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Exhibit 10
ARRANGEMENT AGREEMENT
Among
RAYMOND JAMES FINANCIAL, INC.
and
RAYMOND JAMES HOLDINGS (CANADA), INC.
and
GOEPEL MCDERMID INC.
Dated November 27, 2000
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TABLE OF CONTENTS
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ARTICLE 1 INTERPRETATION..........................................................................................1
1.1 Definitions.....................................................................................1
1.2 Schedules.......................................................................................9
1.3 Interpretation Not Affected by Headings, etc....................................................9
1.4 Currency........................................................................................9
1.5 Number and Gender..............................................................................10
1.6 Date For Any Action............................................................................10
1.7 Entire Agreement...............................................................................10
ARTICLE 2 THE ARRANGEMENT........................................................................................10
2.1 Implementation Steps by GMI....................................................................10
2.2 Implementation Steps by the RJF................................................................11
2.3 Interim Order..................................................................................11
2.4 Articles of Arrangement........................................................................11
2.5 GMI Information Circular.......................................................................13
2.6 Securities Compliance..........................................................................13
2.7 Preparation of Filings.........................................................................14
ARTICLE 3 CLOSING................................................................................................15
3.1 Closing........................................................................................15
3.2 Form of Instruments............................................................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.........................................................................16
4.1 Representations and Warranties of GMI..........................................................16
4.2 Representations and Warranties of the RJF Parties..............................................28
4.3 Survival of Representations and Warranties.....................................................31
ARTICLE 5 REGULATORY APPROVALS...................................................................................32
5.1 Applications...................................................................................32
5.2 Obtaining of Appropriate Regulatory Approvals..................................................32
ARTICLE 6 COVENANTS..............................................................................................32
6.1 Retention of Goodwill..........................................................................32
6.2 Retention of Employees.........................................................................32
6.3 Grant of Options...............................................................................33
6.4 Material Commitments...........................................................................33
6.5 Covenants of GMI...............................................................................33
6.6 Covenants of RJF Parties.......................................................................36
6.7 Covenant Regarding Non-Solicitation............................................................37
6.8 Access to Information..........................................................................37
6.9 Indemnification................................................................................39
6.10 Estimate of Consolidated Book Value............................................................39
ARTICLE 7 CONDITIONS.............................................................................................40
7.1 Mutual Conditions Precedent....................................................................40
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7.2 Additional Conditions Precedent to the Obligations of the RJF Parties...........................41
7.3 Additional Conditions Precedent to the Obligations of GMI.......................................42
7.4 Notice and Cure Provisions.......... ...........................................................42
7.5 Satisfaction of Conditions......................................................................43
ARTICLE 8 AMENDMENT AND TERMINATION...............................................................................43
8.1 Amendment.......................................................................................43
8.2 Mutual Understanding Regarding Amendments.......................................................43
8.3 Termination.....................................................................................44
ARTICLE 9 INDEMNITIES.............................................................................................45
9.1 Effect of Breach of Representation, Warranty or Covenant by GMI.................................45
9.2 Effect of Breach of Representation, Warranty or Covenant by RJF.................................45
9.3 Time Limitations on Certain Indemnities.........................................................45
9.4 Threshold on Indemnities payable to RJ Holdings.................................................45
9.5 Litigation of Claims by RJ Holdings.............................................................46
9.6 Litigation Management for Claims by GMI Shareholders............................................46
9.7 Direct Claims of GMI Shareholders...............................................................46
9.8 Third Party Claims and RJF......................................................................46
9.9 Settlement of Third Party Claims by GMI Shareholders............................................47
ARTICLE 10 GENERAL................................................................................................47
10.1 Notices.........................................................................................47
10.2 Assignment......................................................................................48
10.3 Binding Effect..................................................................................48
10.4 Waiver and Modification.........................................................................49
10.5 No Personal Liability...........................................................................49
10.6 Further Assurances..............................................................................49
10.7 Expenses........................................................................................49
10.8 Consultation....................................................................................49
10.9 Governing Law; Arbitration......................................................................50
10.10 Counterparts....................................................................................51
SCHEDULE 1 - APPROPRIATE REGULATORY APPROVALS.....................................................................52
SCHEDULE 2 - SEE SCHEDULE "E" TO THE MANAGEMENT INFORMATION CIRCULAR..............................................53
SCHEDULE 3 - ARRANGEMENT RESOLUTIONS..............................................................................54
SCHEDULE 4 - SEE SCHEDULE "F" TO THE MANAGEMENT INFORMATION CIRCULAR..............................................55
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ARRANGEMENT AGREEMENT
THIS AGREEMENT made as of the 27th day of November, 2000
AMONG:
RAYMOND JAMES FINANCIAL, INC., a
corporation existing under the laws of the State
of Florida
(hereinafter referred to as "RJF")
-and-
RAYMOND JAMES HOLDINGS
(CANADA), INC., a corporation existing under
the laws of Canada
(hereinafter referred to as "RJ HOLDINGS")
-and-
GOEPEL MCDERMID INC., a corporation
existing under the laws of Canada
(hereinafter referred to as "GMI")
WITNESSES THAT in consideration of the respective covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In addition to other terms defined elsewhere in the Agreement,
unless there is something in the subject matter or context inconsistent
therewith, the following terms shall have the following meanings respectively:
"1933 ACT" means the United States Securities Act of 1933, as amended;
"1934 ACT" means the United States Securities Exchange Act of 1934, as
amended;
"ACCOUNTS RECEIVABLE" means any and all accounts receivable, bills
receivable, trade accounts, book debts and insurance claims recorded as
receivable in the Books and Records and any other amount due to GMI
including any refunds and rebates, and the benefit of all security
(including cash deposits), guarantees and other collateral held by GMI;
"ACCRUED LIABILITIES" means any and all accrued liabilities of GMI
incurred in the ordinary course of business, including accruals for
vacation pay;
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"ACQUISITION PROPOSAL" means any merger, amalgamation, take-over bid,
plan of arrangement, sale of a material portion of its assets (or any
lease, long-term supply agreement or other arrangements having the same
economic effect as a sale), any material sale of shares or rights or
interests therein or thereto or similar transactions involving GMI, or
any proposal to do so, excluding the Arrangement;
"APPROPRIATE REGULATORY APPROVALS" means those rulings, consents,
orders, exemptions, permits and other approvals (including the lapse,
without objection, of a prescribed time under a statute or regulation
that states that a transaction may be implemented if a prescribed time
lapses following the giving of notice without an objection being made)
of Governmental Authorities as set out on Schedule 1 hereto;
"ARRANGEMENT" or "PLAN OF ARRANGEMENT" means an arrangement under
section 192 of the CBCA substantially in the form attached as Schedule
2 hereto, all on the terms and subject to the conditions set out herein
and subject to any amendments or variations thereto made in accordance
with section 8.1 or made at the direction of the Court in the Final
Order;
"ARRANGEMENT RESOLUTION" means the special resolution of the holders of
GMI Shareholders, to be substantially in the form attached as Schedule
3 hereto;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of GMI in
respect of the Arrangement, required under the CBCA to be sent to the
Director after the Final Order is made;
"AUDITOR" means Grant Thornton LLP, Chartered Accountants;
"BALANCE SHEET" means the consolidated balance sheet of GMI as at
September 30, 2000, forming part of the Financial Statements;
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies, practices or undertakings for the benefit of the Employees or
former employees of GMI or any predecessor (or any of their dependents
or beneficiaries), whether oral or written, formal or informal, funded
or unfunded, registered or unregistered to which GMI is a party to or
bound by or under which GMI has, or will have, any liability or
contingent liability, relating thereto;
"BOOKS AND RECORDS" means all books and records of GMI, including
financial, corporate, operations and sales books, records, books of
account, sales and purchase records, lists of suppliers and customers,
business reports, plans and projections and all other documents,
surveys, plans, files, records, correspondence, and other data and
information, financial or otherwise, including all data and information
stored on computer-related or other electronic media;
"BUSINESS DAY" means any day on which commercial banks are open for
business in both New York, New York and Vancouver, British Columbia,
other than a Saturday or a Sunday;
"CBCA" means the Canada Business Corporations Act as now in effect and
as it may be amended from time to time prior to the Effective Date;
"CIRCULAR" means the notice of the GMI Meeting and accompanying
management information circular to be sent to GMI Shareholders in
connection with the GMI Meeting;
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"CLOSING" has the meaning ascribed thereto in section 3.1;
"CLOSING DATE" has the meaning ascribed thereto in section 3.1;
"COMMERCIAL BANK LENDERS" means the lenders providing lines of credit
to RJF, which, at the date hereof, are Bank One, Bank of America,
Citibank and Chase Bank;
"CONFIDENTIALITY AGREEMENT" means the confidentiality letter agreement
dated as of January 14, 2000 between RJF and GMI;
"CONSOLIDATED BOOK VALUE" has the meaning ascribed thereto in section
6.10;
"CONVERSION SHARES" means the RJF Common Shares to be issued upon
exchange of the Exchangeable Shares or to be issued upon any purchase
of the Exchangeable Shares or the Retractable Shares by RJF or its
designee;
"COURT" means the Supreme Court of British Columbia;
"DIRECT CLAIM" has the meaning ascribed thereto in section 9.6;
"DIRECTOR" means the Director appointed pursuant to section 260 of the
CBCA;
"DISSENT RIGHTS" means the right of a GMI Shareholder to dissent in
respect of the Arrangement in accordance with the provisions of the
Interim Order;
"EFFECTIVE DATE" means the effective date as shown on the certificate
of arrangement to be issued by the Director under the CBCA giving
effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Vancouver time) on the Effective
Date;
"EMPLOYEES" means all officers and directors of GMI and any individuals
employed or retained (including any individuals or persons registered
in any capacity to trade securities or sell insurance products who are
independent or dependant contractors) by GMI, including for greater
certainty, those employees on long term disability leave or other
absence;
"ENCUMBRANCE" means any pledge, lien, charge, security interest, lease,
title retention agreement, mortgage, restriction, development or
similar agreement, easement, right-of-way, title defect, option or
adverse claim, or encumbrance of any kind or character whatsoever;
"ENVIRONMENTAL APPROVALS" means all permits, certificates, licenses,
authorizations, consents, instructions or directions having the force
of law, registrations, or approvals issued or required by Governmental
Authorities pursuant to Environmental Laws with respect to the
operation of GMI, its business or its assets;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to the
protection of the environment and employee and public health and
safety, and includes those relating to the storage, generation, use,
handling, manufacture, processing, labeling, advertising, sale,
display, transportation, treatment, release and disposal of hazardous
substances;
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"EQUIPMENT CONTRACTS" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
similar agreements relating to equipment used by GMI;
"ESCROW AGENT" means Montreal Trust Company of Canada, acting in its
capacity as escrow agent under the Escrow Agreement;
"ESCROW AGREEMENT" means an agreement to be made among GMI, on behalf
of GMI Common Shareholders, RJ Holdings and the Escrow Agent relating
to the Escrowed Securities, in substantially the form attached as
Appendix 2 to the Plan of Arrangement, with such changes thereto as the
parties hereto, acting reasonably, may agree;
"ESCROWED SECURITIES" means the Class B and Class C Retractable Shares
and the Class E Exchangeable Shares;
"EXCHANGE RATIO" means:
(A/B)
-----
C
where:
A = $15.00
B = the Foreign Exchange Rate
C = US$25.75
"EXCHANGEABLE SHARES" means the Class D and Class E non-voting
exchangeable shares in the capital of RJ Holdings, having substantially
the rights, privileges, restrictions and conditions set out in
Appendices 1-D and 1-E of the Plan of Arrangement, respectively, and a
reference to "CLASS D EXCHANGEABLE SHARES" or "CLASS E EXCHANGEABLE
SHARES" shall mean only that class of Exchangeable Shares;
"FINAL ORDER" means the final order of the Court approving the
Arrangement as such order may be amended at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn
or denied, as affirmed;
"FINANCIAL STATEMENTS" means the audited financial statements of GMI
for the fiscal years ended March 31, 1999 and 2000, consisting of the
balance sheet and the statements of earnings and retained earnings and
changes in financial position and all notes thereto as reported upon by
the Auditor and unaudited financial statements of GMI for the six
months ended September 30, 2000, consisting of the balance sheet and
the statements of earnings and retained earnings and changes in
financial position and all notes thereto, true and correct copies of
which were previously delivered by GMI to RJF;
"FIXED ASSETS" means the fixed assets, machinery, equipment, fixtures,
furniture, furnishings and vehicles owned or used or held by GMI,
including any which are in storage or in transit, and other tangible
property and facilities used by GMI whether located in or on the
premises of GMI or elsewhere;
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"FOREIGN EXCHANGE RATE" means the average noon buying rate in Canadian
dollars for a US dollar as quoted by the Bank of Canada for the period
of 20 Business Days ending on the fifth Business Day prior to the
Effective Date;
"GMI COMMON SHARES" means the common voting shares in the capital of
GMI and "GMI COMMON SHAREHOLDERS" means the holders of such GMI Common
Shares;
"GMI DISCLOSURE LETTER" means that certain letter dated as of even date
herewith and delivered by GMI to RJF;
"GMI MEETING" means the special meeting of the GMI Shareholders,
including any adjournment thereof, to be called to consider the
Arrangement;
"GMI PREFERRED SHARES" means the Class A non-voting preferred shares in
the capital of GMI and "GMI PREFERRED SHAREHOLDERS" means the holders
of such shares;
"GMI SHAREHOLDERS" means collectively the GMI Common Shareholders and
GMI Preferred Shareholders;
"GMI SHAREHOLDERS' AGREEMENT" means the agreement dated as of April 1,
1988, as amended, among GMI and all the GMI Shareholders;
"GOVERNMENTAL AUTHORITIES" means any government, regulatory authority,
regulatory agencies, self-regulatory organizations, governmental
department, agency, bureau, commission, board, tribunal, central bank,
arbitral body, crown corporation, or court or other law, rule or
regulation-making entity having or purporting to have jurisdiction on
behalf of any nation, or province or state or other subdivision thereof
or any municipality, district or other subdivision thereof or any
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of
the foregoing;
"GOVERNMENTAL AUTHORIZATIONS" means all material authorizations,
approvals, orders, consents, directives, notices, licenses, permits,
