
committee of directors may be held by means of such telephone, electronic or
other communication facilities as permit all persons participating in the
meeting to communicate with each other simultaneously and instantaneously, and
a director participating in such a meeting by such means shall be deemed to be
present at the meeting. Any such consent shall be effective whether given
before or after the meeting to which it relates.
4.05 VOTING - At all meetings of the Board, every question shall be decided
by a majority of the votes cast. In case of an equality of votes the chairman
of the meeting shall not be entitled to a second or casting vote in addition to
his original vote.
4.06 CHAIRMAN - The Chairman of the Board, if elected and present, and
otherwise the President, shall be chairman of any meeting of the Board. If no
such officer is present the directors present shall choose one of their members
to be chairman.
4.07 TRANSACTION OF BUSINESS BY SIGNATURE - A resolution in writing signed
by all the directors entitled to vote on that resolution at a meeting of
directors or a committee of directors is as valid as if it had been passed at a
meeting of directors or a committee of directors.
ARTICLE 5 OFFICERS
5.01 APPOINTMENT - The Board shall annually or more often as may be
necessary, appoint a President and a Secretary and, if deemed advisable, may
annually or more often as may be necessary, appoint a Chairman of the Board, a
Managing Director (who shall be a resident Canadian), one or more
Vice-Presidents, a Treasurer and such other officers as the Board may determine
including one or more assistants to any of the officers so appointed. None of
the said officers, except the Chairman of the Board and the Managing Director,
need be a director. Any two of the said offices may be held by the same person.
If the same person holds the office of Secretary and Treasurer, he may, but
need not, be known as the Secretary-Treasurer The Board may from time to time
appoint such other officers and agents as it shall deem necessary who shall
have such authority and shall perform such duties as may from time to time be
determined by the Board.
5.02 REMUNERATION AND REMOVAL - The terms of employment and remuneration of
all officers appointed by the Board (including the President) shall be
determined, or the manner of determination thereof provided for, from time to
time by resolution of the Board. The fact that any officer or employee is a
director or shareholder of the Corporation shall not disqualify him from
receiving such remuneration as may be determined. All officers, in the absence
of agreement to the contrary, shall be subject to removal by resolution of the
Board at any time, with or without cause.
5.03 CHAIRMAN OF THE BOARD - From time to time the Board may appoint a
Chairman of the Board who shall be a director. If so appointed, the Chairman of
the Board shall, if present, preside at all meetings of the Board and at all
meetings of shareholders. In addition, the Board may assign to him any of the
powers and duties that are by any provisions of this by-law assigned to the
President, and he shall have such other powers and duties as the Board may
prescribe. During the absence or disability of the Chairman of the Board, the
President shall assume all his powers and duties.
5.04 MANAGING DIRECTOR - The Managing Director shall, if appointed, be a
resident Canadian and shall exercise such powers and have such authority as may
be delegated to him by the Board in accordance with the provisions of Section
127 of the Act.
5.05 PRESIDENT - The President shall be the chief executive officer of the
Corporation unless otherwise determined by resolution of the Board and shall
have responsibility for the general management and direction of the business
and affairs of the Corporation, subject to the authority of the Board. When no
chairman of the Board is elected or during the absence or inability to act of
the Chairman of the Board, the President shall, when present, preside at all
meetings of shareholders, and if he is a director at all meetings of the Board.
5.06 VICE-PRESIDENT - During the absence or inability of the President, his
duties may be performed and his powers may be exercised by the Vice-President,
or if there are more than one, by the Vice-Presidents in order of seniority (as
determined by the Board) save that no Vice-President shall preside at a meeting
of the Board or at a meeting of shareholders who is not qualified to attend the
meeting as a director or shareholder, as the case may be. A Vice-President
shall also perform such duties and exercise such powers as the President may
from time to time delegate to him or as the Board may prescribe.
5.07 GENERAL MANAGER - The General Manager, if one be appointed, shall have
responsibility for the general management and direction, subject to the
authority of the Board and the supervision of the President, of the
Corporation's business and affairs and shall have the authority to appoint and
remove any and all officers, employees and agents of the Corporation not
elected or appointed directly by the Board and to settle the terms of their
employment and remuneration.
5.08 SECRETARY - The Secretary shall give, or cause to be given, all
notices required to be given to shareholders, directors, auditors and members
of committees. He shall attend all meetings of the directors and of the
shareholders and shall enter or cause to be entered in books kept for that
purpose, minutes of all proceedings at such meetings. He shall be the custodian
of all books, papers, records, documents and other instruments belonging to the
Corporation and shall prepare and maintain all records (other than accounting
records) referred to in Section 140 of the Act. He shall perform such other
duties as may from time to time be prescribed by the Board.
5.09 TREASURER - The Treasurer shall ensure that adequate accounting records
are prepared and maintained and shall keep, or cause to be kept, full and
accurate books of account in which shall be recorded all receipts and
disbursements of the Corporation and, subject to the direction of the Board,
shall control the deposit of money, the safekeeping of securities and the
disbursement of funds of the Corporation. He shall provide to the Board
whenever required of him an account of all his transactions as Treasurer and of
the financial position of the Corporation and he shall perform such other
duties as may from time to time be prescribed by the Board.
5.10 OTHER OFFICERS - The duties of all other officers of the Corporation
shall be such as the terms of their engagement call for or the Board requires
of them. Any of the powers and duties of an officer to whom an assistant has
been appointed may be exercised and performed by such assistant, unless the
Board otherwise directs.
5.11 VACANCIES - If the office of the Chairman of the Board, Managing
Director, President, Vice-President, Secretary, Assistant Secretary, Treasurer,
Assistant Treasurer, or any one of such offices, or any other office shall be
or become vacant by reason of death, resignation, disqualification or otherwise
the directors by resolution shall in the case of the President or Secretary and
may in the case of any other office appoint a person to fill such vacancy.
ARTICLE 6 PROTECTION OF DIRECTORS AND OFFICERS
6.01 LIMITATION OF LIABILITY - Except as otherwise provided in the Act, no
director or officer for the time being of the Corporation shall be liable for
the acts, receipts, neglects or defaults of any other director or officer or
employee or for joining in any receipt or act for conformity or for any loss,
damage or expense happening to the Corporation through the insufficiency or
deficiency of title to any property acquired by the Corporation of for or on
behalf of the Corporation or for the insufficiency or deficiency of any
security in or upon which any of the moneys of or belonging to the Corporation
shall be invested or for any loss or damage arising from bankruptcy, insolvency
or tortious acts of any person with whom any of the moneys, securities or
effects of the Corporation shall be deposited or for any loss occasioned by any
error of judgement or oversight on his part or for any other loss, damage or
misfortune which may happen in the execution of the duties of his office or in
relation thereto; provided that nothing herein shall relieve any director or
officer from the duty to act in accordance with the Act and Regulations or from
liability for any breach thereof.
6.02 INDEMNITIES TO DIRECTORS AND OFFICERS - Subject to Section 136 of the
Act, every director and officer of the Corporation and his heirs, executors,
administrators and other legal personal representatives, shall from time to
time be indemnified and saved harmless by the Corporation from and against, any
liability and all costs, charges and expenses that he sustains or incurs in
respect of any action, suit or proceeding that is proposed or commenced against
him for or in respect of anything done or permitted by him in respect of the
execution of the duties of his office; and all other costs, charges and
expenses that he sustains or incurs in respect of the affairs of the
Corporation.
6.03 SUBMISSION OF CONTRACTS TO SHAREHOLDERS FOR APPROVAL - The Board in
its discretion may submit any contract, act or transaction for approval or
ratification at any annual meeting of the shareholders (or at any special
meeting of the shareholders) called for the purpose of considering the same
and, subject to the provisions of Section 132 of the Act, any such contract,
act or transaction that shall be approved or ratified or confirmed by a
resolution passed by a majority of the votes cast at any such meeting (unless
any different or additional requirement is imposed by the Act or by the
Corporation's articles or any other by-law) shall be as valid and as binding
upon the Corporation and upon all the shareholders as though it had been
approved, ratified or confirmed by every shareholder of the Corporation.
ARTICLE 7 MEETINGS OF SHAREHOLDERS
7.01 ANNUAL MEETING - Subject to the provisions of Section 94 of the Act,
the annual meeting of shareholders shall be held on such day in each year and
at such time and place in or outside Ontario as the directors may determine for
the purpose of hearing and receiving the reports and statements required by the
Act to be read and laid before the shareholders at any annual meeting, electing
directors, appointing, if necessary, an auditor and fixing or authorizing the
board of directors to fix his remuneration and for the transaction of such
other business as may properly be brought before the meeting.
7.02 SPECIAL MEETINGS - The Board, the Chairman of the Board, the Managing
Director, the President or a Vice-President who is a director shall have the
power at any time to call a special meeting of the shareholders of the
Corporation to be held at any time and place in or outside Ontario. The phrase
"meeting of shareholders " wherever it occurs in this by-law shall mean and
include an annual meeting of shareholders, a special meeting of shareholders
and any meeting of any class or classes of shareholders.
7.03 NOTICE - Notice of the time and place of each meeting of shareholders
shall be given not less than ten (10) days or if the Corporation is an offering
corporation not less than twenty-one (21) days but in either case not more than
fifty (50 ) days before the day on which the meeting is to be held, to the
auditor, if any, the directors and to each shareholder entitled to vote at the
meeting. Notice of a special meeting of shareholders shall state the nature of
the business to be transacted in sufficient detail to permit the shareholders
to form a reasoned judgement thereon together with the text of any special
resolution or by-law to be submitted to the meeting.. A meeting of shareholders
may be held at any time without notice if all the shareholders entitled to vote
thereat are present or represented by proxy and do not object to the holding of
the meeting or those not so present or represented by proxy have waived notice,
if all the directors are present or have waived notice of or otherwise consent
to the meeting and if the auditor, if any, is present or has waived notice of
or otherwise consents to the meeting.
7.04 OMISSION OF NOTICE - The accidental omission to give notice of any
meeting or the non-receipt of any notice by any shareholder or shareholders or
by the auditor of the Corporation shall not invalidate any resolution passed or
any proceedings taken at any meeting of shareholders.
7.05 PERSONS ENTITLED TO BE PRESENT - The only persons entitled to attend a
meeting of shareholders shall be those entitled to vote thereat, the directors
of the Corporation, the auditor, if any, of the Corporation and others who
although not entitled to vote are entitled or required under the provisions of
the Act or by-laws of the Corporation to be present at the meeting. Any other
person may be admitted only on the invitation of the Chairman of the meeting or
with the consent of the meeting.
7.06 QUORUM - A quorum at any meeting of shareholders (unless a greater
number of persons are required to be present or a greater number of shares are
required to be represented by the Act or by the articles or any other by-law)
shall be persons present not being less than two in number and holding or
representing not less than twenty percent (20~0) of the total number of the
issued shares of the Corporation for the time being enjoying voting rights at
such meeting. No business shall be transacted at any meeting unless the
requisite quorum be present at the time of the transaction of such business. If
a quorum is not present at the opening of a meeting of shareholders, the
persons present and entitled to vote may adjourn the meeting to a fixed time
and place but may not transact any other business and the provisions of
paragraph 7.14 with regard to notice shall apply to such adjournment.
Notwithstanding the foregoing, if the Corporation has only one shareholder or
only one holder of any class of shares or series of shares entitled to be
present at a meeting of shareholders, that shareholder present in person or by
proxy shall constitute a meeting.
7.07 RIGHT TO VOTE - At each meeting of shareholders every shareholder
shall be entitled to vote who is entered on the books of the Corporation as a
holder of one (1) or more shares carrying the right to vote at such meeting or
where a record date has been fixed, satisfactory evidence is produced not rater
than ten (10) days before the meeting that such person owns shares in the
Corporation and demands that his name be included on the list of shareholders
entitled to vote at the meeting; save that, if the share or shares in question
have been mortgaged or hypothecated, the person who mortgaged or hypothecated
such share or shares (or his proxy) may nevertheless represent the shares at
the meetings and vote in respect thereof unless in the instrument creating the
mortgage or hypothecation he has expressly empowered the holder of such
mortgage or hypothecation to vote thereon, in which case such holder (or his
proxy) may attend meetings to vote in respect of such shares upon filing with
the secretary of the meeting sufficient proof of the terms of such instrument.
7.08 REPRESENTATIVES - An executor, administrator, committee of a mentally
incompetent person, guardian or trustee and where a corporation is such
executor, administrator, committee of a mentally incompetent person, guardian
or trustee, any person duly appointed a proxy for such corporation, upon filing
with the secretary of the meeting sufficient proof of his appointment, shall
represent the shares in his or its hands at all meetings of the shareholders of
the Corporation and may vote accordingly as a shareholder in the same manner
and to the same extent as the shareholder of record. Where two or more persons
hold the same share or shares jointly, any one of such persons present at a
meeting of shareholders has the right, in the absence of the other or others,
to vote in respect of such share or shares but if more than one of such persons
are present or represented by proxy and vote, they shall vote together as one
on the share or shares jointly held by them.
7.09 PROXIES - Votes at meetings of shareholders may be given either
personally or by proxy or, in the case of a shareholder who is a body corporate
or association, by an individual authorized by a resolution of the directors or
governing body of the body corporate or association to represent it at meetings
of shareholders of the Corporation. At every meeting at which he is entitled to
vote, every shareholder and/or person appointed by proxy and/or individual so
authorized to represent a shareholder who is present in person shall have one
vote on a show of hands. Upon a ballot at which he is entitled to vote, every
shareholder present in person or represented by proxy or by an individual so
authorized shall (subject to the provisions, if any, of the articles of the
Corporation) have one vote for every share held by him.
A proxy shall be executed by the shareholder or his attorney
authorized in writing and is valid only at the meeting in respect of which it
is given or any adjournment thereof. A person appointed by proxy need not be a
shareholder. Subject to the Regulations, a proxy may be in the following form:
The undersigned shareholder of [name of corporation] hereby appoints of
, or failing him, of
as the nominee of the undersigned to attend and act for the
undersigned and on behalf of the undersigned at the meeting of
the shareholders of the said Corporation to be held on the day of
, 19 and at any adjournment or adjournments thereof in the same manner,
to the same extent and with the same power as if the undersigned were present
at the said meeting or such adjournment or adjournments thereof.
DATED this day of , 19
Signature of
Shareholder.
The directors may from time to time make regulations regarding the lodging of
proxies at some place or places other than the place at which a meeting or
adjourned meeting of shareholders is to be held and for particulars of such
proxies to be cabled or telegraphed or sent by telex, or facsimile or in
writing before the meeting or adjourned meeting to the Corporation or any agent
of the Corporation for the purpose of receiving such particulars and providing
that proxies so lodged may be voted upon as though the proxies themselves were
produced at the meeting or adjourned meeting and votes given in accordance with
such regulations shall be valid and shall be counted. The chairman of any
meeting of shareholders may, subject to any regulations made as aforesaid, in
his discretion accept telegraphic or cable or telex, or facsimile or written
communication as to the authority of any person claiming to vote on behalf of
and to represent a shareholder notwithstanding that no proxy conferring such
authority has been lodged with the Corporation, and any votes given in
accordance with such telegraphic or cable or telex, or facsimile or written
communication accepted by the chairman of the meeting shall be valid and shall
be counted.
7.10 CHAIRMAN, SECRETARY AND SCRUTINEERS - The Chairman of the Board, if
such an officer has been elected and is present, otherwise the President shall
be chairman of any meeting of shareholders. If no such officer is present
within fifteen minutes from the time fixed for holding the meeting, then the
persons present and entitled to vote shall choose one of their number to be
chairman. If the Secretary of the Corporation is absent the Chairman shall
appoint some person, who need not be a shareholder, to act as secretary of the
meeting. If desired, one or more scrutineers, who need not be shareholders, may
be appointed by resolution or by the chairman with the consent of the meeting.
7.11 VOTES TO GOVERN - At all meetings of shareholders every question shall
be determined by a majority of the votes cast on the question, unless otherwise
required by the articles or by-laws or by the Act. In the case of an equality
of votes at any meeting of shareholders, either upon a show of hands or upon a
poll, the chairman of the meeting shall be entitled to a second or casting vote
in addition to the vote or votes to which he may be entitled as a shareholder.
7.12 SHOW OF HANDS - Subject to the provisions of the Act, any question at
a meeting of shareholders shall be decided by a show of hands unless a poll
thereon is required or demanded. Upon a show of hands, every shareholder
present in person or represented by proxy and entitled' to vote shall have one
vote. Whenever the vote by show of hands shall have been taken upon a question,
a declaration by the chairman of the meeting that the vote upon the question
has been carried or carried by a particular majority or not carried and an
entry to that effect in the minutes of the meeting shall be prima facie
evidence of the fact without proof of the number or proportion of the votes
recorded in favour of or against any resolution or other proceedings in respect
of the question.
7.13 POLLS - If a poll is required by the chairman of the meeting, or is
demanded by any shareholder who is present in person or represented by proxy
and entitled to vote on the question (whether the poll is required or demanded
either before or after a vote has been taken upon the question by a show of
hands), and such requirement or demand is not withdrawn, a poll upon the
question shall be taken by ballot or in such other manner as the chairman of
the meeting may direct. Upon a poll, each shareholder who is present or
represented by proxy shall (subject to the provisions, if any, of the articles
of the Corporation) be entitled to one vote for each share in respect of which
he is entitled to vote on the question. A demand for a poll may be withdrawn.
7.14 ADJOURNMENT - The Chairman at a meeting of the shareholders may, with
the consent of the meeting and subject to such conditions as the meeting may
decide, adjourn the meeting from time to time to a fixed time and place. If a
meeting of shareholders is adjourned for less than thirty (30) days no notice
of the adjourned meeting need be given to the shareholders. Subject to the Act,
if a meeting of shareholders is adjourned for thirty (30) days or more, notice
of the adjourned meeting shall be given as for an original meeting.
7.15 RESOLUTION IN WRITING - Subject to the provisions of the Act, a
resolution in writing signed by all the shareholders entitled to vote on that
resolution at a meeting of shareholders is as valid and effective as if passed
at a meeting of the shareholders duly called, constituted and held for that
purpose.
ARTICLE 8 SHARES AND TR4NSFERS
8.01 ALLOTMENT AND ISSUE - Subject to the provisions of Section 23 of the
Act, shares in the capital of the Corporation may be allotted and issued by
resolution of the Board at such times and on such terms and conditions and to
such persons or class of persons as the Board determines.
8.02 CERTIFICATES - Share certificates and the form of stock transfer power
on the reverse side thereof shall (subject to Section 56 of the Act) be in such
form as the Board may by resolution approve and such certificates shall be
signed by the Chairman of the Board or the President or a Vice-President and
the Secretary or an Assistant Secretary holding office at the time of signing.
The signature of the Chairman of the Board, the Vice-Chairman of the Board, the
President or a Vice-President may be printed, engraved, lithographed or
otherwise mechanically reproduced upon certificates for shares of the
Corporation. Certificates so signed shall be deemed to have been manually
signed by the Chairman of the Board, the Vice-Chairman of the Board, the
President or the Vice-President whose signature is so printed, engraved,
lithographed or otherwise mechanically reproduced thereon and shall be as valid
to all intents and purposes as if they had been signed manually. While the
Corporation has appointed a trustee, registrar, transfer agent, branch transfer
agent or other authenticating agent for the shares (or for the shares of any
class or classes) of the Corporation the signature of the Secretary or
Assistant Secretary may also be printed, engraved, lithographed or otherwise
mechanically reproduced on certificates representing the shares (Or the shares
of the class or classes in respect of which any such appointment has been made)
of the Corporation and when countersigned by or on behalf of a trustee,
registrar. transfer agent, branch transfer agent or other authenticating agent
such certificates so signed shall be as valid to all intents and purposes as if
they had been signed manually. A share certificate containing the signature of
a person which is printed, engraved, lithographed or otherwise mechanically
reproduced thereon may be issued notwithstanding that the person has ceased to
be an officer of the Corporation and shall be as valid as if he were an officer
at the date of its issue.
8.03 PAYMENT OF COMMISSIONS - The Board may authorize the Corporation to
pay reasonable commissions to persons in consideration of their purchasing or
agreeing to purchase shares of the Corporation, or procuring or agreeing to
procure purchasers for such shares.
8.04 TRANSFER AGENT AND REGISTRAR - The directors may from time to time by
resolution appoint or remove one or more transfer agents and/or branch transfer
agents and/or registrars and/or branch registrars (which may or may not be the
same individual or body corporate) for the securities issued by the Corporation
in registered form (or for such securities of any class or classes) and may
provide for the registration of transfers of such securities (or such
securities of any class or classes) in one or more places and such transfer
agents and/or branch transfer agents and/or registrars and/or branch registrars
shall keep all necessary books and registers of the Corporation for the
registering of such securities (or such securities of the class or classes in
respect of which any such appointment has been made). In the event of any such
appointment in respect of the shares (or the shares of any class or classes) of
the Corporation, all share certificates issued by the Corporation in respect of
the shares (or the shares of the class or classes in respect of which any such
appointment has been made) of the Corporation shall be countersigned by or on
behalf of one of the said transfer agents and/or branch transfer agents and by
or on behalf of one of the said registrars and/or branch registrars, if any.
8.05 SECURITIES REGISTERS - A securities register and the register of
transfers of the Corporation shall be kept at the registered office of the
Corporation or at such other office or place in Ontario as may from time to
time be designated by resolution of the Board and a branch securities register
or registers of transfers may be kept at such office or offices of the
Corporation or other place or places, either in or outside Ontario, as may from
time to time be designated by resolution of the Board.
8.06 SURRENDER OF CERTIFICATES - No transfer of shares shall be recorded or
registered unless or until the certificate representing the shares to be
transferred has been surrendered and cancelled.
8.07 LIEN FOR INDEBTEDNESS - The Corporation has a lien on a share
registered in the name of a shareholder or his legal representative for a debt
of that shareholder to the Corporation. By way of enforcement of such lien the
directors may refuse to permit the registration of a transfer ofsuch share.
