<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Zemex Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
ZEMEX CORPORATION
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
MEETING TO BE HELD AT 11:00 A.M.
(EASTERN STANDARD TIME)
ON JUNE 30, 1998
In Room "C", 11th Floor, The Chase Manhattan Bank
270 Park Avenue, New York, New York 10017, U.S.A.
<PAGE> 3
ZEMEX CORPORATION
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703
Toronto, Ontario
Canada M5J 2S1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 30, 1998
To the Shareholders:
Notice is given that the Annual Meeting of Shareholders of Zemex
Corporation will be held in Room C, 11th Floor, The Chase Manhattan Bank, 270
Park Avenue, New York, New York, 10017, on June 30, 1998 at 11:00 a.m. for the
following purposes:
(i) to elect nine directors for the ensuing year;
(ii) to ratify the appointment of independent public auditors;
(iii) to approve an amendment to Zemex Corporation's Amended and Restated
Certificate of Incorporation to provide for a new class of shares;
and
(iv) to transact such other business as may properly come before the
meeting.
The board of directors has fixed the close of business on -- , 1998 as
the record date for determining shareholders entitled to notice of, and to vote
at, the meeting. Only shareholders of record at the close of business on that
date are entitled to vote at the meeting.
If you are unable to attend the meeting in person, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope, which requires
no postage if mailed in the United States. Any person giving a proxy has the
power to revoke it at any time prior to its exercise at the meeting. Even though
you execute the proxy, you may still vote your stock in person at the meeting.
It is important that your stock be represented regardless of the number of
shares you may hold.
We hope that you can attend the meeting.
By Order of the Board of Directors,
Patricia K. Moran
Corporate Secretary and Assistant
Treasurer
-- , 1998
<PAGE> 4
ZEMEX CORPORATION
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703
Toronto, Ontario
Canada M5J 2S1
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Zemex Corporation (the
"Corporation" or "Zemex"), a Delaware corporation, to be voted at the Annual
Meeting of Shareholders at 11:00 a.m. on June 30, 1998 in Room C, 11th Floor,
The Chase Manhattan Bank, 270 Park Avenue, New York, New York, 10017 and at any
adjournment thereof. This proxy statement and the accompanying notice of meeting
and form of proxy are being mailed to the Corporation's shareholders commencing
on or about -- , 1998. The 1997 Annual Report to the Corporation's
shareholders, which includes financial statements, was mailed to shareholders on
or about March 31, 1998 to each shareholder of record as of the close of
business on March 19, 1998. Such Annual Report, however, is not to be deemed to
be part of this proxy solicitation material.
The Board has fixed the close of business on -- , 1998 as the record
date for the determination of shareholders of the Corporation entitled to vote
at the Annual Meeting of Shareholders. As of the record date, the Corporation
had approximately [8,446,606] common shares, par value $1.00 per share (the
"Common Shares") issued and outstanding.
Each Common Share is entitled to one vote. A majority of the Common Shares
outstanding and entitled to vote must be present at the Annual Meeting of
Shareholders in person or by proxy in order to constitute a quorum for the
transaction of business. Under Delaware law, abstentions are treated as present
and entitled to vote, and therefore will be counted in determining the existence
of a quorum and will have the effect of a vote against any matter requiring the
affirmative vote of a majority of the shares present and entitled to vote at the
Annual Meeting of Shareholders.
Broker "non-votes" are considered present but not entitled to vote, and
thus will be counted in determining the existence of a quorum but will not be
counted in determining approval of any matter requiring the affirmative vote of
a majority of the shares present and entitled to vote at the Annual Meeting of
Shareholders. There are no dissenters' rights available with respect to any
matter to be considered at the Annual Meeting of Shareholders. Any shareholder
giving a proxy in the accompanying form of proxy has the right to revoke it at
any time prior to the voting thereof by delivery of notice of revocation to the
Corporation or by delivery of another proxy subsequent to the date thereof. Such
notices of revocation should be addressed to the Corporate Secretary at the
executive offices of the Corporation located at Canada Trust Tower, BCE Place,
161 Bay Street, Suite 3750, P.O. Box 703, Toronto, Ontario, Canada, M5J 2S1. The
Corporation's telephone number is (416) 365-8080 and its fax number is (416)
365-8094.
The expense of solicitation of proxies will be borne by the Corporation.
Following the mailing of the proxy material, solicitation of proxies may be made
by mail, telephone, facsimile, telegram or personal interview by some of the
regular employees of the Corporation or its subsidiaries, who will receive no
additional compensation for their services. The Corporation has also retained
Kissel-Blake Inc. to solicit proxies personally or by mail, telephone,
facsimile, or telegraph from brokerage houses, custodians, fiduciaries and
nominees for a fee of $4,500 plus expenses. In addition, the Corporation will
reimburse brokers and other nominees for their expenses in forwarding soliciting
material to beneficial owners.