variances, registrations or similar rights issued to or required by GMI
by any Governmental Authorities necessary to enable GMI to carry on its
business in the ordinary course;
"INCLUDING" means including without limitation;
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in section
9.6;
"INDEMNIFYING PARTY" shall have the meaning ascribed thereto in section
9.6;
"INFORMATION" has the meaning ascribed thereto in subsection 6.8(b);
"INTERIM ORDER" means the interim order of the Court in respect of the
Arrangement, as contemplated by section 2.3;
"LAWS" means all statutes, laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, tax treaties, policies,
guidelines, notices, directions and judgements or other requirements of
any Governmental Authority, stock exchange or statutory body (including
The New York Stock Exchange), and the term "applicable" with respect to
such Laws and in the
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context that refers to one or more Persons, means that such Laws apply
to such Person or Persons or its or their business, undertaking,
property, securities or pension or benefit plans and emanate from a
Person having jurisdiction over the Person or Persons or its or their
business, undertaking, property, securities or pension or benefit
plans;
"LEASED REAL PROPERTY" means all premises which are leased, subleased,
licensed or otherwise occupied by GMI and the interest of GMI therein;
"LETTER OF TRANSMITTAL AND ELECTION FORM" means the Letter of
Transmittal and Election Form distributed by GMI to the GMI
Shareholders, in the form accompanying the Circular;
"LOSS" means any and all losses, claims, demands, judgements,
settlements, assessments, reassessments, costs, expenses and damages of
any nature whatsoever, including reasonable legal fees and Taxes;
"MATERIAL ADVERSE CHANGE" when used in relation to RJF or GMI, as the
case may be, means any change, event, occurrence or effect thereof that
is, or would reasonably be expected to be, material and adverse to the
business, operations, financial condition or prospects of such party
and its Subsidiaries taken as a whole other than any change, event,
occurrence or effect thereof relating to (i) the Canadian or United
States' economy or securities markets in general or (ii) the North
American securities brokerage, investment banking or financial services
industry in general (including commodity prices) but not specifically
relating to RJF or GMI;
"MATERIAL ADVERSE EFFECT" when used in connection with RJF or GMI,
means any matter or action that has an effect that is, or would
reasonably be expected to be, material and adverse to the business,
operations, financial condition or prospects of such party and its
Subsidiaries taken as a whole;
"MATERIAL CONTRACT" means any contract (i) involving aggregate payments
to or by GMI in excess of $250,000 in any one year, (ii) involving
aggregate payments to or by GMI in excess of $1,000,000 over any period
of time, (iii) involving material rights or obligations of GMI that may
reasonably extend beyond one year, (iv) which is outside the ordinary
course of business, or (v) which does not or cannot be terminated
without material penalty on less than three months notice;
"OPTIONEES" has the meaning ascribed thereto in section 6.3;
"PENSION PLANS" means any and all benefits relating to retirement or
retirement savings including, without limitation, pension plans,
pensions or supplemental pensions, registered retirement savings plans,
"registered pension plans" (as defined in the Income Tax Act (Canada))
and "retirement compensation arrangements" (as defined in the Income
Tax Act (Canada));
"PERSON" includes any individual, firm, partnership, joint venture,
venture capital fund, association, trust, transfer agent, executor,
administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organisation,
Governmental Authority, syndicate or other entity, whether or not
having legal status;
"PRE-EFFECTIVE PERIOD" means the period from and including the date
hereof to and including the Effective Time;
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"REAL PROPERTY LEASES" means those agreements to lease, leases,
subleases or licenses or other occupancy rights pursuant to which GMI
uses or occupies any part of the Leased Real Property, including all
amendments and supplements thereto;
"REDEMPTION FUNDS" has the meaning ascribed thereto in subsection 1(a)
of the Escrow Agreement;
"REGISTER", "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements or
similar document in compliance with the 1933 Act and the declaration or
ordering of effectiveness of such Registration Statement or document by
the SEC;
"REGISTRABLE SECURITIES" means
(a) the Conversion Shares; and
(b) any RJF Common Shares issued or issuable with respect
to the Conversion Shares, as a result of any stock
split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any
limitations on the exchange of the Exchangeable
Shares;
"REGISTRATION STATEMENT" means a registration statement on Form S-1 or
Form S-3 or any similar or successor form then appropriate for or
applicable to the offer and sale of the Registrable Securities and
filed under the 1933 Act;
"REPRESENTATIVES" has the meaning ascribed thereto in subsection
6.8(a);
"RETENTION LETTER" has the meaning ascribed thereto in section 6.2;
"RETRACTABLE SHARES" means the Class A, Class B and Class C non-voting
retractable shares in the capital of RJ Holdings, having substantially
the rights, privileges, restrictions and conditions set out in
Appendices 1-A, 1-B and 1-C of the Plan of Arrangement, respectively,
and a reference to "CLASS A RETRACTABLE SHARES", "CLASS B RETRACTABLE
SHARES" or "CLASS C RETRACTABLE SHARES" shall mean only that class of
Retractable Shares;
"RJF COMMON SHARES" means the common shares, US$0.01 par value, of RJF;
"RJF OPTION PLAN" has the meaning ascribed thereto in section 6.3;
"RJF OPTIONS" has the meaning ascribed thereto in section 6.3;
"RJF PARTIES" means RJF and RJ Holdings, collectively;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES ACT" means the Securities Act (British Columbia), as now in
effect and as it may be amended from time to time prior to the
Effective Date;
"SECURITIES OFFENCE" means any action within the 36 months preceding
the date of this Agreement that, when it occurred, constituted a breach
of the Securities laws in any jurisdictions in which
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GMI carries on business, or regulations thereunder, the bylaws,
regulations or policies of the Investment Dealers Association of
Canada, or the by-laws, rules or polices of any of The Toronto Stock
Exchange, the Canadian Venture Exchange, the Montreal Exchange or the
Winnipeg Stock Exchange;
"SUBSIDIARY" has the meaning ascribed thereto in the Securities Act;
"SUPPORT AGREEMENT" means an agreement to be made among the RJF
Parties, GMI and the Transfer Agent in substantially in the form
attached as Schedule 4 hereto, with such changes thereto as the parties
hereto, acting reasonably, may agree;
"TAXES" means:
(a) all income taxes (including any tax on or based upon
net income, gross income, income as specially
defined, earnings, profits or selected items of
income, earnings or profits) and all capital taxes,
gross receipts taxes, environmental taxes, sales
taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes, franchise taxes, business
taxes, registration fees, license taxes, withholding
taxes, payroll taxes, employment taxes, Canada
Pension Plan, Quebec and other government pension
premiums, employer health taxes or contributions,
excise taxes, severance, social security premiums,
workers' compensation premiums, employment insurance,
health insurance or compensation premiums, health,
social services, education and social security taxes,
stamp taxes, occupation taxes, premium taxes, land
transfer taxes, realty taxes, property taxes,
windfall profits taxes, alternative or add-on minimum
taxes, goods and services tax, harmonized sales
taxes, customs duties, surtaxes, import and export
taxes or other taxes, fees, imports, assessments,
duties, premiums, imposts, levies or charges of any
kind whatsoever, together with any interest and any
penalties or additional amounts imposed by any taxing
authority (domestic or foreign) on such entity, and
any interest, penalties, fines, additional taxes and
additions to tax imposed with respect to the
foregoing; and
(b) any liability for the payment of any amount of the
type described in the immediately preceding clause
(a) as a result of being a "transferee" (within the
meaning of section 6901 of the United States Internal
Revenue Code or any other applicable Laws) of another
entity or a member of an affiliated or combined
group.
"TAX RETURNS" include all returns, declarations, reports, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"TERMINATION FOR CAUSE" means the termination by GMI of any Employee as
a result of any of the following events or reasons:
(a) wilful breach or non-observance by the Employee of
any of the material conditions or obligations of his
or her employment with GMI;
(b) neglect or refusal by the Employee to carry out any
of his or her duties as an Employee of GMI;
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(c) neglect or unsatisfactory performance of such duties;
(d) insubordinate or insulting behaviour towards GMI, its
officers and clients or other Employees of GMI;
(e) conduct of the Employee which is materially
detrimental to GMI, including without limitation, the
Employee being charged with, cited for or convicted
of an indictable offence under the Criminal Code of
Canada or a Securities Offence; or
(f) misconduct or omissions which would constitute cause
for dismissal at common law.
"THIRD PARTY" has the meaning ascribed thereto in sections 9.8;
"THIRD PARTY CLAIM" has the meaning ascribed thereto in section 9.6;
and
"TRANSFER AGENT" means Montreal Trust Company of Canada acting as
transfer agent under the Support Agreement or any other such transfer
agent under the Support Agreement chosen by GMI or RJF, acting
reasonably.
1.2 SCHEDULES
The following are the schedules attached to this Agreement:
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SCHEDULE DESCRIPTION
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Schedule 1 Appropriate Regulatory Approvals
Schedule 2 Plan of Arrangement
Schedule 3 Arrangement Resolution
Schedule 4 Support Agreement
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1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into Articles, sections,
subsections and other portions and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation
hereof. Unless otherwise indicated, all references to an "Article", "section" or
"subsection" followed by a number and/or a letter refer to the specified
Article, section or subsection of this Agreement. The terms "this Agreement,"
"hereof," "herein," "hereto" and "hereunder" and similar expressions refer to
this Agreement (including the Schedules hereto) and not to any particular
Article, section, subsection or other portion hereof and include any agreement
or instrument supplementary or ancillary hereto.
1.4 CURRENCY
All sums of money referred to in this Agreement are expressed
in lawful money of Canada unless preceded by "US", in which case the reference
is to lawful money of the United States of America.
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1.5 NUMBER AND GENDER
Unless the context otherwise requires in this Agreement, words
importing the singular shall include the plural and vice versa and words
importing any gender shall include all genders.
1.6 DATE FOR ANY ACTION
In the event that any date on which any action is required to
be taken hereunder by any of the parties hereto is not a Business Day, such
action shall be required to be taken on the next succeeding day which is a
Business Day.
1.7 ENTIRE AGREEMENT
This Agreement and the agreements and other documents herein
referred to constitute the entire agreement between the parties hereto
pertaining to the terms of the Arrangement and supersede all other prior
agreements, understandings, negotiations and discussions, whether oral or
written, between the parties hereto with respect to the terms of the
Arrangement.
ARTICLE 2
THE ARRANGEMENT
2.1 IMPLEMENTATION STEPS BY GMI
GMI covenants in favour of the RJF Parties that GMI shall:
(a) as soon as practicable, apply in a manner acceptable to RJF,
acting reasonably, under section 192 of the CBCA for the
Interim Order, and thereafter proceed with and diligently
pursue the obtaining of the Interim Order;
(b) as soon as reasonably practicable after obtaining the Interim
Order, and in any event not later than December 21, 2000
convene and hold the GMI Meeting for the purpose of
considering the Arrangement Resolution (and for any other
proper purpose as may be set out in the notice for such
meeting);
(c) subject to obtaining such shareholder approval as is required
by the Interim Order, proceed with and diligently pursue the
application to the Court for the Final Order;
(d) subject to obtaining the Final Order and the satisfaction or
waiver of the other conditions herein contained in favour of
each party, send to the Director, for endorsement and filing,
the Articles of Arrangement and such other documents as may be
required in connection therewith under the CBCA to give effect
to the Arrangement;
(e) on or before the Closing Date, execute and deliver the Support
Agreement; and
(f) on or before the Closing Date, execute and deliver the Escrow
Agreement.
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2.2 IMPLEMENTATION STEPS BY THE RJF PARTIES
The RJF Parties covenant in favour of GMI that, on or prior to
the Closing Date and subject to the satisfaction or waiver of the other
conditions herein contained in favour of RJF:
(a) RJF shall cause RJ Holdings to have share capital with
substantially the rights, privileges, restrictions and
conditions described in Appendices 1-A to 1-E of the Plan of
Arrangement;
(b) RJF and RJ Holdings shall execute and deliver the Support
Agreement;
(c) RJF and RJ Holdings shall execute and deliver the Escrow
Agreement; and
(d) RJ Holdings shall deliver to the Escrow Agent the funds
required to redeem the Retractable Shares pursuant to the
Escrow Agreement.
2.3 INTERIM ORDER
The notice of motion for the application referred to in
subsection 2.1(a) shall request that the Interim Order provide:
(a) for the class of Persons to whom notice is to be provided in
respect of the Arrangement and the GMI Meeting and for the
manner in which such notice is to be provided;
(b) that the requisite shareholder approval for the Arrangement
Resolution shall be 66 2/3% of the votes cast on the
Arrangement Resolution by GMI Shareholders present in person
or by proxy at the GMI Meeting;
(c) that, in all other respects, the terms, restrictions and
conditions of the by-laws and articles of GMI, including
quorum requirements and all other matters, shall apply in
respect of the GMI Meeting; and
(d) for the grant of the Dissent Rights.
2.4 ARTICLES OF ARRANGEMENT
The Articles of Arrangement shall, with such other matters as
are necessary to effect the Arrangement, provide substantially as follows:
(a) each outstanding GMI Preferred Share that is held by a holder
other than a Person who has exercised its Dissent Rights shall
be, and shall be deemed to be exchanged for $0.50;
(b) subject to the pro rating provisions set forth in subsection
2.4(d), GMI Common Shares held by a GMI Shareholder will be
transferred by the holder thereof, without any act or
formality on his part, to RJ Holdings in exchange for,
(i) a number of Class A Retractable Shares together with
the same number of Class B Retractable Shares, in
each case equal to the number of GMI Common Shares so
held; or
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<PAGE> 15
(ii) cash in an amount equal to the number of GMI Common
Shares so held multiplied by $15.00; or
(iii) a number of Class D Exchangeable Shares equal to 0.7
multiplied by the number of GMI Common Shares so held
multiplied by the Exchange Ratio, together with a
number of Class E Exchangeable Shares equal to 0.3
multiplied by the number of GMI Common Shares so held
multiplied by the Exchange Ratio; or
(iv) a combination of the foregoing,
all as set out in or derived from such holder's Letter of
Transmittal and Election Form.
(c) RJ Holdings will not, pursuant to clause 2.4(b)(iii) or under
any other circumstances, be obligated to issue any fraction of
an Exchangeable Share. If any fractional interest in an
Exchangeable Share would, except for the provisions of this
subsection 2.4(c), be issuable to any holder of GMI Common
Shares, RJ Holdings shall deliver the nearest whole number of
Exchangeable Shares to such holder of GMI Common Shares,
rounding down;
(d) no more than 1,000,000 Exchangeable Shares will be issued, and
if elections are made for more than 1,000,000 Exchangeable
Shares, then each of the holders of GMI Common Shares who has
elected to receive Exchangeable Shares will be allocated a
number of Exchangeable Shares that is not less than the lesser
of (i) the holder's pro rata share calculated in the manner
provided pursuant to the Plan of Arrangement and (ii) the
number of Exchangeable Shares the holder has actually elected
to receive, and the remaining balance of the Exchangeable
Shares, if any, will be allocated among the holders who have
elected to receive more than their pro rata share (the
"OVER-ELECTING HOLDERS") in the proportion that each
Over-electing Holder's percentage of the holdings of GMI
Common Shares immediately prior to the Effective Time bears to
the holdings of all Over-electing Holders, provided that if
such allocation exceeds an Over-electing Holder's actual
election to receive Exchangeable Shares, such excess shall be
allocated on the foregoing basis among the remaining
Over-electing Holders;
(e) all Class A Retractable Shares and Class D Exchangeable Shares
shall be issued and delivered, and all cash consideration
pursuant to clause 2.4(b)(ii) shall be paid to the holders of
GMI Common Shares on the Effective Date;
(f) 30% of the cash consideration received by a holder of GMI
Common Shares pursuant to clause 2.4(b)(ii) will be paid by
such holder to RJ Holdings to purchase Class C Retractable
Shares at a price of $4.50 per share;
(g) all of the Escrowed Securities shall be issued and delivered
to the Escrow Agent on the Effective Date, to be held in
escrow pursuant to the terms of the Escrow Agreement;
(h) RJ Holdings shall be and shall be deemed to be the registered
and beneficial owner of all outstanding GMI Common Shares and
GMI Preferred Shares exchanged as aforesaid;
(i) the articles of GMI shall be amended so that the number of
directors of GMI will be not less than three nor more than
seven directors; and
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<PAGE> 16
(j) the existing directors of GMI shall cease to hold office, and
the following persons will be the directors of GMI, to hold
office until the next annual meeting of GMI:
(i) Kenneth A. Shields;
(ii) Ronald Sakkal;
(iii) Michael Scott; and
(iv) Jeffrey P. Julien.