8.08 NON-RECOGNITION OF TRUSTS - The Corporation shall be entitled to treat
the registered holder of any share as the absolute owner thereof and
accordingly shall not, except as ordered by a court of competent jurisdiction
or as required by statute, be bound to see to the execution of any trust,
whether express, implied or constructive, in respect of any share or to
recognize any such claim to or interest in such share on the part of any person
other than the registered holder thereof.
8.09 LOST CERTIFICATES - The Board or any officer or agent designated by
the Board may in its or his discretion direct the issue of a new share
certificate in lieu of and upon cancellation of a share certificate that has
been mutilated or in substitution for a share certificate that has been lost,
apparently destroyed or wrongfully taken on payment of such fee, not exceeding
$3.00, and on such terms as to indemnity, reimbursement of expenses and
evidence of loss and of title as the Board may from time to time prescribe,
whether generally or in any particular case.
8.10 JOINT SHAREHOLDERS - If two or more persons are registered as joint
holders of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons
may give effectual receipts for the certificate issued in respect thereof or
for any dividend, bonus, return of capital or other money payable or warrant
issuable in respect of such share.
8.11 DECEASED SHAREHOLDERS - In the event of the death of a holder of any
share, the Corporation shall not be required to make any entry in the register
of shareholders in respect thereof or to make payment of any dividends thereon
except upon production of all such documents as may be required by law and upon
compliance with the reasonable requirements of the Corporation and its transfer
agent. Where shares are issued to joint holders, upon satisfactory proof of
death of one joint holder, the Corporation may treat the surviving joint holder
or holders as the issuer of the shares.
ARTICLE 9 VOTING SHARES IN OTHER COMPANIES
9.01 All of the shares or other securities carrying voting rights of any
other body corporate held from time to time by the Corporation may be voted at
any and ail meetings of shareholders, bondholders, debenture holders or holders
of other securities (as the case may be) of such other body corporate and in
such manner and by such person or persons as the Board shall from time to time
determine. The proper signing officers of the Corporation may also from time to
time executive and deliver for and on behalf of the Corporation proxies and/or
arrange for the issuance of voting certificates and/or other evidence of the
right to vote in such names as they may determine without the necessity of a
resolution or other action by the Board.
ARTICLE 10 INFORMATION AVAILABLE TO SHAREHOLDERS
10.01 DISCOVERY OF INFORMATION - Except as provided by the Act, no
shareholder shall be entitled to discovery of any information respecting any
details of conduct of the Corporation's business which in the opinion of the
directors it would be inexpedient in the interests of the Corporation to
communicate to the public.
10.02 INSPECTION OF RECORDS - The directors may from time to time, subject
to rights conferred by the Act, determine whether and to what extent and at
what time and place and under what conditions or regulations the documents,
books and registers and accounting records of the Corporation or any of them
shall be open to the inspection of shareholders and no shareholder shall have
any right to inspect any document or book or register or accounting record of
the Corporation except as conferred by statute or authorized by the Board or by
a resolution of the shareholders.
ARTICLE 11 DIVIDENDS
11.01 DECLARATION - Subject to the Act and articles of the Corporation, the
Board may from time to time by resolution declare dividends payable on the
issued and outstanding shares of the Corporation.
11.02 PAYMENT - A dividend payable in cash shall be paid by check drawn on
the Corporation's bankers or one of them to the order of each registered holder
of shares of the class in respect of which it has been declared, and delivered
or mailed by ordinary mail postage prepaid to such registered holder at his
last address appearing on the records of the Corporation. In the case of joint
holders the cheque shall, unless such joint holders otherwise direct, be made
payable to the order of all of such joint holders and if more than one address
appears on the books of the Corporation in respect of such joint holding the
cheque shall be mailed to the first address so appearing. The mailing of such
cheque as aforesaid shall satisfy and discharge all liability for the dividend
to the extent of the sum represented thereby, unless such check is not paid on
presentation.
ARTICLE 12 NOTICES
12.01 SERVICE - Any notice or other document required by the Act, the
Regulations, the articles or the by-laws of the Corporation to be sent to any
shareholder or director or to the auditor shall be delivered personally or sent
by prepaid mail or by telegram or cable or telex, or facsimile to any such
shareholder or director at his latest address as shown in the records of the
Corporation or its transfer agent, whichever is the more current, and to the
auditor at his business address; provided always that notice may be waived or
the time for the notice may be waived or abridged at any time with the consent
in writing of the person entitled thereto. If a notice or document is sent to a
shareholder by prepaid mail in accordance with this paragraph and the notice or
document is returned on three consecutive occasions because the shareholder
cannot be found, it shall not be necessary to send any further notices or
documents to the shareholder until he informs the Corporation in writing of his
new address.
12.02 SHARES REGISTERED IN SEVERAL NAMES - All notices or other documents
with respect to any shares registered in more than one name shall be given to
whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice to all the
holders of such shares.
12.03 ENTITLEMENT BY OPERATION OF LAW - Subject to Section 67 of the Act,
every person who by operation of law, transfer or by any other means whatsoever
shall become entitled to any share or shares shall be bound by every notice or
other document in respect of such share or shares which previous to his name
and address being entered on the books of the Corporation shall be duly given
to the person or persons from whom he derives his title to such share or shares.
12.04 NOTICE TO DECEASED SHAREHOLDERS - Any notice or other document
delivered or sent by post or left at the address of any shareholder as the same
appears in the records of the Corporation shall, notwithstanding that such
shareholder be then deceased, and whether or not the Corporation has notice of
his decease, be deemed to have been duly served in respect of the shares held
by such shareholder (whether held solely or with any other person or persons)
until some other person be entered in his stead in the records of the
Corporation as the holder or one of the holders thereof and such service shall
for all purposes be deemed a sufficient service of such notice or document on
his heirs, executors or administrators and on all persons, if any, interested
through him or with him in such shares.
12.05 SIGNATURE TO NOTICES - The signature of any director or officer of the
Cotporation to any notice or document to be given by the Corporation may be
written, stamped, typewritten or printed or partly written, stamped,
typewritten or printed.
12.06 COMPUTATION OF TIME - Where a given number of days' notice or notice
extending over a period is required to be given under any provisions of the
articles or by-laws of the Corporation the day of service or posting of the
notice or document shall unless it is otherwise provided be counted in such
number of days or other period.
12.07 PROOF OF SERVICE - With respect to every notice or other document sent
by post it shall be sufficient to prove that the envelope or wrapper containing
the notice or other document was properly addressed as provided in this by-law
and put into a Post Office or into a public letter box. A certificate of an
officer of the Corporation in office at the time of the making of the
certificate or a transfer officer of any transfer agent or branch transfer
agent of shares of any class of the Corporation as to the facts in relation to
the mailing or delivery of any notice or other document to any shareholder,
director, officer or auditor or publication of any notice or other document
shall be conclusive evidence thereof and shall be binding on every shareholder,
director, officer or auditor of the Corporation as the case may be.
ARTICLE 13 CUSTODY OF SECURITIES
13.01 SAFEKEEPING - All shares and securities owned by the Corporation shall
be lodged (in the name of the Corporation) with a chartered bank or a trust
company or in a safety deposit box or, if so authorized by resolution of the
Board, with such other depositories or in such other manner as may be
determined from time to time by the Board.
13.02 NOMINEES - All share certificates, bonds, debentures, notes or other
obligations or securities belonging to the Corporation may be issued or held in
the name of a nominee or nominees of the Corporation (and if issued or held in
the names of more than one nominee shall be held in the names of the nominees
jointly with the right of survivorship) and shall be endorsed in blank with
endorsement guaranteed in order to enable transfer to be completed and
registration to be effected.
ARTICLE 14 EXECUTION OF INSTRUMENTS
14.01 CHEQUES, DRAFTS AND NOTES - All cheques, drafts or orders for the
payment of money and all notes and acceptances and bills of exchange shall be
signed by such officer or officers or person or persons, whether or not
officers of the Corporation, and in such manner as the Board may from time to
time designate by resolution.
14.02 CONTRACTS, DOCUMENTS OR OTHER INSTRUMENTS - Contracts, documents or
instruments in writing requiring the signature of the Corporation may be signed
by (a) the Chairman of the Board, if any, or the President or a Vice-President
and the Secretary or the Treasurer or (b) any two directors and all contracts,
documents and instruments in writing so signed shall be binding upon the
Corporation without any further authorization or formality. The Board shall
have power from time to time by resolution to appoint any officer or officers
or any person or persons on behalf of the Corporation either to sign contracts,
documents and instruments in writing generally or to sign specific contracts,
documents or instruments in writing.
In particular, without limiting the generality of the foregoing, the officer or
officers or the person or persons hereinbefore set out shall have authority to
sell, assign, transfer, exchange, convert or convey any and all shares, stocks,
bonds, debentures, rights, warrants or other securities owned by or registered
in the name of the Corporation and to sign and execute (under the seal of the
Corporation or otherwise) all assignments, transfers, conveyances, powers of
attorney and other instruments that may be necessary for the purpose of
selling, assigning, transferring, exchanging, converting or conveying any such
shares, stocks, bonds, debentures, rights, warrants or other securities .
The term "contracts, documents or instruments in writing" as used in this
by-law shall include deeds, mortgages, hypothecates, charges, conveyances,
transfers and assignments of property, real or personal, immovable or movable,
agreements, releases, receipts and discharges for the payment of money or other
obligations, conveyances, transfers and assignments of shares, share warrants,
stocks, bonds, debentures or other securities and all paper writings.
14.03 SEALING OF CONTRACTS - The seal (if any) of the Corporation may when
required be affixed to contracts, documents and instruments in writing signed
as aforesaid or by any officer or officers, person or persons, appointed as
aforesaid by resolution by the Board.
Enacted the 14th day of Oct. 1997
/s/ James Guest, Pres.
/s/ Blaine Froats, Secy.
BY-LAW NO. 2
A by-law respecting the borrowing of money by the Corporation.
1. In addition to, and without limiting such other powers which the Corporation
may by law possess, the directors of the Corporation may without authorization
of the shareholders,
a) borrow money upon the credit of the Corporation;
b) issue, reissue, sell or pledge debt obligations of the Corporation; and
c) mortgage, hypothecate, pledge or otherwise create a security interest in all
or any property of the Corporation, owned or subsequently acquired, to secure
any obligation of the Corporation.
The words "debt obligation" as used in this paragraph mean a bond, debenture,
note or other similar obligation or guarantee of such an obligation of the
Corporation, whether secured or unsecured.
2. The directors may from time to time by resolution delegate the powers
conferred on them by paragraph 1 of this by-law to a director, a committee of
directors or an officer of the Corporation.
3. The powers hereby conferred shall be deemed to be in supplement of and not
in substitution for any powers to borrow money for the purposes of the
Corporation possessed by its directors or officers independently of a borrowing
by-law.
Enacted the 14th day of Oct. 1997
/s/ James Guest, Pres.
/s/ Blaine Froats, Secy.
Exhibit 3 I
Specimen Common Stock Certificate
Number Shares
ENVIRONMENTAL PRODUCTS GROUP INC.
This Certifies that ________SPECIMEN_____________ is the owner of _______
shares of the Capital Stock of ENVIRONMENTAL PRODUCTS GROUP INC. transferable
only on the books of the Corporation by the holder hereof in person or by
Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ____ day of ____________, ________ AD
(SEAL) _____________________ ____________________
Secretary President
Exhibit 6 J
FAIRGATE CENTRE LTD.
("Landlord")
- - -and-
THE RECLAMATION (U.S.) CORPORATION ("Tenant")
LEASE AGREEMENT
Glynn R. Green, Q. C.
BLACKADDER LACAVERA Barristers & Solicitors
136 East Main Street, Box 580 Welland, Ontario, L3B 5R3 (905) 735-3620
INDEX (Pages Intentionally Omitted)
PARTIES
Section 1 Demised Premises
Section 2 Term of Lease
Section 3 Basic Rent
Section 4 Deposit
Section 5 Use of Demised Premises
Section 6 Net Lease
Section 7 Tenant Covenants
(a) Basic Rent
(b) Additional Rent
(i) Business Taxes
(ii) Tenants Proportionate Share
(iii) Realty and other Taxes
(iv) Insurance
(v) Building Maintenance Costs and Common Area Operating Costs
(vi) Independent Audit
(vii) Utilities
(viii) Interest
(c) General Covenants
(i) View state of repair
(ii) Nuisance
(iii) Assignment and Subletting
(iv) Overloading
(v) Alterations
(vi) Removal of Fixtures
(vii) Compliance with statutes
(viii) Signs
(ix) Awnings, drapes and blinds
(x) Indemnification of the Landlord
(xi) Surrender and Termination
(xii) Notice of Damage
(xiii) Electrical, Mechanical, Heating and Air-Conditioning Systems
(xiv) Repairs and Maintenance
(xv) Sprinkler System
(xvi) Condition of Demised Premises
(xvii) Environment
(xviii) Tenant Certificate
(xix) Rules and Regulation
Section 8 Landlord Covenants
Section 9 Lease Subordinate to Mortgage
Section 10 Landlord's Remedies
(a) Landlord may Perform the Tenant's
Covenants
(b) Re-entry
(c) Landlord may Re-let
(d) Right to Distrain
(e) Costs
(f) Landlords' Remedies Cumulative
Section 11 Overholding
Section 12 Condonation
Section 13 Construction Liens and Other Liens
Section 14 Landlord Repairs, Alterations or Improvements
Section 15 Landlord Showing Demised Premises
Section 16 Damage and Destruction to Demised Premises
Section 17 Assignment by Landlord as Security
Section 18 Transfer by Landlord
Section 19 No Liability of Landlord
Section 20 Special Conditions
(a) Relocation of Tenant
(b) Right of First Refusal
(c) Option to Renew
Section 21 Notices
Section 22 Registration
Section 23 Agent's Fee
Section 24 Miscellaneous
(a) Indemnitor
(b) Tenant's Financial Statements
(c) Impossibility of Performance
(d) Severability
(e) Applicable Law
(f) Schedules
(g) No Representations
EXECUTION
Schedule A & A-1 Site Plan
Schedule B Rules and regulations
(Schedules intentionally omitted)
THIS LEASE made as of this day of May, 1997
PURSUANT TO THE SHORT FORMS OF LEASES ACT
BETWEEN:
FAIRGATE CENTRE INC.
a corporation incorporated under the laws of the Province of Ontario
(herein called the "Landlord")
OF THE FIRST PART
- - -and-
THE RECLAMATION (U.S.) CORPORATION a corporation incorporated under the laws of
the Province of Ontario
(herein called the "Tenant")
OF THE SECOND PART
1. Demised Premises: In consideration of the rents hereby reserved
and the covenants herein contained on the part of the Tenant, the Landlord
hereby leases to the Tenant that part of the building municipally known as 5430
Harvester Road, Burlington Ontario (the "Building") containing approximately
8,954.5 square feet as outlined in blue on Schedule "A" (herein called the
"Demised Premises") and outlined in red on Schedule "A-1" attached hereto,
together with the right to use the "Common Areas" as defined in subsection
7(b)(v) hereof subject to the provisions of this Lease and to any reasonable
rules and regulations prescribed by the Landlord in connection with such
Common Areas.
"Demised Premises" shall exclude the outside fenced-in storage space in the
rear (south-west) of building which is lease and occupied by Fox Pools Canada
Ltd. the tenant of Unit B and Fox Pools Canada Ltd. shall have unrestricted
access to this area.
2. Term of Lease: The term of this Lease, unless such term shall be
terminated sooner as herein provided, shall be for
FIVE (5) years from August 1, 1997 to July 31, 2002.
3. Basic Rent: The Tenant shall pay to the Landlord, in lawful money of
Canada without any deduction, set-off or abatement except as expressly provided
herein, Basic Rent during the FIRST year hereof in the sum of THIRTY-EIGHT
THOUSAND and FIFTY-EIGHT DOLLARS and SEVENTY-FIVE CENTS ($38,058.75) in
equal monthly installments of THIRTY-ONE HUNDRED AND SEVENTY-ONE DOLLARS AND
FIFTY-SIX CENTS ($3,171.56) commencing on August 1, 1997 and continuing on the
first day of each month thereafter until July 1, 1998. THEREAFTER the Tenant
shall pay to the Landlord BASIC RENT as set forth on Page 2A hereof. BASIC RENT
shall be paid by the Tenant without prior demand to the Landlord's Property
Manager, Helstab Enterprises Ltd., 6 Terrace Heights, Fonthill, Ontario, LOS
1EO, Attention: Property Manager, or such other person or at such other place
as the Landlord shall from time-to-tome direct in writing. If the term
commences on any day other than the first day or ends on any day other than the
last day of the calendar month, Basic Rent for the fraction of a month at the
commencement and/or end of the term shall be adjusted pro rata.
4. Deposit: The Landlord acknowledges receipt of a cheque in the amount of
ELEVEN THOUSAND AND FIFTY-NINE DOLLARS AND SIX CENTS ($11,059.06) being a
deposit to be applied by the Landlord on account of the first and last month's
installments of Basic Rent and Additional Rent.
BASIC RENT - continued
YEAR 2: Equal monthly instalments of THIRTY-FIVE HUNDRED AND FORTY-FOUR
DOLLARS AND SIXTY-NINE CENTS ($3,544.69) commencing on August 1, 1998 and
continuing on the first day of each month thereafter until July 1, 1999.
YEAR 3: Equal monthly instalments of THIRTY-SEVEN HUNDRED AND THIRTY-ONE
DOLLARS AND TWENTY-FIVE CENTS ($3,731.25) commencing on August 1, 1999 and
continuing on the first day of each month thereafter until July 1, 2000.
YEAR 4: Equal monthly instalments of THIRTY-NINE HUNDRED AND SEVENTEEN DOLLARS
AND EIGHTY-ONE CENTS ($3,917.81) commencing on August 1, 2000 and continuing on
the first day of each month thereafter until July 1, 2001.
YEAR 5: Equal monthly instalments of FORTY-ONE HUNDRED AND FOUR DOLLARS AND
EIGHTY-EIGHT CENTS ($4,104.38) commencing on August 1, 2001 and continuing on
the first day of each month thereafter until July 1, 2002.
5. Use of Demised Premises: The Demised Premises shall be
used only for the purposes of Manufacturing of Plastic Materials with
ancillary office use and the Tenant covenants that it shall not use and shall
not cause, suffer or permit the Demised Premises to be used for any other
purpose without the Landlord's prior written consent which may be withheld in
the Landlord's sole and absolute discretion.
6. Net Lease: The Tenant acknowledges, covenants and agrees,
except as may be otherwise specifically provided herein, that this Lease
is a completely net and carefree lease to the Landlord and that the Tenant
shall be responsible in addition to Basic Rent and Additional Rent, for all
operating expenses in respect of or attributable to the Demised Premises,
including the amount of management fees of FIVE PER CENT (5%) paid by the
Landlord to the property manager, and excluding only the cost of fulfillment
of the covenants of the Landlord contained herein, mortgage principal and
interest payments and the Landlord's income tax which are the responsibility
of the Landlord.
7. Tenant Covenants:
(a) The Tenant covenants with the Landlord to pay Basic Rent.
(b) The Tenant covenants with the Landlord to pay Additional Rent as follows:
(i) Business Taxes: To pay the business taxes and all other taxes and
assessments levied in respect of any business conducted on the Demised
Premises or in respect of any use or occupancy of the Demised Premises. It is
acknowledged that the Tenant shall pay all such business taxes directly to the
taxing authority.
(ii) Tenants Proportionate Share: The Tenants proportionate share of the
costs referred to in paragraphs 7(b)(iii), (iv) and the Building Maintenance
Costs referred to in paragraph 7(b)(v) shall be computed by multiplying such
costs by a fraction, the numerator of which shall be the total number of square
feet of the Demised Premises (measured to the outside face of the exterior
walls) and the denominator of which shall be the total number of square feet
of all rentable space within the Building (measured to the outside face of the
exterior walls). The Tenants proportionate.share of Common Area Operating
Costs referred to in paragraph 7(b)(v) shall be computed by multiplying such
costs by a fraction, the numerator of which shall be the total number of square
feet of ground floor area within the Demised Premises (measured to the outside
face of exterior walls) and the denominator of which shall be the total number
of square feet of all rentable space measured as aforesaid in all buildings
including the Building shown on the site plan forming part of Schedule A owned
by the Landlord from time to time.
(iii) Realty and Other Taxes:
(A) The Landlord will pay and discharge all taxes (including local
improvement rates), rates, duties, charges, assessments, impositions,
levies and or license fees that may be levied, rated, charged or assessed
against the Demised Premises and the Lands by any federal, provincial
regional or municipal government, agency or commission including school boards,
and utility commissions and without limiting the generality of the foregoing,
every other tax, charge or encumbrance upon, or levied or collected upon, or in
respect of the Demised Premises, and the Lands or any part thereof, including
any business transfer tax, value added tax, multi-stage sales tax, sales tax,
goods and service tax, or any like tax imposed on the Landlord by any
governmental authority on any rent received or receivable by the Landlord with
respect to the Building, including Basic Rent and Additional Rent
payable by tenants of any part or parts of the Building, all of which are
hereinafter collectively referred to as "Taxes". Where used herein, the term
"Tax Year" shall mean the twelve (12) month period established as the tax year
by the taxing authorities having jurisdiction over the Demised Premises.
(B) The Tenant shall pay to the Landlord forthwith upon demand by the
Landlord, in each Tax Year during the term of this Lease, as Additional Rent,
its proportionate share of the Taxes due and payable with respect to the
Building and the Lands. It is understood that the Tenant will be required to
Pay in each year twelve (12) equal monthly installments to cover the taxes.
(C) If the Tenant or any person occupying the Demised Premises, or
any part thereof, through or with the consent of the Tenant shall elect to
have the Demised Premises, or any part thereof, assessed for Separate School
taxes, the Tenant shall pay to the Landlord, as additional rent, as soon as the
amount of the Separate School tax is ascertainable, the amount by which
Separate School taxes exceed the amount which would be payable by the Landlord
for school taxes had such election not been made.
