SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CANADA SOUTHERN PETROLEUM LTD.
(Exact name of issuer as specified in its charter)
Nova Scotia, Canada 98-0085412
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 1410, One Palliser Square, 125 Ninth Avenue, S.E.
Calgary, Alberta, Canada T2G 0P6
Telephone (403) 269-7741
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
CANADA SOUTHERN PETROLEUM LTD. 1998 STOCK OPTION PLAN
(Full title of the plan)
Timothy L. Largay, Esq.
MURTHA, CULLINA, RICHTER AND PINNEY LLP
CityPlace, 29th Floor
Hartford, Connecticut 06103
Telephone (860) 240-6000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Title of Maximum Maximum Amount of
Securities to Amount to Offering Price Aggregate Registration
Be Registered Be Registered Per Share* Offering Price Fee
================================================================================
Limited Voting
Shares, par value
Can. $1.00 per share 700,000 $4.94 $3,458,000 $961.32
================================================================================
(*) Estimated solely for the purpose of calculating the registration fee.
Based on an aggregate of 700,000 shares at U.S. $4.94 per share, the average of
the high and low prices (as reported in The Wall Street Journal, Eastern Ed.) of
the common stock on the Pacific Exchange, Inc. on November 20, 1998.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I of Form S-8 is included in
documents sent or given to individuals selected to participate in the Company's
1998 Stock Option Plan (the "Plan") pursuant to Rule 428(b)(l) of the Securities
Act of 1933, as amended (the "Securities Act"). Such documents are not required
to be and are not filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents previously filed with the Securities
and Exchange Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998; and
(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; and
(5) The Company's Current Reports on Form 8-K dated July 2, 1998
and September 18, 1998.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior
to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated herein by reference and to be part hereof
from the date of filing of such documents.
Item 4. Description of Securities
The following is a brief description of the Limited Voting
Shares (par value $1.00 per share) of the Company, all rights of the
shareholders being determined by the laws of Nova Scotia, Canada. Nova Scotia
law does not, nor do the Company's Articles of Continuance or By-Laws, impose
any limitations on the rights of persons nonresident of Nova Scotia to vote and
hold shares of the Company's Limited Voting Shares by virtue of such nonresident
status.
<PAGE>
Voting Rights
Each shareholder is entitled to one vote for each share of
Limited Voting Shares registered in his name on the books of the Company,
subject, however, to a provision in the Company's Articles of Continuance to the
effect that no person shall vote more than 1,000 shares beneficially owned by
him.
Liquidation and Dividend Rights
Subject to the rights of creditors, all rights to the assets
of the Company available for distribution upon liquidation or upon the payment
of any dividend are vested in the holders of the Limited Voting Shares and each
share is entitled to participate equally with every other share. The Company is
legally restricted from paying any dividend or making any other payment to
shareholders (except by way of return of capital) on the Limited Voting Shares
until its accumulated deficit (Cdn. $23,523,000 at September 30, 1998) is
eliminated.
Current Canadian law does not restrict the remittance of
dividends to persons not resident of Canada. Under current Canadian tax law and
the United States-Canada tax treaty, any dividends paid to U.S.
shareholders are currently subject to a 15% Canadian withholding tax.
Pre-emptive Rights, Conversion Rights, Redemption Provisions,
Assessments
The holders of the Limited Voting Shares have no preemptive
rights. There are no conversion rights attached to the Limited Voting Shares and
there are no provisions for sinking funds or redemption of shares. The holders
of outstanding shares of the Limited Voting Shares are not liable to any further
calls or assessments by the Company.
Item 5. Interest of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Article 177 of the Company's Articles of Association (By-laws)
provides as follows:
177. (a) Each of the Directors and officers for the
time being of the Company and his heirs, executors and
administrators, in the absence of any dishonesty on his part,
shall be indemnified and secured harmless by the Company from
and against all claims, actions, costs, charges, losses,
damages and expenses incurred or sustained by reason of any
action or thing done, concurred in or omitted in or about the
execution of his duty or supposed duty as a result of the
breach of his fiduciary duty.
<PAGE>
(b) No Director or officer for the time being of
the Company and his heirs, executors and administrators, in
the absence of any dishonesty on his part, shall be liable
for: the acts, receipts, neglects or defaults of any other
person; or for joining in any receipt or act for conformity;
or for any loss, damage or expense happening to the Company
through the insufficiency or deficiency of title to any
property acquired by, for or on behalf of the Company; or for
the insufficiency or deficiency of any security in or upon
which any moneys of the Company are invested; or for any loss
or damages arising from the bankruptcy, insolvency or tortious
act of any person with whom any moneys, securities or other
property of the Company are lodged or deposited; or for any
other loss, damage or misfortune whatever which may arise out
of the execution of his duty or supposed duty or as a result
of the breach of his fiduciary duty or in relation thereto.
(c) The Company shall indemnify a director or
officer of the Company, a former director or officer of the
Company or a person who acts or acted at the Company's request
as a director or officer of a body corporate of which the
Company is or was a shareholder or creditor, and his heirs and
legal representatives, against all claims, costs, charges and
expenses, including an amount paid to settle an action or
satisfy a judgment, penalty or fine, reasonably incurred by
him in respect of any civil, criminal or administrative action
or proceeding to which he is made a party by reason of being
or having been a director or officer of such corporation or
body corporate if:
(1) He acted honestly and in good faith with
a view to the best interests of the Company; or
(2) In the case of a criminal or
administrative action or proceeding that is enforced by a
monetary penalty, he had reasonable grounds for believing that
his conduct was lawful; or
(3) He was substantially successful on the
merits in this defense of the action or proceeding.
(d) The foregoing provisions of this article
shall be in amplification of and in addition to and not by way
of limitation of or substitution for any rights, immunities or
protection conferred upon any director or officer by any
statute, law, matter or thing whatsoever.
<PAGE>
The Company has entered into expense agreements with its
executive officer and each of its directors. These agreements provide that the
Company shall advance such persons the costs, including reasonable attorneys'
fees, of defending any litigation brought against them by reason of such person
being or having been a director or executive officer of the Company. The
agreements also obligate the directors and executive officer to repay any such
amounts advanced should a final decision by a court having jurisdiction in the
matter determine that the director or executive officer in question is not
entitled to be indemnified. The Company has offered to all of its directors and
currently provides its executive officer and three other directors with a letter
of credit in the amount of Cdn. $100,000 to secure the Company's obligation to
indemnify them. The executive officer and the three directors bear the Company's
out-of-pocket expenses associated with the letters of credit provided to them.
In 1986, the Company purchased $150,000 of directors and
officers liability insurance coverage with an annual $7,500 service fee during
the period of the policy. The Company is credited with investment income from
the policy premium during the term of the policy and all or a portion of such
premium will be refunded at the end of the policy term to the extent that no
claims are made. Until recently, the Company had been unable to obtain any other
liability coverage for the Company's directors and officers.
The Company presently has a Cdn. $3,000,000 policy of
Directors and Officers liability insurance with a $25,000 deductible provision.
The Company also has two additional policies totaling $7,000,000 of Directors
and Officers liability insurance.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4. Instruments defining the rights of security holders.
A. Canada Southern Petroleum Ltd. 1998 Stock Option Plan
is filed herewith.
B. Memorandum of Association as amended on June 30,
1982, May 14, 1985 and April 7, 1988 is filed
herewith.
C. By-laws, as amended, are filed herewith.
5. Opinion regarding legality.
A. Opinion of counsel, Patterson Palmer Hunt Murphy, is
filed herewith.
23. Consents of experts and counsel.
A. Consent of Patterson Palmer Hunt Murphy is contained
in their opinion regarding legality, and is filed
herewith.
B. Consent of Ernst & Young LLP is filed herewith.
<PAGE>
24. Powers of attorney for Benjamin W. Heath, Timothy L. Largay,
Arthur B. O'Donnell and Eugene C. Pendery are filed herewith.
Item 9. Undertakings
(a) Undertakings Relating to Rule 415 Offerings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
<PAGE>
(b) Undertaking Relating to the Incorporation of Certain Documents
by Reference
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Filing of registration statement on Form S-8
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Calgary, Province of Alberta, Canada on November
23, 1998.
CANADA SOUTHERN PETROLEUM LTD.
(Registrant)
By /s/ M. Anthony Ashton
M. Anthony Ashton, President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Name Title Date
Principal executive officer:
/s/ M. Anthony Ashton President November 23, 1998
- ------------------------------------
M. Anthony Ashton
Principal financial officer
and controller or principal
accounting officer:
/s/ Kelly B. Johnson Secretary-Treasurer November 23, 1998
- ------------------------------------
Kelly B. Johnson
A majority of the Board of Directors:
/s/ M. Anthony Ashton Director November 23, 1998
- ------------------------------------
M. Anthony Ashton
/s/ James R. Joyce November 23, 1998
- ------------------------------------
James R. Joyce
Attorney-in-Fact for:
Benjamin W. Heath Director
Timothy L. Largay Director
Arthur B. O'Donnell Director
Eugene C. Pendery Director
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
4. A. Canada Southern Petroleum Ltd. 1998 Stock Option Plan
B. Memorandum of Association as amended on June 30, 1982,
May 14, 1985 and April 7, 1988
C. By-laws (Articles of Association), as amended
5. Opinion and Consent of Patterson Palmer Hunt Murphy.
23. A. Consent of Patterson Palmer Hunt Murphy is contained
in their opinion regarding legality
B. Consent of Ernst & Young LLP
24. Powers of Attorney for Benjamin W. Heath,
Timothy L. Largay, Arthur B. O'Donnell
and Eugene C. Pendery
CANADA SOUTHERN PETROLEUM LTD.
1998 STOCK OPTION PLAN
1. Purpose of Plan.
The purpose of this 1998 Stock Option Plan (the "Plan") is to further
the interests of Canada Southern Petroleum Ltd., a Nova Scotia corporation, (the
"Company"), and its subsidiaries or affiliates, by providing eligible
individuals (as designated in Section 4 below) with an opportunity to acquire or
increase a proprietary interest in the Company through the grant of options to
purchase Limited Voting Shares of the Company or through the grant of Stock
Appreciation Rights ("SARs"), and thus to provide an additional incentive to
such persons to continue their affiliation with the Company and its subsidiaries
or affiliates and to give them a greater interest in the success of the Company
(options and SARs are referred to herein collectively as "Awards"). Options
granted to eligible individuals ("Optionees") may be accompanied or followed by
SARs or SARs may be granted to eligible individuals without accompanying option
grants as described in Section 6, below.
2. Stock Subject to Plan.
There shall be reserved for issuance or transfer upon the exercise of
all Awards to be granted from time to time under the Plan an aggregate of
700,000 shares of the Company's Limited Voting Shares, $1.00 value (the
"Stock"), which shares may be in whole or in part authorized and unissued shares
of stock or if approved by the Toronto Stock Exchange ("TSE"), issued shares of
Stock which shall have been reacquired by the Company, as the Board of Directors
shall from time to time determine. For the purposes of this Section 2, a share
of Stock shall be deemed issued or transferred upon the exercise of any SAR. If
any Award granted under the Plan shall expire, be surrendered to the Company in
accordance with the terms of the Plan, or terminate for any reason without
having been exercised in full, the shares of Stock subject thereto that have not
been issued or transferred or deemed issued or transferred shall again be
available for the purposes of the Plan.
The number of shares that may be reserved for issue under Awards under
this Plan together with shares that may be issued under options for services
granted by the Company to any one person shall not exceed 5% of the issued and
outstanding shares.
3. Administration.
The Plan shall be administered by a committee (the "Committee") of not
less than two (2) members of the Board of Directors of the Company, appointed by
the Board. Vacancies occurring in membership of the Committee shall be filled by
the Board.
<PAGE>
The Committee shall keep minutes of its meetings. The Committee shall
select one of its members as its chairman and shall hold its meetings at such
times and places as it may determine. The Committee shall establish such rules
and regulations for the conduct of its business as it shall deem advisable and
may act without meeting by unanimous written consent. One or more members of the
Committee may participate in a meeting of the Committee by means of conference
telephone or similar communications equipment provided all persons participating
in the meeting can hear one another. A majority of the entire Committee shall
constitute a quorum, and the acts of a majority of the members present at or so
participating in any meeting at which a quorum is constituted shall be the acts
of the Committee.
The Committee shall have absolute authority in its discretion, but
subject to the express provisions of the Plan, to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the Plan; and to
make any and all other determinations deemed necessary or advisable for the
administration of the Plan. The Committee's determination on the foregoing
matters shall be conclusive.
Absent any other provision by the Board of Directors of the Company,
the power and responsibilities of the Committee shall be vested and assumed by
the Board of Directors of the Company acting as a committee of the whole.
No member of the Board of Directors of the Committee shall be liable
for any action or determination made in good faith in connection with the Plan
and members of the Board of Directors and the Committee shall be entitled to
indemnification and reimbursement from the Company in respect of any claim
relating thereto.
4. Eligibility.
Awards under the Plan may be granted to all employees, directors,
officers of, and consultants and consulting firms to (i) the Company, (ii)
subsidiary corporations of the Company from time to time (the "Subsidiaries"),
(iii) any business entity in which the Company shall from time to time have a
substantial interest ("Affiliate"), who, in the sole opinion of the Committee
are, from time to time, responsible for the management and/or growth of all or
part of the business of the Company. In determining the persons to whom Awards
shall be granted and the number of shares to be covered by each Award, the
Committee may take into account the nature of the services rendered by such
persons, their present and potential contribution to the Company's success, and
such other factors as the Committee in its sole discretion shall deem relevant.
Participation in the Plan shall be entirely voluntary and any decision
not to participate shall not affect any participant's employment with or
retainer by the Company or any of its Affiliates or Subsidiaries.
<PAGE>
The Company's obligations to issue Awards or shares on the exercise of
Awards in accordance with the terms of the Plan is subject to compliance with
the laws, rules and regulations of all public agencies and authorities
applicable to the issuance and distribution of such Awards and shares and to the
rules of any stock exchange on which any shares of the Company may be listed. As
a condition of participating in the Plan, each participant shall agree to comply
with all such laws, rules and regulations and to furnish to the Company all
information and undertakings as may be required to permit compliance with such
laws, rules and regulations.
5. Stock Options.
(a) Grant of Options. The Committee shall have absolute
authority in its discretion, but subject to the express provisions of the Plan,
to determine (i) the person to whom options shall be granted, (ii) the time or
times at which options shall be granted, (iii) the number of shares to be
subject to each option, (iv) the time or times at which an option can be
exercised and whether in whole or in installments, and (v) subject to prior TSE
approval, the amount, if any, by which the exercise price of any granted option
may be reduced during the term thereof.
(b) Option Agreements. The Committee shall have absolute
authority in its discretion to determine the terms and provisions (and
amendments thereof) of the respective option agreements (which need not be
identical), including such terms and provisions (and amendments) as shall be
required in the judgment of the Committee to conform to any change in any law or
regulation applicable thereto. The Committee's determination on the foregoing
matters shall be conclusive. All options granted pursuant to the Plan shall be
evidenced by the Company and by the Optionee, in such form or forms as the
Committee shall from time to time determine. Option agreements covering options
granted from time to time or at the same time need not contain similar
provisions; provided, however, that all such option agreements shall comply with
all terms of the Plan. The terms and conditions of any and all SARs granted at
the same time as an option shall be included in the option agreement and shall
comply with the terms of Section 6, below. Terms and provisions of agreements
evidencing SARs granted alone or following the grant of an option shall comply
with Section 6(b), below.
(c) Option Prices. The purchase price of each share of Stock
subject to an option granted hereunder shall be determined by the Committee but
may not be less than the greater of (i) the par value thereof and (ii) the fair
market value of the Stock on the date of grant. The fair market value of the
Stock on any given date shall be the closing price of the Stock on the TSE (or
the principal exchange on which the Stock is traded) on the date immediately
prior to such grant, or, if no sales of the Stock occurred on that day, then the
most recent day for which sales were reported.