2.5 GMI INFORMATION CIRCULAR
As soon as practicable after the execution and delivery of
this Agreement, and no later than November 29, 2000, GMI shall prepare the
Circular together with any other documents required by applicable Laws in
connection with the Arrangement, and GMI shall cause the Circular and other
documentation required in connection with the GMI Meeting to be sent to each GMI
Shareholder and filed as required by the Interim Order and applicable Laws.
2.6 SECURITIES COMPLIANCE
(a) RJF and GMI shall use all reasonable efforts to obtain all
orders required from the applicable Canadian securities
authorities to permit the issuance of:
(i) the Exchangeable Shares and/or Retractable Shares
issued pursuant to the Arrangement and their resale
to RJ Holdings, its nominee or RJF; and
(ii) the RJF Common Shares issued upon exchange of the
Exchangeable Shares from time to time or issued from
time to time in consideration for Exchangeable Shares
and their first resale outside of Canada subject to
certain conditions,
in each case without qualification with or approval of or the
filing of any document, including any prospectus or similar
document, or the taking of any proceeding with, or the
obtaining of any further order, ruling or consent from, any
Governmental Authority under any Canadian federal or
provincial securities or other Laws or pursuant to the rules
and regulations of any regulatory authority administering such
Laws (other than, with respect to resales, any restrictions on
transfer by reason of, among other things, a holder being a
"control person" of RJF or GMI for purposes of Canadian
federal or provincial securities Laws).
(b) Filing. RJF shall prepare and file, at its expense, with the
SEC prior to the Closing Date a Registration Statement or
Registration Statements (as necessary) covering the issuance
of the Registrable Securities.
(c) RJF shall use its commercially reasonable efforts to cause the
Registration Statement or Registration Statements (as
necessary) covering the issuance of the Registrable Securities
to be declared effective by the SEC prior to the Effective
Date, or as soon thereafter as possible, and to maintain the
effectiveness of such registration for the period that any
Exchangeable Shares remain outstanding.
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<PAGE> 17
(d) RJF shall reasonably cooperate with GMI's legal counsel,
Borden Ladner Gervais LLP, in performing RJF's obligations
under the terms of section 2.6(a).
(e) Whenever required under the terms of this section 2 to effect
the registration of any Registrable Securities, RJF will, as
expeditiously as possible, fulfill the following obligations:
(i) RJF shall furnish to each of the holders of the
Exchangeable Shares such numbers of copies of a
prospectus (not to exceed three), in conformity with
the requirements of the 1933 Act, and such other
documents as it may reasonably request; and
(ii) RJF shall use its commercially reasonable efforts to
cause all the Registrable Securities covered by a
Registration Statement to be listed on each
securities exchange on which securities of the same
class or series issued by RJF are then listed.
2.7 PREPARATION OF FILINGS
(a) The RJF Parties and GMI shall cooperate in:
(i) the preparation of any applications for orders and
the preparation of any required registration
statements and any other documents reasonably deemed
by the RJF Parties or GMI to be necessary to
discharge their respective obligations under United
States and Canadian federal, provincial, territorial
or state securities Laws in connection with the
Arrangement and the other transactions contemplated
hereby;
(ii) the taking of all such action as may be required
under any applicable United States and Canadian
federal, provincial, territorial or state securities
Laws (including "blue sky" laws) in connection with
the issuance of the Exchangeable and/or Retractable
Shares and the RJF Common Shares in connection with
the Arrangement; provided, however, that with respect
to the United States "blue sky" and Canadian
provincial or territorial qualifications neither the
RJF Parties nor GMI shall be required to register or
qualify as a foreign corporation or to take any
action that would subject it to service of process in
any jurisdiction where such entity is not now so
subject, except as to matters and transactions
arising solely from the offer and sale of the
Exchangeable and/or Retractable Shares and the RJF
Common Shares; and
(iii) the taking of all such action as may be required
under the CBCA and the Initial Order and the Final
Order in connection with the transactions
contemplated by this Agreement and the Plan of
Arrangement.
(b) Each of the RJF Parties and GMI shall furnish to the others
all such information concerning it and its shareholders as may
be required (and in the case of RJF's shareholders, available
to it) to effect the actions described in sections 2.5 and 2.6
and the foregoing provisions of this section 2.7, and each
covenants that no information furnished by it (to its
knowledge in the case of information concerning its
shareholders) in connection
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<PAGE> 18
with such actions or otherwise in connection with the
consummation of the Arrangement and the other transactions
contemplated by this Agreement will contain any untrue
statement of a material fact or omit to state a material fact
required to be stated in any such document or necessary in
order to make any information so furnished for use in any such
document not misleading in the light of the circumstances in
which it is furnished.
(c) GMI shall ensure that the Circular complies with all
applicable Laws and, without limiting the generality of the
foregoing, that the Circular does not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements contained therein not misleading in light of the
circumstances in which they are made (other than with respect
to any information relating to and provided by the RJF
Parties). Without limiting the generality of the foregoing,
GMI shall ensure that the Circular provides holders of GMI
Common Shares with information in sufficient detail to permit
them to form a reasoned judgement concerning the matters to be
placed before them at the GMI Meeting.
(d) Each of the RJF Parties and GMI shall notify the other parties
hereto if at any time before the Closing it becomes aware that
the Circular or an application for an order or a registration
statement described in section 2.6 contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements contained therein not misleading in light of the
circumstances in which they are made, or that otherwise
requires an amendment or supplement to the Circular or such
application or registration statement. In any such event, the
RJF Parties and GMI shall cooperate in the preparation of a
supplement or amendment to the Circular or such other
document, as required and as the case may be, and, if
required, shall cause the same to be distributed to GMI
Shareholders and/or filed with the relevant securities
regulatory authorities.
ARTICLE 3
CLOSING
3.1 CLOSING.
At 11:00 a.m. local time on December 28, 2000 at the offices
of Borden Ladner Gervais LLP, 1200 Waterfront Centre, 200 Burrard Street,
Vancouver, British Columbia, Canada or such other time, date or place as the
parties agree (the "CLOSING DATE"):
(a) the executed Support Agreement, Voting Trust and Exchange
Agreement and Escrow Agreement shall be delivered by each of
the parties thereto to each of the other parties thereto;
(b) GMI shall deliver a certificate to the RJF Parties pursuant to
subsection 7.2(b);
(c) the RJF Parties shall deliver certificates to GMI pursuant to
subsection 7.3(b);
(d) RJ Holdings shall deliver all Class A Retractable Shares and
Class D Exchangeable Shares issuable to each holder of GMI
Common Shares pursuant to subsection 2.4(b);
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<PAGE> 19
(e) RJ Holdings shall pay to each holder of GMI Common Shares who
elects to receive cash consideration pursuant to clause
2.4(b)(ii) the amount payable to such holder and each such
holder shall direct that 30% of such cash consideration shall
be applied to purchase Class C Retractable Shares from RJ
Holdings at a price of $4.50 per share;
(f) RJ Holdings or its designee shall deliver the Escrowed
Securities to the Escrow Agent, pursuant to the Escrow
Agreement;
(g) RJ Holdings shall deliver the Redemption Funds to the Escrow
Agent, pursuant to the Escrow Agreement;
(h) GMI shall deliver to the RJF Parties evidence of the
termination of the GMI Shareholders' Agreement as of the
Effective Time, in such form as is acceptable to the RJF
Parties, acting reasonably;
(i) RJF and the Optionees shall deliver executed agreements
governing the grant of the RJF Options to each of such
Optionees; and
(j) each of the RJF Parties and GMI shall deliver such customary
certificates, resolutions, opinions and other closing
documents as may be required by the other parties hereto,
acting reasonably,
(the "CLOSING"). Upon the foregoing deliveries having been made, GMI shall
forthwith file the Articles of Arrangement and all other documents necessary to
effect the Plan of Arrangement effective as of the Effective Time.
Notwithstanding the foregoing, unless this Agreement has been
previously terminated pursuant to the provisions of section 8.3, the Closing
shall be delayed until the third Business Day after all of the conditions set
forth in Article 7 have been satisfied.
3.2 FORM OF INSTRUMENTS.
All of the instruments to be executed, filed, or delivered
hereunder at the Closing shall be in form and substance, and shall be executed
and delivered in a manner, reasonably satisfactory to GMI and the RJF Parties.
In addition, each of the RJF Parties and GMI shall deliver to the other a
certificate, dated as of the Closing Date, confirming that all conditions set
forth in Article 7 pertaining to them have been satisfied.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF GMI
GMI represents and warrants to and in favour of the RJF
Parties as follows and acknowledges that the RJF Parties are relying upon such
representations and warranties in connection with the matters contemplated by
this Agreement:
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<PAGE> 20
(a) Organisation.
(i) GMI has been duly incorporated or formed under all
applicable Laws, is validly subsisting and has full
corporate or legal power and authority to own its
properties and conduct its businesses as currently
owned and conducted. All of the outstanding shares in
the capital of GMI are validly issued, fully paid and
non-assessable, and as at the Effective Time will be
free and clear of all Encumbrances and there will be
no outstanding options, rights, entitlements,
understandings or commitments (contingent or
otherwise) regarding the right to acquire any such
shares in the capital of GMI; and
(ii) Except as disclosed in the GMI Disclosure Letter, GMI
does not have any interest in any other corporation
or entity, except for interests acquired in the
ordinary course of its business as an underwriter or
inventory positions acquired in the ordinary course
of business and GMI is not a partner beneficiary,
transfer agent, co-tenant, joint venturer or
otherwise a participant in any partnership, trust,
joint venture, co-tenancy or similar jointly owned
business undertaking.
(b) Capitalization. The authorised capital of GMI consists of an
unlimited number of GMI Common Shares and an unlimited number
of GMI Preferred Shares. As of the date of this Agreement,
7,172,393 GMI Common Shares and 7,172,393 GMI Preferred Shares
were outstanding, which shares have been duly and validly
issued and are outstanding as fully paid and non-assessable
shares in the capital of GMI.
Except as disclosed in the GMI Disclosure Letter, there are no
options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments (pre-emptive,
contingent or otherwise) obligating GMI to issue or sell any
shares of GMI or securities or obligations of any kind
convertible into or exchangeable for any shares of GMI, nor is
there outstanding any stock appreciation rights, phantom
equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other
attribute of GMI.
Except as disclosed in the GMI Disclosure Letter, there are no
outstanding bonds, debentures or other evidences of
indebtedness of GMI having the right to vote (or that are
convertible for or exercisable into securities having the
right to vote) with the holders of the GMI Common Shares and
GMI Preferred Shares on any matter. There are no outstanding
contractual obligations of GMI to repurchase, redeem or
otherwise acquire any of its outstanding securities, except as
may be contained in the GMI Shareholders' Agreement.
(c) Authority and No Violation.
(i) GMI has the requisite corporate power and authority
to enter into this Agreement, the Escrow Agreement
and the Support Agreement and to perform its
obligations hereunder and thereunder. The execution
and delivery of this Agreement, the Escrow Agreement
and the Support Agreement by GMI and the consummation
by GMI of the transactions contemplated hereunder and
thereunder, have been duly authorised by its Board of
Directors and no other corporate proceedings on its
part
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<PAGE> 21
are necessary to authorise this Agreement, the Escrow
Agreement and the Support Agreement, or the
transactions contemplated hereby or thereby, other
than:
(A) with respect to the Circular and other
matters relating solely to the
implementation of the Arrangement, the
approval of the Board of Directors of GMI;
and
(B) with respect to the completion of the
Arrangement, the approval of the GMI
Shareholders.
(ii) This Agreement has been, and at the Effective Time
the Escrow Agreement and the Support Agreement shall
be, duly executed and delivered by GMI and
constitutes (or in the case of the Escrow Agreement
and the Support Agreement, shall constitute) its
legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to
bankruptcy, insolvency and other similar Laws
affecting creditors' rights generally, and to general
principles of equity.
(iii) The board of directors of GMI has:
(A) determined that the Arrangement is fair to
the GMI Shareholders and is in the best
interests of GMI; and
(B) determined to recommend that the GMI
Shareholders vote in favour of the
Arrangement.
(iv) The approval of this Agreement, the execution and
delivery by GMI of this Agreement, the performance by
it of its obligations hereunder and the completion of
the Arrangement and the transactions contemplated
thereby, will not, except as disclosed in the GMI
Disclosure Letter:
(A) result in a violation or breach of, require
any consent to be obtained under or give
rise to any termination rights or payment
obligation under any provision of:
(I) its certificate of continuance,
articles, by-laws or other charter
documents, including the GMI
Shareholders' Agreement or any
other agreement;
(II) subject to obtaining the
Appropriate Regulatory Approvals
relating to GMI, any Laws,
regulation, order, judgement or
decree; or
(III) any Material Contract or any
material license or permit to which
GMI is party or by which it is
bound;
(B) give rise to any right of termination or
acceleration of indebtedness, or cause any
third party indebtedness to come due before
its stated maturity or cause any available
credit to cease to be available;
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<PAGE> 22
(C) result in the imposition of any Encumbrance
upon any of its material assets or a
material portion of its assets, or restrict,
hinder, impair or limit the ability of GMI
to carry on the business of GMI as and where
it is now being carried on; and
(D) result in any payment (including severance,
unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any
Employee or increase any benefits otherwise
payable under any GMI Plan or result in the
acceleration of time of payment or vesting
of any such benefits, including the time of
exercise of stock options.
(v) No consent, approval, order or authorisation of, or
declaration or filing with, any Governmental
Authority or other Person is required to be obtained
by GMI in connection with the execution and delivery
of this Agreement or the consummation by GMI of the
transactions contemplated hereby other than:
(A) the Interim Order;
(B) any approvals required by the Interim Order;
(C) the Final Order;
(D) filings with the Director under the CBCA;
and
(E) the Appropriate Regulatory Approvals
relating to GMI.
(d) No Defaults. GMI is not in default under, and there exists no
event, condition or occurrence which, after notice or lapse of
time or both, would constitute such a default under any
contract, agreement, license or franchise to which it is a
party which would, if terminated due to such default, cause a
Material Adverse Effect.