(D) The Tenant shall have the right, at its own expense, to contest by
appropriate legal proceedings the validity of any tax rate, including local
improvements assessment or other like charges but may not subject the Landlord
to any liability for failure to pay such amounts. Prior to contesting any
such amounts the Tenant shall give the Landlord notice of its intention to do
so and shall provide the Landlord with copies of all correspondence
relating thereto.
(E) Within ninety (90) days of receipt of the final tax bills for each
Tax Year, the Landlord will certify to the Tenant the amount of the
Taxes and the amount due, if any, or refundable, if any, from the Tenant or
Landlord. Within thirty (30) days after receipt of such notice, the Tenant
shall pay or the Landlord shall refund, the amount stated therein to be
due or refundable.
(F) For the years in which this Lease commences or terminates the provisions
of this clause shall apply but the Tenant's liability for Taxes for such year
shall be subject to a pro rata adjustment based upon the number of days
of the year during which the Demised Premises are occupied by the Tenant.
(iv) Insurance:
(A) The Landlord will arrange insurance at competitive rates on the
Building including, without limitation, fire insurance with multi perils
endorsement an the Building, improvements and equipment, in or appurtenant
to the Building, in an amount sufficient to cover the full replacement
value of the Building such value to be determined annually at the Tenant's
expense by a competent general contractor acceptable to both the Landlord and
the Tenant acting reasonably; rental income insurance for a period of
not less than twelve (12) months; boiler, machinery and vessel
insurance an any such in the Building and public insurance with respect
to the Building and the Lands and such other insurance as the
Landlord or any of its mortgagees reasonably believes is necessary for
protection respecting loss of, or damage to, the Building or Landlord's
liability arising therefrom. The Landlord shall use reasonable efforts to
ensure that there is no duplication in the insurance maintained by the Landlord
and the Tenant pursuant to this Lease. The Landlord and Tenant shall
co-operate on the placing of insurance so that any duplication of insurance
shall be minimized.
(1) The Tenant shall pay the whole of such additional insurance premiums as
may be required to insure any improvements made to the Demised Premises by the
Landlord for the Tenant, if any.
(2) The Tenant shall not do or permit anything to be done on
the Demised Premises or bring to or keep anything therein or thereon which
shall conflict with any insurance policy on the building or its contents, or
with any rules, regulations or orders of the Fire Marshall, any fire
authority having jurisdiction in the Municipality, or any Underwriters or
related Underwriters Associations.
(3) The Tenant shall pay to the Landlord the amount by which any premium
for any insurance on the Building (or the buildings on adjacent lands
owned by the Landlord) or any of their contents shall be increased during the
term, if such increase is caused by the Tenant's occupancy of the Demised
Premises.
(4) All public liability insurance shall include the property manager as a
named insured.
(B) Subject to (A) above, the Tenant shall pay to the Landlord forthwith
upon demand, in each year during the term of this Lease, as Additional
Rent, its proportionate share of the insurance costs with respect to the
coverage for the Building and the Lands. It is understood that the Tenant will
be required to pay its proportionate share of the insurance costs in such
amounts and upon such dates so that the Landlord will have received from the
Tenant its payment by the due date for payment of such insurance costs.
(C) Within ninety (90) days after the end of each calendar year, or such other
12 month period as the Landlord may designate, the Landlord will certify to
the Tenant in reasonable detail, the insurance premium cost for the year
and the amount due, if any, or refundable, if any, from the Tenant or
Landlord. Within thirty (30) days after receipt of such notice, the Tenant
shall pay or the Landlord shall refund, the amount stated therein to be
due or refundable.
(D) For the years in which this Lease commences or terminates the provisions
of this clause shall apply but the Tenant's liability for insurance premiums
for such year shall be subject to a pro rata adjustment based upon the number
of days of the year during which the Demised Premises are occupied by the
Tenant.
(E) The Tenant covenants and agrees that during the term, and any renewal
terms hereof, it shall at its sole cost and expense insure and keep insured
its trade fixtures, equipment and leasehold improvements in an amount equal to
their full replacement value. The Tenant further covenants and agrees that it
shall at its sole cost and expense maintain comprehensive general public
liability insurance with cross liability endorsement against claims for
personal injury, death or property damage occurring upon, in or about the
Demised Premises in the minimum amount of $2,000,000.00 per occurrence. All
insurance required to be carried by the Tenant shall be carried in favour of
the Landlord, Tenant, property manager, and if required, the holder of any
mortgage of the Demised Premises. The Tenant further covenants and agrees that
at no time will it self insure itself directly or through any of its affiliated
companies with respect to any insurance required to be maintained by it
hereunder and that it will provide copies of all insurance to the
Landlord, if requested.
(v) Building Maintenance Costs and Common Area 0perating Costs:
(A) The Landlord will maintain the exterior of the Building in a manner
consistent with the standard of a first class industrial/commercia1
complex and pay all exterior building maintenance costs ("Building
Maintenance Costs"). Building Maintenance Costs include, without
limitation, the total amount paid or due for payment whether by the
Landlord or others on behalf of the Landlord for complete exterior maintenance
of the Building which is in keeping with maintaining the standard of a first
class building in an industrial-commercia1 complex, all repairs and
replacements required for such maintenance, the costs of painting and
otherwise maintaining the outside of the Building service contracts with
independent contractors and all other expenses paid or due for payment by the
Landlord in connection with the operation of the exterior of the Building.
(B) The Landlord will operate and maintain the common areas ("Common Areas")
being all those areas shown on the site plan forming part of Schedule A not
covered by any buildings then owned by the Landlord. The Common Areas shall
include, without limitation, all parking areas, access roads, the truck way
or ways, driveways, loading areas, pedestrian sidewalks, landscaped and
planted areas, retaining walls, lighting facilities, lawn signs and other
areas and improvements.
(C) The Common Areas shall at all times be subject to the exclusive control
and management of the Landlord. The Landlord shall have the right from time
to time to establish, modify and enforce reasonable rules and regulations with
respect to the Common Areas and such rules and regulations shall, in all
respects, be observed and performed by the Tenant and the concessionaires,
employees, licensees, agents, customers, officers and contractors of the
Tenant. The Landlord shall have the right to change the areas, location and
arrangement of Common Areas, to enter into, modify and terminate
easements and other agreements pertaining to the use and maintenance of the
Common Areas, to restrict parking by the Tenant, its officers, agents and
employees to designated areas, to construct surface parking areas and
facilities, to establish and change the level of parking surfaces, to
temporarily close all or any portion of parking areas or other Common Areas to
such extent as may, in the opinion of the Landlord's counsel, be necessary to
prevent a dedication thereof or the accrual of any rights to any person or to
the public therein and to do and perform such other acts in and to the said
areas and improvements as, in the exercise of objective good business
judgement, the Landlord shall determine to be advisable. Where
implementation of any of the foregoing rights results in a continuous
significant impact on the Tenant's business the consent of the Tenant
shall be obtained.
(D) The cost of operating and maintaining the common areas "the Common Area
Operating Costs" shall be those required to maintain the Common Areas in a
manner consistent with the standard of a first class industrial/commercia1
complex including, without limitation, all casts and expenses of operating,
repairing, lighting, cleaning, painting, striping, pumping, insurance,
including liability insurance for personal injury, death or property
damage, insurance against theft or other casualties, removal of snow, ice and
debris; costs and expense of inspecting and depreciation of machinery and
equipment used in the operation and maintenance of the Common Areas and
personal property taxes and other charges incurred in connection with such
equipment; costs and expenses of repairs and replacements of paving, curbs,
walkways, landscaping, underground watering system, drainage and lighting
facilities; costs and expenses of landscape maintenance.
(E) The Landlord shall have the right to estimate, in advance, the amount
that will be payable for Building Maintenance Costs and Common Area Operating
Costs. Such estimate shall be on a reasonable basis having regard to Building
Maintenance Costs and Common Area Operating Costs in the current and preceding
years. The Landlord shall have the right:
(1) to require the Tenant to pay the estimated cost of the
Building Maintenance Costs and Common Area Operating Costs for a calendar
year or such other 12 month period designated by the Landlord by equal
monthly installments during each month of such year.
(F) The Tenant shall pay, in each calendar year or such other 12 month period
designated by the Landlord during the term of this Lease, as Additional Rent,
its proportionate share of the Building Maintenance Costs and Common Area
Operating Costs.
(G) The Tenant acknowledges and agrees that upon the sale or disposition by
the Landlord of any of the lands shown on the site plan, attached as part of
Schedule "A" presently owned by the Landlord (other than the Lands), the
Landlord may discontinue its management of those portions of the Common Areas
that form part of the lands disposed of and thereupon the calculation of
the Tenant's proportionate share of Common Area Operating Costs referred to
above shall be amended to reflect the disposition of the lands disposed
of (which lands will thereafter not form part of the Common Areas) and no
further Common Area Costs shall be incurred by the Landlord with respect to the
lands disposed of.
(H) Within ninety (90) days after the end of each year, the Landlord will
certify to the Tenant in reasonable detail, the Building Maintenance Costs
and Common Area Operating Costs for the year and the amount due, if any, or
refundable, if any, from the Tenant or Landlord. Within thirty (30) days
after receipt of such notice, the Tenant shall pay or the Landlord shall
refund, the amount stated therein to be due or refundable.
(I) For the year in which this Lease commences or terminates the provisions of
this clause shall apply but the Tenant's liability for Building Maintenance
Costs and Common Area Operating Costs for such years shall be subject to a pro
rata adjustment based upon the number of days of the year during which the
Demised Premises are occupied by the Tenant.
(vi) Independent Audit: The Tenant shall have the right at any time upon
reasonable notice to the Landlord or its agent, to have an independent
auditor verify on the Tenant's behalf and at its expense, the documentation
supporting the certification in subparagraphs (iii), (iv) and (v) above. Any
claim for readjustment based on such audit must be brought within six
(6) months from the end of the year in question and if no such claim is brought
within that time, the Tenant shall be deemed to have conclusively accepted
the Landlord's accounting. If such audit discloses that the Tenant has
been overcharged for taxes, insurance, Building Maintenance Costs and Common
Area Operating Costs by 5% or greater, the Landlord shall promptly pay to the
Tenant the reasonable cost of such audit unless the Landlord shall
demonstrate that such audit was in error or was not prepared in accordance
with generally accepted accounting practices.
(vii) Utilities: To pay all utility charges for electricity, water,
fuel and any other utilities supplied to the Demised premises. The Tenant shall
contract with all utilities for the supply thereof, and in no event shall the
Landlord be liable for damages arising from the interruption or failure of
supply of utilities.
(viii) Interest: To pay interest when Basic Rent, Additional Rent or
any other amounts payable to the Landlord shall be in arrears at a rate
eguivalent to three (3%) per cent per annum in excess of the prime commercial
lending rate charged by The Royal Bank of Canada from time to time, until paid,
and the Landlord shall have all remedies for the collection of such
interest, if unpaid after demand, as in the case of rent in arrears, but
this stipulation for interest shall not prejudice or affect any other remedies
of the Landlord under this Lease.
(c) The Tenant covenants with the Landlord as follows:
(i) View state of repair: To permit the Landlord at all reasonable times to
enter and view the state of repair of the Demised Premises and to comply with
all reasonable requirements of the Landlord with regard to the care,
maintenance and repair thereof to the extent that the Tenant is responsible
under this Lease for such care, maintenance and repair. The Landlord shall use
its reasonable efforts to not significantly disrupt the Tenant's business
activity.
(ii) Nuisance: To do or not omit to do, or permit to be done or omitted,
anything upon or in respect of the Demised Premises or the Common Areas, the
doing or omission of which shall be or result in a lawful nuisance.
(iii) Assignment and Subletting: Not to assign or sublet, in whole or
in part, the Demised Premises, without the prior written consent of the
Landlord, such consent not to be unreasonably withheld. If consent to any such
assignment or sublet is given by the Landlord, the Tenant shall remain bound by
the covenants hereunder until the conclusion of the term and any renewals,
if applicable. As a condition of the granting of its consent, the
Landlord may require any assignee, sub-tenant, licensee or occupant of the
Demised Premises to execute an agreement whereby he, it or they attorn to and
become the tenants of the Landlord as if he, it or they had executed this
lease. The Tenant shall furnish to the Landlord copies of any
assignment, sublease, licence or other agreement herein contemplated.
Provided further that the proposed assignee, subtenant, licensee or occupant of
the Demised Premises shall be required to provide financial statements or
other financial information as the Landlord may require. The Tenant agrees
to pay all reasonable fees (including reasonable solicitor's fees) relating
to the consideration by the Landlord of any request for consent.
(iv) Overloadins: Not to bring upon the Demised Premises or the
Common Areas any machinery, equipment or article, or anything that might by
reason of its weight or size damage the Demised Premises or the Common Areas
and forthwith to repair or pay to the Landlord the cost of making good such
damage.
(v) Alterations: Not to make any change in or alteration to the
Demised Premises or the Building and mechanical equipment therein or alter
the location of any fixtures or affix any fixtures to any part of the roof,
walls or floors of the Demised Premises or the Building except insofar as the
Tenant may be expressly permitted to do so by permission in writing of the
Landlord first obtained. All Tenant alterations shall be undertaken
only after a Building Permit and all other necessary consents have been
obtained. The alterations shall be completed in a manner consistent with
a first class building in an industrial commercial complex. Provided that
upon the expiry or other termination of this Lease, the Tenant, if requested by
the Landlord, shall restore the interior of the Demised Premises to their
former condition immediately prior to the installation of such alterations
or changes but subsequent to the Landlords work contemplated by Schedule C
including the restoration of such standard fixtures as may have been installed
by the Landlord, and if not so requested, any such changes or alterations shall
become the property of the Landlord except Tenant trade fixtures and equipment
which shall remain the property of the Tenant.
(vi) Removal of Fixtures: To remove at the expiration or other termination
of this Lease its trade fixtures, improvements and other decorations and
equipment, whether affixed to the realty or not, but shall not remove building
services installed by or on behalf of the Landlord or Tenant and provided that
on such removal it shall make good any damage occasioned by such removal,
consistent with the Tenant's obligations to repair.
(vii) Compliance with Statutes: To observe, abide by and comply with all
statutes, regulations and by-laws of any federal, provincial or municipal
authority which in any way affect the use of the Demised Premises and with all
orders and directions made or addressed to the Landlord or to the Tenant and in
pursuance of any such statute, regulation or by-law in regard thereto.
To comply promptly with and conform to the requirements in respect of the use
of the Demised Premises of every applicable regulation, order and requirement
of the Canadian Fire Underwriters' Association or any body having similar
functions or of any fire or liability insurance company by which either
the Landlord or the Tenant may be insured at any time during the term.
Provided that if the Tenant defaults under the provisions of this clause, the
Tenant shall forthwith pay all costs and expenses incurred by the Landlord in
curing such default and all such costs and expenses shall be recovered by
the Landlord as Additional Rent.
(viii) Signs: Not to erect or maintain any signs or advertising
material upon any part of the outside walls of the Demised Premises, or upon
either the outside or the inside of the windows or doors thereof unless same is
in compliance with the applicable governmental authority and the design and
location of such sign(s) have first been approved by the Landlord.
(ix) Awnings, Drapes and Blinds: Not to put up awnings or other similar things
on the front and side elevations of the Building. The Tenant may supply drapes
or blinds for the Demised Premises at its cost, provided that if such drapes or
blinds are visible from the exterior of the Building, the exterior colour of
such shall be approved by the Landlord.
(x) Indemnification of the Landlord: Provided that the Landlord has all
necessary municipal and governmental approvals to construct and maintain the
Demised Premises, to indemnify the Landlord against all fines, suits,
claims, demands and actions for which the Landlord shall or may become liable
or which it may suffer by reason of the occupation of the Demised Premisi~s or
use of the Common Areas by the Tenant or by reason of any breach, violation or
non-performance by the Tenant of any covenant, term or provision hereof or by
reason of any injury occasioned to or suffered by any person or persons or
property because of any act, omission or default by the Tenant or any of its
servants, employees, agents, sub-lessees, licensees or invitees on the
Demised Premises or Common Areas; the covenants of indemnity contained in this
Lease shall survive the termination of this Lease notwithstanding anything
herein to the contrary.
(xi) Surrender and Termination: To surrender the Demised Premises
peaceably to the Landlord at the expiration or sooner determination of the term
in good condition and substantial repair, reasonable wear and tear excepted,
together with all improvements or erections which at any time during the
said term shall be made therein or thereon, subject to the provisions contained
herein.
(xii) Notice of Damage: To give notice in writing thereof to the Landlord
forthwith upon becoming aware of any substantial damage to the Demised Premises
or the Common Areas by any cause.
(xiii) Electrical. Mechanical. Heating and Air Conditioning Systems: To
operate the electrical, mechanical, heating, air conditioning and sprinkler
systems as a careful owner would throughout the term.
(A) The heating, ventilating and air-conditioning system (the "HVAC
System") of the Demised Premises is composed of all heating, ventilating
and air-conditioning equipment and facilities provided and maintained by
the Landlord and includes from time to time, but is not limited to any
roof-top, ceiling or window/wall-mounted heating, ventilating or
air-conditioning units installed or maintained by the Landlord; the power
facilities of the systems, distribution piping, air-handling mechanisms,
fan coil and ventilation units which form part of the system; and
monitoring, energy saving and control systems including the thermostat in
each of the individual areas within the Demised Premises supplied by the
HVAC System; but does not include: (1) the individual, self-contained
heating, ventilating and air-conditioning systems in any area the Tenant
installs and maintains; (ii) the distribution system within each area installed
by or for the Tenant; and (iii) the Tenant maintained ventilation ducts,
make-up air facilities, or booster units which are installed by or for the
Tenant to satisfy requirements which are in excess of the standard
maximum cooling load established by the Landlord, or which result from
the production of air which is not suitable far recirculation.
(B) In each rental year, the total costs (the "HVAC Costs") of
maintaining and repairing the HVAC System (the "Services"), will be
determined by the Landlord. The HVAC Costs include, but are not limited to,
costs for labour including fringe benefits, water, chemicals, gases,
lubricants, maintenance contracts, all costs incurred by the Landlord in
obtaining engineers' advice concerning Supplementary Charges (as
hereinafter set out). The Tenant will pay during each rental year, monthly
in advance, as additional rent, a charge (the "KVAC Charge") being the HVAC
Costs. The Tenant's HVAC Charge may be estimated by the Landlord
annually in advance and the Tenant will pay as additional rent, to the
Landlord, the Tenant's HVAC Charge as so determined, in monthly instalments in
advance during that period.
(C) If the Landlord, on the advice of its engineer, determines that
the Tenant's use of the HVAC System imposes abnormal demands on the system,
the Tenant agrees to pay an amount determined by the Landlord, acting on
the advice of its engineer, as a Supplementary Charge which Supplementary
Charge will be payable at the times and in the manner hereinbefore
provided for the payment of ordinary HVAC Charges.
(D) The Landlord will maintain, repair and replace the HVAC System, at the
Tenant's expense, subject to subsection 8(b) of this Lease.
(E) The Tenant will pay the cost of fuel and electricity and will
operate the HVAC System.
(F) The Tenant will not, nor will it permit, anyone to enter on the
roof of the Demised Premises for any purpose unless accompanied by a
representative designated by the Landlord for that purpose. Damage caused to
the HVAC System of the Demised Premises which occurs during any period of time
when the Tenant is in default of this subparagraph, will be deemed to
have been caused by the Tenant.
(xiv) Repairs and Maintenance: To maintain and keep the Demised Premises and
every part thereof in a proper state of repair as a careful owner would do and
promptly make all repairs and replacements during the term, reasonable wear and
tear and damage by fire, lightning, tempest, acts of god, civil
commotion, riots and insurrections only excepted.
(xv) Sprinkler System: The parties acknowledge that the Demised Premises do
not at present contain a sprinkler system. If at any time during this Lease or
any renewal thereof, as a result of the Tenant's use of the Demised Premises,
the Landlord's insurer or any governmental or quasi-governmental authority
requires that a sprinkler system be installed in the Demised Premises or that
an existing sprinkler system needs to be upgraded, then the Tenant shall
forthwith upon demand pay to the Landlord the entire cost of installing a
sprinkler system or upgrading the'existing sprinkler system (as the case may
be) and such monies shall be payable to the Landlord as Additional Rent and in
advance of such work being performed. The Tenant further covenants to allow
the Landlord and its servants, agents, employees and representatives to enter
the Demised Premises to effect the installation or upgrading of such sprinkler
system and the. Landlord shall not be responsible to the Tenant for any
disturbance or business interruption which may be caused. The Tenant further
covenants that in the event any such sprinkler system at any time
malfunctions the Tenant will immediately notify the Landlord. The Tenant
shall be fully responsible for all increases in insurance premiums caused in
and about the Demised Premises including the Common Areas until the alterations
have been completed.
(xvi) Condition of Demised Premises: To leave the Demised Premises in a
clean and tidy state.
(xvii) Environment: The Tenant covenants not to carry on any business or
operation or permit anything to be done which contravenes any of the provisions
of the Environmental Protection Act, R.S.O. 1980, as amended, and shall
not permit any objectionable noise or odours, waste or damage on the Demised
Premises which is a lawful nuisance or injurious to the Demised Premises or to
any of the surrounding buildings or surrounding environment. The Tenant
covenants to comply with all applicable environmental standards and to
obtain all necessary regulatory permits.