<PAGE>
(d) Term and Exercise of Options.
(i) The Committee shall have authority in its discretion to
prescribe in any option agreement that the option may be exercised in different
installments during the term of the option. Unless otherwise determined by the
Committee or in the option agreement, each option granted under the Plan shall
be exercisable with respect to not more than one-third (1/3) of such shares of
Stock subject thereto after the expiration of one (1) year following the date of
its grant, and shall be exercisable as to an additional one-third (1/3) of such
shares of Stock after the expiration of each of the succeeding two (2) years, on
a cumulative basis, so that such option, or any unexercised portion thereof,
shall be fully exercisable after a period of three (3) years following the date
of its grant. An option that is exercisable under the Plan may be exercised by
delivery to the Company (on any business day, at its principal office, addressed
to the attention of the Committee) of a written notice of exercise, which notice
shall specify the number of shares of Stock with respect to which the option is
being exercised. The purchase price of the shares to be acquired shall be paid
in full in cash upon the exercise of the option, except as provided in
subparagraph (ii) below. The Company shall not be required to deliver
certificates for such shares until payment has been made in accordance with the
terms of this Section and such other conditions to the valid and lawful issuance
of the shares as may exist from time to time shall have been fully satisfied.
(ii) Payment in full need not accompany the exercise of
options provided that the Stock certificate or certificates for the shares for
which the option is exercised be delivered to a licensed broker acceptable to
the Company as the agent for the individual exercising the option and, at the
time such Stock certificate or certificates are delivered, the broker tenders to
the Company an amount in cash (or cash equivalents) equal to the exercise price
for the shares of Stock purchased pursuant to the exercise of the option plus
the amount (if any) of federal or other taxes which the Company may, in its
judgment, be required to withhold with respect to the exercise of an option. The
Committee shall have the authority, but not the obligation, to establish at its
discretion and in accordance with all applicable laws and stock exchange
requirements and the terms of this Plan, procedures by which an Optionee may
exercise an option in accordance with this subsection 5(ii) absent the
requirement that the Optionee deliver such certificates to a licensed broker,
provided, that the Optionee deliver such certificates directly to the Company.
(iii) The term of each option shall be for such period as the
Committee shall determine, but not more than ten years from the date of the
granting thereof, or such shorter period as described in Sections 8 and 9
hereof.
(iv) As to employees, except as provided in Sections 8 and 9
hereof, an option granted to an employee of the Company or one of its
Subsidiaries or Affiliates may not be exercised unless the holder thereof is at
the time of such exercise (and has been since the date of the grant) an employee
of the Company or one of its then Subsidiaries or a then Affiliate.
<PAGE>
(v) An Optionee shall not have any of the rights of a
stockholder with respect to the shares subject to option until such shares shall
be issued or transferred to him upon exercise of his option.
(vi) The exercise of any option by a United States citizen or
resident may be contingent upon receipt of a representation that at the time of
such exercise it is the Optionee's present intention to acquire the shares being
purchased for investment.
(vii) The certificate(s) representing shares issued upon
exercise of any option may contain a legend restricting the transfer thereof.
6. Grant of Stock Appreciation Rights.
(a) Grant of SARs. The Committee shall have absolute
authority in its discretion, but subject to the express provisions of the Plan,
to determine (i) the person to whom SARs shall be granted, (ii) the time or
times at which SARs shall be granted, (iii) the number of shares to be subject
to each SAR, and (iv) the time or times at which a SAR can be exercised and
whether in whole or in installments, and (v) subject to prior TSE approval, the
amount, if any, by which the exercise price of any granted SAR may be reduced
during the term thereof. In the discretion of the Committee, a SAR may be
granted alone; simultaneously with the grant of an option under the Plan and in
conjunction therewith or in the alternative thereto; or subsequent to the grant
of an option under the Plan and in conjunction therewith or in the alternative
thereto.
(b) SAR Agreements. The Committee shall have absolute
authority in its discretion to determine the terms and provisions (and
amendments thereof) of the respective SAR agreements (which need not be
identical), including such terms and provisions (and amendments) as shall be
required in the judgment of the Committee to conform to any change in any law or
regulation applicable thereto. The Committee's determination on the foregoing
matters shall be conclusive. All SARs granted independently of or following
options granted pursuant to the Plan shall be evidenced by the Company and by
the SAR holder, in such form or forms as the Committee shall from time to time
determine. Such agreements concerning the grant of SARs granted from time to
time or at the same time need not contain similar provisions; provided, however,
that all such agreements shall comply with all terms of the Plan.
(c) SAR Prices.
(i) The exercise price of each SAR granted alone shall be
determined by the Committee but may not be less than the fair market value of
one share of the Stock on the date of grant. The fair market value of the Stock
on any given date shall be the closing price of the Stock on the TSE (or the
principal exchange on which the Stock is traded) on the date immediately prior
to such grant, or, if no sales of the Stock occurred on that day, then the most
recent day for which sales were reported.
<PAGE>
(ii) A SAR granted simultaneously with or subsequent to the
grant of an option and in conjunction therewith or in the alternative thereto
shall have the same exercise price as the related option (and not exceed the
number of shares for which the option was granted), shall be transferable only
upon the same terms and conditions as the related option, and shall be
exercisable only to the same extent as the related option; provided, however,
that a SAR, by its terms, shall be exercisable only when the fair market value
of the shares subject to the SAR and related option exceeds the exercise price
thereof.
(d) Term and Exercise of SARs.
(i) The Committee shall have authority in its discretion to
prescribe in any SAR agreement that the SAR may be exercised in different
installments during the term of the SAR. Unless otherwise determined by the
Committee or in the SAR agreement, each SAR granted under the Plan shall be
exercisable with respect to not more than one-third (1/3) of such shares of
Stock subject thereto after the expiration of one (1) year following the date of
its grant, and shall be exercisable as to an additional one-third (1/3) of such
shares of Stock after the expiration of each of the succeeding two (2) years, on
a cumulative basis, so that such SAR, or any unexercised portion thereof, shall
be fully exercisable after a period of three (3) years following the date of its
grant. A SAR shall entitle the holder upon exercise thereof to receive from the
Company, upon a written request filed with the Committee (the "Request"), a
number of shares (with or without restrictions as to substantial risk of
forfeiture and transferability, as determined by the Committee, in its sole
discretion), an amount in cash, or any combination of shares of Stock and cash,
as specified in the Request (but subject to the approval of the Committee, in
its sole discretion, at any time up to and including the time of payment, as to
the making of any cash payment), having an aggregate fair market value equal to
the product of (i) the excess of the fair market value, on the day of such
Request, of one (1) share over the exercise price per share specified in such
SAR or its related option, multiplied by (ii) the number of shares for which
such SAR shall be exercised.
(ii) Any election by a holder of a SAR to receive cash in full
or partial settlement of such SAR, and any exercise of such SAR for cash, may be
made only by a Request filed with the Committee during the period beginning on
the third (3rd) business day following the date of release for publication by
the Company of quarterly or annual summary statements of sales and earnings and
ending on the twelfth (12th) business day following such date. Within thirty
(30) days of the receipt by the Company of a Request to receive cash in full or
partial settlement of a right or to exercise such SAR for cash, the Committee
shall, in its sole discretion, either consent to or disapprove, in whole or in
part, such Request. A Request to receive cash in full or partial settlement of a
SAR or to exercise a SAR for cash may provide that, in the event the Committee,
shall disapprove such Request, such Request shall be deemed to be an exercise of
such SAR for shares.
<PAGE>
(iii) A holder of a SAR shall not be entitled to request or
receive cash in full or partial payment of such SAR during the first six (6)
months of its term; provided, however, that such prohibition shall not apply if
the holder of such SAR is not subject to the reporting requirements of Section
16(a) of the Exchange Act. In no event will a holder of a SAR who is subject to
the reporting requirements of Section 16(a) of the Exchange Act be entitled to
make such a request or receive cash in full or partial payment of such SAR until
the Company shall have satisfied the informational requirements of Rule
16b-3(e)(1) promulgated under the Exchange Act for the specified one-year
period.
(iv) Upon exercise of a SAR granted simultaneously with or
subsequent to an option and in conjunction therewith or the alternative thereto,
the number of shares for which the related option shall be exercisable shall be
reduced by the number of shares for which the SAR shall have been exercised. The
number of shares for which a SAR shall be exercisable shall be reduced upon any
exercise of a related option by the number of shares for which such option shall
have been exercised.
(v) If the Committee disapproves in whole or in part any
election by a holder to receive cash in full or partial settlement of a SAR or
to exercise such SAR for cash, such disapproval shall not affect such holder's
right to exercise such SAR at a later date, to the extent that such SAR shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive cash upon such later exercise shall be subject to
the approval of the Committee. Additionally, such disapproval shall not affect
such holder's right to exercise any related option or options granted to such
holder under the Plan.
(vi) The term of each SAR shall be for such period as the
Committee shall determine, but not more than ten years from the date of the
granting thereof, or such shorter period as described in Sections 8 and 9
hereof. A SAR shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the SAR exceeds the exercise price thereof on such
date.
(vii) As to employees, except as provided in Sections 8 and 9
hereof, a SAR granted to an employee of the Company or one of its Subsidiaries
or Affiliates, may not be exercised unless the holder thereof is at the time of
such exercise (and has been since the date of the grant) an employee of the
Company of one of its then Subsidiaries or a then Affiliate.
(viii) Any SAR shall be exercisable upon such additional terms
and conditions as may from time to time be prescribed by the Committee.
7. Restrictions on Transfer of Awards.
Subject to the terms of Section 9 below, Awards are transferable only
to the Optionee's spouse. Notwithstanding a permitted assignment under the Plan,
an assigned option shall be deemed for purposes of compliance with policies of
the TSE to be held by the original Optionee.
<PAGE>
8. Termination of Employment.
In the case of an Award granted to any employee of the Company or one
of its Subsidiaries or Affiliates, in the event of termination of employment,
other than (a) a termination that is either (i) for cause or (ii) voluntary on
the part of the employee and without the written consent of the Company, or (b)
a termination by reason of death, the employee may (unless otherwise provided in
his or her award agreement) exercise his or her Award at any time within three
months after such termination of employment, or such other time as the Committee
shall authorize, but in no event after ten years from the date of granting
thereof, to the extent of the number of shares subject to the Award and
exercisable by him or her at the date of termination of his or her employment.
In the event of the termination of the employment of an employee to whom an
Award has been granted under the Plan that is either (i) for cause or (ii)
voluntary on the part of the employee without the written consent of the
Company, any Award granted pursuant to the Plan, to the extent not theretofore
exercised, shall terminate forthwith. Nothing in the Plan or any Award agreement
shall confer on any individual any right to continue in any capacity his
relationship with the Company or any of its Subsidiaries or Affiliates or
interfere in any way with the right of the Company or any of its Subsidiaries or
Affiliates to terminate such relationship at any time. Neither any period of
notice, if any, nor payment in lieu thereof, upon termination of employment
shall be considered as extending the period of employment for purposes of the
Plan.
9. Rights in the Event of Death of Holder of Awards.
In the event of the death of any holder of an Award which has been
granted under the Plan, such Award (unless previously terminated or exercised)
may be exercised (to the extent exercisable by such person at the date of his or
her death) by a legatee or legatees of such option under such person's will, or
by such person's legal representative or distributees, at any time within a
period of one year after his death, but not after ten years from the date of
granting thereof.
10. Reload Options.
Within the Committee's complete discretion, whenever an Optionee
holding options (the "Original Option") outstanding under the Plan (including
any Reload Option granted under this Section) exercises the Original Option and
makes payment of the option price in whole or in part by delivering shares of
common stock (valued at the then current fair market value per share) previously
held by that individual (the "Owned Shares"), then that Optionee may receive a
new option (the "Reload Option") in an amount equal to the Owned Shares
surrendered by the Optionee in payment of the purchase price for the Original
Option being exercised. All such Reload Options granted hereunder shall be
subject to the following terms and conditions:
(a) the option price per share shall be calculated based on
the simple average of the daily high-low prices on the TSE for the five trading
days before the date of exercise of the Original Option; and
<PAGE>
(b) the Committee shall have absolute authority in its
discretion to determine all other terms and conditions of Reload Options.
11. Adjustment Upon Changes in Capitalization.
Notwithstanding any other provisions of the Plan, each Award agreement
shall contain such provisions as the Committee shall determine to be appropriate
for the adjustment of the number and class of shares subject to such Award and
of the exercise price in the event of changes in the outstanding Stock by
reasons of any stock dividend, split-up, recapitalization, rights offering,
combination or exchange of shares, merger, consolidation, acquisition of
property or stock, separation, reorganization, divisive reorganization or
liquidation and the like, and, in the event of any such change in the
outstanding Stock, the aggregate number and class of shares authorized to be
issued under the Plan shall be appropriately adjusted by the Committee, whose
determination of such adjustment shall be conclusive.
12. Adjustments Upon Change of Control.
In the case of a Change of Control (as defined below) of the Company,
each Option and SAR then outstanding shall immediately be nonforfeitable and
exercisable in full.
The term "Change of Control" shall mean the occurrence of any of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
company, or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of the Stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the company (not including in
the securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates) representing more
than 15% of the combined voting power of the Company's then outstanding
voting securities; provided, however, a Change of Control shall not be
deemed to occur solely because such person acquired beneficial
ownership of more than 15% of the combined voting power of the
Company's then outstanding voting securities as a result of the
acquisition of voting securities by the Company, which by reducing the
number of voting securities outstanding, increases the proportional
number of shares beneficially owned by such person, provided that if a
Change of Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and
after such share acquisition by the Company, such person becomes the
beneficial owner of any additional voting securities which increases
the percentage of the then outstanding voting securities beneficially
owned by such person, then a Change of Control shall occur;
<PAGE>
(ii) during any period of 24 consecutive months (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
subsection (i), (iii) or (iv) of this Section 12) whose election by the
Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-third (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;
(iii) the stockholders of the Company approve a merger,
consolidation or reorganization of the Company with any other
corporation, other than a merger, consolidation or reorganization which
would result in the stockholders of the Company immediately before such
merger, consolidation or reorganization, owning, directly or indirectly
immediately following such merger, consolidation or reorganization, at
least 60% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding in immediately after such
merger, consolidation or reorganization in substantially the same
proportion as their ownership of the voting securities immediately
before such merger, consolidation, or reorganization; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
13. Tax Withholding.
Any obligation of the Company to issue shares of stock or cash pursuant
to the grant or exercise of any Award shall be conditioned on the Award holder
having paid or made provision for payment of all applicable tax withholding
obligations, if any, satisfactory to the Committee. The Company and its
Subsidiaries and Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Award holder.
14. Amendment and Termination.
Subject to any required stock exchange approvals, the Board of
Directors of the Company may make such modifications or amendments to the Plan
as it shall deem advisable, or in order to conform to any change in any law or
regulation applicable thereto. Without the consent of any person to whom any
Award shall therefore have been granted, no termination, modification or
amendment of the Plan shall adversely affect any rights which may previously
have been granted under the Plan to such persons.
<PAGE>
15. Term of Plan.
The Plan shall take effect on July 1, 1998 (the "Effective Date") and
shall remain effective until termination by the Board of Directors of the
Company or until all shares of Stock authorized to be issued pursuant to the
Plan have been issued or transferred or deemed issued or transferred as provided
in Section 2.
16. Shareholder Approval.
The Plan will be submitted to the common stockholders of the Company
for confirmation, ratification and approval by the holders of a majority of the
outstanding shares of common stock of the Company by any method adequate under
the laws of Nova Scotia in the case of an action requiring shareholder approval.