(e) Absence of Certain Changes or Events. Except as disclosed in
the GMI Disclosure Letter, since September 30, 2000, GMI has
conducted its business only in the ordinary and regular course
of business consistent with past practice and there has not
occurred:
(i) any change in its condition (financial or
otherwise), properties, assets, liabilities,
businesses, operations, results of operations or
prospects and those of its Subsidiaries, that has
had, or could reasonably be expected to have, a
Material Adverse Effect;
(ii) any damage, destruction or loss, whether covered by
insurance or not, that has had, or could reasonably
be expected to have, a Material Adverse Effect;
(iii) any redemption, repurchase or other acquisition of
GMI Common Shares or GMI Preferred Shares by GMI,
other than a redemption, purchase or other
acquisition made pursuant to the GMI Shareholders'
Agreement which involves no greater than four
percent of the issued and outstanding GMI Common
Shares and GMI Preferred Shares, or any declaration,
setting aside or payment of any dividend or other
distribution (whether in cash, stock or property)
with respect to GMI Common Shares or GMI Preferred
Shares;
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<PAGE> 23
(iv) any increase in or modification of the compensation
payable or to become payable by it to any Employee,
or any grant to any Employee of any increase in
severance or termination pay, except as approved in
writing by RJF, or any payment of bonuses to
Employees in an aggregate amount which would reduce
the Consolidated Book Value to less than $61,000,000;
(v) any material increase in or modification of any
Benefit Plans;
(vi) any grant of stock options by GMI;
(vii) any acquisition or sale of its property or assets,
which for the purposes of this clause 4.1(e)(vii),
excludes customer receivables and customer Registered
Retirement Savings Plan accounts, aggregating two
percent or more of GMI's total consolidated property
and assets as reflected on the Balance Sheet;
(viii) (A) other than loans made in the ordinary and regular
course of business consistent with past practice and
drawings on its credit facilities in existence as at
the date hereof made in the ordinary and regular
course of business consistent with past practice, any
incurrence, assumption or guarantee by it of any debt
for borrowed money or any other liability or
obligation (whether accrued, absolute, contingent or
otherwise which continue to be outstanding), (B) any
issuance or sale of any securities convertible into
or exchangeable for its debt securities, or (C) any
issuance or sale of options or other rights to
acquire from it debt securities or any securities
convertible into or exchangeable for any such debt
securities;
(ix) any creation or assumption by it of any Encumbrance
on any asset, which for the purposes of this clause
4.1(e)(ix) excludes customer receivables and customer
Registered Retirement Savings Plan accounts;
(x) any entering into, amendment of, relinquishment,
termination or non-renewal by it of any Material
Contract or any material license, permit, commitment
or other right or obligation;
(xi) any labour dispute or charge of unfair labour
practice, any activity or proceeding by a labour
union or representative thereof to organise any of
its Employees or any campaign being conducted to
solicit authorisation from Employees to be
represented by such labour union;
(xii) any resolution to approve a split, combination or
reclassification of any of its outstanding shares;
(xiii) any material change in its accounting methods,
principles or practices; and
(xiv) any agreement or arrangement to take any action
which, if taken prior to the date hereof, would have
made any representation or warranty set forth in this
Agreement (except to the extent such representation
and warranty speak as of a specific date, which for
greater certainty includes the use of the phrase "as
at the date hereof") untrue or incorrect as of the
date when made.
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<PAGE> 24
Additionally, except as disclosed in the GMI Disclosure Letter since
March 31, 2000:
(xv) GMI has not incurred any liabilities or obligations
(whether accrued, absolute, contingent or
otherwise), which continue to be outstanding, except
as incurred in the ordinary course of business and
which do not individually or in the aggregate have a
Material Adverse Effect on GMI;
(xvi) GMI has not (A) cancelled any debts or entitlements
except in the ordinary and usual course of business,
(B) discharged or satisfied any Encumbrance other
than in the ordinary and usual course of business,
or (C) paid any obligation or liability (fixed or
contingent) other than liabilities included in the
Balance Sheet or liabilities incurred since the date
of the Balance Sheet in the ordinary and usual
course of business;
(xvii) GMI has not suffered an operating loss or any
extraordinary loss, waived or omitted to take any
action in respect of any rights of substantial
value, or entered into any commitment or transaction
not in the ordinary and usual course of business
where such commitment or transaction does or would
have a Material Adverse Effect on GMI; and
(xviii) GMI has not authorised, agreed or otherwise become
committed to do any of the foregoing acts or matters
listed in clauses 4.1(e)(i) through (xvii).
(f) Employment Matters. Except as disclosed in the GMI Disclosure
Letter:
(i) as at the date hereof no Employee is on long-term
disability leave, extended absence or receiving
benefits pursuant to the Workplace Safety and
Insurance Act (Ontario) or similar workers'
compensation legislation in other provinces;
(ii) there are no written contracts of employment entered
into with any Employees or any oral contracts of
employment which are not terminable on the giving of
reasonable notice in accordance with applicable Law.
(iii) except for the Benefit Plans set out in the GMI
Disclosure Letter, there are no employment policies
or plans which are binding upon GMI.
(iv) GMI is not a party to any written or oral policy,
agreement, obligation or understanding providing for
severance or termination payments to any Employee
except as required by applicable Law.
(v) GMI is not a party to any collective bargaining
agreement nor subject to any application for
certification or threatened or apparent
union-organizing campaigns for employees not covered
under a collective bargaining agreement nor are there
any current, pending or threatened strikes or
lockouts at GMI.
(vi) GMI is not subject to any claim for wrongful
dismissal, constructive dismissal or any other tort
claim, actual or threatened, or any litigation,
actual or threatened, relating to employment or
termination of employment of Employees, other than
those claims or such litigation as would individually
or in the aggregate not have a Material Adverse
Effect.
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<PAGE> 25
(vii) GMI has operated in all material respects in
accordance with all applicable Laws with respect to
employment and labour, including, but not limited to,
employment and labour standards, occupational health
and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations and
there are as at the date hereof no current, pending
or threatened proceedings before any board or
tribunal with respect to any of the above areas.
(g) Disclosure. GMI has disclosed in documents made available to
RJF, any information regarding any event, circumstance or
action taken or failed to be taken which could individually or
in the aggregate reasonably be expected to have a Material
Adverse Effect.
(h) Financial Statements. The Financial Statements have been
prepared in accordance with Canadian generally accepted
accounting principles applied on a basis consistent with that
of the preceding period, the requirements of applicable
Governmental Authorities and any applicable Laws. Such
Financial Statements present fairly, in all material respects,
the financial position and results of operations of GMI as of
the respective dates thereof and for the respective periods
covered thereby.
(i) Books and Records. The Books and Records, in all material
respects:
(i) have been maintained in accordance with good business
practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and accurately and
fairly reflect the transactions and dispositions of
the assets of GMI; and
(iii) accurately and fairly reflect the basis for the
Financial Statements.
GMI has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that:
(iv) transactions are executed in accordance with
management's general or specific authorisation; and
(v) transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity
with Canadian generally accepted accounting
principles, or any other criteria applicable to such
statements, and (B) to maintain accountability for
assets.
(j) Litigation, Etc. Except as disclosed in the GMI Disclosure
Letter:
(i) as at the date hereof there is no claim, action,
proceeding or investigation pending or, to the
knowledge of GMI, threatened, against or relating to
GMI or affecting any of their properties, licenses or
assets before any Governmental Authority;
(ii) as at the Effective Date there will be no claim,
action, proceeding or investigation pending or, to
the knowledge of GMI, threatened, against or relating
to GMI or affecting any of its properties, licences
or assets before any Governmental Authority that, if
adversely determined, could reasonably be expected to
have a
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Material Adverse Effect, or prevent or delay
consummation of the transactions contemplated by this
Agreement or the Arrangement; and
(iii) GMI is not subject to any material outstanding
judgement, order, writ, injunction, decision, ruling
or decree.
(k) Environmental. All operations of GMI have been conducted, and
are now, in material compliance with all Environmental Laws.
GMI is not aware of or subject to:
(i) any proceeding, application, order or directive which
relates to environmental health or safety matters,
and which may require any material work, repairs,
construction or expenditures; or
(ii) any demand or notice with respect to the breach of
any Environmental Laws applicable to GMI.
(l) Tax Matters.
(i) Except as disclosed in the GMI Disclosure Letter, GMI
has duly and timely filed, or caused to be filed, all
Tax Returns required to be filed (all of which
returns were correct and complete in all material
respects) with the appropriate Governmental Authority
and has paid, or caused to be paid, all Taxes,
including all instalments on account of Taxes for the
current year that are due and payable by it whether
or not assessed by the appropriate Governmental
Authority, and GMI has provided adequate accruals in
accordance with Canadian generally accepted
accounting principles in its most recently prepared
financial statements for any Taxes for the period
covered by such financial statements that are not yet
due and payable. GMI has made adequate provision in
its books and records for any Taxes accruing in
respect of any period subsequent to the period
covered by such financial statements. Since the end
of such period, no material Tax liability not
reflected in such statements or otherwise provided
for has been assessed, proposed to be assessed,
incurred or accrued other than in the ordinary course
of business.
(ii) Except as disclosed in the GMI Disclosure Letter, GMI
has not requested or entered into any agreement or
other arrangement or executed any waiver providing
for any extension of time within which (A) to file
any Tax Return covering any Taxes for which GMI is or
may be liable, (B) to file any elections,
designations or similar filings relating to Taxes for
which GMI is or may be liable, (C) GMI is required to
pay or remit any Taxes or amounts on account of
Taxes, or (D) any Governmental Authority may assess
or collect Taxes for which GMI is or may be liable.
(iii) The Canadian federal and provincial income and
capital tax liabilities of GMI have been assessed by
the relevant taxing authorities and notices of
assessment have been issued to GMI by the relevant
taxing authorities for all taxation years prior to
and including the taxation year ended March 31, 1999.
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(iv) Except as disclosed in the GMI Disclosure Letter, (A)
as at the date hereof there are no actions, suits,
proceedings, investigations, audits or claims now
pending or, to the knowledge of GMI, threatened,
against GMI in respect of any Taxes, (B) as at the
date hereof there are no material matters under
discussion, audit or appeal with any Governmental
Authority relating to Taxes, (C) as at the Effective
Date there will be no actions, suits, proceedings,
investigations, audits or claims pending or, to the
knowledge of GMI, threatened, against GMI in respect
of the Taxes, other than actions, suits, proceedings,
investigations, audits or claims that, if adversely
determined, could not reasonably be expected to have
a Material Adverse Effect on GMI, or prevent or delay
consummation of the transactions contemplated by this
Agreement or the Arrangement, and (D) as at the
Effective Date, there will be no material matters
under discussion, approval or appeal with any
Governmental Authority relating to Taxes, other than
matters, approvals or appeals that, if adversely
determined, could not reasonably be expected to have
a Material Adverse Effect on GMI, or prevent or delay
consummation of the transactions contemplated by this
Agreement or the Arrangement.
(v) Except as disclosed in the GMI Disclosure Letter, GMI
has duly and timely withheld from any amount paid or
credited by it to or for the account or benefit of
any Person, including any Employees and any
non-resident Person, the amount of all Taxes and
other deductions required by any laws, rule or
regulation to be withheld from any such amount and
has duly and timely remitted the same to the
appropriate Governmental Authority.
(vi) Except as disclosed in the GMI Disclosure Letter, for
purposes of the Income Tax Act (Canada) or any
applicable provincial or municipal taxing statute, no
Person or group of Persons has ever acquired or had
the right to acquire control of GMI.
(vii) Except as disclosed in the GMI Disclosure Letter,
none of sections 78, 80, 80.01, 80.02, 80.03 or 80.04
of the Income Tax Act (Canada), or any equivalent
provision of the taxation legislation of any province
or any other jurisdiction, have applied or will apply
to GMI at any time up to and including the Effective
Date.
(viii) GMI has not acquired property from a non-arm's length
person, within the meaning of the Income Tax Act
(Canada), for consideration, the value of which is
less than the fair market value of the property
acquired in circumstances which could subject it to a
liability under section 160 of the Income Tax Act
(Canada).
(ix) GMI is duly registered under subdivision (d) of
Division V of Part IX of the Excise Tax Act (Canada)
with respect to the goods and services tax and
harmonized sales tax and its registration number is
10358 9396 RT0001.
(x) GMI has not filed any Tax elections, designations or
similar filings which will be applicable for any
period ending after the Effective Date.
(m) Pension and Employee Benefits. Other than as disclosed in the
GMI Disclosure Letter,
(i) GMI has complied with all the terms of, and all
applicable Laws in respect of, its Benefit Plans.
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<PAGE> 28
(ii) The GMI Disclosure Letter sets forth a complete list
and brief description of the Benefit Plans.
(iii) Current and complete copies of all written Benefit
Plans or, where oral, written summaries of the
material terms thereof, have been provided or made
available to RJF together with current and complete
copies of all documents relating to the Benefit
Plans.
(iv) All employer or employee payments, contributions or
premiums required to be remitted, paid to or in
respect of each Benefit Plan have been paid or
remitted in a timely fashion in accordance with the
terms thereof and all Laws, and no material Taxes,
penalties or fees are owing or eligible under any
Benefit Plan.
(v) No step has been taken, no event has occurred and no
condition or circumstance exists that has resulted in
or could reasonably be expected to result in any
Benefit Plan being ordered or required to be
terminated or wound up in whole or in part or having
its registration under applicable Laws refused or
revoked, or being placed under the administration of
any trustee or receiver or regulatory authority or
being required to pay any material Taxes, fees,
penalties or levies under applicable Laws. There are
no actions, suits, claims (other than routine claims
for payment of benefits in the ordinary course),
trials, demands, investigations, arbitrations or
other proceedings which are pending or threatened in
respect of any Benefit Plan or the assets of a
Benefit Plan which individually or in the aggregate
would have a Material Adverse Effect.
(n) Residence of GMI Shareholders. None of the GMI Shareholders is
a non-resident of Canada for the purposes of the Income Tax
Act (Canada).
(o) Title to the Assets. GMI is the sole beneficial and (where its
interests are registrable) the sole registered owner of all of
its assets and interests in assets, real and personal (other
than customer Registered Retirement Savings Plan accounts),
with good and valid title, free and clear of all Encumbrances
other than immaterial Encumbrances incurred in the ordinary
and usual course of business with trade creditors and
suppliers. All of the assets of GMI are located on the Leased
Real Property or are in transit to or from the Leased Real
Property.
(p) Reserves and Accruals. Except as disclosed in the GMI
Disclosure Letter, the reserves and Accrued Liabilities
disclosed on or reflected in the Financial Statements and the
Books and Records are sufficient in all respects to provide
for the liabilities in respect of which they have been
established.
(q) Non-Arm's Length Transactions. Except as disclosed in the GMI
Disclosure Letter, no current or former Employee or any other
Person not dealing at arm's length with GMI has any
indebtedness, liability or obligation to GMI and GMI is not
indebted or otherwise obligated to any such Person, except
pursuant to employment arrangements with Employees, and as at
the Effective Date no current or former Employee or any other
Person not dealing at arm's length with GMI will have any
indebtedness, liability or obligation to GMI and GMI will not
be indebted or otherwise obligated to any such
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<PAGE> 29
Person, except pursuant to employment arrangements with
Employees adopted in the ordinary and usual course of business
consistent with past practice.
(r) Condition of Assets. The Fixed Assets are in good condition,
repair and (where applicable) proper working order, having
regard to their use and age and such assets have been properly
and regularly maintained.
(s) Collectibility of Accounts Receivable. The Accounts Receivable
are good and collectible at the aggregate recorded amounts,
except to the extent of any reserves provided for such
accounts in the Books and Records and to be provided for in
the Balance Sheet, and are not subject to any defence,
counterclaim or set off.
(t) Governmental Authorisations. GMI holds all Governmental
Authorizations required to enable it to carry on its business
in material compliance with all Laws, and such Governmental
Authorizations are in full force and effect in accordance with
their terms, and there have been no material violations
thereof.
(u) Intellectual Property. GMI has no knowledge that GMI or any
activity in which GMI is engaged breaches, violates, infringes
or interferes with any intellectual property rights of any
third party or requires payment for the use of any patent,
trade-name, trade secret, trade-mark, copyright or other
intellectual property right or technology of another.
(v) Equipment Contracts. All of GMI's material Equipment Contracts
are in full force and effect and no defaults exist on the part
of GMI, or, to the knowledge of GMI, on the part of any of the
other parties thereto. The entire interest of GMI under each
of the material Equipment Contracts is held by it free and
clear of any Encumbrances other than immaterial Encumbrances
incurred in the ordinary and usual course with trade creditors
and suppliers.