The Landlord and its agents, servants, employees and representatives shall have
the right to inspect (including testing) the Demised Premises at any time or
times for the purpose of determining whether the operation of the Tenant
complies with the above provisions. In the event that the Landlord,
acting reasonably, determines that the Tenant is in breach of the above
covenant, then the Landlord shall provide the Tenant with notice in writing of
the breach and the Tenant shall after receipt of such notice immediately
commence to rectify such breach at the Tenant's expense and the Tenant shall
pay as additional rent the reasonable costs incurred by the Landlord in making
such inspection. In the event that the Tenant does not immediately commence to
rectify such breach, then the Landlord at its option and in its sole
discretion may terminate this Lease without any further notice or may rectify
such breach at the cost of the Tenant, and the Tenant shall forthwith upon
demand reimburse the Landlord for the cost of rectification and such sum shall
be considered to be additional rental under this Lease and collectible as
additional rental. Provided further that in the event the Tenant takes action
to rectify such breach as noted above, the Tenant shall complete such
rectification not later than thirty (30) days after receipt of notice given
above by the Landlord. In every event, the Tenant shall be fully responsible
for all damage which may be caused as a result of the breach of this clause and
shall indemnify the Landlord from all claims arising therefrom.
(xviii) Tenant Certificate: To furnish within ten (10) days of any request
from the Landlord or any mortgagee or proposed mortgagee and/or encumbrancer
of the Demised Premises or other person designated by the Landlord, a
certificate signed by Tenant under its seal evidencing whether or not:
(A) this Lease is in full force and effect;
(B) this Lease has been modified or amended in any respect and submitting
copies of such modification or amendments if any;
(C) there are any existing defaults hereunder to the knowledge of the Tenant
and specifying the nature of such default, if any;
(D) there is any rent which has been prepaid or paid in advance except as set
out in this Lease and the dates to which the rent, Additional Rent and
other charges hereunder have been paid.
(xix) Rules and Regulation: To observe the rules and regulations set out
in Schedule "D" attached hereto, as same may be reasonably amended by the
Landlord from time to time.
8. Landlord Covenants: The Landlord covenants with Tenant:
(a) For quiet enjoyment.
(b) To repair or replace for a period of one (1) year from the date that the
Tenant first occupies any portion of the Demised Premises any structural
defects to the roof, walls, foundations, overhead doors, electrical,
mechanical, heating, air conditioning and sprinkler systems found to be
defective by reason of design, materials or workmanship; PROVIDED such
repairs or replacement are not necessary by reason of the Tenant's or its
servants, employees, agents, sublessees, licensees or invitees' negligence
in which event costs related thereto shall be paid by the Tenant. The
Landlord will assign to the Tenant the benefit of any warranties and guarantees
obtained by it with respect to the Demised Premises to the extent that such
warranties and guarantees are assignable.
(c) Intentionally deleted
(d) To be responsible for the cost of the Landlord's covenants contained
herein, mortgage principal and interest payments arising from or relating to
the Demised Premises and its own income tax.
(e) The Landlord will provide, at its expense, a lawn sign at the front
of the Lands in accordance with the Site Plan Agreement with The Corporation of
the City of Burlington. A plan of such sign has previously been given to an
official of the Tenant. The Tenant is to share both sides of such sign on a
50-50 basis with another tenant for the Building. The sign referred to herein
shall have white backlit plastic lenses on each side. The cost of lettering
the sign shall be for the Tenant's account. The Tenant shall not erect signs
on the roof, or front and side elevations of the Building situated on the Lands.
9. Lease Subordinate to Mortgage: The Tenant shall promptly at any
time required by the Landlord execute all documents and give such further
assurances as may be reasonably required to postpone its rights and privileges
to the holder of any charge or mortgage, provided that the holder of such
charge or mortgage agrees that the Tenant's occupation hereunder shall not be
disturbed so long as it observes and performs the covenants contained in the
Lease.
10. Landlord's Remedies:
(a) Landlord may Perform the Tenant's Covenants: If the Tenant shall
be in default of any of its covenants, obligations or agreements under this
Lease (other than its covenant to pay Basic Rent, Additional Rent or any other
amounts due and payable pursuant to this Lease (collectively referred to as
"Rent")) and such default shall have continued for fifteen (15) days after
written notice thereof by the Landlord to the Tenant specifying with
reasonable particularity the nature of such default and requiring the same to
be remedied, and the Tenant within such 15 day period fails to commence and
thereafter to proceed diligently to cure such default, the Landlord, without
prejudice to any other rights which it may have with respect to such default,
may remedy such default and the cost thereof to the Landlord together with
interest thereon as herein provided from the date such cost was incurred by the
Landlord shall be added to the Rent due on the next succeeding date on which
Basic Rent is payable and such amount shall thereupon become due and
payable as Rent in addition to the regular payment of Basic Rent then due.
The Landlord shall be subrogated to the extent of such payment to all rights,
remedies and priorities of the payee of the amounts paid by the Landlord to
remedy such default.
(b) Re-entry: An event of default by the Tenant shall occur when:
(i) the Tenant shall be in default in the payment of any Rent, whether lawfully
demanded or not:
(ii) the Tenant shall be in default of any of its covenants, obligations
or agreements under this Lease (other than its covenant to pay Rent) and
such default shall have continued for fifteen (15) days after written notice
thereof by the Landlord to the Tenant specifying with reasonable
particularity the nature of such default and requiring the same to be
remedied and the Tenant within such 15 day period fails to commence and
thereafter to proceed diligently to cure such default:
(iii) any property of the Tenant has been seized or sold under a valid writ of
execution, or any trustee, receiver, receiver-manager, manager, agent or other
like person has been appointed in respect of any property of the Tenant, or the
Tenant shall have made an assignment for the benefit of creditors or shall have
made any assignment or have had a receiving order made against it under
the Bankruptcy Act, or becoming bankrupt or insolvent shall have made
application for relief under the provisions of any statute now or hereafter in
force concerning bankrupt or insolvent debtors, or any action whatever,
legislative or otherwise shall have been taken with a view to the winding up,
dissolution or liquidation of the Tenant;
(iv) the Tenant makes any sale in bulk affecting any property on the Demised
Premises (other than in accordance with an assignment of this Lease
approved in writing by the Landlord and made pursuant to all applicable
legislation);
(v) any insurance policy is cancelled or not renewed by an insurer by reason of
any particular use or occupation of the Demised Premises; or
(vi) the Demised Premises shall have been vacated or have become vacant or
shall have remained unoccupied for a period of 10 consecutive days, or the
Leased Premises shall not have been open for business on more than 10 business
days in any 12 month period.
Upon the occurrence of any event of default by the Tenant the then
current month's Rent together with the Rent for the 3 months next ensuing shall
immediately become due and payable, and the Landlord may terminate this Lease
and without notice or any form of legal process whatever may reenter the
Demised Premises. Notwithstanding any such termination the Tenant shall
pay to the Landlord all loss of Rent suffered by reason of this Lease having
been prematurely determined and all damages incurred by the Landlord with
respect thereto, including the cost of recovering the Demised Premises, and
including the worth at the time of such termination of the excess, if any, of
the amount of Rent for the remainder of the Term over the then reasonable
Rental value of the Demised Premises for the remainder of the Term.
(c) Landlord may Re-let: If the Landlord does not exercise
its option under Subsection 10(b) to terminate this Lease it may
nevertheless in the events set out in Subsection 10(b) from time to time
re-enter the Demised Premises without terminating this Lease, make such
alterations and repairs as it may consider to be necessary in order to re-let
the Demised Premises, and re-let the Demised Premises or any part thereof as
agent for the Tenant for such period or periods (which may extend beyond the
Term) and at such rental or rentals and upon such other terms and
conditions as the Landlord in its sole discretion may deem advisable. Upon
each such re-letting all rentals received by the Landlord from such re-letting
shall be applied, first, to the payment of any costs and expenses of such
re-letting, including brokerage fees and solicitors' fees and of the costs of
such alterations and repairs; second, to the payment of any indebtedness other
than Rent due from the Tenant to the Landlord; third, to the payment of Rent
due and unpaid, and the residue, if any, shall be held by the Landlord and
applied in payment of future Rent as it may become due and payable. The Tenant
shall pay to the Landlord the amount by which the rentals received from such
re-letting during any month are less than the Rent payable during that month by
the Tenant. Notwithstanding any such re-letting without termination, the
Landlord may at any time thereafter elect to terminate this lease. No
such re-entry or taking of possession by the Landlord shall be construed as
an election on its part to terminate this Lease, unless, at the time of or
subsequent to such re-entry or taking of possession, a written notice of such
intention has been given to the Tenant or unless the termination thereof is
decreed by a court of competent jurisdiction.
(a) Right to Distrain: The Tenant waives and renounces
the benefit of any present or future statute purporting to limit or
qualify the Landlord's right to distrain and agrees with the Landlord that
upon the happening of any event of default described in Subsection 10(b) the
Landlord, in addition to the other rights reserved to it, shall have the right:
(i) to enter the Demised Premises as agent of the Tenant either by force or
otherwise without being liable for any prosecution therefor and to take
possession of any goods and chattels whatsoever on the Demised Premises,
save and except any such goods and chattels as are owned by any occupiers of
the Demised Premises other than the Tenant;
(ii) to levy distress against the goods and chattels of the Tenant at any place
to which the Tenant or any other person may have moved them, in the same
manner as if such goods and property had remained upon the Demised Premises or
at any other premises of the Tenant:
(iii) to change the locks on the Demised Premises to prevent the removal
by the Tenant or any other person of the goods and chattels which are the
subject matter of the distress without thereby reentering the Demised Premises
or terminating this lease;
(iv) to levy distress after dark and on Sundays; and
(v) to sell any goods and chattels seized at public or private sale without
notice and to apply the proceeds of such sale on account of the Rent or
other sums provided in this Lease to be paid by the Tenant as Rent in arrears
or in satisfaction of the default by the Tenant of its covenants, obligations
and agreements under this Lease; provided that the Tenant shall remain liable
for the deficiency, if any.
Notwithstanding any term or condition of this Lease or anything
contained in any legislation, none of the goods and chattels of the Tenant at
any time during the continuance of the Term shall be exempt from levy by
distress for Rent or other sums provided in this Lease to be paid by the Tenant
as Rent in arrears, and upon any claim being made for such exemption by the
Tenant, or upon distress being made by the Landlord, this provision may be
pleaded as an estoppel against the Tenant in any action brought to test the
rights to the levying upon any such goods as are named as exempted in such
legislation, the Tenant waiving as it hereby does all and every benefit that it
could or might have with regard thereto.
(e) Costs: The Tenant shall be responsible for and pay to the Landlord
as Rent forthwith upon demand all costs incurred by the Landlord,
including, without limitation, reasonable compensation for all time
expended by the Landlord's own personnel, legal costs on a solicitor and his
client basis, and all other costs of any kind whatsoever, arising from or
incurred as a result of any default of the Tenant or any enforcement by the
Landlord of any of the Tenant's obligations under this Lease.
(f) Landlords' Remedies Cumulative: The remedies of the Landlord
provided for in this Lease are cumulative and not alternatives.
11. Overholding: Should the Tenant remain in occupation of the Demised
Premises after expiration of the term wit.hont the consent of the Landlord and
in the absence of special written agreement, it shall be asa monthly Tenant at
a monthly rent equal to 120% of the Basic Rent payable herein payable on the
first day of each and every month and subject in other respects to the terms of
this Lease, including those provisions requiring the payment of
Additional Rent.
12. Condonation: Any condoning, excusing or overlooking by the
Landlord of any default, breach or nonperformance by the Tenant at any time
or any covenant, proviso or condition herein contained shall not operate to
waive the Landlord's rights under this Lease in respect of any later default,
breach or non-observance so as to defeat in any way the rights of the Landlord
under this Lease or on any such later default, breach or non-observance and all
rights and remedies of the Landlord shall be deemed to be cumulative, not
alternative.
13. Construction Liens and other Liens: The Tenant covenants
and agrees that if during the Term any construction lien or other liens or
encumbrances (other than those liens or encumbrances that may be permitted
under this Lease) are filed or registered against the Lands or the Demised
Premises or upon the reversion or other estate of the Landlord therein, as a
result of any act or omission of the Tenant or its employees or those for whom
the Tenant is at law responsible, the Tenant shall, at is own cost and
expense, cause the same to be cancelled and discharged within twenty (20)
days after notice of the registration or filing thereof, and if the Tenant
shall fail or neglect to do so within the time provided the Landlord may, but
without obligation to do so, satisfy, cancel and discharge such lien or
encumbrance and may add to the next ensuing instalment of Basic Rent the amount
of such lien or encumbrance and all legal and other expenses including counsel
fees and bond premiums together with interest thereon from the date of payment,
which shall thereupon become due and payable as Additional Rent.
Provided that the Tenant shall not be deemed to be in default under the
terms of this Lease for failing to discharge any construction lien or
other liens or encumbrances provided the Tenant shall, in good faith,
contest the validity of same and shall forthwith upon demand obtain an order
of the court of competent jurisdiction discharging the lien or encumbrance
from the title to the Lands or the Demised Premises by payment into court or by
furnishing to the Landlord security satisfactory to the Landlord, acting
reasonably, in nature and amount against all loss or damage which the Landlord
might suffer or incur thereby.
14. Landlord Repairs. Alterations or Improvements: The Landlord shall
be entitled to enter upon the Demised Premises at any time for the purpose of
making repairs, alterations and improvements to the Demised Premises, and the
Tenant shall not be entitled to compensation for any inconvenience, nuisance or
discomfort occasioned thereby provided that such repairs, alterations and
improvements are effected in a reasonable and expeditious manner so as to not
unduly interfere with the Tenant's use of the Demised Premises.
15. Landlord Showing Demised Premises: During the term hereby granted,
the Landlord, upon reasonable notice to the Tenant shall be entitled to enter
the Demised Premises at all reasonable hours for the purpose of showing them to
any prospective purchaser or tenant or the Demised Premises and shall be
entitled to affix and maintain upon the Demised Premises notices stating that
they are for sale or rent which shall not be disturbed by the Tenant, and to
enter the Demised Premises by its servants and agents and any
prospective purchaser/tenants during all reasonable hours in order to exhibit
them for sale/rent. The Landlord acknowledges that it shall not be
entitled to show the Demised Premises to prospective tenants or place notices
or signs saying the Demised Premises are for rent except during the last 7
months of the Term and only if Tenant has not provided notice that it intends
to exercise the right to renew provided far herein.
16. Damage and Destruction to Demised Premises: If during the term
hereby demised or any renewal thereof the Demised Premises shall be damaged or
destroyed by a peril or perils which is covered by insurance, the Basic Rent
shall abate in the proportion (as determined by the Landlord acting reasonably)
that the part of the Demised Premises rendered unfit for the business purposes
of the Tenant bears to the whole of the Demised Premises until the Demised
Premises are rebuilt; and the Landlord agrees that it will, with
reasonable diligence, repair the Demised Premises unless the Tenant is
obligated to repair under the terms hereof or unless this Lease is terminated
as hereinafter provided. If the Demised Premises are damaged or destroyed by
any cause whatsoever and if, in the opinion of an independent engineer retained
by the Landlord (such opinion to be obtained within twenty-one (21) days of
such damage or destruction), the Demised Premises cannot be rebuilt or made fit
for the business purposes of the Tenant within one hundred and fifty (150) days
of the damage or destruction, the Landlord instead of rebuilding or making the
Demised Premises fit for the Tenant, may, terminate this Lease by giving the
Tenant within thirty (30) days of such damage or such destruction, notice of
termination and thereupon Basic Rent, Additional Rent and any other payment for
which the Tenant is liable under this Lease shall be apportioned and paid to
the date of such damage or destruction and the Tenant shall immediately
deliver up possession of the Demised Premises to the Landlord.
17. Assignment by Landlord as Security: The Landlord may assign its
right under this Lease to a mortgagee(s) as collateral security for a loan and
if such an assignment is made and notification thereof is given to the Tenant
by or on behalf of the Landlord, this Lease shall not be cancelled or modified
for any reason whatsoever, except as provided for, anticipated or permitted by
the terms hereof or by law without the consent in writing of such mortgagee(s)
and the obligations of the Landlord under the Lease to the Tenant shall remain
unimpaired.
18. Transfer by Landlord: The Landlord at any time and from time to time
may sell, transfer, assign or otherwise dispose of the whole or any part of
its interest in the Demised Premises. If the party acquiring such interest
shall have agreed to assume the covenants, obligations and agreements of the
Landlord under this Lease in the same manner and to the same extent as if
originally named as the Landlord in this Lease, the Landlord shall thereupon be
released from all of its covenants and obligations under this Lease.
19. No Liability of Landlord: The Landlord shall not in any event be
liable or responsible in any way for any personal injury or death that may be
suffered or sustained by or for any loss of or damage or any injury to any
property, including vehicles and contents thereof, belonging to any employee,
servant, agent, sub-tenant, licensee, or invitee of the Tenant on the Demised
Premises, no matter how caused and in particular, without restricting the
generality of the foregoing, which may be caused or occasioned by
steam, rainwater and any other water, sleet, snow, ice, melted sleet, snow
or ice, which may leak, issue or flow from any part of the Demised Premises
or which may leak, issue or flow into the Demised Premises from any other place
or quarter or from any water, sprinkler or drainage pipe or plumbing works
situate in the Demised Premises or elsewhere or which may be caused or
occasioned or attributable to the condition or arrangement of any electrical or
other wiring and caused or occasioned by snow or ice or other substances or
obstructions on the sidewalks, driveways, roads, streets and grounds on or
about, or appurtenant to the Demised Premises, or caused or occasioned by the
effective condition or the lack or repair, or disrepair thereof, or by any lack
or defect of, any machinery or equipment in the Demised Premises, or in the
operation thereof by the Tenant, or by any defects therein or the disrepair or
non-repair of the Demised Premises and the Tenant shall indemnify the Landlord
from and against all liabilities, claims, demands and causes of action of any
nature or expense for such injury, loss, death or damage as aforesaid and the
covenants of indemnity herein contained in respect of damage to property,
injury or death occurring during the term of this Lease shall survive any
termination of this Lease, anything herein to the contrary notwithstanding.
20. Special Conditions:
(a) Relocation of Tenant:
Intentionally deleted
(b) Right of First Refusal:
Intentionally deleted
(c) Option to Renew: The Tenant shall have the right, if not in default, to
renew this lease for One (1) further term of Five (5) years on the same terms
and conditions as contained herein, save and except as follows:
(i) The Lease after renewal shall contain no further option to renew; and,
(ii) The Basic Rent shall be at a rental rate to be negotiated in
good faith between the parties and failing agreement shall be established
pursuant to The Arbitrations Act of Ontario in effect at the date of renew; and
(iii) Intentionally deleted
and (iv) The Landlord shall not be obligated to do any construction and/or any
other work to the Demised Premises and/or the Lands; and
(v) The Tenant gives notice in writing of its intention to renew to the
Landlord not less than three (3) months prior to the expiration;
and
(vi) The Tenant shall pay additional rent during each and every renewal period
calculated in accordance with paragraph 7(b)
21. Notices: Any Notice required to contemplated by any provision of this
Lease shall be sufficiently given, if given in any manner herein specifically
provided, or if served personally, or if mailed postage prepaid by registered
mail to the Landlord, at Fairgate Centre Inc., P. O. Box 1040, 6 Terrace
Heights, Fonthill, Ontario, LOS 1EO, Attention: Property Manager, and to the
Tenant at the Demised Premises, or such other addresses as each party may
designate in writing and any notice so mailed shall be deemed to have been
given on the third business day after mailing. If at the date of any such
mailing or on or before such third day thereafter there is a general
interruption in the operation of the postal service in Canada which does or is
likely to delay delivery by mail of such notice, the notice shall be served
personally.
22. Registration: The Tenant shall not register this Lease or other
memorandum referring to or describing this Lease or other parts thereof,
without the prior written consent of the Landlord. However, both parties shall
join in the execution of a Notice of Lease for the purposes of registration in
the property Registry or Land Titles Office. Such notice shall conform to the
minimum requirements of the Registry Act or Land Titles Act relating thereto.
Cost of registration of such Notice(s) to be for the account of the Tenant.
23. Agent's Fee:
Intentionally deleted
24. Miscellaneous:
(a) Indemnitor:
Intentionally deleted
(b) Tenant's Financial Statements:
The Landlord or any mortgagee designated by the Landlord shall have the
privilege at any time during the term or any renewal term, upon forty eight
(48) hours advance notice to inspect and review the Tenant's most recent annual
audited financial statements, or in the event the Tenant does not prepare
annual audited financial statements, the Tenant's mast recent financial
statements, on a confidential basis.
The Landlord shall not use any statement acquired hereunder or permit the same
to be used for any purpose except for financing or refinancing or sale of the
Demised Premises and such statements shall otherwise be kept strictly
confidential.
(c) Impossibility of Performance: It is understood and agreed that whenever
and to the extent that the Landlord shall be unable to fulfill or shall be
delayed or restricted in the fulfillment of any obligation hereunder in respect
of the supply or provision of any service or utility or the doing of any work
or the making of any repairs by reason of being unable to obtain the
material, goods, equipment, service or labour required to enable it to fulfill
such obligation, or by reason of any Statute, Law or Order in council, or any
regulation or Order passed or made pursuant thereto, or by reason of any
other cause beyond its control, whether of the foregoing character or not,
the Landlord shall be relieved from the fulfillment of such obligation during
the period of such delay and the Tenant shall not be entitled to compensation
for any inconvenience, nuisance or discomfort thereby occasioned.
(d) Severabilitv: If any clause or clauses or part or parts of clauses in
this Lease be illegal or unenforceable, it or they shall be considered
separate and severable from the Lease and the remaining provisions of
the Lease shall remain in full force and effect and shall be binding upon the
parties hereto as though the said clause or clauses or part or parts of
clauses had never been included.
(e) Applicable Law: This Lease shall be governed by and in accordance with
the laws of the Province of Ontario.
(f) Schedules: The Schedules attached hereto are incorporated
herein and form part of this Lease.
(g) No Representations: The Tenant agrees that no representation or promise
with respect to the Demised Premises has been made by or on behalf of the
Landlord except as are herein expressly set forth.
THIS AGREEMENT and everything herein contained shall enure to the
benefit of, and may be taken advantage of, and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto
respectively.