If the Plan is not approved by the holders of a majority of the outstanding
shares of common stock of the Company by July 1, 1998, then the Plan shall
terminate and any Awards granted hereunder shall be void and of no further force
or effect.
An Act Respecting
Canada Southern Petroleum Ltd.
(Assented to the 17th day of May, A.D. 1985)
Be it enacted by the Governor and Assembly as follows:
1 This Act may be cited as the Canada Southern Petroleum Ltd. Act.
2 Canada Southern Petroleum Ltd. may, by special resolution, describe
its common shares to indicate that the voting rights attached to such shares may
be limited.
------------
<PAGE>
PROVINCE OF NOVA SCOTIA
-------------------------
I HEREBY CERTIFY that CANADA
SOUTHERN PETROLEUM LTD., a subsisting company incorporated under the laws of
Canada, has satisfied the Registrar that the provisions of Section 119B of the
Nova Scotia Companies Act, R.S.N.S. 1967, and any amendments thereto, have been
complied with.
I FURTHER CERTIFY that the
aforementioned company is hereby continued in the province of Nova Scotia.
GIVEN under my hand and seal of office
at the City of Halifax, in the
Province of Nova Scotia, this
fourth day of June, one thousand
nine hundred and eighty.
REGISTRAR OF JOINT STOCK COMPANIES
<PAGE>
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that the attached
Resolution is a true copy of a Special Resolution duly passed by a majority of
not less than three-fourths of such Members of CANADA SOUTHERN PETROLEUM LTD.
(the "Company") entitled to vote, as were present in person or by proxy at a
General Meeting of the Members of the Company duly called and held at the
Sheraton Hotel, Halifax, Nova Scotia, on the 28th day of June 1994, of which
notice specifying the intention to propose the Resolution as a Special
Resolution had been duly given, and that the said Resolution was duly confirmed
by a majority of such Members of the Company entitled to vote, as were present
in person or by proxy at a subsequent General Meeting of the Members of the
Company duly called and held the offices of Patterson Kitz, Halifax, Nova
Scotia, on the 13th day of July, 1994, of which notice was duly given.
WITNESS my hand and the seal of the Company at Madison,
Connecticut, this 18th day of July, 1994.
/s/ James R. Joyce
James R. Joyce
Assistant Secretary
<PAGE>
WHEREAS, Canada Southern Petroleum Ltd. (the "Company"), is a Company
governed in all respects by the provisions of the Companies Act of Nova Scotia
(hereinafter called the "Act"), which has been amended and modernized since the
date of the Articles of Continuance;
AND WHEREAS the Act provides in accordance with subsection 51(5) and
(9) that subject to restrictions contained in the Act and in its Memorandum of
Association, a company may, if authorized by special resolution, purchase or
otherwise acquire shares issued by it or may purchase, redeem or otherwise
acquire redeemable shares issued by it for an amount not exceeding the
redemption price thereof;
BE IT RESOLVED as a Special Resolution of the Company as is meant in
the Act:
1. That the members of the Company in the general meeting assembled hereby
sanction the exercise by the Company of all and every power to purchase or
otherwise acquire shares issued by it or to purchase, redeem or otherwise
acquire redeemable shares issued by it for an amount not exceeding the
redemption price thereof and that the Directors of the Company be and hereby are
empowered to exercise at any time and from time to time any and all such powers
in the name of and on behalf of the Company.
2. That the Directors be and hereby are authorized and empowered to fix and
determine the form and contents of such documents as are necessary or incidental
thereto;
3. That the special Resolution be effective upon the adjournment of the Special
General Meeting of the Shareholders of the Corporation to be held on July 13,
1994 and that the Secretary cause a copy of this Special Resolution, certified
under the seal of the Company, to be filed within fifteen (15) days of July 13,
1994 with the office of the Registrar of Joint Stock Companies in Halifax, Nova
Scotia.
I HEREBY CERTIFY that this is a true
copy of a document filed in the
office of the Registrar of Joint
Stock Companies on the 21st day of
July, 1994
Registrar of Joint Stock Companies
<PAGE>
"BE IT RESOLVED as a Special Resolution of the Company that:
(a) clause 7 of the Articles of Continuance of the Company be
amended by deleting the phrase "common shares" and
substituting therefor the phrase "limited voting shares";
(b) the directors and officers of the Company are authorized to
execute all documents and do all acts necessary to give effect
to the foregoing including, without limitation, the filing of
Articles of Amendment relating thereto."
<PAGE>
BE IT RESOLVED as a Special Resolution of Canada
Southern Petroleum Ltd. ("the Company") that the
Authorized Capital of the Company shall be increased
so that the Authorized Capital shall consists of One
Hundred Million Limited Voting Shares with a par
value of One Dollar each and that:
(a) By-law 8 of the Company be hereby amended to
provide in paragraph 1 thereof in place of the
existing paragraph 1:
"The Authorized Capital of the Company
shall consist of One Hundred Million
Limited Voting Shares with a par value
of One Dollar each";
(b) Clause 7 of the Articles of Continuance of
the Company by amended to read in its entirety as
follows:
"7. Authorized Capital
The Authorized Capital of the Company
shall consist of One Hundred Million
Limited Voting Shares with a par value
of One Dollar each";
(c) The directors and officers of the Company
are authorized to execute all documents and do all
acts necessary to give effect to the foregoing
including, without limitation, the filing of the
Special Resolution herein with the Registrar of Joint
Stock Companies Office and the notice of increase in
authorized capital relating thereto.
<PAGE>
ARTICLES OF CONTINUANCE
under
Section 119B Nova Scotia Companies Act
(the "Act")
1. Name
The name of the corporation to be continued is CANADA SOUTHERN PETROLEUM
LTD. (hereinafter the "Company").
2. Details of Incorporation
The Company was incorporated under the laws of Canada by Letters Patent
dated the 13th day of April, 1954, under the Companies Act, R.S.C. 1952 and was
continued under the Canada Business Corporations Act on June 4, 1980 as
evidenced by a Certificate of Continuance so dated and signed by the Director.
3. Registered Office
The office of the Company is to be located at
500 Bank of Canada Building
1583 Hollis Street
Halifax, Nova Scotia
B3J 2X2
4. Board of Directors
The number of Directors of the Company shall be five.
(a) The Directors of the Company shall be divided into five (5)
classes, each class to be composed of one (1) Director;
(b) Five (5) Directors were first elected in class as aforesaid: one
for a term of five (5) years, one for a term of four (4) years, one for a
term of three (3) years, one for a term of two (2) years and one for a term
of one (1) year;
(c) At each Annual Meeting of the Shareholders of the Company a
Director to replace the Director whose term has then expired shall be
elected for a term of five (5) years;
(d) Directors, unless they voluntarily resign, shall continue in office
until their successors are elected and duly qualified, and shall be
eligible for re-election if otherwise qualified; and
(e) So long as a quorum of the Directors remains in office any vacancy
howsoever caused occurring in the Board of Directors may be filled by the
remaining Directors from among the qualified shareholders of the Company
for the remainder of the term of the Director whose ceasing to be a
Director caused such vacancy.
The Directors on continuation under the Nova Scotia Act are as follows:
<TABLE>
<CAPTION>
Date term
of office
Name Address Occupation expires
---- ------- ---------- -------
<S> <C> <C> <C>
John W. Buckley......... P.O. Box 125, Sharon, Connecticut Executive 1983
G. David N. Covert...... 893 Marlborough Road, Halifax, Nova Scotia Solicitor 1982
M. A. Reasoner.......... 505 Eighth Avenue, Calgary, Alberta Executive 1980
Thomas W. Donlon........ 5639 La Cumber Road, Somis, California Executive 1984
Frank M. Covert......... 5885 Spring Garden Road, Halifax, Nova Scotia Solicitor 1981
</TABLE>
<PAGE>
5. Objects
The Objects for which the Company is continued are
(a) To carry on in any or all of its branches, as principals or as
agents, directly or through the ownership of shares or other securities of
any other company or companies or in any other manner, any or all of the
businesses of prospecting, exploring, drilling, boring, mining and
otherwise in any manner whatsoever searching for, producing, extracting,
acquiring, gathering, storing, leasing, buying, selling, processing,
treating, refining, marketing, distributing, otherwise disposing of and in
any other manner whatsoever dealing in or with natural gas, oil, petroleum,
other related deposits or products of nature of whatsoever kind and
products and by-products and derivatives of any thereof and any other
business or businesses directly or indirectly related to any of the
aforesaid businesses or which, in the opinion of the Company, may be
conveniently carried on in connection with any thereof;
(b) To manage, supervise, control or in any other manner whatsoever
participate in the business, operations or undertakings of any other
company or other organization of which the Company holds any shares, bonds,
debentures or other securities or in which the Company has any other
interest;
(c) To carry on its operations in Nova Scotia or elsewhere;
(d) To buy, sell and otherwise dispose of, hold, own, manufacture,
produce, export and import and deal in, either as principal or agent, and
upon commission, consignment or otherwise, goods, wares, products and
merchandise of any kind and nature whatsoever and to do a general
commission merchant's merchandise, brokerage, selling agents' and factors'
business in goods, wares and merchandise dealt in, by the Company;
(e) To purchase or otherwise acquire and undertake all or any of the
assets, business, property, privileges, contracts, rights, obligations and
liabilities of any company, society, partnership or persons carrying on any
part of the business which the Company is authorized to carry on or
possessed of property suitable for the purpose of this Company or of any
company in which this Company holds shares, bonds, debentures,
debenture-stock or other securities and to pay for the same in cash or in
shares or securities of this Company or partly in cash and partly in shares
or securities or any other consideration and to carry on the business of
any such company, society, partnership or person whose assets are so
acquired;
(f) To carry on the businesses of carriers, truckmen, carters, agents
and forwarders by land, air and water, agents, commission agents, insurance
agents, merchants and warehousemen in all their several branches and to
store products, materials, goods, wares and merchandise for other persons,
firms and corporations;
(g) To carry on business as manufacturers' agents and representatives
and as commission agents and merchants and to carry on a jobbing commission
and general agency business for the sale of goods, wares and merchandise of
all kinds;
(h) To invest in any stocks, shares, bonds, obligations, debentures or
securities of any government, state, dominion, province, or authority,
municipal, local or otherwise, or of any company or corporation whatsoever
whether public or private, or in any undertaking upon which the Company may
enter itself or which may be entered into by others and to vary, change or
alter any such investment and to reinvest in the manner aforesaid any
moneys which may at any time be in the hands of the Company;
(i) To acquire by purchase, lease, exchange, concession or otherwise,
any description of real estate and real property, or any interest and
rights therein, legal or equitable or otherwise howsoever; to take, build
upon, hold, own, maintain, work, develop, sell, lease, mortgage, exchange,
improve or otherwise deal with in any manner and dispose of such lots,
lands, sites, real estate and real property or any interest therein, to
deal with any portion of the lands and property so acquired, subdividing
the same into building lots, and generally laying the same out into lots,
streets and building sites for residential purposes or otherwise;
<PAGE>
(j) To carry on a general exporting and importing business in all its
branches;
(k) To do any or all of the above things as principals, agents, or
otherwise and by or through trustees or otherwise and either alone or in
conjunction with others;
(l) To procure the Company to be registered or recognized in any
country or place, and to carry on and perform any or all of its objects in
any part of Canada or any province thereof or in any foreign country or in
any area of the world, subject to the laws of such province or country;
(m) To obtain any provincial order or Act of Parliament or the
Legislature, for enabling the Company to carry any of its objects into
effect or for effecting any modification in the Company's constitution, or
for any other purpose which may seem expedient, and to oppose any
proceedings or applications which may seem calculated, directly or
indirectly, to prejudice the Company's interest;
(n) To apply for, secure, acquire by assignment, transfer, purchase or
otherwise and to exercise, carry out and enjoy any licence, power,
authority, franchise, concession, right or privilege which any government
or authority may be empowered to grant;
(o) To amalgamate with any other company having objects altogether or
in part similar to those of the Company;
(p) To allot, issue, and deliver fully paid shares, debentures,
debenture-stock or other securities of the Company in payment or part
payment of any property, contracts, rights, shares, debentures or
securities of any other company which this Company may acquire for the
purpose of its business;
(q) To remunerate any person, firm or company for services rendered, or
to be rendered to the Company, in or about the formation or promotion of
the Company, or the conduct of its business, and to allot, issue and
deliver fully paid shares of the capital stock of the Company in payment or
part payment for services so rendered and upon any issue of shares to
employ brokers and to pay commissions;
(r) To pay out of the funds of the Company all or any of the expenses
of or incidental to the formation or organization thereof;
(s) To improve, manage, develop, exchange, sell, lease or otherwise
dispose of, turn to account or otherwise deal with all or any part of the
property and rights of the Company, and to distribute any of the Company's
property among the members in specie, and particularly the shares, bonds,
debentures, or other securities of any other company that may take over the
whole or any other part of the assets or liabilities of the Company;
(t) To accept in payment for any work done by or debt due to the
Company any stocks, shares, bonds, debentures or other securities of any
other company;
(u) To raise and assist in raising money for and to aid by way of
bonus, loan, promise, endorsement, guarantee of bonds, debentures or other
securities or otherwise, any other company, corporation or person
whatsoever;
(v) Except as prohibited by the Act, to lend monies to any company,
corporation or person whatsoever and to guarantee the performance of
obligations or contracts by any company, corporation or person whatsoever
and as security for such guarantee, to mortgage, pledge, hypothecate or
otherwise charge the whole or any part of the property, present or future,
of the Company;
<PAGE>
(w) To issue debentures, debenture-stock, bonds, obligations and
securities of all kinds and to frame, constitute and secure the same, as
may seem expedient, with full power to make the same transferable by
delivery or by instrument or transfer or otherwise and either perpetual or
terminable and either redeemable or otherwise, and to charge or secure the
same on the undertaking, property, rights and assets of the Company,
present and future, in whole or in whole or in part, including if thought
fit, uncalled capital or otherwise howsoever;
(x) To adopt and carry out the provisions of any preliminary agreement
or agreements with or without modification;
(y) To do all acts and things mentioned and set out in subsection (3)
of Section 24 of the Act;
(z) To sell or dispose of the undertaking of the Company or any part
thereof for such consideration as the Company may think fit and in
particular for shares, bonds, debentures, debenture-stock or other
securities of any other company;
(aa) To subscribe for, take or otherwise acquire and hold shares and
securities of any other company having objects altogether or in part
similar to those of the Company and to carry on any business capable of
being conducted so as directly or indirectly to benefit the Company;
(bb) To distribute any of the property of the Company in specie among
the Members;
(cc) To invest the moneys of the Company not immediately required in
the business of the Company in such manner as may from time to time be
determined by the Directors of the Company;
AND it is hereby declared that Paragraphs (z), (aa), (bb) and (cc) of this
clause shall be deemed to be modifications of the rights and powers in
Paragraphs (f), (g), (h) and (i) respectively of subsection (3) of Section 24 of
the Act;
AND it is further declared that the intention is that the objects specified
in each paragraph of this clause shall, except where otherwise expressed in such
paragraph, be in no wise limited or restricted by reference to or inference from
the terms of any other paragraph or the name of the Company;
PROVIDED that nothing herein contained shall be deemed to authorize the
Company to carry on the business of a Banking, Loan, Trust or Insurance Company.
6. Limitation of Liability
The liability of the Members (which means and includes Shareholders) of the
Company is limited.
7. Authorized Capital
The authorized capital of the Company shall consist of Fifteen Million
common shares with a par value of $1 each.