(w) Owned Real Property. Except for the Leased Real Property, GMI
does not own and does not have any interest in, and is not a
party to, any agreement to purchase any real or immovable
property.
(x) Leased Real Property.
(i) The GMI Disclosure Letter sets forth a complete and
correct list and description of all of the Leases of
Real Property. Each of the Real Property Leases is in
good standing and in full force and effect, and
neither GMI nor, to GMI's knowledge, any other party
thereto is in material breach of any covenants,
conditions or obligations contained therein and all
rental and other payments required to be paid
pursuant to the Real Property Leases have been duly
paid. GMI has the exclusive right to occupy and use
the Leased Real Property;
(ii) Except as disclosed in the Disclosure Letter, GMI has
not waived, or omitted to take any action in respect
of any substantial rights under any of the Real
Property Leases;
(iii) Except as disclosed in the GMI Disclosure Letter, GMI
has not granted any option, right of first refusal or
other contractual rights with respect to, or
subleased, any of the Real Property Leases; and
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<PAGE> 30
(iv) There are no matters affecting the right, title and
interest of GMI in and to the Leased Real Property
which, in the aggregate, would have a Material
Adverse Effect on RJF or would adversely affect the
ability of RJF to carry on its business of GMI upon
the Leased Real Property as it has been carried on
in the ordinary and usual course in the past.
(y) Insurance. GMI maintains such policies of insurance, issued
by responsible insurers, as are appropriate to its
operations, property and assets, in such amounts and against
such risks as are customarily carried and insured against by
owners of comparable businesses, properties and assets. All
such policies of insurance are in full force and effect and
GMI is not in default, as to the payment of premium or
otherwise, under the terms of any such policy. The GMI
Disclosure Letter sets forth a complete list of all policies
of insurance which GMI maintains and the particulars of such
policies, including the name of the insurer, the risk insured
against, the amount of coverage and the amount of any
deductible.
(z) Material Contracts. The GMI Disclosure Letter sets forth a
complete list of the Material Contracts as at the date
hereof. As at the date hereof the Material Contracts listed
in the GMI Disclosure Letter are all in full force and effect
unamended and no material default exists under such Material
Contracts on the part of GMI or, to the knowledge of GMI, on
the part of any other party to such Contracts. GMI, has the
capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations under the Material
Contracts listed in the GMI Disclosure Letter. Current and
complete copies of the Material Contracts have been delivered
to RJF and there are no current or pending negotiations with
respect to the renewal, repudiation or amendment of any such
agreement, plan or policy.
(aa) Corporate Records and Minute Books. The Articles and by-laws
of GMI, including any and all amendments have been delivered
or made available to RJF and such Articles and by-laws as so
amended are in full force and effect and no amendments are
being made to the same. The corporate records and minute
books of GMI have been delivered or made available to RJF.
The minute books include complete and accurate minutes of all
meetings of the directors or shareholders of GMI, as
applicable, held to date or resolutions passed by the
directors or shareholders on consent, since the date of its
incorporation. The share certificate book, register of
shareholders, register of transfers and register of directors
of GMI, are complete and accurate.
(bb) Management Recommendation Letters. RJF has been provided with
copies of all management recommendation letters received by
GMI or its board of directors from the Auditor, or any
previous auditor of GMI, since April 1, 1998.
(cc) Compliance with Laws. Except as disclosed in the GMI
Disclosure Letter, GMI has complied with and is not in
material violation of any applicable Laws, orders, judgements
and decrees. Without limiting the generality of the
foregoing, all securities of GMI have been issued in
compliance with all applicable securities Laws.
(dd) Circular. The information to be contained in the Circular or
any amendment thereto (including any information referred to
therein or incorporated therein by reference) relating to GMI
will be accurate and complete in all material respects as at
the date thereof and will not contain a misrepresentation as
at such date.
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(ee) Securities Matters. Except as disclosed in the GMI Disclosure
Letter, there is no material Securities Offence on the part
of GMI or on the part of any of their respective employees or
independent contractors or former employees or independent
contractors (committed while such current or former employee
or independent contractor was an employee or independent
contractor of GMI).
(ff) Guarantees. Other than guarantees in the form required by the
Investment Dealers Association of Canada and described in the
GMI Disclosure Letter, GMI has not given or agreed to give,
nor is it a party to or bound by, any guarantee of
indebtedness, material indemnity or suretyship of other
obligations of any Person, nor is it contingently responsible
for such indemnity or suretyship or obligations.
(gg) Restrictions on Business Activities. There is no agreement,
commitment, document, decision, ruling, judgement,
injunction, order or decree binding upon GMI that has or
could reasonably be expected to have the effect of
prohibiting, restricting or materially impairing any business
practice of GMI, any acquisition of property by GMI or the
conduct of business by GMI as currently conducted.
(hh) Registration Rights. No holder of securities issued by GMI
has any right to compel GMI to register or otherwise qualify
such securities for public sale in Canada or the United
States.
4.2 REPRESENTATIONS AND WARRANTIES OF THE RJF PARTIES
Each of the RJF Parties jointly and severally represents and
warrants to and in favour of GMI as follows and acknowledge that GMI is relying
upon such representations and warranties in connection with the matters
contemplated by this Agreement:
(a) Organisation. Each of the RJF Parties and their respective
Subsidiaries has been duly incorporated or formed under all
applicable Laws, is validly subsisting and has full corporate
or legal power and authority to own its properties and
conduct its businesses as currently owned and conducted.
(b) Capitalization. The authorised capital of:
(i) RJF consists of 100,000,000 RJF Common Shares with
U.S.$0.01 par value and 10,000,000 preferred shares
with U.S.$0.10 par value, of which, as at October
31, 2000, there were 46,569,014 RJF Common Shares
and no preferred shares issued and outstanding.
Except for employee stock options pursuant to
employee compensation plans and pursuant to RJF's
publicly disclosed stock option plans, there are no
options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments
(contingent or otherwise) obligating RJF to issue or
sell any shares or securities or obligations of any
kind convertible into or exchangeable for any
shares. All outstanding RJF Common Shares have been
duly authorized and are validly issued and
outstanding as fully paid and non-assessable shares,
free of pre-emptive rights. There are no outstanding
bonds, debentures or other evidences of indebtedness
of RJF having the right to vote (or that are
convertible for or exercisable into securities
having the right to vote) with the holders of the
RJF Common Shares on any matter. Other than under
employee
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<PAGE> 32
stock option plans, there are no outstanding
contractual obligations of RJF to repurchase, redeem
or otherwise acquire any of its outstanding
securities or with respect to the voting or
disposition of any outstanding securities of any of
its Subsidiaries;
(ii) RJ Holdings consists of an unlimited number of
common shares without par value, of which 100 common
shares are issued and outstanding; and
(iii) all prior sales of securities of RJF were either
registered under the 1933 Act and applicable blue
sky laws or exempt from registration thereunder, and
no holder of such securities has any rescission
rights with respect thereto.
(c) Stock Exchange Listing. The RJF Common Shares are listed and
posted for trading on the New York Stock Exchange.
(d) Authority and No Violation.
(i) Each of the RJF Parties has the requisite corporate
power and authority to enter into this Agreement,
the Support Agreement and the Escrow Agreement and
to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement, the
Support Agreement and the Escrow Agreement by each
of the RJF Parties and the consummation by each of
the RJF Parties of the transactions contemplated by
this Agreement, the Support Agreement and the Escrow
Agreement have been duly authorised by its
respective Board of Directors and no other corporate
proceedings on its part are necessary to authorise
this Agreement, the Support Agreement and the Escrow
Agreement or the transactions contemplated hereby or
thereby and, in the case of the RJF Parties, other
matters (if any) relating solely to the
implementation of the Arrangement.
(ii) This Agreement has been duly executed and delivered
by each of the RJF Parties and constitutes its
legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to
bankruptcy, insolvency and other similar Laws
affecting creditors' rights generally, and to
general principles of equity. Each of the Support
Agreement and the Escrow Agreement when duly
executed and delivered by each of the RJF Parties
thereto will constitute its legal, valid and binding
obligation, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency
and other similar Laws affecting creditors' rights
generally, and to general principles of equity.
(iii) The approval of this Agreement, the Support
Agreement and the Escrow Agreement, the execution
and delivery by each of the RJF Parties of this
Agreement, the Support Agreement and the Escrow
Agreement and the performance by it of its
obligations hereunder and thereunder and the
completion of the Arrangement and the transactions
contemplated thereby, will not:
(A) result in a violation or breach of, require
any consent to be obtained under or give
rise to any termination rights or payment
obligation under any provision of:
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(I) its certificate of incorporation,
articles, by-laws or other charter
documents or understanding with
any party holding an ownership
interest in it;
(II) subject to obtaining the
Appropriate Regulatory Approvals
relating to the RJF Parties, any
Laws, regulation, order, judgement
or decree; or
(III) any material contract, agreement,
license, franchise or permit to
which it is party or by which it
is bound;
(B) give rise to any right of termination or
acceleration of indebtedness, or cause any
third party indebtedness to come due before
its stated maturity or cause any available
credit to cease to be available; or
(C) except as would not, individually or in the
aggregate, have a Material Adverse Effect,
result in the imposition of any
encumbrance, charge or lien upon any of its
assets, or restrict, hinder, impair or
limit its ability to carry on its business
as and where it is now being carried on.
(iv) No consent, approval, order or authorisation of, or
declaration or filing with, any Governmental
Authority or other Person in connection with the
execution and delivery of this Agreement, the
Support Agreement and the Escrow Agreement or the
consummation by RJF of the transactions contemplated
hereby or thereby other than:
(A) the Appropriate Regulatory Approvals
relating to RJF;
(B) the approval of the Commercial Bank Lenders;
(C) any approvals required in connection with
the issuance of the RJF Common Shares
required to be issued pursuant to the terms
of this Agreement; and
(D) any other consents, approvals, orders,
authorizations, declarations or filings of
or with a Governmental Authority which, if
not obtained, would not in the aggregate
have a Material Adverse Effect.
(e) Absence of Certain Changes or Events. Except as disclosed in
publicly available reports filed by RJF with the SEC prior to
the date of this Agreement, since June 30, 2000 RJF there has
not occurred:
(i) any change in its condition (financial or
otherwise), properties, assets, liabilities,
businesses, operations, results of operations or
prospects and those of its Subsidiaries, that has
had, or could reasonably be expected to have a
Material Adverse Change;
(ii) any agreement or arrangement to take any action
which, if taken prior to the date hereof, would have
made any representation or warranty set forth in
this Agreement materially untrue or incorrect as of
the date when made.
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(f) Disclosure. RJF has filed with the SEC true and complete
copies of all forms, reports, schedules, statements and other
documents required to be filed by it since September 27,
1999, and such documents, at the time filed:
(i) did not contain any untrue statement of a material
fact or omit to state a material fact necessary in
order to make the statements made, in the light of
the circumstances under which they were made, not
misleading; and
(ii) complied in all material respects with the
requirements of applicable securities Laws.
(g) Financial Statements. The audited consolidated financial
statements for RJF as at and for each of the fiscal years
ended September 24, 1999 and September 25, 1998 and the
unaudited consolidated financial statements for the period
beginning September 25, 1999 and ended June 30, 2000 have
been prepared in accordance with United States generally
accepted accounting principles, the requirements of
applicable Governmental Authorities and applicable securities
Laws; such financial statements present fairly, in all
material respects, the consolidated financial position and
results of operations of RJF and its Subsidiaries as of the
respective dates thereof and for the respective periods
covered thereby.
(h) Circular. The information provided to GMI by the RJF Parties
for inclusion in the Circular or any amendment thereto
(including any information referred to therein or
incorporated therein by reference) relating to the RJF
Parties will be accurate and complete in all material
respects as at the date thereof and will not contain a
misrepresentation (as such term is defined in the Securities
Act) as at such date.
(i) Retractable and Exchangeable Shares. The Retractable Shares
and Exchangeable Shares to be issued in connection with the
Arrangement will be duly authorised and validly issued by RJ
Holdings on the Effective Date.
(j) Exemptions from Registration. The issuance by RJF of the RJF
Options and the issuance by RJ Holdings of the Exchangeable
Shares and the Retractable Shares, shall be exempt from
registration or registered under applicable United States
federal and state securities laws.
(k) No Assets or Liabilities. RJ Holdings has no material assets
or liabilities except as contemplated by this Agreement.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of GMI and the RJF Parties
contained herein shall survive the execution and delivery of this Agreement and
shall terminate on the earlier of the termination of this Agreement in
accordance with its terms and January 10, 2003.
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ARTICLE 5
REGULATORY APPROVALS
5.1 APPLICATIONS
GMI and the RJF Parties covenant and agree to proceed
diligently, in a coordinated fashion, to apply for and obtain the Appropriate
Regulatory Approvals.
5.2 OBTAINING OF APPROPRIATE REGULATORY APPROVALS
For purposes of this Agreement, no Appropriate Regulatory
Approval shall be considered to have been obtained if it contains any condition
that:
(a) would put RJF at a material competitive disadvantage by
comparison with its competitors in any jurisdiction in which
RJF currently has significant operations, if the competitive
disadvantage is greater than any competitive disadvantage
which may reasonably be expected in consequence of regulatory
requirements that result from the operations of a securities
firm in multiple jurisdictions, or is materially onerous to
RJF in some other respect; or
(b) would put the combined operations of RJF and GMI at a
material competitive disadvantage by comparison with its
competitors in any jurisdiction in which RJF and it
Subsidiaries and GMI have significant operations, if the
competitive disadvantage is greater than any competitive
disadvantage which may reasonably be expected in consequence
of regulatory requirements that result from the operations of
a securities firm in multiple jurisdictions, or is materially
onerous to the combined operations of RJF and GMI in some
other respect.
In addition, no Appropriate Regulatory Approval shall be
considered to have been obtained if an appeal has been instituted from the
granting of any Appropriate Regulatory Approval and remains outstanding.
ARTICLE 6
COVENANTS
6.1 RETENTION OF GOODWILL
During the Pre-Effective Period, each of GMI and RJF shall,
subject to the fact that a merger of their businesses is contemplated hereby,
continue to carry on their respective businesses in a manner consistent with
prior practice, working to preserve the attendant goodwill of such entities and
to contribute to retention of that goodwill to and after the Effective Date,
but subject to the following provisions of this Article 6. The following
provisions of this Article 6 are intended to be in furtherance of this general
commitment.
6.2 RETENTION OF EMPLOYEES
As an incentive to retain certain Employees of GMI, the RJF
Parties shall cause GMI to establish a retention program on or before the
Effective Time in the aggregate amount of $17,482,000, which will be allocated
among certain Employees in the amounts set forth in a letter to be delivered by
GMI
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<PAGE> 36
to RJF at least five Business Days prior to the Closing Date and approved by
RJF, such approval not to be unreasonably withheld (the "RETENTION LETTER"). On
January 10, 2004, RJ Holdings shall pay to each Employee listed in the
Retention Letter one-third of the amount listed for such Employee in the
Retention Letter. On January 10, 2005, RJ Holdings shall pay to each of the
Employees listed in the Retention Letter two-thirds of the amount listed for
such Employee in the Retention Letter. Notwithstanding the foregoing, in the
event that such an Employee terminates his or her employment with GMI or is
subject to Termination for Cause by GMI prior to such payment date or dates,
then RJ Holdings shall not be required to make any payment on such date or
dates to such an Employee pursuant to this section 6.2. For greater certainty,
the death or disability of an Employee does not constitute a termination of
such Employee's employment with GMI or Termination for Cause by GMI.