IN WITNESS WHEREOF all parties have affixed their corporate seals
under the hands of their officer duly appointed for that purposes.
FAIRGATE CENTRE INC.
(Landlord)
/s/ Edmond Helstab, President
THE RECLAMATION (U.S.) CORPORATION
(Tenant)
/s/ Blaine Froats, Chairman & CEO
Addendum:
Notwithstanding the provisions in paragraph 2. Term of Lease above, the Tenant
shall take possession of the Demised Premises on May 5, 1997 and shall pay to
the Landlord during the period from May 5, 1997 to July 31, 1997 Basic Rent at
NIL Dollars and Additional Rent calculated in accordance with Paragraph 7(b)
above and shall observe all other terms and conditions of this Lease in like
manner as during the Term of this Lease.
Landlord Initials Tenant Initials
SCHEDULE "A" Site plan
SCHEDULE "B"
RULES AND REGULATIONS
1. Tenant shall not perform any acts or carry on any practice which
may injure the lands described in schedule B or be a nuisance to any others.
2. Tenant shall not burn trash or garbage in or about the Demised
Premises.
3. Tenant shall not keep or display any merchandise on or otherwise
obstruct any part of the Demised Premises except as is specifically permitted
in the Lease.
4. All loading and unloading of merchandise, supplies, materials,
garbage, refuse and other chattels shall be made only through or by means of
such doorways at the rear of the Demised Premises or as shall be agreed upon by
the Tenant and the Landlord in writing from time to time.
5. Tenant shall, upon written notice from the Landlord,
within five (5) days, furnish the Landlord with the current Provincial License
Plate Number of any vehicles owned or used by employees of the Tenant.
6. Tenant shall not bring upon the Demised Premises any equipment,
motor or any other thing which might damage the building.
7. Garbage or refuse shall be placed in containers of a type and in a
location approved by the Landlord in writing outside the Demised Premises and
shall be removed at such time or times as the Landlord shall from time to time
advise the Tenant.
8. No vehicles, merchandise, supplies, materials, garbage,
refuse or other chattels shall be allowed to remain on any access driveway.
9. No birds or animals shall be kept in or about the Demised Premises
nor shall the Tenant operate or permit to be operated any musical or sound
producing instrument or device inside or outside the Demised Premises which may
be heard outside the Demised Premises.
10. No one shall use the Demised Premises for sleeping apartments or
residential purposes, or for the storage of personal effects or articles other
than those required for business purposes.
11. No inflammable oils or other inflammable, dangerous or explosive
materials shall be kept or permitted to be kept in the Demised Premises.
Nothing shall be placed on the outside of windowsills or projections.
12. Tenants shall not place any additional lock upon any door of the
Demised Premises without the written consent of the Landlord.
13. Tenants shall not mark, paint, drill into or in any way deface the
walls, ceilings, Dartitions, floors or other parts of the Demised Premises
except with the prior written consent of Landlord and as it may direct.
14. For the benefit and welfare of all or any tenants of the whole site,
the Landlord shall have the right to issue further reasonable Rules and
Regulation and such further Rules and Regulations, shall thereupon be binding
upon Tenant.
Exhibit 6 K
AGREEMENT AND PLAN OF REORGANIZATION
ENVIRONMENTAL PRODUCTS GROUP INC.
ACQUISITION OF
FORMULATED MOULDINGS (CANADA) INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") made as of this 20th day
of November, 1998, by and among Environmental Products Group Inc. ("Products"),
a Delaware corporation with offices at 152 Main Street, First Floor,
Flemington, New Jersey, USA, 08822, and Formulated Mouldings (Canada) Inc.
("FMCI"), with offices at 5430 Harvester Road, Unit A, Burlington, Ontario,
Canada, L7L-5N5 and the shareholders of FMCI as set forth on the signature
pages hereof ("Shareholders").
PREMISES
Products desires to acquire all of the issued and outstanding stock of
FMCI, so as to make FMCI a wholly-owned subsidiary of Products, the shares of
FMCI will be exchanged for shares of Products's common stock, to be exchanged
as set out herein with the said shareholders.
PLAN OF REORGANIZATION
The reorganization will comprise the acquisition by Products of all the
outstanding capital stock of FMCI in exchange solely for a part of Products's
voting stock. The exchange by the Shareholders of the capital stock of FMCI
for voting common stock of Products shall be made upon and subject to the
terms and conditions of this Agreement hereinafter set forth and is intended to
qualify as a tax free reorganization pursuant to the provisions of Section
368(a) (1) (B) of the Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and respective agreements
hereinafter set forth, the aforementioned parties hereby agree as follows:
1. EXCHANGE OF SHARES
Products and the Shareholders agree that all of the issued and outstanding
shares of common stock of FMCI (the "FMCI Stock") shall be exchanged with
Products for the issuance by Products to the shareholders of FMCI of eight
million and thirty one thousand and four hundred and twenty six (8,031,426)
shares of Common Stock of Products, $.001 par value, per share (the "New
Products shares"). The distribution to the Shareholders shall be as follows:
Blaine Froats In Trust 8,031,426 Shares
2. CLOSING
2.1 Time and Place.
The closing of the transactions contemplated by Section 1 hereof shall take
place at 10:00 A.M., on November 23, 1998, at 5430 Harvester Road, Burlington,
Ontario, Canada or such other time and place as the parties hereto shall agree.
2.2 Actions to be taken.
At the Closing the Shareholders' representative shall assign, transfer,
deliver and set over to Products any and all evidence of ownership of the
issued and outstanding FMCI Stock duly endorsed and with any required
documentary or stamp taxes affixed at the Shareholder's expense so as to make
Products the sole owner thereof, free and clear of all liens, claims and
encumbrances. At the closing, Products shall issue and deliver to the
shareholders the New Products Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS AND FMCI.
The FMCI and the Shareholders, hereby represent and warrant to Products
that, with respect to the FMCI Stock and with respect to FMCI, effective this
date, the representations listed below are true and correct, and further
covenant and agree that, as of the Closing Date, the following representations
will be true and correct.
3.1 Organization and Standing
FMCI is a corporation duly organized and validly existing and in good
standing under the laws of Ontario, Canada and has all requisite corporate
power and authority to own its property, to carry on its business as now being
conducted and to enter into and carry out the provisions of this Agreement.
FMCI is duly licensed and qualified to do business and own properties in each
jurisdiction in which it conducts business.
3.2 Capitalization
The duly authorized capital stock of FMCI consists of an unlimited number
of shares of common stock, no par value per share, of which 8,031,426 shares
are outstanding, validly issued, fully paid and nonassessable and owned of
record by the Shareholders. There are no other securities of FMCI now
outstanding or securities on which it is or may be liable, or securities that
are or may become required to be issued by reason of any statutory requirements
(including, without limitation, preemptive rights), or warrants, rights,
options, calls, commitments or other agreements presently outstanding.
3.3 Corporate Records
A copy of FMCI's Articles of Incorporation and the By-Laws, all as amended,
all of which are certified by the Secretary of FMCI as of a recent date, are
attached as Schedule 3.3 hereto and each of the foregoing will be complete,
true and correct on the Closing date. The minute books, if any, of FMCI or any
other documents record and reflect the complete and accurate records of all
corporate actions taken by the directors and shareholders of FMCI. The stock
book or its corporate equivalent of FMCI reflects accurately the foregoing or,
in the event that there have in the past been shareholders of FMCI the names of
all persons who at any time in the past were record shareholders of FMCI, the
number of shares of capital stock held by each such shareholder and the
circumstances of any past transfers or redemption's of any shares of FMCI held
prior to the date hereof by any person other than the shareholders.
3.4 Subsidiaries
FMCI owns no securities of any other entity.
3.5 Default Under Loans
FMCI is not in default in the payment of principal or interest and has
fully complied with all other covenants, obligations and conditions of all
indebtedness outstanding. No event has occurred which with the passage of time
would be a default under any instrument of indebtedness. Attached hereto as
Schedule 3.5 is a complete and accurate list of all indebtedness, in whatever
form, of FMCI.
3.6 No Agreement or Court Orders
FMCI is not a party or subject to or bound by any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contained any provisions which could operate to impair the carrying out
of this Agreement or any of the transactions contemplated hereby.
3.7 Authority
The execution, delivery and performance of this entire Agreement is subject
to agreement of the Board of Directors of and dependent on a vote of agreement
by the shareholders of FMCI with a minimum acceptance percentage of eighty
percent (80%). FMCI has been duly and effectively authorized by all requisite
corporate action and will not violate any provision of the Articles of
Incorporation or By-Laws of FMCI or any provision of, or result in the
acceleration of any obligation under, any agreement, indenture, instrument,
lease, contract or other undertaking to which FMCI is a party or by which it is
bound.
3.8 Recent Financial Statements
FMCI's Representative delivered to Products a Balance Sheet of the Company
as of May 31, 1998 (the "Recent Balance Sheet") and the related Statement of
Earnings for the fiscal year then ended (the "Recent Income Statement") all
attached hereto as Schedule 3.8. Such Recent Balance Sheet and Recent Income
Statement being hereinafter sometimes collectively called the "Recent
Financial Statement" have been audited by Tinkham & Associates Chartered
Accountants. The Recent Financial Statements are true, correct and complete
and accurately and truly present the financial condition of FMCI as of the date
thereof and the results of its operations for the period therein specified and
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding period and
consistently maintained throughout the periods involved. Without limiting the
generality of the foregoing, the Recent Financial Statements, either on the
face thereof or in the notes thereto, include, reflect or disclose all periods
involved. Without limiting the generality of the foregoing, the Recent
Financial Statements disclose all debts, liabilities, commitments and
obligations of every nature, whether absolute, accrued, contingent or otherwise
of FMCI, as at the date thereof, including all appropriate reserves for taxes
and there are no other debts or claims or demands with respect thereof,
relating to or arising out of any act, transaction or circumstances which
occurred or existed on or before the date of the Recent Balance Sheet, due or
payable, except as included, reflected or disclosed on the Recent Balance
Sheet. The Recent Income Statement does not contain any item of special or
non-recurring income or other income not earned in the ordinary course of
business except as expressly specified therein.
3.9 Other Financial Statements
FMCI has delivered to Products copies of all other financial statements of
FMCI, prepared by or for FMCI as of the Closing Date from the date of the
Recent Financial Statements, all of which will be true, complete and correct
and will have been prepared in accordance with sound generally accepted
accounting principles consistently followed throughout the period indicated.
3.10 Liabilities and Obligations
All liabilities of FMCI and all obligations of FMCI with respect to
contracts and commitments which arose or arise after the date of FMCI's Recent
Financial Statements and prior to the Closing were or will be incurred only in
the ordinary course of business. All liabilities for taxes with respect to the
period after the date of FMCI's Recent Financial Statements and prior to the
Closing were or will be incurred in the ordinary course of business. Except to
the extent reflected, included, disclosed or reserved against in FMCI's recent
Balance Sheet. FMCI has no present knowledge of, or present reason to believe
in the existence of, any liability of any kind or nature whether accrued,
absolute, contingent or otherwise, including without limitation, tax
liabilities due to or to become due, with respect to any period after the date
of FMCI's Recent Balance Sheet and prior to the date of this Agreement.
3.11 Absence of Changes
Since May 31, 1998, the business of FMCI has been operated and as of the
Closing will be operated only in the ordinary course of business, and without
limiting the generality of the foregoing, FMCI has not:
(a) Suffered any materially adverse change in its financial condition,
prospects, operations or business.
(b) Increased the rate of compensation payable to any officer, employee or
agent, or granted or accrued any bonus, payment or other benefit due under any
pension, incentive, deferred compensation or similar plan to any such person.
(c) Incurred any labor dispute, work stoppage, sabotage, formal or
informal complaint of unfair labor practices, or had any representational
proceedings initiated, demand made for the recognition of any union as
bargaining agent or any other similar event or condition which has materially
and adversely affected its business.
(d) Incurred any obligation or liability (absolute or contingent) except
current liabilities under contracts entered into in the ordinary course of
business, none of which materially adversely affects the business or prospects
of FMCI.
(e) Discharged or satisfied any lien, encumbrance, obligation or liability
(absolute or contingent) other than current liabilities and obligations shown
on the Recent Financial Statements or incurred since the date of the Recent
Financial statements in the ordinary course of business.
(f) Mortgaged, pledged, or subjected to lien, charge or other encumbrances
any of its assets except for the ordinary cause of business.
(g) Sold, transferred, mortgaged, pledged, or subjected to lien, charge or
other encumbrances any of its assets except in the ordinary course of business.
(h) Suffered any extraordinary losses or waived any rights of substantial
value.
(i) Made or declared any distribution or dividend to its shareholders with
respect to its capital stock, or otherwise.
(j) Entered into any transaction not in the ordinary course of business other
than this Agreement.
3.12 Taxes
All required national profit tax returns of FMCI have been accurately
prepared and duly and timely filed, and all national and local taxes have been
paid with respect to the periods covered by such returns.
3.13 Title to Properties
FMCI has good and marketable title to all the properties and assets it
purports to own, including, without limitation, those reflected in its books
and records and in its Recent Financial statements (except assets thereafter
sold in the ordinary course of business). No properties and assets are subject
to a lien or mortgage, except as expressly set forth in its Recent Financial
Statements. All of such properties and assets are in good operating condition
and repair and conform to all applicable ordinances, regulations and other laws
or requirements. All of FMCI's fixtures and improvements to real property, and
its use of real property, conform in all material respects with all applicable
building, zoning and other laws, ordinances, orders and regulations and
applicable public and private covenants or restrictions.
3.14 Title to Stock
The Shareholders are the owners of the FMCI Stock, which stock constitutes
all of the capital stock of FMCI, issued and outstanding, and all of which
stock will be delivered by them hereunder, free and clear of all liens,
pledges, encumbrances, charges, agreements or claims by or on the part of any
persons, firm or corporation, and the Shareholders have good and marketable
title thereto with full right and unrestricted power to assign, transfer, and
deliver such stock to Products as provided in this Agreement. No right or
option to purchase any of the FMCI Stock or any other securities of FMCI exists
in favor of any person, firm or corporation.
3.15 Agreements
FMCI is not in default under any contract, agreement or commitment. No
consent of third parties to any contract, agreement or commitment of FMCI is
required for the execution or consummation of this Agreement.
3.16 Indebtedness of Officers and Directors
FMCI is not indebted to the shareholders or to any other person who is or
has been an officer, director, or shareholder of FMCI, or to any member of the
immediate family of any such person.
3.17 Litigation
There are no claims, legal actions, suits, arbitrations, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of FMCI or the shareholders threatened against or
relating to FMCI, its properties, assets or business and neither FMCI nor the
shareholders knows or has reason to be aware of any facts which might result in
any such claim, action, suit, arbitration or other proceeding.
3.18 Pension or Benefit Plans
FMCI has no formal or informal written or unwritten pension,
profit-sharing, stock option, or employee benefit or welfare plans of any kind
whatsoever, or agreements with any persons for the making or granting of any
pension, profit sharing or bonus payments or benefits or any stock options,
other than a Commission Bonus Plan for sales employees.
3.19 Relations with Labor
FMCI is not a party to any collective bargaining agreements and there is no
union or collective bargaining agent for FMCI's employees. FMCI has no
employment grievances, disputes, or controversies and there are no threats of
strikes or work stoppage or demand for the recognition of any union or
bargaining agent for any employees.
3.20 Patents
FMCI is not infringing upon or otherwise acting adversely to any
copyrights, trademarks, trademark rights, patents, patent rights or licenses
owned by any person or persons, and there is no such claim or action pending or
threatened, with respect thereto.
3.21 Good Standing
Each license, permit, franchise and authorization of FMCI from any local
governmental or other regulatory authority is in good standing and in full
force and effect. FMCI does not know of any reason which could cause any of
the above to be terminated. There shall not be any termination or suspension
after the Closing Date of any or all of the above arising out of, relating to,
or caused by (i) any failure to file, or any inadequacy in filing of, any
documents, reports and disclosures required under applicable rules and
regulations of any local law or agency to be filed by FMCI prior to the Closing
Date, (ii) activities of FMCI or its personnel prior to the Closing Date, (iii)
any other failure to comply with applicable rules and regulations prior to the
Closing Date, or (iv) this Agreement or the transactions contemplated by this
Agreement.
3.22 Compliance with Law
FMCI has complied with all state and local applicable laws, rules,
regulations, ordinances and orders applicable to its business or properties
including, without limitation, those of any agency or subdivision thereof.
FMCI has duly filed all returns, reports, registration statements and other
documents and furnished all information required or requested by any local
governmental agency having jurisdiction with respect to FMCI or its business or
properties and all of the foregoing are true and complete in all respects and
all payments, fees and charges reflected therein as due, or upon any deficiency
notice with respect thereto, have been paid. No act of FMCI, including without
limitations the issuance and transfers of the capital stock of FMCI, required
registration under the Securities Act of 1933, as amended or the applicable
Canadian equivalent thereof.
3.23 Continuance of Business
The businesses now conducted by FMCI are substantially the same as the
respective businesses conducted by it throughout the periods covered by its
respective financial statements referred to in Section 3.8 and 3.9 hereof, and
there has been no material change during any of such periods in the type or
nature of its respective services, products, customers, suppliers or methods of
operation. FMCI has not received any notification and neither has any reason to
believe that any persons or businesses with whom FMCI does business will cease
doing business, or any portion of any business, with FMCI.
3.24 Adverse Facts
No facts are known to FMCI that would materially and adversely affect
future operations of FMCI.
3.25 Brokers
FMCI'sn negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by FMCI directly with Products in such
manner, without the intervention of any third parties so as not to give rise to
any valid claims against any of the parties hereto for a brokerage commission
or other like payment.
3.26 Warranties
No representation, covenant or warranty by FMCI in this Agreement or any
statement or certification furnished or to be furnished to Products pursuant to
this Agreement or in connection with the transaction contemplated hereby,
contains or will contain any untrue statement of material facts or omits or
will omit a material fact necessary to make the statements contained herein, in
light of the circumstances under which they were made, true and correct.
4. REPRESENTATION AND WARRANTIES BY PRODUCTS
Products hereby represents and warrants as follows:
4.1 Organization and Standing
Products is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware, and Products has all
requisite corporate power and authority to enter into and carry out the
provisions of this Agreement. Products owns no property and neither conducts
nor carries on any business.
4.2 Capitalization
The duly authorized capital stock of Products consists of twenty million
(20,000,000) shares, par value $.001 per share, of Common Stock, of which a
total of 53,417 Products shares are presently outstanding (pre contemplated
take-overs and purchases), validly issued, fully paid and non assessable and
owned of record by the shareholders in those amounts indicated on a shareholder
list, as of a date not more than thirty (30) days prior to the date of this
Agreement, certified as accurate by the duly appointed transfer agent of
Products, and annexed hereto as Exhibit 4.2 hereof. Except as otherwise noted
by Products on the said shareholder list, Products does not know of any
beneficial interests in the said outstanding common stock other than the
interests of record set forth on such list or on Schedule 4.2 hereto. There
are no other securities of Products now outstanding or securities on which it
is or may become liable, or securities on which it is or may become liable, or
securities that are or may become required to be issued by reason of any
statutory requirements (including, without limitation, preemptive right(s), or
warrants, rights, options, calls, commitments or other agreements presently
outstanding.
4.3 Corporate Records
A copy of Products's certificate of incorporation and the By-Laws, all as
amended, all of which are certified by the Secretary of Products as of a recent
date are attached as Schedule 4.3 hereto and each of the foregoing will be
complete, true and correct on the Closing date. The minute books of Products
contain complete and accurate records of all meetings of its stockholders and
directors and of all corporate action taken by them to the extent available as
at the present date. The shareholder records of Products reflect accurately
the names of the record shareholders of Products and the number of shares of
capital stock held by each shareholder.
4.4 Subsidiaries
Products owns no securities of any other entity.
4.5 Inactive Corporation
Products has conducted no business activities since 1995 and has no
liabilities or assets except as disclosed on Schedule 4.11 attached hereto.
4.6 Tradable Stock
All of Products's outstanding Common Stock is presently traded or is
eligible to be traded publicly in the over-the-counter market in accordance
with regulations pertaining thereto.
4.7 SEC Reporting Obligations
Products intends to register new Products shares under the Securities
Exchange Act of 1934, as amended (the "34 Act") and Products will therefore be
required to comply with the reporting requirements of Section 13 of the said 34
Act.
4.8 Default Under Loans
Products has no outstanding mortgages, loan agreements or indebtedness of
any kind, nature or description.
4.9 No Agreements or Court Orders
Products is not a party to, subject to, or bound by, any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contains any provisions which could operate to impair the carrying out of
this Agreement or any of the transactions contemplated hereby.
4.10 Authority
The execution, delivery and performance of this Agreement by Products has
been duly and effectively authorized by all requisite corporate action and will
not violate any provision of the Articles of Incorporation or By-Laws of
Products or any provision of, or result in the acceleration of any obligation
under, any agreement, indenture, instrument, lease, contract or other
undertaking to which Products is a party or by which it is bound.
4.11 Audited Financial Statements
Prior to or on the Closing Date, Products will deliver to FMCI the audited
financial statements & any unaudited interim period (the "Products Financial
Statements") through its last fiscal year and any subsequent interim periods.
T
he Products Financial Statements are true, correct and complete and accurately
and truly present the financial condition of Products as at the date thereof
and the results of its operations for the period therein specified and are
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding period and consistently
maintained throughout the periods involved. Without limiting the generality of
the foregoing, the Products Financial Statements disclose all debts,
liabilities, commitments and obligations of every nature, whether absolute,
accrued, contingent or otherwise of Products as at the date thereof, and there
will be no other debts, claims, or demands relating to or arising out of any
act, transaction or circumstances which will have occurred or existed on or
before the date of the Products Financial Statements. Products is inactive,
and represents that it will conduct no business subsequent to the date of the
Products Financial Statements.
4.12 Agreements
Products is not a party to any contract, agreement or commitment and no
consent of any third party is required for the execution or consummation of
this Agreement.