8. Voting Restrictions
With respect to any matter to be voted upon at any meeting of Members any
one person, hereinafter defined, shall be entitled to vote:
(i) with respect to shares registered in his name on the books of the
Company which are beneficially owned by him, the number of shares, but in
no event more than 1,000;
(ii) with respect to shares registered in his name on the books of the
Company which he holds as a trustee other than as a nominee, the number of
shares but in no event more than 1,000; and
<PAGE>
(iii) with respect to shares registered in his name as nominee and on
instructions from each one person who is the owner thereof a number of
shares owned by each such one person but in no event more than 1,000 with
respect to each such one person, provided that no such one person shall
vote or give instruction as to the voting of more than 1,000 shares in the
aggregate.
That for all purposes of these Articles:
(a) Any entity or group in the nature of and including:
(i) a corporation, its subsidiaries and affiliates; or
(ii) a trust; or
(iii) two or more trusts created by one person or having
substantially the same beneficiaries or remaindermen; or
(iv) an association, partnership, joint or common venture; or
(v) all shareholders, securityholders, officers, directors,
members and employees of one person who owns beneficially more than 10%
of the shares of the Company;
shall be deemed to be one person;
(b) One person who has shares registered in his name who is not a
beneficial owner or nominee thereof, shall be deemed to hold such shares as
a trustee;
(c) No person shall be deemed beneficially to own shares of the Company
if such shares are subject to any agreement whereunder any other person
either certainly or contingently is or may become entitled to any interest
in or right to or control over such shares other than an agreement
whereunder such shares are bona fide mortgaged, pledged or charged to any
bank, trust company or other lending institution or to any brokerage firm
to secure indebtedness;
(d) In order to determine the number of shares that any Member is
entitled to vote at any meeting of Members, the board of directors may
require in or with the notice of the meeting or an adjourned meeting that
any Member must provide as a condition precedent to his right to vote, such
evidence as the board of directors may require as to the beneficial
ownership of the shares held by him; and
(e) If the board of directors of the Company decides, or if the
chairman for the time being at any meeting of the Members believes that it
is in the best interests of the Company that any meeting of Members be
adjourned to determine the number of shares that any holder of shares is
entitled to vote at such meeting, then the chairman shall on his own motion
adjourn once such meeting for a period not exceeding 60 days.
9. Share Transfer Restrictions
There are no restrictions on the transferability of shares.
10. Other Provisions
The board of directors of the Company may without further authorization of
the Members:
(a) borrow money upon the credit of the Company;
(b) issue, reissue, sell or pledge debt obligations (including bonds,
debentures, notes or any other evidence of indebtedness or guarantee,
whether secured or unsecured) of the Company;
<PAGE>
(c) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any owned or subsequently acquired real or personal,
movable or immovable, property of the Company, including, without
limitation, book debts, rights, powers, franchises, and undertakings, to
secure any debt obligations (including bonds, debentures, notes or any
other evidence of indebtedness or guarantee) of the Company.
The board may from time to time delegate to such one or more of the
directors and officers of the Company as may be designated by the board all or
any of the powers conferred on the board above to such extent and in such manner
as the board shall determine at the time of each such delegation.
11. Continuation Authorized
The continuation of the Company under the laws of Nova Scotia has been
properly authorized under the laws of the jurisdiction in which the Company was
incorporated.
CANADA SOUTHERN PETROLEUM LTD.
by: ..............................
...................................
ARTICLES OF ASSOCIATION OF
CANADA SOUTHERN PETROLEUM LTD.
INTERPRETATION
1. In these Articles unless there be something in the subject or
context inconsistent therewith:
(a) "the Act" means the Companies Act of Nova Scotia and all amendments
thereto;
(b) "the Company" means the company above named;
(c) "the Office" means the registered office for the time being of the
Company;
(d) "the Register" means the register of members kept pursuant to the
provisions of the Act;
(e) "the Registrar" means the Registrar of Joint Stock Companies for
the time being;
(f) "month" means calendar month;
(g) "in writing" and "written" includes printing, lithography and other
modes of representing or reproducing words in visible form;
(h) "these Articles" and "these presents" includes these Articles of
Association and all amendments thereto;
(i) "the Directors" or "the Board" means the Directors of the Company
for the time being;
(j) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(k) "Shareholders" means the members of the Company for the time being;
(l) "special resolution" has the meaning assigned by the provisions of
the Act;
(m) words importing the singular number only include the plural number
and vice versa;
(n) words importing the masculine gender only include the feminine
gender;
(o) words importing persons include corporations;
<PAGE>
(p) "dividend" includes a bonus or stock dividend;
(q) "ordinary general meeting" means the annual general meeting or
annual meeting, as it may be referred to in these Articles from
time to time.
2. The regulations appearing in Table A in the First Schedule to the
Act shall not apply to the Company.
SHARES
3. The Directors shall control the shares and, subject to the
provisions of these Articles, may allot or otherwise dispose of them to such
persons, at such prices, at such times, on such terms and conditions and either
at a premium or at par as they think fit.
4. The Directors may pay on behalf of the Company a commission to any
person in consideration of his subscribing or agreeing to subscribe (whether
absolutely or conditionally) for any shares in the Company, or his procuring or
agreeing to procure subscription (whether absolute or conditional) for any
shares in the Company, provided that such commission paid or agreed to be paid
does not exceed the amount permitted under the Act. The commission may be paid
or satisfied in cash or in shares, debentures or debenture stock of the Company.
5. On the issue of shares the Company may arrange among the holders
thereof differences in the calls to be paid and in the times for their payment.
6. If the whole or part of the allotment price of any shares is, by
the conditions of their allotment, payable in installments, every such
installment shall, when due, be payable to the Company by the person who is at
such time the registered holder of the shares.
7. Shares may be registered in the names of joint holders not
exceeding three in number.
8. The joint holders of a share shall be severally as well as jointly
liable for the payment of all installments and calls due in respect of such
share. On the death of one or more joint holders of shares, the survivor or
survivors of them shall alone be recognized by the Company as having title to
the shares.
9. Save as herein provided, the Company 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 required by
statute, be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person.
<PAGE>
CERTIFICATES
10. Certificates of title to shares shall be signed (i) by the
President, a Vice-President or a Director, and (ii) by a Director, the Secretary
or an Assistant Secretary, being a person other than one referred to in the
immediately preceding Clause (i) unless the person is the sole Director or sole
Officer of the Company, in which case that person may sign pursuant to Clauses
(i) and (ii); or such other person as the Directors may authorize and, (iii) if
the Directors have appointed a transfer agent and/or share registrar for the
Company, by an authorized officer of such transfer agent and/or share registrar.
The signature of the President or Vice-President and if a transfer agent and/or
share registrar has been appointed and either one or both are required to sign
manually, of the Secretary or Assistant Secretary may be engraved, lithographed
or printed upon the certificates, or any one or more of them, and all such
certificates when signed by the Secretary and Assistant Secretary or, if a
transfer agent and/or share registrar has been appointed, an authorized officer
of such transfer agent and/or share registrar, shall be valid and binding upon
the Company. An engraved, lithographed or printed signature upon any certificate
of title to shares shall for all purposes of these Articles be deemed to be the
signature of the person whose signature it purports to be and notwithstanding
that any person whose signature may appear on such certificate is not at the
date thereof the President, Vice-President, the Secretary, Assistant Secretary
or Director, as the case may be, of the Company, such certificate shall be valid
and binding upon the Company. Any share certificate issued by the Company shall
state legibly such information as may be required by the Act.
11. Subject to any regulations made at any time by the Directors, each
shareholder may have title to the shares registered in his name evidenced by any
number of certificates so long as the aggregate of the shares stipulated in such
certificates equals the aggregate registered in his name.
12. Where shares are registered in the names of two or more persons the
Company shall not be bound to issue more than one certificate or one set of
certificates and such certificate or set of certificates shall be delivered to
the person first named on the register.
13. Any certificate that has become worn, damaged or defaced may, upon
its surrender to the Directors, be canceled and replaced by a new certificate.
Any certificate that has become lost or destroyed may also be replaced by a new
certificate upon proof of such loss or destruction to the satisfaction of the
Directors and the furnishing to the Company of such undertakings of indemnity as
the Directors deem adequate.
14. Such sum as the Directors from time to time determine shall be paid
to the Company for every certificate other than the first certificate issued to
any holder in respect of any share or shares.
<PAGE>
15. The Directors may cause one or more branch registers of members to
be kept in any place or places, whether inside or outside of Nova Scotia.
CALLS
16. The Directors may from time to time make such calls as they think
fit upon the shareholders in respect of all moneys unpaid on the shares held by
them respectively and not made payable at fixed times by the conditions on which
such shares were allotted and each shareholder shall pay the amount of every
call so made on him to the persons and at the times and places appointed by the
Directors. A call may be made payable by installments.
17. A call shall be deemed to have been made at the time when the
resolution of the Directors authorizing such call was passed.
18. At least fourteen days' notice of any call shall be given and such
notice shall specify the time and place at which and the person to whom such
call shall be paid.
19. If the sum payable in respect of any call or installment is not
paid on or before the day appointed for the payment thereof, the holder for the
time being of the share in respect of which the call has been made or the
installment is due shall pay interest on such call or installment at the rate
per annum as the Directors may from time to time determine from the day
appointed for the payment thereof up to the time of actual payment.
20. At the trial or hearing of any action for the recovery of any money
due for any call, it shall be sufficient to prove that the name of the
Shareholder sued is entered on the register as the holder or one of the holders
of the share or shares in respect of which such debt accrued, that the
resolution making the call is duly recorded in the minute book and that notice
of such call was duly given to the shareholder sued in pursuance of these
Articles. It shall not be necessary to prove the appointment of the Directors
who made such call or any other matters whatsoever and the proof of the matters
stipulated shall be conclusive evidence of the debt.
21. The Directors may, if they think fit, receive from any shareholder
willing to advance it, all or any part of the moneys due upon shares held by him
beyond the sums actually called for; and, upon the moneys so paid or satisfied
in advance or so much thereof as from time to time exceeds the amount of the
calls then made upon the shares in respect of which such advance has been made,
the Company may pay interest at such rate per annum, as the Directors may from
time to time determine as the Shareholder paying such sum in advance and the
Directors agree upon, or the Directors may agree with such shareholder that he
may participate in profits upon the amount so paid or satisfied in advance.
<PAGE>
FORFEITURE OF SHARES
22. If any shareholder fails to pay any call or installment on or
before the day appointed for payment, the Directors may at any time thereafter
while the call or installment remains unpaid, serve a notice on such shareholder
requiring him to pay the call or installment together with any interest that may
have accrued and all expenses that may have been incurred by the Company by
reason of such nonpayment.
23. The notice shall name a day (not being less than fourteen days
after the date of the notice) and a place or places on and at which such call or
installment and such interest and expenses are to be paid. The notice shall also
state that, in the event of nonpayment on or before the day and at the place or
one of the places so named, the shares in respect of which the call was made or
installment is payable will be liable to be forfeited.
24. If the requirements of any such notice are not complied with, any
shares in respect of which such notice has been given may at any time
thereafter, before payment of all calls or installments, interest and expenses
due in respect thereof, be forfeited by a resolution of the Directors to that
effect. Such forfeiture shall include all dividends declared in respect of the
forfeited shares and not actually paid before the forfeiture.
25. When any share has been so forfeited, notice of the resolution
shall be given to the shareholder in whose name it stood immediately prior to
the forfeiture and an entry of the forfeiture shall be made in the register.
26. Any share so forfeited shall be deemed the property of the Company
and the Directors may sell, re-allot or otherwise dispose of it in such manner
as they think fit.
27. The Directors may at any time before any share so forfeited has
been sold, re-allotted or otherwise disposed of, annul the forfeiture thereof
upon such conditions as they think fit.
28. Any shareholder whose shares have been forfeited shall nevertheless
be liable to pay and shall forthwith pay the Company all calls, installments,
interest and expenses owing upon or in respect of such shares at the time of the
forfeiture together with interest thereon at such rate per annum as the
Directors may determine from time to time from the time of forfeiture until
payment. The Directors may enforce such payment if they think fit, but are under
no obligation to do so.
<PAGE>
29. A certificate in writing under the hands of one of the Directors
and countersigned by the Secretary stating that a share has been duly forfeited
on the specified date in pursuance of these Articles and the time when it was
forfeited shall be conclusive evidence of the facts therein stated as against
all persons who would have been entitled to the share but for such forfeiture.
LIEN ON SHARES
30. The Company shall have a first and paramount lien upon all shares
(other than fully paid up shares) registered in the name of each shareholder
(whether solely or jointly with others) and upon the proceeds from the sale
thereof for his debts, liabilities and other engagements, solely or jointly with
any other person, to or with the Company, whether or not the period for the
payment, fulfillment or discharge thereof has actually arrived, and such lien
shall extend to all dividends from time to time declared in respect of such
shares. Unless otherwise agreed, the registration of a transfer of shares shall
operate as a waiver of any lien of the Company on such shares.
31. For the purpose of enforcing such lien the Directors may sell the
shares subject to it in such manner as they think fit; but no sale shall be made
until the period for the payment, fulfillment or discharge of such debts,
liabilities or other engagements has arrived and until notice in writing of the
intention to sell has been given to such shareholder, his executors or
administrators and default has been made by him or them in such payment,
fulfillment or discharge for seven days after such notice.
32. The net proceeds of any such sale after the payment of all costs
shall be applied in or towards the satisfaction of such debts, liabilities or
engagements and the residue, if any, shall be paid to such shareholder or his
executors, administrators or assigns.
VALIDITY OF SALES
33. Upon any sale after forfeiture or the enforcing of a lien in
purported exercise of the powers given by these Articles, the Directors may
cause the purchaser's name to be entered in the register in respect of the
shares sold and the purchaser shall not be bound to see to the regularity of the
proceedings or to the application of the purchase money and after his name has
been entered in the register in respect of such shares, the validity of the sale
shall not be impeached by any person and the remedy of any person aggrieved by
the sale shall be in damages only and against the Company exclusively.
<PAGE>
TRANSFER OF SHARES
34. The instrument of transfer of any share in the Company shall be
signed by the transferor. The transferor shall be deemed to remain the holder of
such share until the name of the transferee is entered in the register in
respect thereof and shall be entitled to receive any dividend declared thereon
before the registration of the transfer.
35. The instrument of transfer of any share shall be in writing:
(a) in the following form;
(b) in a form as near as circumstances permit to the following form; or
(c) in such form as may be approved by the Directors;
For value received hereby sell, assign and transfer unto shares of
the capital stock of the Company represented by the within
certificate and do hereby irrevocably constitute and appoint
Attorney to transfer such stock on the books of the Company with
full power of substitution in the premises.
Dated ____________ 19 __
In the Presence of
Witness
36. The Directors may, without assigning any reason therefor, decline
to register any transfer of shares not fully paid up or upon which the Company
has a lien.
37. Every instrument of transfer shall be left at the office of the
Company or its transfer agent where the principal or a branch register of
members is maintained for registration together with the certificate of the
shares to be transferred and such other evidence as the Company may require to
prove the title of the transferor or his right to transfer the shares.
38. A fee may be charged for each transfer and shall, if required by
the Directors, be paid before its registration.
39. Every instrument of transfer shall after its registration, remain
in the custody of the Company. Any instrument of transfer that the Directors
decline to register shall, except in case of fraud, be returned to the person
who deposited it.
<PAGE>
40. The transfer books and register of members may be closed during
such time as the Directors think fit, not exceeding in the whole thirty (30)
days in each year, notice of which shall be given by advertisement in some
newspaper circulating in the district in which the registered office of the
Company is situate.
TRANSMISSION OF SHARES
41. The executors or administrators of a deceased member (not being one
of several joint holders) shall be the only persons recognized by the Company as
having any title to the shares registered in the name of such member. When a
share is registered in the names of two or more joint holders, the survivor or
survivors of the executors or administrators of the deceased shall be the only
persons recognized by the Company as having any title to, or interest in such
share.