6.3 GRANT OF OPTIONS
(a) As an incentive for certain Employees of GMI to remain
employees of GMI, RJF shall grant on the Effective Date
200,000 options (the "RJF OPTIONS") to purchase common shares
of RJF to such current senior managers of GMI (the
"OPTIONEES") and in such proportions as is determined prior
to the Closing Date by RJF, acting in good faith, following
consultation with senior management of GMI. These RJF Options
will be issued pursuant to the terms and conditions of RJF's
Stock Option Plan for Key Management Personnel, dated
November 21, 1996 (the "RJF OPTION PLAN"). The exercise price
for such RJF Options will be not less than the market price
of RJF Common Shares on the Business Day immediately prior to
the Effective Date. The term and the vesting schedule for
such RJF Options shall be in accordance with the RJF Option
Plan and in a manner consistent with RJF's prior practice.
(b) The RJF Common Shares to be issued from time to time upon
exercise of the RJF Options shall be issued pursuant to an
effective registration statement filed on Form S-8. The RJF
Parties represent and warrant to GMI that such Form S-8 is
effective as of the date hereof. RJF shall use its
commercially reasonable efforts to maintain the effectiveness
of such registration for such period as the RJF Options
remain outstanding.
6.4 MATERIAL COMMITMENTS
During the Pre-Effective Period, GMI shall consult officers
of RJF regarding any commitments, arrangements or transactions proposed to be
entered into by GMI that would give rise to a material liability or commitment
of any kind where such liability or commitment is unusual or is of such a
nature as to be inconsistent with the historical conduct by GMI and its
business, with materiality being determined for the purposes of this section
6.4 by reference to the capital base of GMI.
6.5 COVENANTS OF GMI
(a) GMI covenants and agrees that, until the Effective Date or
the earlier termination of this Agreement in accordance with
Article 8, except:
(i) with the consent of RJF on behalf of the RJF Parties
to any deviation therefrom;
(ii) with respect to any binding commitments or proposed
courses of action which were disclosed in the GMI
Disclosure Letter; or
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(iii) with respect to any matter contemplated by this
Agreement,
GMI shall:
(iv) carry on its business in, and only in, the ordinary
and regular course in substantially the same manner
as heretofore conducted and, to the extent
consistent with such business, use all reasonable
efforts to preserve intact its present business
organisation and keep available the services of its
present Employees and others having business
dealings with it to the end that its goodwill and
business shall be maintained;
(v) not commence or undertake a substantial or unusual
expansion of its business facilities or an expansion
that is out of the ordinary and regular course of
business consistent with prior practice in light of
current market and economic conditions;
(vi) not declare or pay any dividends on or make any
other distributions on or in respect of the
outstanding shares of GMI;
(vii) not amend its articles or by-laws;
(viii) not allot, reserve, set aside or issue, authorise or
propose the allotment, reservation, setting aside or
issuance of, or purchase or redeem or propose the
purchase or redemption of, any shares in its capital
stock or any class of securities convertible or
exchangeable into, or rights, warrants or options to
acquire, any such shares or other convertible or
exchangeable securities, other than a redemption or
purchase made pursuant to the GMI Shareholders'
Agreement which involves no greater than four
percent of the issued and outstanding GMI Common
Shares and GMI Preferred Shares;
(ix) not acquire or agree to acquire any GMI Common
Shares, GMI Preferred Shares or other outstanding
securities of GMI, other than an acquisition made
pursuant to the GMI Shareholders' Agreement which
involves no greater than four percent of the issued
and outstanding GMI Common Shares and GMI Preferred
Shares;
(x) not enter into or agree to enter into any Material
Contract;
(xi) not acquire or agree to acquire by amalgamating,
merging or consolidating with, purchasing material
assets of or any material business of any
corporation, partnership, association or other
business organisation or division thereof, which
acquisition would be material to GMI's business or
financial condition on a consolidated basis;
(xii) except in the ordinary and regular course of
business consistent with past practice, not sell,
lease or otherwise dispose of any of its assets;
(xiii) except in the ordinary and regular course of
business consistent with past practice, not
guarantee the payment of indebtedness or incur
indebtedness for money borrowed or issue or sell any
debt securities;
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(xiv) continue to provide RJF and its representatives with
information as reasonably requested by them from
time to time concerning the business, assets,
liabilities and affairs of GMI subject to and in
accordance with the Confidentiality Agreement, and
with access (on a basis that does not detract
unreasonably from their performance of their
business responsibilities) to management and
employees of GMI;
(xv) use reasonable efforts to comply promptly with all
requirements which applicable Laws may impose on GMI
with respect to the transactions contemplated hereby
and by the Arrangement;
(xvi) except in the ordinary and regular course of
business consistent with past practice, not permit
or grant any of its Employees any increase in
compensation or to pay any severance or termination
amounts whether or not such compensation, payment or
amount is payable in cash, other than the payment of
bonuses to Employees in an aggregate amount which
will not reduce the Consolidated Book Value to less
than $61,000,000, or enter into any employment
agreement with any Employee which are not terminable
on the giving of reasonable notice in accordance
with applicable Laws;
(xvii) cause GMI's Consolidated Book Value to be not less
than $61,000,000 as at the Effective Date; and
(xviii) promptly advise RJF orally and, if then requested,
in writing:
(I) of any event occurring subsequent to the
date of this Agreement that would render
any representation or warranty of GMI
contained in this Agreement, if made on or
as of the date of such event or the
Effective Date, untrue or inaccurate in any
material respect;
(II) of any Material Adverse Change in respect
of GMI; and
(III) of any breach by GMI of any covenant or
agreement contained in this Agreement; and
(b) GMI shall perform all obligations required or desirable to be
performed by GMI under this Agreement and shall do all such
other acts and things as may be necessary or desirable in
order to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated in this Agreement
and, without limiting the generality of the foregoing, GMI
shall:
(i) use reasonable efforts to obtain those approvals of
GMI Shareholders that may be necessary to effectuate
the Arrangement;
(ii) apply for and use all reasonable efforts to obtain
all Appropriate Regulatory Approvals relating to
GMI;
(iii) apply for and use all reasonable efforts to obtain
the Interim Order and the Final Order;
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(iv) defend all lawsuits or other legal, regulatory or
other proceedings to which it is a party challenging
or affecting this Agreement or the consummation of
the transactions contemplated hereby;
(v) use reasonable efforts to have lifted or rescinded
any injunction or restraining order or other order
relating to GMI which may adversely affect the
ability of the parties to consummate the
transactions contemplated hereby; and
(vi) effect all necessary registrations, filings and
submissions of information required by Governmental
Authority from GMI or any of its Subsidiaries.
6.6 COVENANTS OF RJF PARTIES
Each of the RJF Parties hereby jointly and severally
covenants and agrees:
(a) to perform all obligations required or desirable to be
performed by it under this Agreement within the time periods
prescribed by this Agreement and to do all such other acts
and things as may be necessary or desirable in order to
consummate and make effective, as soon as reasonably
practicable, the transactions contemplated by this Agreement
and, without limiting the generality of the foregoing, to:
(i) apply for and use reasonable efforts to obtain all
Appropriate Regulatory Approvals relating to the RJF
Parties;
(ii) defend all lawsuits or other legal, regulatory or
other proceedings to which it is a party challenging
or affecting this Agreement or the consummation of
the transactions contemplated hereby;
(iii) use commercially reasonable efforts to have lifted
or rescinded any injunction or restraining order or
other order relating to the RJF Parties which may
adversely affect the ability of the parties to
consummate the transactions contemplated hereby;
(iv) effect all necessary registrations, filings and
submissions of information required by Governmental
Authorities from the RJF Parties;
(v) cause RJ Holdings to adopt articles of RJ Holdings
that, among other things, create the Retractable
Shares and Exchangeable Shares; and
(vi) cause RJF to reserve a sufficient number of RJF
Common Shares for issuance upon the exchange from
time to time of the Exchangeable Shares;
(b) to cause the RJF Common Shares to be issued upon the exchange
from time to time of the Exchangeable Shares, in all cases,
to be duly and validly issued by RJF on their respective
dates of issue free from all taxes, liens and charges;
(c) to cause the RJF Common Shares to be issued upon the exercise
from time to time of the RJF Options, in all cases, to be
duly and validly issued by RJF on their respective date of
issue free from all taxes, liens and charges;
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(d) to file the registration statement on Form S-3 described in
Schedule 5;
(e) RJF shall use its commercially reasonable efforts to cause
all the Registrable Securities covered by a Registration
Statement to be listed on each securities exchange on which
securities of the same class or series issued by RJF are then
listed.
(f) RJF shall pay all documentary stamp taxes and similar
charges, if any, in respect of the original issuance of all
of the RJF Common Shares to be issued from time to time after
the Effective Time upon exchange of the Exchangeable Shares
and upon exercise of the RJF Options;
(g) to use all reasonable efforts to cause each of RJF's
Commercial Bank Lenders, to give its written approval to the
Arrangement on or before the date of the GMI Meeting; and
(h) to nominate Mr. Kenneth A. Shields for election to RJF's
board of directors at the first annual meeting of
shareholders of RJF following the Effective Date and to
ensure that Mr. Shields is appointed to the board of
directors of RJ Holdings on or before the Effective Date.
6.7 COVENANT REGARDING NON-SOLICITATION
(a) GMI shall not, directly or indirectly, through any officer,
director, employee, representative or agent of GMI or any of
its Subsidiaries (i) solicit, initiate or knowingly encourage
(including by way of furnishing information or entering into
any form of agreement, arrangement or understanding) the
initiation of any inquiries or proposals regarding an
Acquisition Proposal, (ii) withdraw or modify in a manner
adverse to the RJF Parties the approval of the board of
directors of GMI of the transactions contemplated hereby,
(iii) approve or recommend any Acquisition Proposal or (iv)
cause GMI to enter into any agreement related to any
Acquisition Proposal.
(b) GMI shall promptly notify the RJF Parties, at first orally
and then in writing, of all current Acquisition Proposals,
and of all future Acquisition Proposals, of which GMI's
directors or senior officers are or become aware, or any
amendments to the foregoing, or any request for non-public
information relating to GMI or any Subsidiaries in connection
with an Acquisition Proposal or for access to the properties,
books or records of GMI or any Subsidiary by any Person that
informs GMI or such Subsidiary that is considering making, or
has made, an Acquisition Proposal. Such notice shall include
a description of the material terms and conditions of any
proposal and provide such details of the proposal, inquiry or
contact as RJF may reasonably request including the identify
of the Person making such proposal, inquiry or contact.
GMI shall ensure that its officers, directors and employees
and its Subsidiaries and their officers, directors and employees and any
financial advisors or other advisors or representatives retained by it are
aware of the provisions of this section 6.7.
6.8 ACCESS TO INFORMATION
(a) Subject to subsections 6.8(b) and (c) and applicable Laws,
upon reasonable notice, GMI shall afford RJF's officers,
employees, counsel, accountants and other authorised
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representatives and advisors ("Representatives") access,
during normal business hours from the date hereof and until
the earlier of the Effective Date or the termination of this
Agreement, to its properties, books, contracts and records as
well as to its management personnel, and, during such period,
GMI shall furnish promptly to RJF all information concerning
GMI's business, properties and personnel as RJF may
reasonably request. Subject to subsections 6.8(b) and (c) and
applicable Laws, upon reasonable notice, RJF shall afford
GMI's Representatives access, during normal business hours
from the date hereof and until the earlier of the Effective
Date or the termination of this Agreement, to such of RJF's
management personnel as RJF may determine, acting reasonably,
and, during such period, RJF shall furnish promptly to GMI
all information respecting material changes in RJF's
business, properties and personnel as GMI may reasonably
request.
(b) Each of RJF and GMI acknowledges that certain information
provided to it under subsection 6.8(a) above will be
non-public and/or proprietary in nature (the "INFORMATION").
Except as permitted below, each of RJF and GMI shall keep
Information confidential and shall not, without the prior
written consent of the other, disclose it, in any manner
whatsoever, in whole or in part, to any other person, and
shall not use it for any purpose other than to evaluate the
transactions contemplated by this Agreement. Each of RJF and
GMI shall make all reasonable, necessary and appropriate
efforts to safeguard the Information from disclosure to
anyone other than as permitted hereby and to control the
copies, extracts or reproductions made of the Information.
The Information may be provided to the Representatives of
each of RJF and GMI who require access to the same to assist
it in proceeding in good faith with the transactions
contemplated by this Agreement, and whose assistance is
required for such purposes, provided that it has first
informed such Representatives to whom Information is provided
that the Representative has the same obligations, including
as to confidentiality, restricted use and otherwise, that it
has with respect to such Information. This provision shall
not apply to such portions of the Information that: (i) are
or become generally available to the public otherwise than as
a result of disclosure by a party or its Representatives; or
(ii) become available to a party on a non-confidential basis
from a source other than, directly or indirectly, the other
party or its Representatives, provided that such source is
not to the knowledge of the first party, upon reasonable
inquiry, prohibited from transmitting the Information by a
contractual, legal or fiduciary obligation; or (iii) were
known to a party or were in its possession on a
non-confidential basis prior to being disclosed to it by the
other party or by someone on its behalf; or (iv) are required
by applicable Laws or court order to be disclosed. The
provisions of this subsection 6.8(b) shall survive the
termination of this Agreement.
(c) The parties acknowledge that certain Information may be
competitively sensitive and that disclosure thereof shall be
limited to that which is reasonably necessary for the purpose
of:
(i) preparing submissions or applications in order to
obtain the Appropriate Regulatory Approvals;
(ii) preparing the Circular;
(iii) avoiding conflicts; and
(iv) integrating the operations of RJF and GMI.
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6.9 INDEMNIFICATION
RJF agrees that all rights to indemnification or exculpation
now existing in favour of the directors or officers of GMI as provided in GMI's
articles of incorporation or by-laws, a copy of which has been provided to RJF
prior to the date of the execution of this Agreement, in effect on the date
hereof shall survive the Arrangement and shall continue in full force and
effect for a period up until January 10, 2003.
6.10 AUDIT OF CONSOLIDATED BOOK VALUE
Not later than 90 days after the Effective Date, GMI shall
calculate and have audited by a nationally recognized independent accounting
firm the Consolidated Book Value, and deliver notice to each of the RJF Parties
of the amount of such audited Consolidated Book Value. RJF and its independent
certified public accountants shall have the right to observe all steps taken by
GMI in connection with the determination of the amount of Consolidated Book
Value and to review fully all work papers and procedures related thereto. RJF
shall have 20 Business Days following the receipt of notice of the audited
Consolidated Book Value to object to the calculation of Consolidated Book
Value, and if RJF does not object during such period, then the amount of the
Consolidated Book Value as calculated by GMI, and confirmed by the audit shall
be deemed for all purposes to be final and binding on the RJF Parties.