4.13 Competing Interests
None of Products's principal shareholders (owning 5% or more of its issued
and outstanding common stock), officers or directors, own, directly or
indirectly, a material interest in any corporation, partnership, firm or
association which is a competitor or potential competitor of FMCI.
4.14 Indebtedness of Officers and Directors
Products is not indebted to any person who is or has been an officer,
director or stockholder of Products or to any member of the immediate family of
any such person.
4.15 Litigation
There are no claims, legal actions, suits, arbitrations, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of Products or threatened against or relating to
Products, its assets or activities and Products does not know or have any
reason to be aware of any facts which might result in any such claim, action,
suit, arbitration or other proceeding.
4.16 Adverse Facts
No facts are known to Products that would materially and adversely affect
the future activities of Products.
4.17 Brokers
Products's negotiations relative to this Agreement and the transaction
contemplated hereby have been carried on by it directly with FMCI and the
shareholders in such manner, without the intervention of any third parties, so
as not to give rise to any valid claims against any of the parties hereto for a
brokerage commission or other like payments.
4.18 Confidential Information
Products shall not, prior to or after the Closing, divulge to third parties
any confidential information received from FMCI or the shareholders except as
may be required to be disclosed pursuant to applicable law.
5. CONDUCT OF FMCI'S BUSINESS PRIOR TO THE CLOSING
5.1 Negative Covenants
FMCI agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of Products, FMCI will not take, or
permit to be taken, any of the following actions:
(a) Alter or amend its Articles of Incorporation or By-Laws.
(b) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(c) Enter into any option, call or commitment with respect to its stock..
(d) Incur any liability or obligation, except current liabilities in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business.
(e) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors at a rate in excess of the rate of compensation in
effect as to such individual, respectively, on the date hereof.
(f) Enter into any contract or commitment, which is not the ordinary
course of business of FMCI or which, does, or could be expected to, materially
adversely affect FMCI's business.
(g) Borrow funds or incur any indebtedness of any nature except in the
ordinary course of business.
(h) Change its banking and safe deposit arrangements, except as in the
ordinary course of business.
(i) Accept, amend or grant any license, patent or trademark, or settle the
infringement of any trademark or patent.
(j) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business, except settlements made
by insurers.
5.2 Affirmative Covenants
FMCI and the Shareholders agree that between the date hereof and the
Closing, FMCI will:
(a) Conduct its business only in the ordinary course and at the place or
places said business is conducted.
(b) Maintain in force the insurance policies presently in force or
insurance policies providing substantially the same coverage, under which FMCI
is the insured or the beneficiary.
(c) Preserve its business organization taken as a whole substantially
intact, keep available the services of its present officers and employees and
preserve the good will of its suppliers, customers and others having business
relations with any of them.
(d) Afford to Products and its counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of FMCI's properties, books, contracts, commitments
and records, and during said period furnish all information which Products may
reasonably request.
6. CONDUCT OF PRODUCTS'S CORPORATE AFFAIRS PRIOR TO THE CLOSING
6.1 Negative Covenants
Products agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of FMCI and the shareholders, Products
will not take, or permit to be taken, any of the following actions:
(a) Initiate or engage in any business activities of any kind whatsoever.
(b) Alter or amend its Articles of Incorporation or By-Laws except to
change its name.
(c) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(d) Enter into any option, call or commitment with respect to its capital
stock.
(f) Incur any liability or obligation except legal and accounting fees.
(g) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors.
(h) Make any profit sharing, incentive, pension or retirement payment.
(i) Maintains no bank account; therefore cannot change its banking and safe
deposit arrangements.
(j) Enter into any contract or commitment.
(k) Borrow funds or incur any indebtedness.
(l) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business.
6.2 Affirmative Covenants
Products agrees that between the date hereof and the Closing, Products will:
(a) Preserve its organizations taken as a whole substantially intact and
keep available the services of its present officers.
(b) Afford to FMCI and their counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of Products's properties, books, contracts,
commitments and records, and during said period furnish all information which
FMCI may desire to effectuate this Agreement.
7. CONDITIONS PRECEDENT TO PRODUCTS'S OBLIGATIONS
Products's obligations under this Agreement are subject to the fulfillment
prior to the Closing of each of the following conditions:
7.1 FMCI's representations and warranties contained in this Agreement and
in any certificate or document delivered to Products pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; FMCI shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing.
7.2 FMCI shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against FMCI that would
materially affect the business of FMCI or the carrying out of this Agreement.
7.3 Products shall have been furnished with an opinion, dated as of
the Closing Date, of counsel to FMCI to the effect that:
(a) FMCI is a corporation duly organized, validly existing and in good
standing under the laws of Ontario, Canada.
(b) The authorized and issued capital stock of FMCI consists of the number
of shares stated in Section 3.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by FMCI and constitutes a legal, valid and binding
obligation of FMCI enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, orders, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) FMCI's stock to be delivered to Products under this Agreement will,
when so delivered, be validly issued and outstanding and fully paid and
non-assessable.
(f) Except as may be specified by said counsel, he does not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to FMCI or its properties or businesses, or the
transactions contemplated by this Agreement.
7.4 FMCI has not incurred any material adverse change in its assets,
liabilities, financial condition, business, prospects or operations since the
execution of this Agreement.
7.5 FMCI shall deliver to Products a certified copy of the resolution of
its Board of Directors and Shareholders approving this Agreement and the
transaction contemplated hereby.
7.6 All documents required to be delivered to Products at or prior to the
Closing shall have been so delivered.
8. CONDITIONS PRECEDENT TO FMCI'S OBLIGATIONS
FMCI's obligations under this agreement are subject to the fulfillment
prior to the closing of each of the following conditions.
8.1 Products's representations and warranties contained in this Agreement
and in any certificate or document delivered to FMCI pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; Products shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
8.2 Products shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against Products that would
materially affect the carrying out of this Agreement.
8.3 FMCI shall have been furnished with an opinion dated as of the Closing
date of counsel for Products, to the effect that:
(a) Products is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The authorized and issued capital stock of Products consists of the
number of shares stated in Section 4.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by Products and constitutes a legal, valid and
binding obligation of Products enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, order, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) Except as may be specified by said counsel, they do not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to Products or its activities or assets, or the
transactions contemplated by this Agreement.
8.3 Products shall not have incurred any adverse change in its assets,
liabilities, financial condition, activities, prospects or operations.
8.4 Products shall deliver to the Shareholders of FMCI a certified copy of
the resolutions of its Board of Directors approving this Agreement and the
transactions contemplated hereby.
8.5 All documents required to be delivered to the Shareholders and FMCI at or
prior to the Closing shall have been so delivered.
9. MISCELLANEOUS
9.1 Survival
All representations, warranties, covenants and agreements made by any of
the parties hereto in this Agreement or in any certificate or instrument
delivered by or on behalf of any of them pursuant hereto shall survive the
execution and delivery of this Agreement, any investigation that may have been
made or may be made at any time by or on behalf of any party hereto, and the
consummation of this Agreement.
9.2 Parties in Interest
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by each corporate party hereto and its successors and each
individual party hereto and his heirs, personal representatives and successors.
This Agreement shall not be assigned by any party hereto (except by operation
of law) and any such prohibited assignment shall be null and void.
9.3 Expenses and Reorganization
Each of the parties to this Agreement shall bear their respective expenses
relating to this Agreement.
9.4 Governing Law
This Agreement shall be governed by and construed and enforced under the
laws of the State of Delaware without regard to principles of conflicts of law.
9.5 Entire Agreement
This Agreement contains the entire understanding of the parties hereto with
respect to the subject mater herein contained and no amendment, modification or
termination of this Agreement shall be valid unless expressed in a written
instrument executed by the parties hereto or their respective successors.
9.6 Exhibits
All Schedules to this Agreement or other certificates or documents
delivered pursuant to this Agreement shall be deemed to be a part of this
Agreement, whether or not required to be annexed hereto, and shall be initialed
by the party required to deliver such Schedule, certificate or document.
9.7 Waiver
No waiver or any provision of, or any breach or default of this Agreement,
shall be considered valid unless in writing and signed by the party giving such
waiver and no waiver shall be deemed a waiver of any other provisions or any
subsequent breach or default of a similar nature.
9.8 Further Assurances
Each party to this Agreement will, at the request of the other, execute and
deliver to such other party all further endorsements and documents as such
other party may reasonably request in order to consummate and perfect the
transactions contemplated by this Agreement.
9.9 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
9.10 Headings
Section headings are contained on this Agreement only for purposes of
convenience of reference and shall not affect the interpretation of this
Agreement or modify any of its terms or provisions.
9.11 Notices
Any notice or other communication permitted or required to be given
hereunder shall be in writing and shall be deemed to have been given upon
receipt by first class registered mail, certified mail, or recognized
over-night courier, in all cases with written confirmation of receipt required,
addressed to the parties as set forth below:
To: PRODUCTS c/o Gentile & Turpen
152 Main Street, First Floor
Flemington, New Jersey
USA
08822
To: FMCI 5430 Harvester Road, Unit A
Burlington, Ontario
Canada
L7L-5N5
Each of the foregoing shall be entitled to specify a different address by
giving notice as aforesaid to the other parties.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
ENVIRONMENTAL PRODUCTS GROUP INC.
BY: /s/Blaine Froats, Chairman & CEO
seal BY: /s/Sean Froats, Secretary/Treasurer
SHAREHOLDER
BY: /s/Blaine Froats In Trust
Witness: /s/James Guest
Exhibit 6 L
AGREEMENT AND PLAN OF REORGANIZATION
ENVIRONMENTAL PRODUCTS GROUP INC.
ACQUISITION OF
ENVIRONMENTAL FUEL TECHNOLOGY INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") made as of this 20th day
of November, 1998, by and among Environmental Products Group Inc. ("Products"),
a Delaware corporation with offices at 152 Main Street, First Floor,
Flemington, New Jersey, USA, 08822, and Environmental Fuel Techonolgy Inc.
("EFT"), with offices at 5430 Harvester Road, Unit A, Burlington, Ontario,
Canada, L7L-5N5 and the shareholders of EFT as set forth on the signature
pages hereof ("Shareholders").
PREMISES
Products desires to acquire all of the issued and outstanding stock of EFT,
so as to make EFT a wholly-owned subsidiary of Products, the shares of EFT will
be exchanged for shares of Products's common stock, to be exchanged as set out
herein with the said shareholders.
PLAN OF REORGANIZATION
The reorganization will comprise the acquisition by Products of all the
outstanding capital stock of EFT in exchange solely for a part of Products's
voting stock. The exchange by the Shareholders of the capital stock of EFT for
voting common stock of Products shall be made upon and subject to the terms
and conditions of this Agreement hereinafter set forth and is intended to
qualify as a tax free reorganization pursuant to the provisions of Section
368(a) (1) (B) of the Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and respective agreements
hereinafter set forth, the aforementioned parties hereby agree as follows:
1. EXCHANGE OF SHARES
Products and the Shareholders agree that all of the issued and outstanding
shares of common stock of EFT (the "EFT Stock") shall be exchanged with
Products for the issuance by Products to the shareholders of EFT of Five
hundred and forty four thousand five hundred (544,500) shares of Common Stock
of Products, $.001 par value, per share (the "New Products shares"). The
distribution to the Shareholders shall be as follows:
Blaine Froats In Trust 544,500 Common, voting Shares
2. CLOSING
2.1 Time and Place.
The closing of the transactions contemplated by Section 1 hereof shall take
place at 10:00 A.M., on November 23, 1998, at 5430 Harvester Road, Burlington,
Ontario, Canada or such other time and place as the parties hereto shall agree.
2.2 Actions to be taken.
At the Closing the Shareholders' representative shall assign, transfer,
deliver and set over to Products any and all evidence of ownership of the
issued and outstanding EFT Stock duly endorsed and with any required
documentary or stamp taxes affixed at the Shareholder's expense so as to make
Products the sole owner thereof, free and clear of all liens, claims and
encumbrances. At the closing, Products shall issue and deliver to the
shareholders the New Products Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS AND EFT.
The EFT and the Shareholders, hereby represent and warrant to Products
that, with respect to the EFT Stock and with respect to EFT, effective this
date, the representations listed below are true and correct, and further
covenant and agree that, as of the Closing Date, the following representations
will be true and correct.
3.1 Organization and Standing
EFT is a corporation duly organized and validly existing and in good
standing under the laws of Ontario, Canada and has all requisite corporate
power and authority to own its property, to carry on its business as now being
conducted and to enter into and carry out the provisions of this Agreement.
EFT is duly licensed and qualified to do business and own properties in each
jurisdiction in which it conducts business.
3.2 Capitalization
The duly authorized capital stock of EFT consists of an unlimited number of
shares of common stock, no par value per share, of which 544,500 shares are
outstanding, validly issued, fully paid and nonassessable and owned of record
by the Shareholders. There are no other securities of EFT now outstanding or
securities on which it is or may be liable, or securities that are or may
become required to be issued by reason of any statutory requirements
(including, without limitation, preemptive rights), or warrants, rights,
options, calls, commitments or other agreements presently outstanding.
3.3 Corporate Records
A copy of EFT's Articles of Incorporation and the By-Laws, all as amended,
all of which are certified by the Secretary of EFT as of a recent date, are
attached as Schedule 3.3 hereto and each of the foregoing will be complete,
true and correct on the Closing date. The minute books, if any, of EFT or any
other documents record and reflect the complete and accurate records of all
corporate actions taken by the directors and shareholders of EFT. The stock
book or its corporate equivalent of EFT reflects accurately the foregoing or,
in the event that there have in the past been shareholders of EFT the names of
all persons who at any time in the past were record shareholders of EFT, the
number of shares of capital stock held by each such shareholder and the
circumstances of any past transfers or redemption's of any shares of EFT held
prior to the date hereof by any person other than the shareholders.
3.4 Subsidiaries
EFT owns no securities of any other entity.
3.5 Default Under Loans
EFT is not in default in the payment of principal or interest and has fully
complied with all other covenants, obligations and conditions of all
indebtedness outstanding. No event has occurred which with the passage of time
would be a default under any instrument of indebtedness. Attached hereto as
Schedule 3.5 is a complete and accurate list of all indebtedness, in whatever
form, of EFT.
3.6 No Agreement or Court Orders
EFT is not a party or subject to or bound by any agreement or any judgment,
order, writ, injunction or decree of any court or governmental body which
contained any provisions which could operate to impair the carrying out of this
Agreement or any of the transactions contemplated hereby.
3.7 Authority
The execution, delivery and performance of this entire Agreement is subject
to agreement of the Board of Directors of and dependent on a vote of agreement
by the shareholders of EFT with a minimum acceptance percentage of eighty
percent (80%). EFT has been duly and effectively authorized by all requisite
corporate action and will not violate any provision of the Articles of
Incorporation or By-Laws of EFT or any provision of, or result in the
acceleration of any obligation under, any agreement, indenture, instrument,
lease, contract or other undertaking to which EFT is a party or by which it is
bound.
3.8 Recent Financial Statements
EFT's Representative delivered to Products a Balance Sheet of the Company
as of May 31, 1998 (the "Recent Balance Sheet") and the related Statement of
Earnings for the fiscal year then ended (the "Recent Income Statement") all
attached hereto as Schedule 3.8. Such Recent Balance Sheet and Recent Income
Statement being hereinafter sometimes collectively called the "Recent
Financial Statement" have not been audited. The Recent Financial Statements
are true, correct and complete and accurately and truly present the financial
condition of EFT as of the date thereof and the results of its operations for
the period therein specified and have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
that of the preceding period and consistently maintained throughout the periods
involved. Without limiting the generality of the foregoing, the Recent
Financial Statements, either on the face thereof or in the notes thereto,
include, reflect or disclose all periods involved. Without limiting the
generality of the foregoing, the Recent Financial Statements disclose all
debts, liabilities, commitments and obligations of every nature, whether
absolute, accrued, contingent or otherwise of EFT, as at the date thereof,
including all appropriate reserves for taxes and there are no other debts or
claims or demands with respect thereof, relating to or arising out of any act,
transaction or circumstances which occurred or existed on or before the date of
the Recent Balance Sheet, due or payable, except as included, reflected or
disclosed on the Recent Balance Sheet. The Recent Income Statement does not
contain any item of special or non-recurring income or other income not earned
in the ordinary course of business except as expressly specified therein.
3.9 Other Financial Statements
EFT has delivered to Products copies of all other financial statements of
EFT, prepared by or for EFT as of the Closing Date from the date of the Recent
Financial Statements, all of which will be true, complete and correct and will
have been prepared in accordance with sound generally accepted accounting
principles consistently followed throughout the period indicated.
3.10 Liabilities and Obligations
All liabilities of EFT and all obligations of EFT with respect to contracts
and commitments which arose or arise after the date of EFT's Recent Financial
Statements and prior to the Closing were or will be incurred only in the
ordinary course of business. All liabilities for taxes with respect to the
period after the date of EFT's Recent Financial Statements and prior to the
Closing were or will be incurred in the ordinary course of business. Except to
the extent reflected, included, disclosed or reserved against in EFT's recent
Balance Sheet. EFT has no present knowledge of, or present reason to believe
in the existence of, any liability of any kind or nature whether accrued,
absolute, contingent or otherwise, including without limitation, tax
liabilities due to or to become due, with respect to any period after the date
of EFT's Recent Balance Sheet and prior to the date of this Agreement.
3.11 Absence of Changes
Since September 10th, 1998, the business of EFT has been operated and as of
the Closing will be operated only in the ordinary course of business, and
without limiting the generality of the foregoing, EFT has not:
(a) Suffered any materially adverse change in its financial condition,
prospects, operations or business.
(b) Increased the rate of compensation payable to any officer, employee or
agent, or granted or accrued any bonus, payment or other benefit due under any
pension, incentive, deferred compensation or similar plan to any such person.
(c) Incurred any labor dispute, work stoppage, sabotage, formal or
informal complaint of unfair labor practices, or had any representational
proceedings initiated, demand made for the recognition of any union as
bargaining agent or any other similar event or condition which has materially
and adversely affected its business.
(d) Incurred any obligation or liability (absolute or contingent) except
current liabilities under contracts entered into in the ordinary course of
business, none of which materially adversely affects the business or prospects
of EFT.
(e) Discharged or satisfied any lien, encumbrance, obligation or liability
(absolute or contingent) other than current liabilities and obligations shown
on the Recent Financial Statements or incurred since the date of the Recent
Financial statements in the ordinary course of business.
(f) Mortgaged, pledged, or subjected to lien, charge or other encumbrances
any of its assets except for the ordinary cause of business.
(g) Sold, transferred, mortgaged, pledged, or subjected to lien, charge or
other encumbrances any of its assets except in the ordinary course of business.
(h) Suffered any extraordinary losses or waived any rights of substantial
value.
(i) Made or declared any distribution or dividend to its shareholders with
respect to its capital stock, or otherwise.
(j) Entered into any transaction not in the ordinary course of business other
than this Agreement.
3.12 Taxes
All required national profit tax returns of EFT have been accurately
prepared and duly and timely filed, and all national and local taxes have been
paid with respect to the periods covered by such returns.
3.13 Title to Properties
EFT has good and marketable title to all the properties and assets it
purports to own, including, without limitation, those reflected in its books
and records and in its Recent Financial statements (except assets thereafter
sold in the ordinary course of business). No properties and assets are subject
to a lien or mortgage, except as expressly set forth in its Recent Financial
Statements. All of such properties and assets are in good operating condition
and repair and conform to all applicable ordinances, regulations and other laws
or requirements. All of EFT's fixtures and improvements to real property, and
its use of real property, conform in all material respects with all applicable
building, zoning and other laws, ordinances, orders and regulations and
applicable public and private covenants or restrictions.
3.14 Title to Stock
The Shareholders are the owners of the EFT Stock, which stock constitutes
all of the capital stock of EFT, issued and outstanding, and all of which stock
will be delivered by them hereunder, free and clear of all liens, pledges,
encumbrances, charges, agreements or claims by or on the part of any persons,
firm or corporation, and the Shareholders have good and marketable title
thereto with full right and unrestricted power to assign, transfer, and deliver
such stock to Products as provided in this Agreement. No right or option to
purchase any of the EFT Stock or any other securities of EFT exists in favor of
any person, firm or corporation.
3.15 Agreements
EFT is not in default under any contract, agreement or commitment. No
consent of third parties to any contract, agreement or commitment of EFT is
required for the execution or consummation of this Agreement.
3.16 Indebtedness of Officers and Directors
EFT is not indebted to the shareholders or to any other person who is or
has been an officer, director, or shareholder of EFT, or to any member of the
immediate family of any such person.
3.17 Litigation
There are no claims, legal actions, suits, arbitration's, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of EFT or the shareholders threatened against or
relating to EFT, its properties, assets or business and neither EFT nor the
shareholders knows or has reason to be aware of any facts which might result in
any such claim, action, suit, arbitration or other proceeding.
3.18 Pension or Benefit Plans
EFT has no formal or informal written or unwritten pension,
profit-sharing, stock option, or employee benefit or welfare plans of any kind
whatsoever, or agreements with any persons for the making or granting of any
pension, profit sharing or bonus payments or benefits or any stock options,
other than a Commission Bonus Plan for sales employees.
3.19 Relations with Labor
EFT is not a party to any collective bargaining agreements and there is no
union or collective bargaining agent for EFT's employees. EFT has no
employment grievances, disputes, or controversies and there are no threats of
strikes or work stoppage or demand for the recognition of any union or
bargaining agent for any employees.
3.20 Patents
EFT is not infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, patents, patent rights or licenses owned by any
person or persons, and there is no such claim or action pending or threatened,
with respect thereto.