42. Any person becoming entitled to shares in consequence of the death
or bankruptcy of any member or in any way other than by allotment or transfer
upon producing such evidence of his being entitled to act in the capacity
claimed or of his title as the Directors think sufficient, may, with the consent
of the Directors (which they shall not be under any obligation to give) be
registered as a member in respect of such shares, or may, without being
registered, transfer such shares subject to the provisions of these Articles
respecting the transfer of shares. The Directors shall have the same right to
refuse to register a person entitled by transmission to any shares, or his
nominee, as if he were the transferee named in an ordinary transfer presented
for registration.
SHARE WARRANTS
43. The Company, with respect to fully paid-up shares, may issue under
its Common Seal warrants (hereinafter called "Share Warrants") stating that the
bearer is entitled to the shares therein specified, and may provide, by coupons
or otherwise, for the payment of future dividends on the shares included in such
warrants.
44. The Directors may determine, and from time to time vary, the
conditions upon which share warrants will be issued and, in particular, the
conditions upon which a new Share Warrant or coupon will be issued in the place
of one worn out, defaced, lost or destroyed, or upon which the bearer of a Share
Warrant will be entitled to attend and vote at general meetings, or upon which a
Share Warrant may be surrendered and the name of the bearer entered in the
register in respect of the shares therein specified. Subject to such conditions
and to these Articles the bearer of a Share Warrant shall be a member to the
full extent. The bearer of a Share Warrant shall be subject to the conditions
for the time being in force, whether made before or after the issue of such
warrant.
<PAGE>
INCREASE AND REDUCTION OF CAPITAL
45. The Company may from time to time increase its capital by the
creation of new shares of such amount as it thinks expedient.
46. The new shares may be issued upon such terms and conditions and
with such rights and privileges annexed thereto as the Company in general
meeting determines or, if no direction is given, as the Directors determine, and
in particular (but without limiting the generality of the foregoing) such shares
may be issued with a preferential or qualified right to dividends and to the
assets of the Company upon distribution and with a special or without any right
of voting.
47. The Company may, before the issue of any new shares, determine that
such shares or any of them, shall be offered in the first instance to all the
then members or to the members of any class of Shareholders in proportion to the
amount of the capital held by them, or make any other provisions as to the issue
and allotment of such shares.
48. Except so far as otherwise provided by the conditions of issue or
these Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the provisions
herein contained with reference to payment of calls and installments, transfer
and transmission, forfeiture, lien and otherwise.
49. The Company may from time to time reduce its share capital and any
capital redemption reserve fund in any way and with and subject to any incident
authorized and consent required by law.
ALTERATION OF CAPITAL
50. The Company may from time to time consolidate and divide all or any
of its share capital into shares of larger amount than its existing shares.
51. The Company may from time to time convert all or any of its paid-up
shares into stock and re-convert that stock into paid-up shares of any
denomination.
52. The Company may from time to time subdivide its shares, or any of
them, into shares of smaller amount than is fixed by the Memorandum of
Association so, however, that in the subdivision the proportion between the
amount paid and the amount, if any, unpaid on each reduced share shall be the
same as it was in the case of the share from which the reduced share is derived.
The Directors may determine that, as between the holders of the shares resulting
from such subdivision, one or more of such shares shall have some preference or
special advantage as regards dividend, capital, voting or otherwise, over or as
compared with, the others or other.
<PAGE>
53. The Company may from time to time exchange shares of one
denomination for another.
54. The Company may from time to time cancel shares which, at the date
of the passing of the resolution in that behalf, have not been taken or agreed
to be taken by any person, and diminish the amount of its share capital by the
amount of the shares so canceled.
55. The Company may from time to time convert any part of its unissued
share capital into preference shares redeemable or purchasable by the Company in
the manner provided in the Act.
56. The Company may from time to time provide for the issue of shares
without nominal or par value provided that, upon any such issue, a declaration
executed by the Secretary of the Company must be filed with the Registrar
stating the number of shares issued and the amount received therefor.
57. The Company may from time to time convert all or any of its
previously authorized, unissued or issued, fully paid-up shares other than
preferred shares, with nominal or par value into the same number of shares
without any nominal or par value and reduce, maintain or increase accordingly
its liability on any of its shares so converted; provided that the power to
reduce its liability on any of its shares so converted may, where it results in
a reduction of capital, only be exercised subject to confirmation by the courts
as provided by the Act.
58. The Company may from time to time convert all or any of its
previously authorized, unissued or issued, fully paid-up shares without nominal
or par value into the same or a different number of shares with nominal or par
value. For such purpose the shares issued without nominal or par value and
replaced by shares with a nominal or par value shall be considered as fully paid
but their aggregate par value shall not exceed the value of the net assets of
the Company as represented by the shares without par value before the
conversion.
58A. Notwithstanding any other provision in these Articles, where the
exercise of any of the powers, rights or privileges granted to the Company in
Articles 45-58 or 61 would give any shareholder the right to vote or the right
to dissent under the Third Schedule of the Act, the exercise of such right,
power or privilege by the Company shall be subject to the provisions of the
Third Schedule of the Act.
59. The Directors, on behalf of the Company, may, without further
authorization of the Shareholders, from time to time, in their discretion:
<PAGE>
(a) purchase, redeem or acquire any preference shares issued by
the Company which, by their conditions, may be redeemed;
(b) purchase or otherwise acquire any common shares issued by the
Company; or
(c) purchase or otherwise acquire any other capital share, bond or
debenture issued by the Company;
and the Directors may determine the manner and terms for such purchase,
redemption or acquisition; and the Directors may, from time to time, provide a
sinking fund on such terms as they think fit for the redemption or purchase of
such preference shares of any class or series or any other capital share, bond
or debenture issued by the Company.
INTEREST ON SHARE CAPITAL
60. The Company may pay interest at a rate not exceeding six per centum
(6%) per annum on share capital issued and paid-up for the purpose of raising
money to defray the expenses of the construction of any works or buildings or
the provision on any plant which cannot be operated profitably for a lengthy
period of time. Such interest may be paid for such period and may be charged to
capital as part of the cost of construction of the work or building or of the
provision of the plant. The payment of the interest shall not operate to reduce
the amount paid-upon the shares in respect of which it is paid. The accounts of
the Company shall show full particulars of the payment during the period to
which the accounts relate.
CLASSES OF SHARES
61. Any share may be issued with such preferred, deferred or other
special rights or with such restrictions, whether in regard to dividends,
voting, return of share capital or otherwise, as the Company may from time to
time determine.
SURRENDER OF SHARES
62. The Directors may accept the surrender of any share by way of
compromise of any question as to the holder being properly registered in respect
thereof. Any share so surrendered may be disposed of in the same manner as a
forfeited share.
BORROWING POWERS
63. The Directors on behalf of the Company may, without authorization
of the shareholders, from time to time in their discretion:
<PAGE>
(a) Raise or borrow money upon the credit of the Company;
(b) Secure the repayment of moneys so raised or borrowed in such
manner and upon such terms and conditions in all respects as they think fit, and
in particular by the execution and delivery of mortgages of the Company's real
or personal property, or by the issue of bonds, debentures or debenture stock of
the Company secured by mortgage or other charge upon all or any part of the
property of the Company, both present and future, including its uncalled capital
for the time being;
(c) Sign or endorse bills, notes, acceptances, cheques, contracts
and other evidence of or securities for money borrowed or to be borrowed;
(d) Pledge debentures as security for loans;
(e) Issue, reissue, sell or pledge debt obligations (including
bonds, debentures, notes or any other evidence of indebtedness or guarantee,
whether secured, or unsecured) of the Company;
(f) Mortgage, hypothecate, pledge or otherwise create a security
interest in all or any owned or subsequently acquired real or personal, movable
or immovable, property of the Company, including without limitation, book debts,
rights, powers, franchises and undertakings, to secure any debt obligations
(including bonds, debentures, notes or any other evidence of indebtedness or
guarantee) of the Company;
(g) Give any guarantee which the Company is otherwise
permitted to give to secure performance of an obligation of any person.
(h) Exercise such additional powers as are set forth in
Section 10 of the Memorandum of Association (Articles of Continuance) of the
Company and in a Special Resolution of the Company dated December 10, 1980
respecting the borrowing of money and granting of security.
64. Bonds, debentures and other securities may be made assignable, free
from any equities between the Company and the person to whom such securities
were issued.
65. Any bonds, debentures and other securities may be issued at a
discount, premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of Directors and other matters.
<PAGE>
SHAREHOLDERS RESOLUTIONS AND MEETINGS
66. (1) A resolution, including a special resolution, in writing and
signed by every Shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it was passed by such Shareholders at a meeting and
satisfied all the requirements of the Act respecting meetings of Shareholders.
Any such resolution may be signed in counterpart.
(2) A copy of every resolution referred to in subsection (1)shall
be kept with the minutes of proceedings of Shareholders.
67. Ordinary general meetings shall be held at least once in every
calendar year at such time and place as may be determined by the Directors and
not later than fifteen months after the preceding ordinary general meeting. All
other meetings of the Company shall be called special general meetings.
68. Special general meetings of the members may be convened at any time
by the Chairman of the Board, or by the President of the Company, or by the
Board of Directors pursuant to a resolution approved by a majority of the entire
Board of Directors. In addition, the Chairman of the Board or the President of
the Company shall forthwith proceed to convene a special general meeting of the
Company, to be held at such time and place as the Directors determine, upon the
requisition of members of the Company holding not less than ten percent (10%)
(or such other percent as prescribed in the Act at that time) of the total
number of issued shares of the Company for the time being carrying voting rights
and in respect of whose shares all calls or other sums then due have been paid.
69. The requisition shall state the objects of the special general
meeting requested, be signed by the members making it and deposited at the
registered office of the Company. It may consist of several documents in like
form each signed by one or more of the members making such request. Only such
business shall be conducted at a special general meeting of members as shall
have been brought before the meeting pursuant to the Company's notice of
meeting.
70. Notice of every special general meeting, stating the time, place
and purpose, shall be given by mailing, postage prepaid, at least twenty-five
(25) but not more than sixty (60) days before each such meeting, a copy of such
notice addressed to each member of the Company at his post office address as
recorded on the books of the Company. The Board of Directors may postpone or
reschedule any previously scheduled special general meeting.
<PAGE>
71. If at any such meeting a resolution requiring confirmation at
another meeting is passed, the Directors shall forthwith convene a further
special general meeting for the purpose of considering such resolution and, if
thought fit, of confirming it as a special resolution; and, if the Directors do
not convene the meeting within seven (7) days from the date of the passing of
the first resolution, the requisitionists, or a majority of them in value, may
themselves convene the meeting.
72. Such meetings shall be convened as nearly as possible as meetings
are to be convened by the Directors.
73. At least twenty-five (25) days notice of every general meeting,
specifying the place, day and hour of the meeting and, when special business is
to be considered, the general nature of such business, shall be given to members
entitled to be present at such meeting by notice sent by post or otherwise. With
the consent in writing of all members entitled to vote at such meeting, a
meeting may be convened if all the members are present at a meeting either in
person or by proxy or if those absent have signified their assent to such
meeting or their consent to the business transacted at such meeting and notice,
however given, shall be adequate if all those present waive further notice of
the time, place and purpose of the meeting.
74. When it is proposed to pass a special resolution, the two meetings
may be convened by the same notice, and it shall be no objection to such notice
that it only convenes the second meeting contingently upon the resolution being
passed by the requisite majority at the first meeting.
75. Any meeting duly constituted and adjourned to a later date and
place specified thereat shall continue to be duly constituted without further
notice to the Shareholders.
75A. The accidental omission to give any such notice to any of the
members or the failure of any Shareholder to receive such notice shall not
invalidate any resolution passed at any such meeting.
75B. For the purposes of determining Shareholders entitled
(a) to notice of or to vote at any ordinary or special general
meeting of Shareholders or any adjournment thereof;
(b) to receive payment of any dividend or other distribution or
allotment of any rights; or
(c) to exercise any rights in respect of any change, conversion,
or exchange of stock or for the purpose of any other lawful action,
<PAGE>
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, for any such determination of Shareholders, such date in
any case to be not more than sixty (60) days and, subject to any lawful
authority providing otherwise, not less than ten (10) days prior to such meeting
nor more than sixty (60) days prior to any other action. If no record date is
fixed:
(i) The record date for determining Shareholders entitled to
notice of or to vote at any ordinary or special general meeting of Shareholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(ii) The record date for determining Shareholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating hereto.
(iii) A determination of Shareholders of record entitled to
notice of or to vote at any ordinary or special general meeting of Shareholders
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.
PROCEEDINGS AT GENERAL MEETINGS
76. The ordinary general meeting of the members for the election of
Directors, for the receipt and consideration of the profit and loss account, the
balance sheet and the reports of the Directors and Auditors thereon, and for the
transaction of such other business as may properly come before the meeting shall
be held on such date as the board of directors shall each year fix. The day,
place and hour of each annual meeting shall be specified in the notice of annual
meeting. The meeting may be postponed or adjourned from time to time and place
to place until its business is completed.
At an ordinary general meeting of the members, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the board of directors, (b) otherwise properly brought before the meeting by or
at the direction of the board of directors, or (c) otherwise properly brought
before the meeting by a member. For business to be properly brought before an
annual meeting by a member, the member must have given timely notice thereof in
writing to the Secretary of the Company. To be timely, a member's notice must be
delivered to or mailed and received at the principal executive offices of the
Company, not less than ninety (90) days before the anniversary date of the
previous annual meeting of Shareholders.
<PAGE>
A member's notice to the Secretary shall set forth as to each matter
the member proposes to bring before the annual meeting
(a) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting;
(b) the name and address, as they appear on the Company's books, of the
member intending to propose such business;
(c) the class and number of shares of the Company which are
beneficially owned by the member;
(d) a representation that the member is a holder of record of capital
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to present such business; and
(e) any material interest of the member in such business.
Notwithstanding anything in these Articles to the contrary, no business
shall be conducted at an annual meeting except in accordance with the procedures
set forth in this Article 76. The presiding officer of an annual meeting shall,
if the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this Article 76, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
77. No business shall be transacted at any general meeting unless the
quorum requisite is present at the commencement of the business. A corporation
that is a member of the Company and has a duly authorized agent or
representative present at any such meeting shall for the purpose of this Article
be deemed to be personally present at such meeting.
78. Two Shareholders personally present and entitled to vote shall be a
quorum for a general meeting for the choice of a chairman and the adjournment of
the meeting. For all other purposes, two Shareholders present in person and
holding or representing by proxy (whether or not instructed to vote in respect
of any or all matters to come before the meeting) not less than 25 percent (25%)
of the total number of issued shares of the capital stock of the Company for the
time being carrying voting rights shall constitute a quorum.
<PAGE>
79. The Chairman of the Board shall be entitled to take the chair at
every general meeting or, if there be no Chairman of the Board, or if he is not
present within fifteen minutes after the time appointed for holding the meeting,
the President, or failing him, a Vice-President shall be entitled to take the
chair. If the Chairman, the President or a Vice-President is not present within
fifteen minutes after the time appointed for holding the meeting, the members
present entitled to vote at the meeting shall choose another Director as
chairman and, if no Director is present or if all the Directors present decline
to take the chair, then the members present entitled to vote shall choose one of
their number to be chairman.
80. If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if it was convened pursuant to a requisition
under Articles 68-72, shall be dissolved; if it was convened in any other way,
it shall stand adjourned to the same day, in the next week, at the same time and
place. If at such adjourned meeting a quorum is not present, those members
entitled to vote who are present shall be a quorum and may transact the business
for which the meeting was called.
81. At any general meeting a resolution put to the meeting shall be
decided by show of hands unless, either before or on the declaration of the
result of the show of hands, a poll is demanded by (i) the chairman or (ii) at
least five members present and entitled to vote at the meeting or (iii) a member
or members holding or representing by proxy at least one-tenth in number of the
issued shares of the Company that confer upon their holders the right to vote at
the meeting.