If RJF believes that any adjustments should be made in the
calculation of the amount of the Consolidated Book Value, then RJF shall give
the GMI Shareholders notice of such adjustments within 20 Business Days of its
receipt of notice of the audited Consolidated Book Value. If, after a period of
20 Business Days following the date that RJF gives written notice of any
proposed adjustments to the amount of Consolidated Book Value, any such
adjustments remain disputed by the former holders of five percent or more of
the GMI Common Shares and GMI Preferred Shares immediately prior to the
Effective Time, RJF and such disputing former GMI Shareholders shall jointly
engage a nationally recognized independent accounting firm that is mutually
satisfactory to RJF and the disputing former GMI Shareholders to resolve such
disputed adjustments in accordance with this Agreement and the decision of such
firm shall be deemed for all purposes to be final and finding on the RJF
Parties. The fees of the independent accounting firm shall be borne by RJF,
unless such accounting firm determines that the amount of the Consolidated Book
Value is less than the lesser of $61,000,000 and the Consolidated Book Value as
originally calculated by GMI and confirmed by the initial audit, in which event
the fees of the independent accounting firm shall be paid from the Escrowed
Consideration.
The term "CONSOLIDATED BOOK VALUE" shall mean the total
assets of GMI, less the total liabilities of GMI, as of the date immediately
prior to the Effective Date, prepared in accordance with Canadian generally
accepted accounting principles on a basis consistent with the Financial
Statements.
Within five Business Days after the audit of the Consolidated
Book Value is finally completed in accordance with the provisions hereof, if
the amount of the audited Consolidated Book Value is less than $61,000,000,
then RJ Holdings shall be entitled to be indemnified for the difference between
$61,000,000 and the audited Consolidated Book Value, pursuant to the terms of
the Escrow Agreement, from the Escrowed Securities, such indemnification to be
allocated pro rata among the Escrowed Securities owing to each GMI Shareholder
and to be allocated proportionately from each separate form of Escrowed
Securities owing to each GMI Shareholder (whether Exchangeable Shares,
Retractable Shares or any combination thereof). If the difference between
$61,000,000 and the audited Consolidated Book Value is greater than the entire
amount of the Escrowed Securities and GMI intentionally and in bad faith
reduced the Consolidated Book Value in breach of its covenant pursuant to
clause 6.5(a)(xvi), the GMI Shareholders shall pay to RJ Holdings an amount
(whether in the form of cash or securities) equal to the
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difference between (a) $61,000,000 less the amount of the Escrowed Securities,
and (b) the audited Consolidated Book Value.
ARTICLE 7
CONDITIONS
7.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of the parties hereto to complete
the transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of the following conditions
precedent, each of which may only be waived by the mutual consent of the RJF
Parties and GMI and any one or more of which, if not satisfied or waived, will
relieve the parties hereto of any obligation under this Agreement, except for
obligations pursuant to section 6.8:
(a) the Arrangement shall have been approved at the GMI Meeting
by not less than two-thirds of the votes cast by the GMI
Shareholders who are represented at the GMI Meeting (each GMI
Shareholder being entitled to cast one vote for each GMI
Common Share held and one vote for each GMI Preferred Share
held, as provided in the Interim Order);
(b) the Arrangement shall have been approved at the GMI Meeting
in accordance with any conditions in addition to those set
out in subsection 7.1 (a) which may be imposed by the Interim
Order and which are acceptable to each of GMI and RJF, acting
reasonably;
(c) the Interim Order and the Final Order shall each have been
obtained in form and terms acceptable to each of GMI and RJF,
acting reasonably, and shall not have been set aside or
modified in a manner unacceptable to such parties on appeal
or otherwise;
(d) there shall not be in force any order or decree restraining
or enjoining the consummation of the transactions
contemplated by this Agreement and there shall be no
proceeding (other than an appeal made in connection with the
Arrangement), of a judicial or administrative nature or
otherwise, in progress or threatened that relates to or
results from the transactions contemplated by this Agreement
that would, if successful, result in an order or ruling that
would preclude completion of the transactions contemplated by
this Agreement in accordance with the terms hereof or would
otherwise be inconsistent with the Appropriate Regulatory
Approvals which have been obtained;
(e) this Agreement shall not have been terminated pursuant to
Article 8; and
(f) the RJF Common Shares issuable upon exchange of the
Exchangeable Shares from time to time shall have been
approved for listing on the New York Stock Exchange, subject
only to notice of issuance.
Neither GMI nor the RJF Parties may rely on the failure to satisfy any of the
above conditions precedent as a basis for non-compliance by it with its
obligations under this Agreement if the condition precedent would have been
satisfied but for a material default by it (in the case of GMI) or by either of
the RJF Parties (in the case of the RJF Parties) in complying with its
obligations hereunder.
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7.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE RJF PARTIES
The obligations of the RJF Parties to complete the
transactions contemplated by this Agreement shall also be subject to the
fulfilment of each of the following conditions precedent (each of which is for
the RJF Parties' exclusive benefit and may be waived by RJF on behalf of the
RJF Parties and any one or more of which, if not satisfied or waived, will
relieve the RJF Parties of any obligation under this Agreement, except for
obligations pursuant to section 6.8):
(a) all covenants of GMI under this Agreement to be performed on
or before the Effective Date shall have been duly performed
by GMI in all material respects;
(b) the representations and warranties of GMI shall be true and
correct in all material respects as of the Effective Date as
if made on and as of such date (except to the extent such
representations and warranties speak as of an earlier date,
which for greater certainty includes the use of the phrase
"as at the date hereof", in which event such representations
and warranties shall be true and correct in all material
respects as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement) and
the RJF Parties shall have received a certificate of GMI
addressed to the RJF Parties and dated the Closing Date,
signed on behalf of GMI by two senior executive officers,
confirming the same as at the Closing Date;
(c) between the date hereof and the Effective Date, there shall
not have occurred, in the judgement of RJF, acting
reasonably, a Material Adverse Change in relation to GMI;
(d) the board of directors of GMI shall have adopted all
necessary resolutions, and all other necessary corporate
action shall have been taken by GMI, to permit the
consummation of the Arrangement;
(e) the board of directors of GMI shall have made and shall not
have modified or amended, in any material respect, prior to
the GMI Meeting, an affirmative recommendation that the GMI
Shareholders approve the Arrangement;
(f) the Appropriate Regulatory Approvals shall have been obtained
in accordance with Article 7 and shall be in full force and
effect and shall not be the subject of any stop-order or
proceedings seeking a stop-order or any revocation
proceedings;
(g) holders of no more than five percent of the issued and
outstanding GMI Common Shares and GMI Preferred Shares shall
have exercised their Dissent Rights (and not withdrawn such
exercise) in respect of the Arrangement; and
(h) The Commercial Bank Lenders shall have approved the
Arrangement.
The RJF Parties may not rely on the failure to satisfy any of
the above conditions precedent as a basis for a non-compliance by the RJF
Parties with their obligations under this Agreement if the condition precedent
would have been satisfied but for a material default by either or both of the
RJF Parties in complying with their obligations hereunder.
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7.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF GMI
The obligations of GMI to complete the transactions
contemplated by this Agreement shall also be subject to the following
conditions precedent (each of which is for the exclusive benefit of GMI and may
be waived by GMI and any one or more of which, if not satisfied or waived, will
relieve GMI of any obligation under this Agreement, except for obligations
pursuant to section 6.8):
(a) all covenants of the RJF Parties under this Agreement to be
performed on or before the Effective Date shall have been
duly performed by the RJF Parties in all material respects;
(b) all representations and warranties of the RJF Parties under
this Agreement shall be true and correct in all material
respects as of the Effective Date as if made on and as of
such date (except to the extent such representations and
warranties speak as of an earlier date, which for greater
certainty includes the use of the phrase "as at the date
hereof", in which event such representations and warranties
shall be true and correct in all material respects as of such
earlier date, or except as affected by transactions
contemplated or permitted by this Agreement) and GMI shall
have received a certificate of each of the RJF Parties
addressed to GMI and dated the Closing Date, signed on behalf
of each of the RJF Parties by two senior executive officers
of the relevant the RJF Parties, confirming the same as at
the Closing Date;
(c) between the date hereof and the Effective Date, there shall
not have occurred, in the judgement of GMI, acting
reasonably, a Material Adverse Change in relation to RJF;
(d) the boards of directors of the RJF Parties shall have adopted
all necessary resolutions, and all other necessary corporate
action shall have been taken by the RJF Parties to permit the
consummation of the Arrangement and the issue of the
Exchangeable and/or Retractable Shares contemplated thereby
and the issue of RJF Common Shares upon the exchange from
time to time of the Exchangeable Shares; and
(e) the Appropriate Regulatory Approvals shall have been obtained
in accordance with Article 7 and shall be in full force and
effect and shall not be the subject of any stop-order or
proceedings seeking a stop-order or any revocation
proceedings.
GMI may not rely on the failure to satisfy any of the above
conditions precedent as a basis for non-compliance by GMI with its obligations
under this Agreement if the condition precedent would have been satisfied but
for a material default by GMI in complying with its obligations hereunder.
7.4 NOTICE AND CURE PROVISIONS
The RJF Parties and GMI shall give prompt notice to the other
of the occurrence, or failure to occur, at any time from the date hereof until
the Effective Date, of any event or state of facts which occurrence or failure
would, or would be likely to:
(a) cause any of the representations or warranties of the other
contained herein to be untrue or inaccurate in any material
respect as of the date hereof or as of the Effective Date
(except to the extent such representations and warranties
speak as of an earlier date, which for greater certainty
includes the use of the phrase "as at the date hereof"); or
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(b) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by
the other hereunder prior to the Effective Date.
Neither the RJF Parties nor GMI may elect not to complete the
transactions contemplated hereby pursuant to the conditions precedent contained
in sections 7.1, 7.2 and 7.3, or exercise any termination right arising
therefrom, unless forthwith and in any event prior to the filing of the Final
Order for acceptance by the Director, the RJF Parties or GMI, as the case may
be, have delivered a written notice to the other setting out in reasonable
detail all breaches of covenants, representations and warranties or other
matters which the RJF Parties or GMI, as the case may be, are asserting as the
basis for the non-fulfilment of the applicable condition precedent or the
exercise of the termination right, as the case may be. If any such notice is
delivered, provided that RJF or GMI, as the case may be, are proceeding
diligently to cure such matter, if such matter is susceptible to being cured,
the other may not terminate this Agreement until the later of January 31, 2000
and the expiration of a period of 30 days from such notice, and the Effective
Date shall not occur until the expiry of such period. If such notice has been
delivered prior to the date of the GMI Meeting, such meeting shall be postponed
until the expiry of such period.
7.5 SATISFACTION OF CONDITIONS
The conditions precedent set out in sections 7.1, 7.2 and 7.3
shall be conclusively deemed to have been satisfied, waived or released when,
with the agreement of RJF and GMI, a certificate of arrangement in respect of
the Arrangement is issued by the Director.
ARTICLE 8
AMENDMENT AND TERMINATION
8.1 AMENDMENT
This Agreement may, at any time and from time to time before
or after the holding of the GMI Meeting but not later than the Effective Date,
be amended by mutual written agreement of the parties hereto, and any such
amendment may, without limitation:
(a) change the time for performance of any of the obligations or
acts of the parties;
(b) waive any inaccuracies or modify any representation contained
herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the
obligations of the parties; and
(d) waive compliance with or modify any conditions precedent
herein contained;
provided, however, that any such change, waiver or modification does not
invalidate any required GMI Shareholder approval of the Arrangement.
8.2 MUTUAL UNDERSTANDING REGARDING AMENDMENTS
(a) The parties shall continue, from and after the date hereof
and through and including the Effective Date, to use their
respective reasonable efforts to maximise present and future
financial and tax planning opportunities for the GMI
Shareholders, and for RJF and for
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GMI as and to the extent that the same shall not prejudice
any party or its security holders. The parties shall ensure
that such planning activities do not impede the progress of
the Arrangement in any material way.
The parties agree that if the RJF Parties or GMI, as the case
may be, propose any amendment or amendments to this Agreement
or to the Plan of Arrangement, the other shall act in a
reasonable manner in considering such amendment and if the
other and its shareholders are not prejudiced by reason of
any such amendment the other shall co-operate in a reasonable
fashion with the RJF Parties or GMI, as the case may be, so
that such amendment can be effected subject to applicable
Laws and the rights of the security holders.
8.3 TERMINATION
(a) Subject to section 7.4, if any condition contained in
sections 7.1 or 7.2 is not satisfied at or before the Closing
Date to the satisfaction of the RJF Parties, then RJF on
behalf of the RJF Parties may by notice to GMI terminate this
Agreement and the obligations of the parties hereunder except
as otherwise herein provided, but without detracting from the
rights of the RJF Parties arising from any breach by GMI but
for which the condition would have been satisfied.
(b) Subject to section 7.4, if any condition contained in
sections 7.1 or 7.3 is not satisfied at or before the Closing
Date to the satisfaction of GMI, then GMI may by notice to
RJF terminate this Agreement and the obligations of the
parties hereunder except as otherwise herein provided, but
without detracting from the rights of GMI arising from any
breach by the RJF Parties but for which the condition would
have been satisfied.
(c) This Agreement may, at any time before or after the holding
of the GMI Meeting but not later than the Effective Date be
terminated by the mutual agreement of GMI and the RJF Parties
(without further action on the part of GMI's Securityholders
if terminated after the holding of the GMI Meeting).
(d) If the Effective Date does not occur on or prior to January
31, 2001, then this Agreement shall terminate, provided that
GMI and RJF may mutually agree to extend such date.
(e) If this Agreement is terminated in accordance with the
foregoing provisions of this section 8.3, no party shall have
any further liability to perform its obligations hereunder
except as otherwise contemplated hereby, and provided that,
neither the termination of this Agreement nor anything
contained in this section 8.3(e) shall relieve any party from
any liability for any breach by it of this Agreement,
including from any inaccuracy in its representations and
warranties and any non-performance by it of its covenants
made herein.
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ARTICLE 9
INDEMNITIES
9.1 EFFECT OF BREACH OF REPRESENTATION, WARRANTY OR COVENANT BY GMI
Notwithstanding any investigations or enquiries made by
either of the RJF Parties prior to the Effective Date, and except to the extent
waived in writing by RJ Holdings, the representations, warranties, covenants
and agreements of GMI shall survive the Effective Date and, notwithstanding the
completion of the Arrangement and the exchange by the GMI Shareholders of the
GMI Preferred Shares and GMI Common Shares for Retractable Shares or
Exchangeable Shares, shall continue in full force and effect up until January
10, 2003. In the event that any representations and warranties of GMI are found
to be incorrect or there is a breach of any covenant or agreement by GMI or a
misrepresentation in or omission from any certificate furnished to any of the
RJF Parties hereunder which incorrectness or breach results in any Losses
sustained directly or indirectly to any of the RJF Parties, RJ Holdings shall
be entitled to be indemnified and held harmless from such Losses, pursuant to
the terms of the Escrow Agreement, from the Escrowed Securities, such
indemnification to be allocated pro rata among the Escrowed Securities owing to
each GMI Shareholder and to be allocated proportionately from each separate
form of Escrowed Securities owing to each GMI Shareholder (whether Exchangeable
Shares, Retractable Shares or any combination thereof).
9.2 EFFECT OF BREACH OF REPRESENTATION, WARRANTY OR COVENANT BY RJF
Notwithstanding any investigation or inquiries made by GMI
prior to the Effective Time and except to the extent waived in writing by GMI,
the representations, warranties, covenants and agreements of the RJF Parties
shall survive the Effective Time and, notwithstanding the completion of the
Arrangement and the exchange by the GMI Shareholders of the GMI Preferred
Shares and the GMI Common Shares for Retractable Shares or Exchangeable Shares,
shall continue in full force and effect up until January 10, 2003. In the event
that any representations and warranties of an RJF Party are found to be
incorrect or there is a breach of any covenant or agreement by an RJF Party or
misrepresentation in or omission from any certificate furnished to GMI
hereunder which incorrectness or breach shall result in any Losses sustained
directly or indirectly by any of the GMI Shareholders then RJF, on behalf of
the RJF Parties, shall indemnify and hold harmless such GMI Shareholders from
such Losses in accordance with, and subject to the provisions of, section 9.3
and 9.6.