3.21 Good Standing
Each license, permit, franchise and authorization of EFT from any local
governmental or other regulatory authority is in good standing and in full
force and effect. EFT does not know of any reason which could cause any of the
above to be terminated. There shall not be any termination or suspension
after the Closing Date of any or all of the above arising out of, relating to,
or caused by (i) any failure to file, or any inadequacy in filing of, any
documents, reports and disclosures required under applicable rules and
regulations of any local law or agency to be filed by EFT prior to the Closing
Date, (ii) activities of EFT or its personnel prior to the Closing Date, (iii)
any other failure to comply with applicable rules and regulations prior to the
Closing Date, or (iv) this Agreement or the transactions contemplated by this
Agreement.
3.22 Compliance with Law
EFT has complied with all state and local applicable laws, rules,
regulations, ordinances and orders applicable to its business or properties
including, without limitation, those of any agency or subdivision thereof. EFT
has duly filed all returns, reports, registration statements and other
documents and furnished all information required or requested by any local
governmental agency having jurisdiction with respect to EFT or its business or
properties and all of the foregoing are true and complete in all respects and
all payments, fees and charges reflected therein as due, or upon any deficiency
notice with respect thereto, have been paid. No act of EFT, including without
limitations the issuance and transfers of the capital stock of EFT, required
registration under the Securities Act of 1933, as amended or the applicable
Canadian equivalent thereof.
3.23 Continuance of Business
The businesses now conducted by EFT are substantially the same as the
respective businesses conducted by it throughout the periods covered by its
respective financial statements referred to in Section 3.8 and 3.9 hereof, and
there has been no material change during any of such periods in the type or
nature of its respective services, products, customers, suppliers or methods of
operation. EFT has not received any notification and neither has any reason to
believe that any persons or businesses with whom EFT does business will cease
doing business, or any portion of any business, with EFT.
3.24 Adverse Facts
No facts are known to EFT that would materially and adversely affect future
operations of EFT.
3.25 Brokers
EFT's negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by EFT directly with Products in such
manner, without the intervention of any third parties so as not to give rise to
any valid claims against any of the parties hereto for a brokerage commission
or other like payment.
3.26 Warranties
No representation, covenant or warranty by EFT in this Agreement or any
statement or certification furnished or to be furnished to Products pursuant to
this Agreement or in connection with the transaction contemplated hereby,
contains or will contain any untrue statement of material facts or omits or
will omit a material fact necessary to make the statements contained herein, in
light of the circumstances under which they were made, true and correct.
4. REPRESENTATION AND WARRANTIES BY PRODUCTS
Products hereby represents and warrants as follows:
4.1 Organization and Standing
Products is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware, and Products has all
requisite corporate power and authority to enter into and carry out the
provisions of this Agreement. Products owns no property and neither conducts
nor carries on any business.
4.2 Capitalization
The duly authorized capital stock of Products consists of twenty million
(20,000,000) shares, par value $.001 per share, of Common Stock, of which a
total of 53,417 Products shares are presently outstanding (pre contemplated
take-overs and purchases), validly issued, fully paid and non assessable and
owned of record by the shareholders in those amounts indicated on a shareholder
list, as of a date not more than thirty (30) days prior to the date of this
Agreement, certified as accurate by the duly appointed transfer agent of
Products, and annexed hereto as Exhibit 4.2 hereof. Except as otherwise noted
by Products on the said shareholder list, Products does not know of any
beneficial interests in the said outstanding common stock other than the
interests of record set forth on such list or on Schedule 4.2 hereto. There
are no other securities of Products now outstanding or securities on which it
is or may become liable, or securities on which it is or may become liable, or
securities that are or may become required to be issued by reason of any
statutory requirements (including, without limitation, preemptive right(s), or
warrants, rights, options, calls, commitments or other agreements presently
outstanding.
4.3 Corporate Records
A copy of Products's certificate of incorporation and the By-Laws, all as
amended, all of which are certified by the Secretary of Products as of a recent
date are attached as Schedule 4.3 hereto and each of the foregoing will be
complete, true and correct on the Closing date. The minute books of Products
contain complete and accurate records of all meetings of its stockholders and
directors and of all corporate action taken by them to the extent available as
at the present date. The shareholder records of Products reflect accurately
the names of the record shareholders of Products and the number of shares of
capital stock held by each shareholder.
4.4 Subsidiaries
Products owns no securities of any other entity.
4.5 Inactive Corporation
Products has conducted no business activities since 1995 and has no
liabilities or assets except as disclosed on Schedule 4.11 attached hereto.
4.6 Tradable Stock
All of Products's outstanding Common Stock is presently traded or is
eligible to be traded publicly in the over-the-counter market in accordance
with regulations pertaining thereto.
4.7 SEC Reporting Obligations
Products intends to register new Products shares under the Securities
Exchange Act of 1934, as amended (the "34 Act") and Products will therefore be
required to comply with the reporting requirements of Section 13 of the said 34
Act.
4.8 Default Under Loans
Products has no outstanding mortgages, loan agreements or indebtedness of
any kind, nature or description.
4.9 No Agreements or Court Orders
Products is not a party to, subject to, or bound by, any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contains any provisions which could operate to impair the carrying out of
this Agreement or any of the transactions contemplated hereby.
4.10 Authority
The execution, delivery and performance of this Agreement by Products has
been duly and effectively authorized by all requisite corporate action and will
not violate any provision of the Articles of Incorporation or By-Laws of
Products or any provision of, or result in the acceleration of any obligation
under, any agreement, indenture, instrument, lease, contract or other
undertaking to which Products is a party or by which it is bound.
4.11 Audited Financial Statements
Prior to or on the Closing Date, Products will deliver to EFT the audited
financial statements & any unaudited interim period (the "Products Financial
Statements") through its last fiscal year and any subsequent interim periods.
T
he Products Financial Statements are true, correct and complete and accurately
and truly present the financial condition of Products as at the date thereof
and the results of its operations for the period therein specified and are
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding period and consistently
maintained throughout the periods involved. Without limiting the generality of
the foregoing, the Products Financial Statements disclose all debts,
liabilities, commitments and obligations of every nature, whether absolute,
accrued, contingent or otherwise of Products as at the date thereof, and there
will be no other debts, claims, or demands relating to or arising out of any
act, transaction or circumstances which will have occurred or existed on or
before the date of the Products Financial Statements. Products is inactive,
and represents that it will conduct no business subsequent to the date of the
Products Financial Statements.
4.12 Agreements
Products is not a party to any contract, agreement or commitment and no
consent of any third party is required for the execution or consummation of
this Agreement.
4.13 Competing Interests
None of Products's principal shareholders (owning 5% or more of its issued
and outstanding common stock), officers or directors, own, directly or
indirectly, a material interest in any corporation, partnership, firm or
association which is a competitor or potential competitor of EFT.
4.14 Indebtedness of Officers and Directors
Products is not indebted to any person who is or has been an officer,
director or stockholder of Products or to any member of the immediate family of
any such person.
4.15 Litigation
There are no claims, legal actions, suits, arbitration's, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of Products or threatened against or relating to
Products, its assets or activities and Products does not know or have any
reason to be aware of any facts which might result in any such claim, action,
suit, arbitration or other proceeding.
4.16 Adverse Facts
No facts are known to Products that would materially and adversely affect
the future activities of Products.
4.17 Brokers
Products's negotiations relative to this Agreement and the transaction
contemplated hereby have been carried on by it directly with EFT and the
shareholders in such manner, without the intervention of any third parties, so
as not to give rise to any valid claims against any of the parties hereto for a
brokerage commission or other like payments.
4.18 Confidential Information
Products shall not, prior to or after the Closing, divulge to third parties
any confidential information received from EFT or the shareholders except as
may be required to be disclosed pursuant to applicable law.
5. CONDUCT OF EFT'S BUSINESS PRIOR TO THE CLOSING
5.1 Negative Covenants
EFT agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of Products, EFT will not take, or
permit to be taken, any of the following actions:
(a) Alter or amend its Articles of Incorporation or By-Laws.
(b) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(c) Enter into any option, call or commitment with respect to its stock..
(d) Incur any liability or obligation, except current liabilities in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business.
(e) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors at a rate in excess of the rate of compensation in
effect as to such individual, respectively, on the date hereof.
(f) Enter into any contract or commitment, which is not the ordinary
course of business of EFT or which, does, or could be expected to, materially
adversely affect EFT's business.
(g) Borrow funds or incur any indebtedness of any nature except in the
ordinary course of business.
(h) Change its banking and safe deposit arrangements, except as in the
ordinary course of business.
(i) Accept, amend or grant any license, patent or trademark, or settle the
infringement of any trademark or patent.
(j) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business, except settlements made
by insurers.
5.2 Affirmative Covenants
EFT and the Shareholders agree that between the date hereof and the
Closing, EFT will:
(a) Conduct its business only in the ordinary course and at the place or
places said business is conducted.
(b) Maintain in force the insurance policies presently in force or
insurance policies providing substantially the same coverage, under which EFT
is the insured or the beneficiary.
(c) Preserve its business organization taken as a whole substantially
intact, keep available the services of its present officers and employees and
preserve the good will of its suppliers, customers and others having business
relations with any of them.
(d) Afford to Products and its counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of EFT's properties, books, contracts, commitments
and records, and during said period furnish all information which Products may
reasonably request.
6. CONDUCT OF PRODUCTS'S CORPORATE AFFAIRS PRIOR TO THE CLOSING
6.1 Negative Covenants
Products agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of EFT and the shareholders, Products
will not take, or permit to be taken, any of the following actions:
(a) Initiate or engage in any business activities of any kind whatsoever.
(b) Alter or amend its Articles of Incorporation or By-Laws except to
change its name.
(c) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(d) Enter into any option, call or commitment with respect to its capital
stock.
(f) Incur any liability or obligation except legal and accounting fees.
(g) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors.
(h) Make any profit sharing, incentive, pension or retirement payment.
(i) Maintains no bank account; therefore cannot change its banking and safe
deposit arrangements.
(j) Enter into any contract or commitment.
(k) Borrow funds or incur any indebtedness.
(l) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business.
6.2 Affirmative Covenants
Products agrees that between the date hereof and the Closing, Products will:
(a) Preserve its organizations taken as a whole substantially intact and
keep available the services of its present officers.
(b) Afford to EFT and their counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of Products's properties, books, contracts,
commitments and records, and during said period furnish all information which
EFT may desire to effectuate this Agreement.
7. CONDITIONS PRECEDENT TO PRODUCTS'S OBLIGATIONS
Products's obligations under this Agreement are subject to the fulfillment
prior to the Closing of each of the following conditions:
7.1 EFT's representations and warranties contained in this Agreement and
in any certificate or document delivered to Products pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; EFT shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing.
7.2 EFT shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against EFT that would
materially affect the business of EFT or the carrying out of this Agreement.
7.3 Products shall have been furnished with an opinion, dated as of
the Closing Date, of counsel to EFT to the effect that:
(a) EFT is a corporation duly organized, validly existing and in good
standing under the laws of Ontario, Canada.
(b) The authorized and issued capital stock of EFT consists of the number
of shares stated in Section 3.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by EFT and constitutes a legal, valid and binding
obligation of EFT enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, orders, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) EFT's stock to be delivered to Products under this Agreement will,
when so delivered, be validly issued and outstanding and fully paid and
non-assessable.
(f) Except as may be specified by said counsel, he does not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to EFT or its properties or businesses, or the transactions
contemplated by this Agreement.
7.4 EFT has not incurred any material adverse change in its assets,
liabilities, financial condition, business, prospects or operations since the
execution of this Agreement.
7.5 EFT shall deliver to Products a certified copy of the resolution of
its Board of Directors and Shareholders approving this Agreement and the
transaction contemplated hereby.
7.6 All documents required to be delivered to Products at or prior to the
Closing shall have been so delivered.
8. CONDITIONS PRECEDENT TO EFT'S OBLIGATIONS
EFT's obligations under this agreement are subject to the fulfillment prior
to the closing of each of the following conditions.
8.1 Products's representations and warranties contained in this Agreement
and in any certificate or document delivered to EFT pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; Products shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
8.2 Products shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against Products that would
materially affect the carrying out of this Agreement.
8.3 EFT shall have been furnished with an opinion dated as of the Closing
date of counsel for Products, to the effect that:
(a) Products is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The authorized and issued capital stock of Products consists of the
number of shares stated in Section 4.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by Products and constitutes a legal, valid and
binding obligation of Products enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, order, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) Except as may be specified by said counsel, they do not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to Products or its activities or assets, or the
transactions contemplated by this Agreement.
8.3 Products shall not have incurred any adverse change in its assets,
liabilities, financial condition, activities, prospects or operations.
8.4 Products shall deliver to the Shareholders of EFT a certified copy of
the resolutions of its Board of Directors approving this Agreement and the
transactions contemplated hereby.
8.5 All documents required to be delivered to the Shareholders and EFT at
or prior to the Closing shall have been so delivered.
9. MISCELLANEOUS
9.1 Survival
All representations, warranties, covenants and agreements made by any of
the parties hereto in this Agreement or in any certificate or instrument
delivered by or on behalf of any of them pursuant hereto shall survive the
execution and delivery of this Agreement, any investigation that may have been
made or may be made at any time by or on behalf of any party hereto, and the
consummation of this Agreement.
9.2 Parties in Interest
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by each corporate party hereto and its successors and each
individual party hereto and his heirs, personal representatives and successors.
This Agreement shall not be assigned by any party hereto (except by operation
of law) and any such prohibited assignment shall be null and void.
9.3 Expenses and Reorganization
Each of the parties to this Agreement shall bear their respective expenses
relating to this Agreement.
9.4 Governing Law
This Agreement shall be governed by and construed and enforced under the
laws of the State of Delaware without regard to principles of conflicts of law.
9.5 Entire Agreement
This Agreement contains the entire understanding of the parties hereto with
respect to the subject mater herein contained and no amendment, modification or
termination of this Agreement shall be valid unless expressed in a written
instrument executed by the parties hereto or their respective successors.
9.6 Exhibits
All Schedules to this Agreement or other certificates or documents
delivered pursuant to this Agreement shall be deemed to be a part of this
Agreement, whether or not required to be annexed hereto, and shall be initialed
by the party required to deliver such Schedule, certificate or document.
9.7 Waiver
No waiver or any provision of, or any breach or default of this Agreement,
shall be considered valid unless in writing and signed by the party giving such
waiver and no waiver shall be deemed a waiver of any other provisions or any
subsequent breach or default of a similar nature.
9.8 Further Assurances
Each party to this Agreement will, at the request of the other, execute and
deliver to such other party all further endorsements and documents as such
other party may reasonably request in order to consummate and perfect the
transactions contemplated by this Agreement.
9.9 Count erparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
9.10 Headings
Section headings are contained on this Agreement only for purposes of
convenience of reference and shall not affect the interpretation of this
Agreement or modify any of its terms or provisions.
9.11 Notices
Any notice or other communication permitted or required to be given
hereunder shall be in writing and shall be deemed to have been given upon
receipt by first class registered mail, certified mail, or recognized
over-night courier, in all cases with written confirmation of receipt required,
addressed to the parties as set forth below:
To: PRODUCTS c/o Gentile & Turpen
152 Main Street, First Floor
Flemington, New Jersey
USA
08822
To: EFT 5430 Harvester Road, Unit A
Burlington, Ontario
Canada
L7L-5N5
Each of the foregoing shall be entitled to specify a different address by
giving notice as aforesaid to the other parties.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
ENVIRONMENTAL PRODUCTS GROUP INC.
BY: /s/Blaine Froats, Chairman & CEO
seal BY: /s/Sean Froats, Secretary/Treasurer
SHAREHOLDER
BY: /s/Blaine Froats In Trust
Witness: /s/James Guest
Exhibit 6 M
AGREEMENT AND PLAN OF REORGANIZATION
ENVIRONMENTAL PRODUCTS GROUP INC.
ACQUISITION OF
ENVIRONMENTAL SHELTER CORPORATION INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") made as of this 20th day
of November, 1998, by and among Environmental Products Group Inc. ("Products"),
a Delaware corporation with offices at 152 Main Street, First Floor,
Flemington, New Jersey, USA, 08822, and Environmental Shelter Corporation Inc.
("ESC"), with offices at 5430 Harvester Road, Unit A, Burlington, Ontario,
Canada, L7L-5N5 and the shareholders of ESC as set forth on the signature
pages hereof ("Shareholders").
PREMISES
Products desires to acquire all of the issued and outstanding stock of ESC,
so as to make ESC a wholly-owned subsidiary of Products, the shares of ESC will
be exchanged for shares of Products's common stock, to be exchanged as set out
herein with the said shareholders.
PLAN OF REORGANIZATION
The reorganization will comprise the acquisition by Products of all the
outstanding capital stock of ESC in exchange solely for a part of Products's
voting stock. The exchange by the Shareholders of the capital stock of ESC for
voting common stock of Products shall be made upon and subject to the terms
and conditions of this Agreement hereinafter set forth and is intended to
qualify as a tax free reorganization pursuant to the provisions of Section
368(a) (1) (B) of the Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and respective agreements
hereinafter set forth, the aforementioned parties hereby agree as follows:
1. EXCHANGE OF SHARES
Products and the Shareholders agree that all of the issued and outstanding
shares of common stock of ESC (the "ESC Stock") shall be exchanged with
Products for the issuance by Products to the shareholders of ESC of six hundred
and sixty five hundred thousand (665,000) shares of Common Stock of Products,
$.001 par value, per share (the "New Products shares"). The distribution to
the Shareholders shall be as follows:
Blaine Froats In Trust 665,000 Common, voting Shares
2. CLOSING
2.1 Time and Place.
The closing of the transactions contemplated by Section 1 hereof shall take
place at 10:00 A.M., on November 23, 1998, at 5430 Harvester Road, Burlington,
Ontario, Canada or such other time and place as the parties hereto shall agree.
2.2 Actions to be taken.
At the Closing the Shareholders' representative shall assign, transfer,
deliver and set over to Products any and all evidence of ownership of the
issued and outstanding ESC Stock duly endorsed and with any required
documentary or stamp taxes affixed at the Shareholder's expense so as to make
Products the sole owner thereof, free and clear of all liens, claims and
encumbrances. At the closing, Products shall issue and deliver to the
shareholders the New Products Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS AND ESC.
The ESC and the Shareholders, hereby represent and warrant to Products
that, with respect to the ESC Stock and with respect to ESC, effective this
date, the representations listed below are true and correct, and further
covenant and agree that, as of the Closing Date, the following representations
will be true and correct.
3.1 Organization and Standing
ESC is a corporation duly organized and validly existing and in good
standing under the laws of Ontario, Canada and has all requisite corporate
power and authority to own its property, to carry on its business as now being
conducted and to enter into and carry out the provisions of this Agreement.
ESC is duly licensed and qualified to do business and own properties in each
jurisdiction in which it conducts business.
3.2 Capitalization
The duly authorized capital stock of ESC consists of an unlimited number of
shares of common stock, no par value per share, of which 665,000 shares are
outstanding, validly issued, fully paid and nonassessable and owned of record
by the Shareholders. There are no other securities of ESC now outstanding or
securities on which it is or may be liable, or securities that are or may
become required to be issued by reason of any statutory requirements
(including, without limitation, preemptive rights), or warrants, rights,
options, calls, commitments or other agreements presently outstanding.
3.3 Corporate Records
A copy of ESC's Articles of Incorporation and the By-Laws, all as amended,
all of which are certified by the Secretary of ESC as of a recent date, are
attached as Schedule 3.3 hereto and each of the foregoing will be complete,
true and correct on the Closing date. The minute books, if any, of ESC or any
other documents record and reflect the complete and accurate records of all
corporate actions taken by the directors and shareholders of ESC. The stock
book or its corporate equivalent of ESC reflects accurately the foregoing or,
in the event that there have in the past been shareholders of ESC the names of
all persons who at any time in the past were record shareholders of ESC, the
number of shares of capital stock held by each such shareholder and the
circumstances of any past transfers or redemption's of any shares of ESC held
prior to the date hereof by any person other than the shareholders.
3.4 Subsidiaries
ESC owns no securities of any other entity.
3.5 Default Under Loans
ESC is not in default in the payment of principal or interest and has fully
complied with all other covenants, obligations and conditions of all
indebtedness outstanding. No event has occurred which with the passage of time
would be a default under any instrument of indebtedness. Attached hereto as
Schedule 3.5 is a complete and accurate list of all indebtedness, in whatever
form, of ESC.
3.6 No Agreement or Court Orders
ESC is not a party or subject to or bound by any agreement or any judgment,
order, writ, injunction or decree of any court or governmental body which
contained any provisions which could operate to impair the carrying out of this
Agreement or any of the transactions contemplated hereby.
3.7 Authority
The execution, delivery and performance of this entire Agreement is subject
to agreement of the Board of Directors of and dependent on a vote of agreement
by the shareholders of ESC with a minimum acceptance percentage of eighty
percent (80%). ESC has been duly and effectively authorized by all requisite
corporate action and will not violate any provision of the Articles of
Incorporation or By-Laws of ESC or any provision of, or result in the
acceleration of any obligation under, any agreement, indenture, instrument,
lease, contract or other undertaking to which ESC is a party or by which it is
bound.
3.8 Recent Financial Statements
ESC's Representative delivered to Products a Balance Sheet of the Company
as of October 14th, 1998 (the "Recent Balance Sheet") and the related Statement
of Earnings for the fiscal year then ended (the "Recent Income Statement") all
attached hereto as Schedule 3.8. Such Recent Balance Sheet and Recent Income
Statement being hereinafter sometimes collectively called the "Recent
Financial Statement" have not been audited. The Recent Financial Statements
are true, correct and complete and accurately and truly present the financial
condition of ESC as of the date thereof and the results of its operations for
the period therein specified and have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
that of the preceding period and consistently maintained throughout the periods
involved. Without limiting the generality of the foregoing, the Recent
Financial Statements, either on the face thereof or in the notes thereto,
include, reflect or disclose all periods involved. Without limiting the
generality of the foregoing, the Recent Financial Statements disclose all
debts, liabilities, commitments and obligations of every nature, whether
absolute, accrued, contingent or otherwise of ESC, as at the date thereof,
including all appropriate reserves for taxes and there are no other debts or
claims or demands with respect thereof, relating to or arising out of any act,
transaction or circumstances which occurred or existed on or before the date of
the Recent Balance Sheet, due or payable, except as included, reflected or
disclosed on the Recent Balance Sheet. The Recent Income Statement does not
contain any item of special or non-recurring income or other income not earned
in the ordinary course of business except as expressly specified therein.