82. When a resolution is decided by a show of hands, a declaration by
the chairman that a resolution has been carried, carried by a particular
majority, lost or not carried by a particular majority and an entry to that
effect in the Company's book of proceedings shall be conclusive evidence of the
fact without proof of the number or proportion of the votes recorded in favor or
against such resolution.
83. When a poll is demanded, it shall be taken in such manner at such
time and place as the chairman of the meeting directs, and either at once or
after an interval of adjournment or otherwise. The result of the poll shall be
deemed to be the resolution of the meeting at which the poll was demanded. The
demand of a poll may be withdrawn. When any dispute occurs over the admission or
rejection of a vote, it shall be resolved by the chairman and such determination
made in good faith shall be final and conclusive.
84. Where there is an equality of votes, either on the show of hands or
on a poll, the Chairman shall have an additional casting vote in addition to the
vote or votes he has as a member.
<PAGE>
85. The chairman of a general meeting may, with the consent of a
majority of the members present, adjourn the meeting from time to time and from
place to place, but no business shall be transacted at any adjourned meeting
other than the business left unfinished at the meeting that was adjourned.
86. Any poll demanded on the election of a chairman of a meeting or any
question of adjournment shall be taken at the meeting without adjournment.
87. The demand of a poll shall not prevent the continuance of a meeting
for the transaction of any business other than the question on which a poll has
been demanded.
VOTES OF MEMBERS
88. Subject to the provisions applicable to any shares limiting or
excluding the rights of the holders thereof to vote at general meetings and
subject to the voting restrictions provided for in paragraph 8 of the Memorandum
of Association, on a show of hands every member present in person shall have one
vote and upon a poll every member present in person or by proxy shall have one
vote for every share held by him. Where a corporation that is a member is
present by proxy or a representative duly authorized under the Act, such proxy
or representative shall, whether or not he himself is a member, be entitled to
vote for such corporation either on a show of hands or at a poll. For purposes
of a special resolution, in the determination of members of the Company entitled
to vote who are present in person or by proxy the Chairman shall:
(a) not count the number of limited voting shares of any person so
present in excess of the voting restrictions in paragraph 8 of the Memorandum of
Association (Articles of Continuance); and,
(b) count those shareholders represented by proxy only if the
proxy holder present is authorized to vote in respect of the special resolution
and amendments thereto.
Where, pursuant to the Act, the Articles herein, other lawful authority
or the prescribed policy of any authority with which the Company chooses to
remain in good standing, a vote, resolution, approval or consent of the members
is required, whether by way of simple majority, ordinary resolution, special
resolution, class vote or otherwise, such vote, resolution, approval or consent
shall not be effective or binding upon the Company until it is confirmed by a
majority of votes at a meeting of the Directors.
<PAGE>
89. Where there are joint registered holders of any share, any one of
such persons may vote such share at any meeting, either personally or by proxy,
as if he were solely entitled to it. If more than one of such joint holders is
present at any meeting, personally or by proxy, the one whose name stands first
on the register in respect of such share shall alone be entitled to vote it.
Several executors or administrators of a deceased member in whose name any share
stands shall for the purpose of this Article be deemed joint holders thereof.
90. Votes may be cast either personally or by proxy or, in the case of
a corporation, by a representative duly authorized under the Act.
91. Subject to Article 91A, the instrument appointing a proxy shall be
in writing under the hand of the appointer or of his attorney duly authorized in
writing or, if such appointer is a corporation, under its common seal. Any
solicitation of proxies, by or on behalf of management or otherwise, shall be in
accordance with the Act.
91A. The Directors may from time to time make regulations regarding the
lodging of proxies at some place other than the place at which a meeting or
adjourned meeting of members is to be held and for particulars of such proxies
to be cabled or telegraphed or sent by telex or in writing before the meeting or
adjourned meeting to the Company or any agent of the Company for the purpose of
receiving such particulars and providing that proxies so lodged may be voted
upon as though 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 members may, subject to any
regulations made as aforesaid, in his discretion accept telegraphic or cable or
telex or written communication from the appointer or his lawful attorney as to
the authority of any persons claiming to vote on behalf of and to represent a
member notwithstanding that no proxies conferring such authority have been
lodged with the Company and any votes given in accordance with such telegraphic
or cable or telex or written communications accepted by the Chairman of the
meeting shall be valid and shall be counted.
92. A member of unsound mind in respect of whom an order has been made
by any court having jurisdiction in lunacy may vote by his guardian or other
person in the nature of a guardian appointed by that court and any such guardian
or other person may vote by proxy.
93. The instrument appointing a proxy or appointing the representative
of a corporation and the power of attorney or other authority, if any, under
which it is signed or a notarially certified copy of that power of authority
shall be deposited at the office of the Company not less than forty-eight hours
before the time for holding the meeting or adjourned meeting at which the person
named in such instrument proposes to vote except with the approval of the
chairman. No instrument appointing a proxy shall be valid at the expiration of
twelve months from the date of its execution.
<PAGE>
94. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death of the principal, the
revocation of the proxy, or the transfer of the share in respect of which the
vote is given, provided no intimation in writing of the death, revocation or
transfer is received at the office of the Company before the meeting or by the
chairman of the meeting before the vote is given.
95. Every instrument of proxy, whether for a specified meeting or
otherwise, shall as nearly as circumstances will permit, be in the form
following or in such other form as the Directors may from time to time
determine:
I, ______________________ of _________________________ in the County
of_________________________ being a member of _____________ hereby
appoint _________________________ of___________________ (or failing
him___________________ of___________________) as my proxy to vote for
me and on my behalf at the ordinary general (or special general as the
case may be) meeting of the Company, to be held on the _________ day of
___________________ and at any adjournment thereof, or at any meeting
of the Company which may be held within _________ months from the date
thereof. As witness my hand this __________ day of ____________________
19 __.
WITNESS:
------------------------------------
Shareholder
96. No member shall be entitled to be present or to vote on any
question, either personally or by proxy or as proxy for another member, at any
general meeting or upon a poll, or be reckoned in a quorum whilst any call or
other sum is due and payable to the Company in respect of any of the shares of
such member.
97. Any resolution passed by the Directors, notice of which has been
given to the members in the manner in which notices are hereinafter directed to
be given and which is, within one month after it has been passed, ratified and
confirmed in writing by members entitled on a poll to three-fifths of the votes,
shall be as valid and effectual as a resolution of a general meeting. This
Article shall not apply to a resolution for winding up the Company or to a
resolution dealing with any matter that by statute or these Articles ought to be
dealt with by a special resolution.
<PAGE>
DIRECTORS
98. The number of Directors shall be five. The Directors shall be
divided into five classes, each class to be composed of one Director.
99. Five Directors were first elected in such classes: one for a term
of five (5) years, one for a term of four (4) years, one for a term of three (3)
years, one for a term of two (2) years and one for a term of one (1) year. At
each annual general meeting of Shareholders of the Company, a Director to
replace the Director whose term has then expired shall be elected for a term of
five (5) years. Any Director not re-elected shall cease to hold office upon the
election of their successors, but a Director re-elected at a meeting at which
his term of office would otherwise terminate shall be deemed for all purposes to
have continued in office without break.
100. Directors, unless they voluntarily resign, vacate office as
provided in Article 106 or are removed as provided in Article 109, shall
continue in office until their successors are elected and duly qualified, and
shall be eligible for re-election if otherwise qualified.
101. So long as a quorum of Directors remains in office, any vacancy,
howsoever caused, occurring in the Board of Directors may be filled by the
remaining Directors for the remainder of the term of the Director whose ceasing
to be a Director caused such vacancy.
102. Notwithstanding anything else herein contained a Director may but
not need be a member.
103. A Director may resign by mailing, postage prepaid addressed to the
Company at its head office or delivering to any officer of the Company his
written resignation which shall take effect, without notice, upon the day of
such mailing or delivery.
104. The Directors shall be paid out of the funds of the Company as
remuneration for their service such sums, if any, as the Board may determine and
such remuneration shall be divided among them in such proportions and manners as
the Directors determine. The Directors may also be paid their reasonable
travelling, hotel and other expenses incurred in attending board meetings and
the execution of their duties as Directors.
105. A Director may, in conjunction with the office of Director, and on
such terms as to remuneration and otherwise as the Directors arrange or
determine, hold any other office or place of profit under the Company or under
any company in which this Company is a shareholder or is otherwise interested.
<PAGE>
106. The office of a Director shall ipso facto be vacated:
(a) if he becomes bankrupt, makes an authorized assignment,
suspends payment or compounds with his creditors;
(b) if, by notice in writing to the Company, he resigns his
office; or
(c) if he is removed as provided by Article 109.
107. No Director shall be disqualified by his office, or by reason of
holding any other office or place of profit under the Company or under any
company in which the Company shall be a Shareholder or otherwise interested,
from contracting with the Company, either as vendor, purchaser, or otherwise,
nor shall any such contract, or any contract or arrangement entered into or
proposed to be entered into by or on behalf of the Company in which any Director
is in any way interested, either directly or indirectly, be avoided, nor shall
any Director so contracting or being so interested be liable to account to the
Company for any profit realized by any such contract or arrangement by reason
only of such Director holding that office or of the fiduciary relation thereby
established. However, the existence and nature of his interest must be declared
by him at a meeting of the Directors of the Company. In the case of a proposed
contract such Director shall declare his interest at the meeting of Directors at
which the question is first taken into consideration, or if he was not then
interested, at the next meeting held after he became so interested, and when he
becomes interested after it is made, he shall declare his interests at the first
meeting held after he becomes so interested. A general notice given to the
Directors by a Director that he is a member, Shareholder or director of any
specified firm or company and is to be regarded as interested in any transaction
or contract with such firm or company shall be deemed to be a sufficient
declaration under this Article and no further or other notice shall be required.
Subject to compliance with the Act, and the provisions of this Article, no
Director shall be obliged to make any further disclosure of interest. Any
Director who may be interested in any such contract or arrangement shall be
entitled to vote and to have his vote counted with respect to such contract or
arrangement and any of the terms and conditions thereof provided notice of such
interest has been given as herein provided. Any such contract or arrangement of
which the Directors have approved shall be fully effective and any Director who
has given notice as provided herein shall not be liable to account for any
profit made therefrom.
ELECTION OF DIRECTORS
108. If at any ordinary general meeting at which an election of
Directors ought to take place, or if no ordinary general meeting is held in any
year or period of years, the retiring Directors shall continue in office until
their successors are elected and a general meeting for that purpose may on
notice be held at any time.
<PAGE>
109. The Company may, by special resolution, remove any Director for
Cause (as defined below) before the expiration of the Director's term of office.
Any person appointed in his stead shall hold office during such time only as the
Director in whose place he is appointed. The term "Cause" is defined as (i)
conviction of the Director of a felony, (ii) declaration by order of a court
that the Director is of unsound mind, or (iii) the gross abuse of trust which is
proven by clear and convincing evidence to have been committed in bad faith. The
Board of Directors shall also have the power to remove Directors for any proper
cause (whether or not similar to the Cause defined above) and to suspend
Directors pending a final determination that cause exists for removal.
110. Any casual vacancy occurring among the Directors may be filled by
the remaining Directors provided a quorum be in office; but any person so chosen
shall retain office only so long as the vacating Director would have retained it
if he had continued as a Director. If at anytime there be not a quorum in office
any Shareholder may call a general meeting for the purpose of electing such
Directors.
110A. Only persons who are nominated in accordance with the procedures
set forth in these Articles shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the Company
only may be made at an annual general meeting of members (and not at a special
general meeting) (a) by or at the direction of the Board of Directors or (b) by
any member of the Company entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in this Article 110A.
Nominations by members shall be made pursuant to timely notice in writing to the
Secretary of the Company. To be timely, a member's notice shall be delivered to
or mailed and received at the principal executive offices of the Company not
less than ninety (90) days before the anniversary date of the previous annual
meeting of Shareholders.
Each such notice shall set forth:
(a) the name and address of the member who intends to make
the nomination and of the person or persons to be nominated;
(b) a representation that the member is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice;
(c) a description of all arrangements or understandings
between the member and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the member; and
<PAGE>
(d) such other information regarding each nominee proposed by
such member as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the United States Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by the
board of directors.
To be effective, each notice of intent to make a nomination
given hereunder shall be accompanied by the written consent of each nominee to
being named in a proxy statement and to serve as a director of the Company if
elected.
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth in these
Articles. The presiding officer of the meeting shall, if the facts warrant,
determine and declare to the meeting that nomination was not made in accordance
with the procedures prescribed by these Articles, and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.
OFFICERS
111. The officers of the Company shall be a president and a secretary
and such other officers as the Board of Directors in its discretion shall from
time to time elect or appoint including, if deemed advisable, one or more
vice-presidents, a chairman of the board, a general manager, a secretary, a
treasurer, one or more assistant-secretaries and one or more
assistant-treasurers.
(a) Any offices except those of president and vice-president may
be held by the same person.
(b) All officers shall be elected or appointed by and a vacancy
in any office, however occurring, may be filled by the Board of Directors.
(c) In the absence of an agreement to the contrary: all offices
shall be held during pleasure of the Board of Directors; all officers shall be
subject to removal with or without cause by resolution of the Directors; and an
officer may resign his office at any time at a meeting of the board or by
delivering his resignation in writing to any other officer or mailing the same
by ordinary prepaid post addressed to the Company at its head office. Subject
thereto an officer shall continue in office until but shall cease to hold office
when his successor is elected or appointed.
(d) The president shall be the chief executive officer of the
Company and shall have general supervision of all other officers and their
duties.
<PAGE>
(e) Subject to such limitation as the Board of Directors may from
time to time impose, an officer shall have all the powers and authority and
shall perform all the duties usually incident to the office he holds and shall
perform such other duties as may from time to time be imposed upon the holder of
such office by these Articles or by resolution of the Board.
(f) In the absence of the president, any vice-president in
office may exercise any of the powers and authority of or perform any of the
duties of the president; subject thereto and to any statutory limitation, the
Board of Directors may from time to time delegate to any other person the
powers, authority and duties of any officer.
(g) The remuneration of all officers of the Company shall be
established by or in such manner as the Board of Directors shall from time to
time determine.
CHAIRMAN OF THE BOARD
112. The Directors may also elect one of their number to be Chairman of
the Board and may determine the period during which he is to hold office. He
shall perform such duties and receive such special remuneration as the Board may
from time to time provide.
PROCEEDINGS OF DIRECTORS
113. The Directors may meet together for the dispatch of business,
adjourn and otherwise regulate their meetings and proceedings as they think fit,
and may otherwise determine the quorum necessary for the transaction of
business. Two Directors shall constitute a quorum.
114. Meetings of Directors may be held either within or without the
Province of Nova Scotia and the Directors may from time to time make
arrangements relating to the time and place of holding Directors' meetings, the
notices to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of Directors may be held at the close of every
ordinary general meeting of the Company without notice;
(2) Notice of every other Directors' meeting may be delivered
or mailed or telegraphed or telephoned to each Director before the meeting is to
take place. Such notice shall be delivered or mailed or telegraphed or
telephoned at least forty-eight hours before the time fixed for the meeting.
<PAGE>
(3) A meeting of Directors may be held without formal notice if
all the Directors are present or if those absent have signified their assent to
such meeting or their consent to the business transacted at such meeting.
(4) In the case of a Director elected to fill a vacancy on the
Board, no notice of the meeting at which he is elected shall be required to be
given to that Director.
(5) A Director or a member of a committee of the Board of
Directors may participate in a meeting of the Board of Directors or of such
committee by means of conference telephone or similar communications equipment
enabling all Directors participating in the meeting to hear one another, and
participation in such meeting shall constitute presence in person at such
meeting.