9.3 TIME LIMITATIONS ON CERTAIN INDEMNITIES
No claim by RJ Holdings or a GMI Shareholder in respect of a
misrepresentation or breach of warranty, covenant or agreement, or otherwise
arising under this Agreement shall be made, if notice of such claim is
delivered to the Transfer Agent (in the case of a claim by RJ Holdings) or to
RJF (in the case of a claim by GMI Shareholders) following January 10, 2003.
9.4 THRESHOLD ON INDEMNITIES PAYABLE TO RJ HOLDINGS
No claim of indemnity shall be payable from the Escrowed
Securities unless the aggregate amount of all claims exceeds $100,000 and
provided that in no event will a claim of indemnity be payable from the
Escrowed Securities for an aggregate amount in excess of $9,074,015. If the
amount of any claim is not determined at the time any notice hereunder must be
given pursuant to section 9.3, then RJ Holdings or any GMI Shareholder may
reasonably estimate the amount of such claim. The amount of any claim of
indemnity shall be reduced by the amount (if any) that has been accrued or
otherwise provided for in the
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books and records of GMI at or prior to the Effective Date in respect of
such indemnity claim and reflected in the Consolidated Book Value.
9.5 LITIGATION OF CLAIMS BY RJ HOLDINGS
Any claim for Losses by RJ Holdings pursuant to this
Agreement shall be administered in accordance with the terms and conditions of
the Escrow Agreement.
9.6 LITIGATION MANAGEMENT FOR CLAIMS BY GMI SHAREHOLDERS
If any GMI Shareholder (the "INDEMNIFIED PARTY") shall become
aware of facts (including specific communication or notice from any relevant
taxing authority) that may give rise to any claim in respect of which any RJF
Party (an "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. The notice shall specify whether the
claim arises as a result of a claim by a Person (a "THIRD PARTY CLAIM") against
the Indemnified Party or whether a claim does not so arise (a "DIRECT CLAIM"),
and shall also specify with reasonable particularity (to the extent that the
information is available) (i) the factual basis for the claim; and (ii) the
amount of the claim, if known.
If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any claim in time to effectively
contest the determination of any liability susceptible of being contested, the
Indemnifying Party shall be entitled to set off against the amount claimed by
the Indemnified Party the amount of any losses incurred by the Indemnifying
Party resulting from the Indemnified Party's failure to give the notice on a
timely basis.
9.7 DIRECT CLAIMS OF GMI SHAREHOLDERS
With respect to any Direct Claim, following receipt of notice
from the Indemnified Party of the claim, the Indemnifying Party shall have
sixty (60) days to make such investigation of the claim as it considers
necessary or desirable. For the purpose of this investigation, the Indemnified
Party shall make available to the Indemnifying Party the information relied
upon by the Indemnified Party to substantiate the claim, together with all
other information as the Indemnifying Party may reasonably request. If both
parties agree prior to the expiration of such sixty (60) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Indemnified Party
the fully agreed upon amount of the claim; if the parties fail to reach such an
agreement, either party may seek to have the matter determined by arbitration
pursuant to section 10.9.
9.8 THIRD PARTY CLAIMS AND RJF
With respect to any Third Party Claim, the Indemnifying Party
shall have the right, at its expense, to participate in or assume control of
the negotiation, settlement or defence of the claim and, in that event, the
Indemnifying Party shall reimburse the Indemnified Party for all of the
Indemnified Party's out-of-pocket expenses as a result of the participation or
assumption. If the Indemnifying Party elects to assume such control, (i) the
Indemnified Party shall make available to the Indemnifying Party information in
respect of such claim as the Indemnifying Party may reasonably request, and
(ii) the Indemnified Party shall have the right to participate in the
negotiation, settlement or defence of the Third Party Claim and to retain
counsel to act on its behalf, provided that the fees and disbursements of such
counsel shall be paid by the Indemnified Party unless the Indemnifying Party
consents to the retention of such counsel or unless the named parties to any
action or proceeding include both the Indemnifying Party and the Indemnified
Party
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<PAGE> 50
and the representations of both the Indemnifying Party and Indemnified Party by
the same counsel would be inappropriate due to the actual or potential
differing interests between them (such as the availability of different
defences). If the Indemnifying Party, having elected to so assume control,
fails to defend the Third Party Claim within a reasonable time, the Indemnified
Party shall be entitled to assume control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to the
Third Party Claim. If the Indemnifying Party fails to assume control of the
defence of any Third Party Claim, the Indemnified Party shall have the
exclusive right to contest, settle or pay the amount claimed. If any Third
Party Claim is of a nature such that the Indemnified Party is required by
applicable law to make a payment to any Person other than the parties hereto
and their respective affiliates (a "THIRD PARTY") with respect to the Third
Party Claim before the completion of settlement negotiations or related legal
proceedings, as the case may be, the Indemnified Party may make the payment and
the Indemnifying Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for payment. If the amount of any liability of
the Indemnified Party under the Third Party Claim in respect of which such a
payment was made, as finally determined, is less than the amount which was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party
shall, forthwith after receipt of the differences from the Third Party, pay the
amount of the difference to the Indemnifying Party. If such a payment, by
resulting in settlement of the Third Party Claim, precludes a final
determination of the merits of the Third Party Claim and the Indemnified Party
and the Indemnifying Party are unable to agree whether such payment was
unreasonable in the circumstances having regard to the amount and merits of the
Third Party Claim, either party may seek to have the matter determined by
arbitration pursuant to section 10.9.
9.9 SETTLEMENT OF THIRD PARTY CLAIMS BY GMI SHAREHOLDERS
Whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defence of any Third Party Claim, the Indemnifying
Party shall not settle any Third Party Claim without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
ARTICLE 10
GENERAL
10.1 NOTICES
All notices and other communications which may or are
required to be given pursuant to any provision of this Agreement shall be given
or made in writing and shall be deemed to be validly given if served personally
or by telecopy, in each case addressed to the particular party at:
(a) If to GMI:
Goepel McDermid Inc.
Suite 2200
925 West Georgia Street
Vancouver, BC V6C 3L2
Attention: Kenneth Shields
Telecopier No.: (604) 659-8398
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With a copy to:
Borden Ladner Gervais LLP
1200 Waterfront Centre
200 Burrard Street
P.O. Box 48600
Vancouver, BC V7X 1T2
Attention: Neil de Gelder, Q.C.
Telecopier No.: (604) 640-4213
(b) If to the RJF Parties:
Raymond James Financial, Inc.
880 Carillon Parkway
Post Office Box 12749
St. Petersburg, Florida 33733-2739
Attention: Jeffrey P. Julien
Telecopier No.: (727) 573-8888
With a copy to:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33133
Attn: Phillip J. Kushner, Esq.
Telecopier: (305) 579-0717
With a copy to:
Osler, Hoskin & Harcourt LLP
Box 50
1 First Canadian Place
Toronto, Ontario M5X 1B8
Attn: Andrew MacDougall
Telecopier: (416) 862-6666
or at such other address of which any party may, from time to time, advise the
other parties by notice in writing given in accordance with the foregoing. The
date of receipt of any such notice shall be deemed to be the date of delivery
or telecopying thereof unless such day is not a Business Day in which case it
shall be deemed to have been given and received upon the immediately following
Business Day.
10.2 ASSIGNMENT
No party may assign its rights or obligations under this
Agreement or the Arrangement.
10.3 BINDING EFFECT
This Agreement and the Arrangement shall be binding upon and
shall enure to the benefit of the parties hereto and their respective
successors.
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10.4 WAIVER AND MODIFICATION
GMI and RJF may waive or consent to the modification of, in
whole or in part, any inaccuracy of any representation or warranty made to them
hereunder or in any document to be delivered pursuant hereto and may waive or
consent to the modification of any of the covenants herein contained for their
respective benefit or waive or consent to the modification of any of the
obligations of the other parties hereto. Any waiver or consent to the
modification of any of the provisions of this Agreement, to be effective, must
be in writing executed by the party granting such waiver or consent.
10.5 NO PERSONAL LIABILITY
(a) No director or officer of any of the RJF Parties shall have
any personal liability whatsoever to GMI under this
Agreement, or any other document delivered in connection with
the Arrangement on behalf of RJF Parties.
(b) No director or officer of GMI shall have any personal
liability whatsoever to the RJF Parties under this Agreement,
or any other document delivered in connection with the
Arrangement on behalf of GMI.
10.6 FURTHER ASSURANCES
Each party hereto shall, from time to time, and at all times
hereafter, at the request of the other parties hereto, but without further
consideration, do all such further acts and execute and deliver all such
further documents and instruments as shall be reasonably required in order to
fully perform and carry out the terms and intent hereof.
10.7 EXPENSES
(a) The parties agree that all out-of-pocket expenses of the
parties relating to the Arrangement and the transactions
contemplated hereby, including legal fees, accounting fees,
financial advisory fees, regulatory filing fees, all
disbursements of advisors and printing and mailing costs,
shall be paid by the party incurring such expenses.
(b) RJF and GMI represent and warrant to each other that, except
for any amounts owing to Berkshire Capital Corporation by
GMI, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in
connection with the Arrangement.
10.8 CONSULTATION
RJF and GMI agree to consult with each other as to the
general nature of any news releases or public statements with respect to this
Agreement or the Arrangement, and to use their respective reasonable efforts
not to issue any news releases or public statements inconsistent with the
results of such consultations. Subject to applicable Laws, each party shall use
its reasonable efforts to enable the other parties to review and comment on all
such news releases prior to the release thereof. The parties agree to issue
jointly a news release with respect to this Arrangement as soon as practicable
following the execution of this Agreement.
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10.9 GOVERNING LAW; ARBITRATION
Interpretation and enforcement of this Agreement shall be
governed by and construed in accordance with the laws of the Province of
Ontario and the federal Laws of Canada applicable therein. Any controversy
between the Parties regarding this Agreement or any other agreement executed in
connection with this Agreement and any claims arising out of this Agreement or
its breach or out of any other agreement executed in connection with this
Agreement or its breach shall be exclusively resolved by nonappealable binding
arbitration conducted in accordance with the provisions of this section, which
arbitration may be commenced by either party. The arbitration proceedings shall
be conducted by a single arbitrator pursuant to the Commercial Arbitration
Rules of the Canadian Arbitration Association. The arbitrator shall be fluent
in English and shall be experienced in matters involving the brokerage and
investment banking industry. The arbitration shall be conducted in Toronto,
Canada and the arbitrator shall have the right to award actual damages and
reasonable attorney fees and costs, but shall not have the right to award
punitive, exemplary or consequential damages against either party. The
arbitrator shall have the power, but not the obligation, to hire an independent
accounting firm or other professional within the financial services sector as
an expert in order to assist the arbitrator in issuing findings of fact. It is
expressly agreed that the arbitrator shall have the jurisdiction and power to
make an interim, partial or final award ordering specific performance,
injunction and other equitable remedies. Any arbitral award resulting from such
proceeding or settlement in connection therewith shall be held in strict
confidence by the parties hereto, unless the disclosure of such award or
settlement is required by Law. The parties hereby consent to such venue and
personal jurisdiction in such venue. Osler, Hoskin & Harcourt LLP at the
address given in section 10.1 is appointed agent for service of process for
each of the RJF Parties and Borden Ladner Gervais LLP, Scotia Plaza, 40 King
Street West, Toronto, Ontario M5H 3Y4 Attention: John Warren, Telecopier: (416)
367-6749 is appointed agent for service of process for GMI and the GMI
Shareholders in each case at the above addresses or such other addresses in
Ontario as such counsel may notify the parties.
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10.10 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the date first written above.
RAYMOND JAMES FINANCIAL, INC.
(c/s)
by
------------------------------------
by
-----------------------------------
RAYMOND JAMES HOLDINGS (CANADA), INC.
by (c/s)
-----------------------------------
by
-----------------------------------
GOEPEL MCDERMID INC.
by (c/s)
-----------------------------------
by
-----------------------------------
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SCHEDULE 1
APPROPRIATE REGULATORY APPROVALS
CANADA
- consent of the Minister of Finance pursuant to the Bank Act (Canada)
- change of control approval under the Investment Canada Act (Canada)
- expiration or earlier termination of the waiting period under Part IX
of the Competition Act (Canada) and receipt of an advance ruling
certificate ("ARC") pursuant to the Competition Act (Canada) or, in
the alternative to an ARC, a favourable advisory opinion for the
Director of Investigation and Research under the Program of Compliance
- approval of the Investment Dealers' Association ("IDA"), The Toronto
Stock Exchange, the Canadian Venture Exchange, the Montreal Exchange
and the Winnipeg Stock Exchange regarding the change in name and
control of Goepel McDermid Inc.
- approval of all securities regulators having jurisdiction
- exemption orders from the Canadian securities regulators from the
registration and prospectus requirements with respect to the
Exchangeable Shares and Retractable Shares.
Such other material authorisations, orders or consents of or, registration,
declaration or filing with, any Governmental Authorities as required by or with
respect to RJF or GMI in connection with the execution and delivery by RJF and
GMI of this Agreement or the Arrangement or any other documents and agreements
to be delivered under this Agreement, or consummation by RJF and GMI of the
transactions contemplated by this Agreement or the Arrangement.
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SCHEDULE 2
PLAN OF ARRANGEMENT AND APPENDICES
SEE SCHEDULE "E" TO THE MANAGEMENT INFORMATION CIRCULAR
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SCHEDULE 3
ARRANGEMENT RESOLUTIONS
SPECIAL RESOLUTIONS
BE IT RESOLVED as a special resolution THAT:
1. the plan of arrangement (the "Arrangement") under section 192 of the
Canada Business Corporations Act (the "Act"), in the form attached as
Schedule 3 to the arrangement agreement (the "Arrangement Agreement")
attached as Schedule "D" to the Circular of Goepel McDermid Inc.
("GMI") dated November 27, 2000 (the "Circular"), is hereby
authorized, approved and agreed to;
2. notwithstanding the approval by holders of GMI Common Shares (as
defined in the Circular) of this Special Resolution or the approval of
the Supreme Court of British Columbia, the Board of Directors of GMI,
subject to the provisions of the Arrangement Agreement, and without
further notice to or approval of the GMI Shareholders, may amend the
Arrangement or may decide not to proceed with the Arrangement or
revoke this resolution at any time prior to the Arrangement becoming
effective pursuant to the provisions of the Act; and
3. any two of the officers of GMI be and are hereby authorized for and on
behalf of GMI (whether under its corporate seal or otherwise) to
execute and deliver Articles of Arrangement and all other documents
and instruments and to take all such other actions as such officers
may deem necessary or desirable to implement this resolution and the
matters authorized hereby, including the transactions required by the
Arrangement, such determination to be conclusively evidenced by the
execution and delivery of such documents and other instruments or the
taking of any such actions.
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SCHEDULE 4
SUPPORT AGREEMENT
SEE SCHEDULE "F" TO THE MANAGEMENT INFORMATION CIRCULAR
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