3.9 Other Financial Statements
ESC has delivered to Products copies of all other financial statements of
ESC, prepared by or for ESC as of the Closing Date from the date of the Recent
Financial Statements, all of which will be true, complete and correct and will
have been prepared in accordance with sound generally accepted accounting
principles consistently followed throughout the period indicated.
3.10 Liabilities and Obligations
All liabilities of ESC and all obligations of ESC with respect to contracts
and commitments which arose or arise after the date of ESC's Recent Financial
Statements and prior to the Closing were or will be incurred only in the
ordinary course of business. All liabilities for taxes with respect to the
period after the date of ESC's Recent Financial Statements and prior to the
Closing were or will be incurred in the ordinary course of business. Except to
the extent reflected, included, disclosed or reserved against in ESC's recent
Balance Sheet. ESC has no present knowledge of, or present reason to believe
in the existence of, any liability of any kind or nature whether accrued,
absolute, contingent or otherwise, including without limitation, tax
liabilities due to or to become due, with respect to any period after the date
of ESC's Recent Balance Sheet and prior to the date of this Agreement.
3.11 Absence of Changes
Since October 14th, 1998, the business of ESC has been operated and as of
the Closing will be operated only in the ordinary course of business, and
without limiting the generality of the foregoing, ESC has not:
(a) Suffered any materially adverse change in its financial condition,
prospects, operations or business.
(b) Increased the rate of compensation payable to any officer, employee or
agent, or granted or accrued any bonus, payment or other benefit due under any
pension, incentive, deferred compensation or similar plan to any such person.
(c) Incurred any labor dispute, work stoppage, sabotage, formal or
informal complaint of unfair labor practices, or had any representational
proceedings initiated, demand made for the recognition of any union as
bargaining agent or any other similar event or condition which has materially
and adversely affected its business.
(d) Incurred any obligation or liability (absolute or contingent) except
current liabilities under contracts entered into in the ordinary course of
business, none of which materially adversely affects the business or prospects
of ESC.
(e) Discharged or satisfied any lien, encumbrance, obligation or liability
(absolute or contingent) other than current liabilities and obligations shown
on the Recent Financial Statements or incurred since the date of the Recent
Financial statements in the ordinary course of business.
(f) Mortgaged, pledged, or subjected to lien, charge or other encumbrances
any of its assets except for the ordinary cause of business.
(g) Sold, transferred, mortgaged, pledged, or subjected to lien, charge or
other encumbrances any of its assets except in the ordinary course of business.
(h) Suffered any extraordinary losses or waived any rights of substantial
value.
(i) Made or declared any distribution or dividend to its shareholders with
respect to its capital stock, or otherwise.
(j) Entered into any transaction not in the ordinary course of business other
than this Agreement.
3.12 Taxes
All required national profit tax returns of ESC have been accurately
prepared and duly and timely filed, and all national and local taxes have been
paid with respect to the periods covered by such returns.
3.13 Title to Properties
ESC has good and marketable title to all the properties and assets it
purports to own, including, without limitation, those reflected in its books
and records and in its Recent Financial statements (except assets thereafter
sold in the ordinary course of business). No properties and assets are subject
to a lien or mortgage, except as expressly set forth in its Recent Financial
Statements. All of such properties and assets are in good operating condition
and repair and conform to all applicable ordinances, regulations and other laws
or requirements. All of ESC's fixtures and improvements to real property, and
its use of real property, conform in all material respects with all applicable
building, zoning and other laws, ordinances, orders and regulations and
applicable public and private covenants or restrictions.
3.14 Title to Stock
The Shareholders are the owners of the ESC Stock, which stock constitutes
all of the capital stock of ESC, issued and outstanding, and all of which stock
will be delivered by them hereunder, free and clear of all liens, pledges,
encumbrances, charges, agreements or claims by or on the part of any persons,
firm or corporation, and the Shareholders have good and marketable title
thereto with full right and unrestricted power to assign, transfer, and deliver
such stock to Products as provided in this Agreement. No right or option to
purchase any of the ESC Stock or any other securities of ESC exists in favor of
any person, firm or corporation.
3.15 Agreements
ESC is not in default under any contract, agreement or commitment. No
consent of third parties to any contract, agreement or commitment of ESC is
required for the execution or consummation of this Agreement.
3.16 Indebtedness of Officers and Directors
ESC is not indebted to the shareholders or to any other person who is or
has been an officer, director, or shareholder of ESC, or to any member of the
immediate family of any such person.
3.17 Litigation
There are no claims, legal actions, suits, arbitration's, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of ESC or the shareholders threatened against or
relating to ESC, its properties, assets or business and neither ESC nor the
shareholders knows or has reason to be aware of any facts which might result in
any such claim, action, suit, arbitration or other proceeding.
3.18 Pension or Benefit Plans
ESC has no formal or informal written or unwritten pension,
profit-sharing, stock option, or employee benefit or welfare plans of any kind
whatsoever, or agreements with any persons for the making or granting of any
pension, profit sharing or bonus payments or benefits or any stock options,
other than a Commission Bonus Plan for sales employees.
3.19 Relations with Labor
ESC is not a party to any collective bargaining agreements and there is no
union or collective bargaining agent for ESC's employees. ESC has no
employment grievances, disputes, or controversies and there are no threats of
strikes or work stoppage or demand for the recognition of any union or
bargaining agent for any employees.
3.20 Patents
ESC is not infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, patents, patent rights or licenses owned by any
person or persons, and there is no such claim or action pending or threatened,
with respect thereto.
3.21 Good Standing
Each license, permit, franchise and authorization of ESC from any local
governmental or other regulatory authority is in good standing and in full
force and effect. ESC does not know of any reason which could cause any of the
above to be terminated. There shall not be any termination or suspension
after the Closing Date of any or all of the above arising out of, relating to,
or caused by (i) any failure to file, or any inadequacy in filing of, any
documents, reports and disclosures required under applicable rules and
regulations of any local law or agency to be filed by ESC prior to the Closing
Date, (ii) activities of ESC or its personnel prior to the Closing Date, (iii)
any other failure to comply with applicable rules and regulations prior to the
Closing Date, or (iv) this Agreement or the transactions contemplated by this
Agreement.
3.22 Compliance with Law
ESC has complied with all state and local applicable laws, rules,
regulations, ordinances and orders applicable to its business or properties
including, without limitation, those of any agency or subdivision thereof. ESC
has duly filed all returns, reports, registration statements and other
documents and furnished all information required or requested by any local
governmental agency having jurisdiction with respect to ESC or its business or
properties and all of the foregoing are true and complete in all respects and
all payments, fees and charges reflected therein as due, or upon any deficiency
notice with respect thereto, have been paid. No act of ESC, including without
limitations the issuance and transfers of the capital stock of ESC, required
registration under the Securities Act of 1933, as amended or the applicable
Canadian equivalent thereof.
3.23 Continuance of Business
The businesses now conducted by ESC are substantially the same as the
respective businesses conducted by it throughout the periods covered by its
respective financial statements referred to in Section 3.8 and 3.9 hereof, and
there has been no material change during any of such periods in the type or
nature of its respective services, products, customers, suppliers or methods of
operation. ESC has not received any notification and neither has any reason to
believe that any persons or businesses with whom ESC does business will cease
doing business, or any portion of any business, with ESC.
3.24 Adverse Facts
No facts are known to ESC that would materially and adversely affect future
operations of ESC.
3.25 Brokers
ESC's negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by ESC directly with Products in such
manner, without the intervention of any third parties so as not to give rise to
any valid claims against any of the parties hereto for a brokerage commission
or other like payment.
3.26 Warranties
No representation, covenant or warranty by ESC in this Agreement or any
statement or certification furnished or to be furnished to Products pursuant to
this Agreement or in connection with the transaction contemplated hereby,
contains or will contain any untrue statement of material facts or omits or
will omit a material fact necessary to make the statements contained herein, in
light of the circumstances under which they were made, true and correct.
4. REPRESENTATION AND WARRANTIES BY PRODUCTS
Products hereby represents and warrants as follows:
4.1 Organization and Standing
Products is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware, and Products has all
requisite corporate power and authority to enter into and carry out the
provisions of this Agreement. Products owns no property and neither conducts
nor carries on any business.
4.2 Capitalization
The duly authorized capital stock of Products consists of twenty million
(20,000,000) shares, par value $.001 per share, of Common Stock, of which a
total of 53,417 Products shares are presently outstanding (post contemplated
take-overs and purchases), validly issued, fully paid and non assessable and
owned of record by the shareholders in those amounts indicated on a shareholder
list, as of a date not more than thirty (30) days prior to the date of this
Agreement, certified as accurate by the duly appointed transfer agent of
Products, and annexed hereto as Exhibit 4.2 hereof. Except as otherwise noted
by Products on the said shareholder list, Products does not know of any
beneficial interests in the said outstanding common stock other than the
interests of record set forth on such list or on Schedule 4.2 hereto. There
are no other securities of Products now outstanding or securities on which it
is or may become liable, or securities on which it is or may become liable, or
securities that are or may become required to be issued by reason of any
statutory requirements (including, without limitation, preemptive right(s), or
warrants, rights, options, calls, commitments or other agreements presently
outstanding.
4.3 Corporate Records
A copy of Products's certificate of incorporation and the By-Laws, all as
amended, all of which are certified by the Secretary of Products as of a recent
date are attached as Schedule 4.3 hereto and each of the foregoing will be
complete, true and correct on the Closing date. The minute books of Products
contain complete and accurate records of all meetings of its stockholders and
directors and of all corporate action taken by them to the extent available as
at the present date. The shareholder records of Products reflect accurately
the names of the record shareholders of Products and the number of shares of
capital stock held by each shareholder.
4.4 Subsidiaries
Products owns no securities of any other entity.
4.5 Inactive Corporation
Products has conducted no business activities since 1995 and has no
liabilities or assets except as disclosed on Schedule 4.11 attached hereto.
4.6 Tradable Stock
All of Products's outstanding Common Stock is presently traded or is
eligible to be traded publicly in the over-the-counter market in accordance
with regulations pertaining thereto.
4.7 SEC Reporting Obligations
Products intends to register new Products shares under the Securities
Exchange Act of 1934, as amended (the "34 Act") and Products will therefore be
required to comply with the reporting requirements of Section 13 of the said 34
Act.
4.8 Default Under Loans
Products has no outstanding mortgages, loan agreements or indebtedness of
any kind, nature or description.
4.9 No Agreements or Court Orders
Products is not a party to, subject to, or bound by, any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contains any provisions which could operate to impair the carrying out of
this Agreement or any of the transactions contemplated hereby.
4.10 Authority
The execution, delivery and performance of this Agreement by Products has
been duly and effectively authorized by all requisite corporate action and will
not violate any provision of the Articles of Incorporation or By-Laws of
Products or any provision of, or result in the acceleration of any obligation
under, any agreement, indenture, instrument, lease, contract or other
undertaking to which Products is a party or by which it is bound.
4.11 Audited Financial Statements
Prior to or on the Closing Date, Products will deliver to ESC the audited
financial statements & any unaudited interim period (the "Products Financial
Statements") through its last fiscal year and any subsequent interim periods.
T
he Products Financial Statements are true, correct and complete and accurately
and truly present the financial condition of Products as at the date thereof
and the results of its operations for the period therein specified and are
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding period and consistently
maintained throughout the periods involved. Without limiting the generality of
the foregoing, the Products Financial Statements disclose all debts,
liabilities, commitments and obligations of every nature, whether absolute,
accrued, contingent or otherwise of Products as at the date thereof, and there
will be no other debts, claims, or demands relating to or arising out of any
act, transaction or circumstances which will have occurred or existed on or
before the date of the Products Financial Statements. Products is inactive,
and represents that it will conduct no business subsequent to the date of the
Products Financial Statements.
4.12 Agreements
Products is not a party to any contract, agreement or commitment and no
consent of any third party is required for the execution or consummation of
this Agreement.
4.13 Competing Interests
None of Products's principal shareholders (owning 5% or more of its issued
and outstanding common stock), officers or directors, own, directly or
indirectly, a material interest in any corporation, partnership, firm or
association which is a competitor or potential competitor of ESC.
4.14 Indebtedness of Officers and Directors
Products is not indebted to any person who is or has been an officer,
director or stockholder of Products or to any member of the immediate family of
any such person.
4.15 Litigation
There are no claims, legal actions, suits, arbitration's, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of Products or threatened against or relating to
Products, its assets or activities and Products does not know or have any
reason to be aware of any facts which might result in any such claim, action,
suit, arbitration or other proceeding.
4.16 Adverse Facts
No facts are known to Products that would materially and adversely affect
the future activities of Products.
4.17 Brokers
Products's negotiations relative to this Agreement and the transaction
contemplated hereby have been carried on by it directly with ESC and the
shareholders in such manner, without the intervention of any third parties, so
as not to give rise to any valid claims against any of the parties hereto for a
brokerage commission or other like payments.
4.18 Confidential Information
Products shall not, prior to or after the Closing, divulge to third parties
any confidential information received from ESC or the shareholders except as
may be required to be disclosed pursuant to applicable law.
5. CONDUCT OF ESC'S BUSINESS PRIOR TO THE CLOSING
5.1 Negative Covenants
ESC agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of Products, ESC will not take, or
permit to be taken, any of the following actions:
(a) Alter or amend its Articles of Incorporation or By-Laws.
(b) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(c) Enter into any option, call or commitment with respect to its stock..
(d) Incur any liability or obligation, except current liabilities in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business.
(e) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors at a rate in excess of the rate of compensation in
effect as to such individual, respectively, on the date hereof.
(f) Enter into any contract or commitment, which is not the ordinary
course of business of ESC or which, does, or could be expected to, materially
adversely affect ESC's business.
(g) Borrow funds or incur any indebtedness of any nature except in the
ordinary course of business.
(h) Change its banking and safe deposit arrangements, except as in the
ordinary course of business.
(i) Accept, amend or grant any license, patent or trademark, or settle the
infringement of any trademark or patent.
(j) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business, except settlements made
by insurers.
5.2 Affirmative Covenants
ESC and the Shareholders agree that between the date hereof and the
Closing, ESC will:
(a) Conduct its business only in the ordinary course and at the place or
places said business is conducted.
(b) Maintain in force the insurance policies presently in force or
insurance policies providing substantially the same coverage, under which ESC
is the insured or the beneficiary.
(c) Preserve its business organization taken as a whole substantially
intact, keep available the services of its present officers and employees and
preserve the good will of its suppliers, customers and others having business
relations with any of them.
(d) Afford to Products and its counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of ESC's properties, books, contracts, commitments
and records, and during said period furnish all information which Products may
reasonably request.
6. CONDUCT OF PRODUCTS'S CORPORATE AFFAIRS PRIOR TO THE CLOSING
6.1 Negative Covenants
Products agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of ESC and the shareholders, Products
will not take, or permit to be taken, any of the following actions:
(a) Initiate or engage in any business activities of any kind whatsoever.
(b) Alter or amend its Articles of Incorporation or By-Laws except to
change its name.
(c) Issue or become obligated to issue any securities of any kind
including without limitation any notes or capital stock.
(d) Enter into any option, call or commitment with respect to its capital
stock.
(f) Incur any liability or obligation except legal and accounting fees.
(g) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors.
(h) Make any profit sharing, incentive, pension or retirement payment.
(i) Maintains no bank account; therefore cannot change its banking and safe
deposit arrangements.
(j) Enter into any contract or commitment.
(k) Borrow funds or incur any indebtedness.
(l) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business.
6.2 Affirmative Covenants
Products agrees that between the date hereof and the Closing, Products will:
(a) Preserve its organizations taken as a whole substantially intact and
keep available the services of its present officers.
(b) Afford to ESC and their counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of Products's properties, books, contracts,
commitments and records, and during said period furnish all information which
ESC may desire to effectuate this Agreement.
7. CONDITIONS PRECEDENT TO PRODUCTS'S OBLIGATIONS
Products's obligations under this Agreement are subject to the fulfillment
prior to the Closing of each of the following conditions:
7.1 ESC's representations and warranties contained in this Agreement and
in any certificate or document delivered to Products pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; ESC shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing.
7.2 ESC shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against ESC that would
materially affect the business of ESC or the carrying out of this Agreement.
7.3 Products shall have been furnished with an opinion, dated as of
the Closing Date, of counsel to ESC to the effect that:
(a) ESC is a corporation duly organized, validly existing and in good
standing under the laws of Ontario, Canada.
(b) The authorized and issued capital stock of ESC consists of the number
of shares stated in Section 3.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by ESC and constitutes a legal, valid and binding
obligation of ESC enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, orders, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) ESC's stock to be delivered to Products under this Agreement will,
when so delivered, be validly issued and outstanding and fully paid and
non-assessable.
(f) Except as may be specified by said counsel, he does not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to ESC or its properties or businesses, or the transactions
contemplated by this Agreement.
7.4 ESC has not incurred any material adverse change in its assets,
liabilities, financial condition, business, prospects or operations since the
execution of this Agreement.
7.5 ESC shall deliver to Products a certified copy of the resolution of
its Board of Directors and Shareholders approving this Agreement and the
transaction contemplated hereby.
7.6 All documents required to be delivered to Products at or prior to the
Closing shall have been so delivered.
8. CONDITIONS PRECEDENT TO ESC'S OBLIGATIONS
ESC's obligations under this agreement are subject to the fulfillment prior
to the closing of each of the following conditions.
8.1 Products's representations and warranties contained in this Agreement
and in any certificate or document delivered to ESC pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; Products shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
8.2 Products shall not be a defendant in any lawsuit or proceeding or
governmental investigation pending or threatened against Products that would
materially affect the carrying out of this Agreement.
8.3 ESC shall have been furnished with an opinion dated as of the Closing
date of counsel for Products, to the effect that:
(a) Products is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The authorized and issued capital stock of Products consists of the
number of shares stated in Section 4.2 of this Agreement.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action and this Agreement has been
duly executed and delivered by Products and constitutes a legal, valid and
binding obligation of Products enforceable in accordance with its terms.
(d) To the best of counsel's knowledge, there are no agreements,
judgments, order, writs, injunctions or decrees of any court or governmental
body which would prevent the transactions contemplated by this Agreement.
(e) Except as may be specified by said counsel, they do not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to Products or its activities or assets, or the
transactions contemplated by this Agreement.
8.3 Products shall not have incurred any adverse change in its assets,
liabilities, financial condition, activities, prospects or operations.
8.4 Products shall deliver to the Shareholders of ESC a certified copy of
the resolutions of its Board of Directors approving this Agreement and the
transactions contemplated hereby.
8.5 All documents required to be delivered to the Shareholders and ESC at
or prior to the Closing shall have been so delivered.
9. MISCELLANEOUS
9.1 Survival
All representations, warranties, covenants and agreements made by any of
the parties hereto in this Agreement or in any certificate or instrument
delivered by or on behalf of any of them pursuant hereto shall survive the
execution and delivery of this Agreement, any investigation that may have been
made or may be made at any time by or on behalf of any party hereto, and the
consummation of this Agreement.
9.2 Parties in Interest
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by each corporate party hereto and its successors and each
individual party hereto and his heirs, personal representatives and successors.
This Agreement shall not be assigned by any party hereto (except by operation
of law) and any such prohibited assignment shall be null and void.
9.3 Expenses and Reorganization
Each of the parties to this Agreement shall bear their respective expenses
relating to this Agreement.
9.4 Governing Law
This Agreement shall be governed by and construed and enforced under the
laws of the State of Delaware without regard to principles of conflicts of law.
9.5 Entire Agreement
This Agreement contains the entire understanding of the parties hereto with
respect to the subject mater herein contained and no amendment, modification or
termination of this Agreement shall be valid unless expressed in a written
instrument executed by the parties hereto or their respective successors.
9.6 Exhibits
All Schedules to this Agreement or other certificates or documents
delivered pursuant to this Agreement shall be deemed to be a part of this
Agreement, whether or not required to be annexed hereto, and shall be initialed
by the party required to deliver such Schedule, certificate or document.
9.7 Waiver
No waiver or any provision of, or any breach or default of this Agreement,
shall be considered valid unless in writing and signed by the party giving such
waiver and no waiver shall be deemed a waiver of any other provisions or any
subsequent breach or default of a similar nature.
9.8 Further Assurances
Each party to this Agreement will, at the request of the other, execute and
deliver to such other party all further endorsements and documents as such
other party may reasonably request in order to consummate and perfect the
transactions contemplated by this Agreement.
9.9 Count erparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
9.10 Headings
Section headings are contained on this Agreement only for purposes of
convenience of reference and shall not affect the interpretation of this
Agreement or modify any of its terms or provisions.
9.11 Notices
Any notice or other communication permitted or required to be given
hereunder shall be in writing and shall be deemed to have been given upon
receipt by first class registered mail, certified mail, or recognized
over-night courier, in all cases with written confirmation of receipt required,
addressed to the parties as set forth below:
To: PRODUCTS c/o Gentile & Turpen
152 Main Street, First Floor
Flemington, New Jersey
USA
08822
To: ESC 5430 Harvester Road, Unit A
Burlington, Ontario
Canada
L7L-5N5
Each of the foregoing shall be entitled to specify a different address by
giving notice as aforesaid to the other parties.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
ENVIRONMENTAL PRODUCTS GROUP INC.
BY: /s/Blaine Froats, Chairman & CEO
seal BY: /s/Sean Froats, Secretary/Treasurer
SHAREHOLDER
BY: /s/Blaine Froats In Trust
Witness: /s/ James Guest