115. The President or any Director may at any time, summon a meeting of
the Directors.
116. (1) Questions arising at any meeting of Directors shall be
decided by a majority of votes. The Chairman of the Board and the Chairman of
the meeting, if different, may vote as Directors, but no Director, including the
Chairman, shall have a second or casting vote.
(2) At any meeting of Directors the chairman shall receive and
count the vote of any Director not present in person at such meeting on any
question or matter arising at such meeting whenever such absent Director has
indicated by telegram, letter or other writing lodged with the chairman of such
meeting the manner in which he desires to vote on such question or matter and
such question or matter has been specifically mentioned in the notice calling
the meeting as a question or matter to be discussed or decided thereat. In
respect of any such question or matter so mentioned in such notice any Director
may give to any other Director a proxy authorizing such other Director to vote
for such first named Director at such meeting, and the chairman of such meeting,
after such proxy has been lodged with him, shall receive and count any vote
given in pursuance thereof notwithstanding the absence of the Director giving
such proxy.
117. If no Chairman of the Board is elected, or if at any meeting of
Directors he is not present within five minutes after the time appointed for
holding the meeting, the President, if a Director, shall preside. If the
President, being a Director, is not present at such time, a Vice-President who
is also a Director shall preside. If neither the President nor a Vice-President
who is also a Director is present at such time, the Directors present shall
choose some one of their number to be chairman of the meeting.
118. A meeting of the Directors at which a quorum is present shall be
competent to exercise all or any of the authorities, powers and discretions for
the time being vested in or exercisable by the Directors generally.
<PAGE>
119. The Directors may delegate any of their powers to committees
consisting of such number of members of their body as they think fit. Any
committee so formed shall in the exercise of the powers so delegated conform to
any regulations that may be imposed on them by the Directors.
120. The meetings and proceedings of any such committee consisting of
two or more members shall be governed by the provisions contained in these
Articles for regulating the meetings and proceedings of the Directors insofar as
they are applicable and are not superseded by any regulations made by the
Directors.
121. All acts done at any meeting of the Directors or of a committee of
Directors or by any person acting as a Director shall, notwithstanding that it
is afterwards discovered that there was some defect in the appointment of the
Directors or persons so acting, or that they or any of them were disqualified,
be as valid as if every such person had been duly appointed and was qualified to
be a Director.
122. (1) A resolution in writing and signed by every Director who
would be entitled to vote on the resolution at a meeting is as valid as if it
was passed by such Directors at a meeting. Any such resolution may be signed in
counterpart.
(2) A copy of every resolution referred to in subsection (1) shall
be kept in the minutes of proceedings of the Directors or committee thereof, as
the case may be.
123. If any one or more of the Directors is called upon to perform
extra services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof, the
Company may remunerate the Director or Directors so doing, either by a fixed sum
or by a percentage of profits or otherwise. Such remuneration shall be
determined by the Directors and may be either in addition to or in substitution
for his share in the remuneration provided under Article 104.
REGISTERS
124. The Directors shall cause to be kept at the Company's head office
in accordance with the provisions of the Act a register of the members of the
Company, a register of the bond and debenture holders of the Company and a
register of its Directors. Branch registers of the members and the bond and
debenture holders may be kept elsewhere, either within or without Nova Scotia,
in accordance with the Act.
<PAGE>
MINUTES
125. The Directors shall cause minutes to be entered in books designed
for the purpose:
(1) of all appointments of officers;
(2) of the names of the Directors present at each meeting of Directors
and of the committees of Directors;
(3) of all orders made by the Directors and committees of Directors;
(4) of all resolutions and proceedings of meetings of the Shareholders
and of the Directors.
Any such minutes of any meeting of the Directors or of any committee of
the Directors or of the Company, if purporting to be signed by the chairman of
such meeting or by the chairman of the next succeeding meeting, shall be
receivable as prima facie evidence of the matters stated in such minutes.
POWERS OF DIRECTORS
126. The management of the business of the Company shall be vested in
the Directors who, in addition to the powers and authorities by these Articles
or otherwise expressly conferred upon them, may exercise all such powers and do
all such acts and things as may be exercised or done by the Company and are not
hereby or by statute expressly directed or required to be exercised or done by
the Company in general meeting, but subject nevertheless to the provisions of
the statutes in that behalf and of these Articles and to any regulations from
time to time made by the Company in general meeting; provided that no regulation
so made shall invalidate any prior act of the Directors that would have been
valid if such regulation had not been made. Where any power, right or privilege
is conferred upon the Company in the Articles or the Act, it shall be deemed to
mean the Directors of the Company acting alone unless the Articles or Act
expressly provide otherwise.
127. Without restricting the generality of the terms of the last
preceding Article and without prejudice to the powers conferred thereby, and the
other powers conferred by these Articles, the Directors shall have power:
(1) to take such steps as they think fit to carry out any
agreement or contract made by or on behalf of the Company;
<PAGE>
(2) to pay the costs, charges and expenses preliminary and
incidental to the promotion, formation, establishment and registration of the
Company;
(3) to purchase or otherwise acquire for the Company and
property, rights or privileges that the Company is authorized to acquire, and at
such price and generally on such terms and conditions as they think fit;
(4) at their discretion to pay for any property, rights or
privileges acquired by, or services rendered to the Company either wholly or
partially in cash or in shares, bonds, debentures or other securities of the
Company, and any such shares may be issued either as fully paid-up, or with such
amount credited as paid-up thereon as may be agreed upon;
(5) to secure the fulfillment of any contracts or engagements
entered into by the Company by mortgaging or charging all or any of the property
of the Company and its unpaid capital for the time being, or in such other
manner as they think fit;
(6) to appoint, remove or suspend at their discretion such
experts, managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from time to time
think fit, and to determine their powers and duties, and fix their salaries or
emoluments and to require security in such instances and to such amounts as they
think fit;
(7) to accept from any member insofar as the law permits and
on such terms and conditions as may be agreed upon a surrender of his shares or
any part thereof;
(8) to appoint any person or persons (whether incorporated or
not) to accept and hold in trust for the Company any property belonging to the
Company, or in which it is interested, to execute and do all such deeds and
things as may be requisite in relation to any such trust and to provide for the
remuneration of any such trustee or trustees;
(9) to institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company or its officers or otherwise concerning
the affairs of the Company, and also to compound and allow time for payment or
satisfaction of any debts due and of any claims or demands by or against the
Company;
(10) to refer any claims or demands by or against the Company to
arbitration and observe and perform the awards;
(11) to make and give receipts, releases and other discharges for
money payable to the Company and for claims and demands of the Company;
<PAGE>
(12) to determine who shall be entitled to exercise the
borrowing powers of the Company and sign on the Company's behalf bonds,
debentures or other securities, bills, notes, receipts, acceptances,
assignments, transfers, hypothecations, pledges, endorsements, cheques, drafts,
releases, contracts, agreements and all other instruments and documents;
(13) to provide from time to time for the management of the
affairs of the Company abroad in such manner as they think fit, and in
particular to appoint any persons to be the attorneys or agents of the Company
with such powers (including power to sub-delegate) and upon such terms as may be
thought fit;
(14) to invest and deal with any of the moneys of the Company not
immediately required for the purposes thereof in such securities and in such
manner as they think fit; and from time to time to vary or realize such
investments;
(15) to execute in the name and on behalf of the Company in favour
of any Director or other person who may incur or be about to incur any personal
liability for the benefit of the Company such mortgages of the Company's
property, present and future, as they think fit, and any such mortgages of the
Company's property, present and future, as they think fit, and any such
mortgages may contain a power of sale and such other powers, covenants and
provisions as are agreed on;
(16) to give any officer or other person employed by the Company
a commission on the profits of any particular business or transaction or a share
in the general profits of the Company and such commission or share of profits
shall be treated as part of the working expenses of the Company;
(17) to set aside out of the profits of the Company before
declaring any dividend such sums as they think proper as a reserve fund to meet
contingencies or provided for dividends, depreciation, repairing, improving and
maintaining any of the property of the Company and such other purposes as the
Directors may in their absolute discretion think conducive to the interests of
the Company; and to invest the several sums set aside in such investments, other
than shares of the Company, as they may think fit, and from time to time to deal
with and vary such investments, and to dispose of all or any part of them for
the benefit of the Company and to divide the reserve fund into such special
funds as they think fit, with full power to employ the assets constituting the
reserve fund in the business of the Company without being bound to keep them
separate from the other assets;
(18) from time to time to make, vary and repeal rules for the
regulation of the business of the Company, its officers and servants, the
members of the Company or any section or class of them;
<PAGE>
(19) to enter into all such negotiations and contracts, rescind
and vary all such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they may consider expedient for or
in relation to any of the matters aforesaid or otherwise for the purposes of the
Company;
(20) from time to time to provide for the management of the
affairs of the Company in such manner as they shall think fit.
127A. In addition to any approval of the Shareholders required in the
Memorandum of Association (Articles of Continuance), the Articles herein, or
pursuant to the Act, the approval of the Directors shall be required in respect
of any decision of the Company to:
(a) Amalgamate with another company;
(b) Be continued under the laws of another jurisdiction;
(c) Sell, lease or exchange all or substantially all of its
property;
SOLICITORS
128. The Company may employ or retain a solicitor or solicitors and
such solicitor may, at the request of the Board of Directors or on instructions
of the Chairman of the Board, the President or the Managing Director, attend
meetings of the Directors or Shareholders, whether or not he himself is a member
or a Director of the Company. If such solicitor is also a Director, he may
nevertheless charge for services rendered to the Company as a solicitor.
SECRETARY AND TREASURER
129. The Directors shall appoint a Secretary of the Company to keep the
minutes of the Shareholders' and Directors' meetings and perform such other
duties as may be assigned to him by the Board. The Directors may also appoint a
temporary substitute for the Secretary who shall, for the purpose of these
Articles, be deemed to be the Secretary.
130. The Directors may appoint a Treasurer of the Company to carry out
such duties as the Board may assign. If the Directors think it advisable, the
same person may hold the offices of both Secretary and Treasurer.
<PAGE>
THE SEAL
131. The Directors shall arrange for the safe custody of the Common
Seal of the Company. The Common Seal shall not be affixed to any instrument
unless authorized by a resolution of the Board of Directors or of a committee
thereof and then only in the presence of and contemporaneously with the
attesting signature of the Secretary of other officer or person appointed by the
Board for the purpose. Notwithstanding the foregoing, for the purpose of
certifying documents or proceedings, the Common Seal may be affixed by the
President, or Vice-President, the Secretary or any Director of the Company
without the authorization of a resolution of the Board. If any person who is
either the sole officer of the Company or the sole Director of the Company
executes any deeds, transfer, assignments, contracts, obligations, certificates
or other instruments, he shall be deemed to be authorized so to do as if
authorized by a resolution of the Directors.
132. The Company may have for use at any place outside Nova Scotia to
which the corporate existence and capacity of the Company extends, an official
seal that is a facsimile of the Common Seal of the Company with the addition on
its face of the name of the place where it is to be used; and the Company may by
writing under the seal of its Common Seal authorize any person to affix such
official seal to any document at such place to which the Company is a party.
DIVIDENDS
133. Subject to the provisions of these Articles and the rights of
those persons, if any, entitled to shares with special rights to dividends, the
profits of the Company may be divided among the members in proportion to the
amount of capital paid-up on the shares held by them respectively. Where capital
is paid-up in advance of calls upon the footing that it will carry interest,
such capital shall not whilst carrying interest confer a right to participate in
profits.
134. The Directors may from time to time declare such dividend as they
deem proper upon the shares of the Company according to the rights of the
members and the respective classes thereof, and may determine the date upon
which such dividend will be payable and that it will be payable to the persons
registered as the holders of the shares on which it is declared at the close of
business upon a specified date. No transfer of such shares made or registered
after the date so specified shall pass any right to the dividend so declared.
135. (1) Any dividend may be payable if not otherwise prohibited by
law.
<PAGE>
(2) Any Director may, at any time and from time to time express
to the Directors in such manner as he may determine his views on the
appropriateness of the payment of any dividend or may protest against the
payment of any dividend and if he protests the payment of any dividend within
ten (10) days of becoming aware of its declaration and he has not voted in
favour of recommending the payment of the dividend then he shall be under
absolutely no liability to the Company or the members with respect to the
payment of such dividend.
136. The declaration of the Directors as to the amount of the net
profits of the Company shall be conclusive.
137. The Directors may from time to time pay to the members such
interim dividends as in their judgment the position of the Company justifies.
138. The Directors may deduct from the dividends payable to any member
all such sums of money as may be due and payable by him to the Company on
account of calls, installments or otherwise and may apply the same in or towards
satisfaction of such sums of money so due and payable.
139. The Directors may retain any dividends on which the Company has a
lien and may apply the same in or towards satisfaction of the debts, liabilities
or engagements in respect of which the lien exists.
140. The Directors may retain any dividends payable upon shares in
respect of which any person is, under Article 42, entitled to become a member,
or which any person under that clause is entitled to transfer, until such person
has become a member in respect of or has duly transferred such shares.
141. Any meeting declaring a dividend may make a call on the members
for such amount as the meeting fixes so long as the call on each member does not
exceed the dividend payable to him. The call shall be made payable at the same
time as the dividend and the dividend may, if so arranged between the Company
and the member, be set off against the call. The making of a call under this
Article shall be deemed to be and be business of a meeting which declares such a
dividend.
142. Any meeting declaring a dividend may resolve that such dividend be
paid wholly or in part by the distribution of specific assets, paid-up shares,
debentures, bonds or debenture-stock of the Company or paid-up shares,
debentures, bonds or debenture stock of any other Company, or in any one or more
of such ways.
<PAGE>
143. Any meeting may resolve that any moneys, investments or other
assets forming part of the undivided profits of the Company standing to the
credit of the reserve fund or in the hands of the Company and available for
dividends or representing premiums received on the issue of shares and standing
to the credit of the share premium account, be capitalized and distributed to
the Shareholders who would be entitled to receive them if distributed by way of
dividend and in the same proportions, that all or any part of such capitalized
fund be applied on behalf of such Shareholders in paying up in full, either at
par or at such premium as the resolution may provide, any unissued shares or
debentures or debenture stock of the Company (which shall be distributed
accordingly) or in or towards payment of the uncalled liability on any issued
shares or debentures or debenture stock, and that such distribution or payment
shall be accepted by such Shareholders in full satisfaction of their interest in
the said capitalized sum.
144. For the purpose of giving effect to any resolution under the two
last preceding Articles, the Directors may settle any difficulty that may arise
in regard to the distribution as they think expedient and, in particular, may
issue fractional certificates, may fix the value for distribution of any
specific assets, may determine that cash payments will be made to any members
upon the footing of the value so fixed or that fractions of less value than
$5.00 may be disregarded in order to adjust the rights of all parties, and may
vest any such cash or specific assets in trustees upon such trusts for the
persons entitled to the dividend or capitalized fund as may seem expedient to
the Directors.
145. A transfer of shares shall not pass the right to any dividend
declared thereon after such transfer and before the registration of the
transfer.
146. Any one of several persons registered as the joint holder of any
share may give effectual receipts for all dividends and payments on account of
dividends in respect of such share.
147. Unless otherwise determined by the Directors, any dividend may be
paid by a cheque or warrant delivered to or sent through the post to the
registered address of the member entitled, or when there are joint holders, to
the registered address of that one whose name stands first on the register for
the shares jointly held. Every cheque or warrant so delivered or sent shall be
made payable to the other of the person to whom it is delivered or sent.
148. Notice of the declaration of any dividend, whether interim or
otherwise, shall be given to the holders of registered shares in the manner
hereinafter provided.
149. All dividends unclaimed one year after having been declared may,
until claimed, be invested or otherwise made use of by the Directors for the
benefit of the Company.
<PAGE>
HEAD OFFICE
150. The head office of the Company shall be at such place in the City
of Calgary, Alberta as the Board of Directors shall from time to time determine.
ACCOUNTS
151. The Directors shall cause proper books of accounts to be kept in
accordance with the Act.
152. The books of account shall be kept at the head office of the
Company or at such other place or places as the Directors may direct.
153. The Directors shall from time to time determine whether and to
what extent and at what times and places and under what conditions or
regulations the accounts and books of the Company or any of them shall be open
to inspection of the members and no member shall have any right of inspecting
any account or book or document of the Company except as conferred by statute or
authorized by the Directors or a resolution of the Company in general meeting.
154. At the ordinary annual general meeting in every year the Directors
shall lay before the Company financial statements, the report of the auditors
and, if applicable, the report of the Directors, in accordance with the Act.
155. The Directors shall send copies of financial statements required
to be placed before the meeting and the report of the auditors and the report of
the Directors to all persons entitled to receive notices of general meetings of
the Company at least seven (7) days before the date of the general meeting at
which the reports are to be presented.
156. The costs (if any) to the Company of the formation of the Company,
the completion of the title of any property and rights acquired by it, the
purchase of any business or contract, the establishing of any new branch of
business, the acquisition by purchase of any property of a wasting nature or any
extraordinary expenditure may be spread over a series of years or otherwise
treated as the Board may determine, due provision in their opinion being always
made for writing down such cost, and the amount of such cost for the time being
outstanding may, for the purpose of calculating the profits of the Company for
dividends, be reckoned as an asset.
157. In the event the Act so requires, the Directors shall send to each
member who holds voting securities, such interim financial statements as stated
in the Act.
<PAGE>
AUDITORS AND AUDIT
158. The Company shall at each annual general meeting appoint an
auditor or auditors to hold office until the next annual general meeting.
159. The first auditors of the Company may be appointed by the
Directors at any time before the first annual general meeting and the auditors
so appointed shall hold office until such meeting unless previously removed by a
resolution of the Shareholders in general meeting, in which event the
Shareholders at such meeting may appoint auditors.
160. The Directors may fill any casual vacancy in the office of auditor
but while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
161. A person is disqualified from being auditor of the Company if that
person is not independent of the Company, all of its affiliates, or the
Directors or officers of the Company and its affiliates as is meant for purposes
of the Act.
162. The remuneration of the auditors shall be fixed by the Company in
general meeting, or by the Directors pursuant to authorization given by the
shareholders at the annual ordinary general meeting except that the remuneration
of an auditor appointed to fill a casual vacancy may be fixed by the Directors.
163. The auditors of the Company shall conduct such examinations,
prepare such reports, carry out such duties, be entitled to attend such
meetings, and be furnished with such information as is required by the Act.
164. Every account of the Directors, when audited and approved by a
general meeting, shall be conclusive unless an error is discovered within three
months after such approval. Whenever any such error is discovered within that
period, the account shall forthwith be corrected and thenceforth be conclusive.
165. If one auditor only is appointed, all the provisions herein
contained relating to auditors shall apply to him.
NOTICES
166. A notice may be served by the Company upon members personally or
by sending it through the post in a prepaid envelope or wrapper addressed to
such member at his registered place of address.
<PAGE>
167. Members who have no registered place of address shall not be
entitled to receive any notice.
168. The holder of a share warrant shall not, unless otherwise
expressed therein, be entitled in respect thereof to notice of any general
meeting of the Company.
169. Any notice required to be given by the Company to the members, or
any of them, and not expressly provided for by these Articles, shall be
sufficiently given if given by advertisement.
170. Any notice given by advertisement shall be advertised twice in a
paper published in the place where the head office of the Company is situated,
or if no paper is published there, then in any newspapers published in the City
of Halifax, Nova Scotia.
171. All notices shall, with respect to any registered shares to which
persons are jointly entitled, be given to whichever of such persons is named
first in the register for such shares, and notice so given shall be sufficient
notice to all the holders of such shares.
172. Any notice sent by post shall be deemed to be served on the day
following that upon which the letter, envelope or wrapper containing it is
posted, and in proving such service it shall be sufficient to prove that the
letter, envelope or wrapper containing the notice was properly addressed and put
into the post office with the postage prepaid thereon. A certificate in writing
signed by any manager, secretary or other official of the Company that the
letter, envelope or wrapper containing the notice was so addressed and posted
shall be conclusive evidence thereof. The foregoing provisions of this clause
shall not apply to a notice of a meeting of the Directors.
173. Every person who by operation of law, transfer or other means
whatsoever becomes entitled to any share shall be bound by every notice in
respect of such share that prior to his name and address being entered on the
register was duly served in the manner hereinbefore provided upon the person
from whom he derived his title to such share.
174. Any notice or document so advertised or sent by post to or left at
the registered address of any member in pursuance of the Articles shall,
notwithstanding that such member is then deceased and that the Company has
notice of his decease, be deemed to have been served in respect of any
registered shares, whether held by such deceased member solely or jointly with
other persons, until some other person is registered in his stead as the holder
or joint holder thereof, and such service shall for all purposes of these
Articles be deemed a sufficient service of such notice or document on his heirs,
executors, or administrators and all persons, if any, jointly interested with
him in any such share.
<PAGE>
175. The signature to any notice given by the Company may be written or
printed.
176. When a given number of days' notice or notice extending over any
other period is required to be given, the day of service and the day upon which
such notice expires shall not, unless it is otherwise provided, be counted in
such number of days or other period.
INDEMNITY
177. (a) Each of the Directors and officers for the time being of the
Company and his heirs, executors and administrators, in the absence of any
dishonesty on his part, shall be indemnified and secured harmless by the Company
from and against all claims, actions, costs, charges, losses, damages and
expenses incurred or sustained by reason of any action or thing done, concurred
in or omitted in or about the execution of his duty or supposed duty as a result
of the breach of his fiduciary duty.
(b) No Director or officer for the time being of the Company and
his heirs, executors and administrators, in the absence of any dishonesty on his
part, shall be liable for: the acts, receipts, neglects or defaults of any other
person; or for joining in any receipt or act for conformity; or for any loss,
damage or expense happening to the Company through the insufficiency or
deficiency of title to any property acquired by, for or on behalf of the
Company; or for the insufficiency or deficiency of any security in or upon which
any moneys of the Company are invested; or for any loss or damages arising from
the bankruptcy, insolvency or tortious act of any person with whom any moneys,
securities or other property of the Company are lodged or deposited; or for any
other loss, damage or misfortune whatever which may arise out of the execution
of his duty or supposed duty or as a result of the breach of his fiduciary duty
or in relation thereto.
(c) The Company shall indemnify a director or officer of the
Company, a former director or officer of the Company or a person who acts or
acted at the Company's request as a director or officer of a body corporate of
which the Company is or was a shareholder or creditor, and his heirs and legal
representatives, against all claims, costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, penalty or fine,
reasonably incurred by him in respect of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of such corporation or body corporate if:
(1) He acted honestly and in good faith with a view to the
best interests of the Company; or
<PAGE>
(2) In the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful; or
(3) He was substantially successful on the merits in this
defense of the action or proceeding.
(d) The foregoing provisions of this article shall be in
amplification of and in addition to and not by way of limitation of or
substitution for any rights, immunities or protection conferred upon any
director or officer by any statute, law, matter or thing whatsoever.
FISCAL YEAR
178. The fiscal year of the Company shall terminate on December 31 in
each year or on such other day as the Board of Directors may from time to time
determine.
SHAREHOLDER AGREEMENTS
179. Any written agreement or agreements which may be entered into by
the Company and signed by all its shareholders respecting any matters dealt with
under these Articles or otherwise, shall, to the extent any provisions of the
agreements are inconsistent with these Articles, supersede the terms of these
Articles and be deemed to be amendments thereto and be binding upon the Company,
the Shareholders and future Shareholders.
<PAGE>
SECRETARY'S CERTIFICATE
I, the undersigned, hereby certify that the attached
Resolution is a true copy of a Special Resolution duly passed by a majority of
not less than three-fourths of such Members of CANADA SOUTHERN PETROLEUM LTD.
(the "Company") entitled to vote, as were present in person or by proxy at a
General Meeting of the Members of the Company duly called and held at The
Bristol Place Hotel, in the City of Etobicoke, in the municipality of
metropolitan Toronto, province of Ontario, on the 4th day of December 1990, of
which notice specifying the intention to propose the Resolution as a Special
Resolution had been duly given, and that the said Resolution was duly confirmed
by a majority of such Members of the Company entitled to vote, as were present
in person or by proxy at a subsequent General Meeting of the Members of the
Company duly called and held at The Bristol Place Hotel, in the City of
Etobicoke, in the municipality of metropolitan Toronto, province of Ontario, on
the 19th day of December 1990, of which notice was duly given.
WITNESS my hand and the seal of the Company at Calgary,
Alberta this 19th day of December 1990.
/s/ Evelyn D. Scott
Evelyn D. Scott
Secretary
<PAGE>
WHEREAS, Canada Southern Petroleum Ltd. (the Corporation), by Articles of
Continuance, is a Corporation governed in all respects by the provisions of the
Companies Act of Nova Scotia (hereinafter called the "Act") which has been
amended and modernized since the date of the Articles of Continuance;
BE IT RESOLVED as a Special Resolution of the Corporation as is meant in the
Act:
1. That subject as hereinafter provided, that the Articles of Association
of the Corporation (otherwise known as By-Laws) be revoked and replaced
with Articles of Association in the form as appears attached hereto and
identified as Schedule "A";
2. That the special Resolution be effective upon the adjournment of the
Special General Meeting of the Shareholders of the Corporation to be
held on December 19, 1990 and that the Secretary cause a copy of this
Special Resolution, certified under the seal of the Corporation, to be
filed within fifteen (15) days of December 19, 1990 with the office of
the Registrar of Joint Stock Companies in Halifax, Nova Scotia.
I HEREBY CERTIFY that this is a
true copy of a document filed in
the office of the Registrar of
Joint Stock Companies on the 27th
day of December, 1990
/s/ Nancy Homans
Registrar of Joint Stock Companies
Dated 12th day of July, 1991
PATTERSON PALMER HUNT MURPHY
------------------------------------------------------------------------
Atlantic Canada Lawyers
August 27, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Ladies and Gentlemen:
Canada Southern Petroleum Ltd.
Registration Statement on Form S-8
We have acted as counsel for Canada Southern Petroleum Ltd. (the "Company") in
connection with the proposed sale and issuance by the Company of up to an
aggregate of 700,000 shares of the Company's Limited Voting Shares, par value
$1.00 per share (the "Shares"), pursuant to the Company's 1998 Stock Option Plan
(the "Plan"), as described in the Company's Registration Statement on Form S-8
being filed this day under the Securities Act of 1933, as amended.
We are familiar with the action taken by the Company to date with respect to the
adoption of the Plan, and the reservation of an aggregate of 700,000 shares of
Common Stock for issuance under the Plan, all of which are described in the
Registration Statement. We have examined originals, or copies certified or
otherwise authenticated to our satisfaction, of such corporate records of the
Company, agreements and other instruments, certificates of public officials,
officers and representatives of the Company and such other documents as we have
deemed necessary as a basis for the opinions hereinafter expressed. We are
furnishing this opinion in connection with the filing of the Registration
Statement.
Based upon the foregoing, we are of the opinion that, upon the effectiveness of
the Registration Statement, the shares of Common Stock proposed to be issued and
sold by the Company under the Registration Statement pursuant to the Plan will,
when issued in accordance with the terms of the Plan, be legally issued, fully
paid and nonassessable.
We hereby consent to the inclusion of this opinion as an exhibit in the
Registration Statement and to the reference to our firm under the caption "Legal
Opinion" in the prospectus constituting a part of the Registration Statement.
Yours truly,
PATTERSON PALMER HUNT MURPHY
/s/ George L. White
Per: George L. White
10 Church Street, PO Box 1068, Truro, Nova Scotia, B2N 5B9
Telephone: (902) 897-2000 o Fax: (902) 893-3071 or (902) 895-7799
- ---------------------- ----------------------- ----------------- ---------------
Truro Saint John St. John's Charlottetown
Halifax Summerside
- ---------------------- ----------------------- ----------------- ---------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Stock Option Plan of Canada Southern Petroleum Ltd. and
in the related Prospectus of our report dated March 20, 1998, with respect to
the consolidated financial statements and schedules of Canada Southern Petroleum
Ltd. included in the Annual Report (Form 10-K) for the year ended December 31,
1997.
/s/ Ernst & Young LLP
Calgary, Canada
November 23, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby appoint and constitute James R. Joyce and Timothy L. Largay, and each of
them, as his agent and attorney in fact to execute in his name, place and stead
(whether on behalf of the undersigned individually or as an officer or director
of Canada Southern Petroleum Ltd. or otherwise) the Registration Statement on
Form S-8 of Canada Southern Petroleum Ltd., all amendments thereto, and any
additional Registration Statements on Form S-8 with respect to the Canada
Southern Petroleum Ltd. 1998 Stock Option Plan, and all instruments necessary or
advisable in connection with such Registration Statement or amendments; and to
file such Registration Statement and any amendments thereto with the Securities
and Exchange Commission. Each of the said attorneys shall have the power to act
hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this
instrument this 23rd day of November, 1998.
/s/ Benjamin W. Heath
Benjamin W. Heath
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby appoint and constitute James R. Joyce and Timothy L. Largay, and each of
them, as his agent and attorney in fact to execute in his name, place and stead
(whether on behalf of the undersigned individually or as an officer or director
of Canada Southern Petroleum Ltd. or otherwise) the Registration Statement on
Form S-8 of Canada Southern Petroleum Ltd., all amendments thereto, and any
additional Registration Statements on Form S-8 with respect to the Canada
Southern Petroleum Ltd. 1998 Stock Option Plan, and all instruments necessary or
advisable in connection with such Registration Statement or amendments; and to
file such Registration Statement and any amendments thereto with the Securities
and Exchange Commission. Each of the said attorneys shall have the power to act
hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this
instrument this 23rd day of November, 1998.
/s/ Arthur B. O'Donnell
Arthur B. O'Donnell
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby appoint and constitute James R. Joyce and Timothy L. Largay, and each of
them, as his agent and attorney in fact to execute in his name, place and stead
(whether on behalf of the undersigned individually or as an officer or director
of Canada Southern Petroleum Ltd. or otherwise) the Registration Statement on
Form S-8 of Canada Southern Petroleum Ltd., all amendments thereto, and any
additional Registration Statements on Form S-8 with respect to the Canada
Southern Petroleum Ltd. 1998 Stock Option Plan, and all instruments necessary or
advisable in connection with such Registration Statement or amendments; and to
file such Registration Statement and any amendments thereto with the Securities
and Exchange Commission. Each of the said attorneys shall have the power to act
hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this
instrument this 23rd day of November, 1998.
/s/ Eugene C. Pendery
Eugene C. Pendery
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby appoint and constitute James R. Joyce as his agent and attorney in fact
to execute in his name, place and stead (whether on behalf of the undersigned
individually or as an officer or director of Canada Southern Petroleum Ltd. or
otherwise) the Registration Statement on Form S-8 of Canada Southern Petroleum
Ltd., all amendments thereto, and any additional Registration Statements on Form
S-8 with respect to the Canada Southern Petroleum Ltd. 1998 Stock Option Plan,
and all instruments necessary or advisable in connection with such Registration
Statement or amendments; and to file such Registration Statement and any
amendments thereto with the Securities and Exchange Commission. Each of the said
attorneys shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this
instrument this 23rd day of November, 1998.
/s/ Timothy L. Largay
Timothy L. Largay