ELECTION OF DIRECTORS
A board of nine directors is to be elected at the Annual Meeting of
Shareholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Corporation's nine nominees named below, all of
whom are presently directors of the Corporation. If any nominee of the
Corporation is
1
<PAGE> 5
unable or declines to serve as a director at the time of the Annual Meeting of
Shareholders, the proxies will be voted for the nominee designated by the
present Board to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until a successor has been elected and qualified.
Opposite the name of each nominee for election as a director is (i) his
age; (ii) his position with the Corporation, his principal occupation and his
business experience during the past five years; and (iii) the year in which he
first became a director of the Corporation. All information is as of March 1,
1998.
PROPOSAL I
NOMINEES FOR ELECTION AS A DIRECTOR
<TABLE>
<CAPTION>
POSITION WITH THE CORPORATION; PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
- ---- --- ------------------------------------------------------- --------
<S> <C> <C> <C>
Paul A. Carroll................ 56 Chairman of the Executive Compensation/Pension 1991
Committee; Chairman and Chief Executive Officer, World
Wide Minerals Ltd. (Toronto-based mining company);
Counsel, Smith Lyons (Toronto law firm) since 1997 and
prior thereto Partner of Smith Lyons since 1973;
Chairman, Juno Limited; Director, Dundee Bancorp Inc.;
Director, Pan Pacific Strategies Corp.
- --------------------------------------------------------------------------------------------------------
Morton A. Cohen................ 62 Chairman, President and Chief Executive Officer, 1991
Clarion Capital Corporation (Cleveland-based venture
capital company) since 1982; Chairman, Cohesant
Technologies Inc.; Director, Gothic Energy Corporation;
Director, Sentex Sensing Technology Inc.; Director, DHB
Capital Group
- --------------------------------------------------------------------------------------------------------
John M. Donovan................ 70 Member of the Audit Committee, Executive Committee and 1991
Executive Compensation/ Pension Committee; Independent
Consultant since July 1990; Director, Philex Gold Inc.
- --------------------------------------------------------------------------------------------------------
Thomas B. Evans, Jr............ 66 Member of the Audit Committee and the Nominating 1989
Committee; Vice Chairman, The Evans Group, Ltd.
(Washington D.C. consulting firm) since January 1997;
Vice Chairman, The Jefferson Group Inc. (Washington
D.C. consulting firm) from December 1995 to December
1996; President, The Evans Group, Ltd. from 1989 to
1995; Director, Juno Limited; Director, World Wide
Minerals Ltd.
- --------------------------------------------------------------------------------------------------------
Ned Goodman.................... 60 Chairman, President and Chief Executive Officer, Dundee 1991
Bancorp Inc. (a Toronto-based financial services
company) and its subsidiary, Goodman & Company Ltd.,
since 1979; Chairman, Dynamic Mutual Funds; Chairman,
Goodman & Company, Investment Counsel; Director, BGR
Precious Metals Inc.; Director, Breakwater Resources
Ltd.
- --------------------------------------------------------------------------------------------------------
Peter O. Lawson-Johnston....... 71 Chairman of the Board of Directors, Member of the 1960
Executive Compensation/Pension Committee, Member of the
Executive Committee and Chairman of the Nominating
Committee; Chairman and Trustee, Solomon R. Guggenheim
Foundation; Chairman of the Board, The Harry Frank
Guggenheim Foundation; Senior Partner, Guggenheim
Brothers; President and Director, Elgerbar Corporation;
Director, National Review, Inc.; Limited Partner
Emeritus, Alex Brown & Sons, Inc.; Director, UBS
Private Investor Funds, Inc.
- --------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
POSITION WITH THE CORPORATION; PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
- ---- --- ------------------------------------------------------- --------
<S> <C> <C> <C>
Richard L. Lister.............. 59 President and Chief Executive Officer of the 1991
Corporation since May 1993; Chairman of the Executive
Committee and Member of the Nominating Committee; Vice
Chairman of the Board of Directors from 1991 to May
1993; Director, Dundee Bancorp Inc.; Director, World
Wide Minerals Ltd.; Vice Chairman, Dundee Bancorp Inc.
from 1991 to 1993
- --------------------------------------------------------------------------------------------------------
Patrick H. O'Neill............. 82 Chairman of the Audit Committee; Independent Mining 1975
Consultant since 1982; Counselor, American Geographical
Society, New York; Director, Ireland U.S. Council for
Commerce and Industry, New York
- --------------------------------------------------------------------------------------------------------
William J. Vanden Heuvel....... 67 Member of the Executive Committee; Counsel, Stroock, 1989
Stroock & Lavan (attorneys at law, New York) since
1984; Senior Advisor, Allen & Company Inc. (investment
bankers) since 1984; Chairman of the Board, IRC Group,
Inc.; Co-Chairman, Council of American Ambassadors;
Director, Winstar Communications, Inc.
</TABLE>
VOTE REQUIRED FOR ELECTION OF DIRECTORS
Directors will be elected at the Annual Meeting of Shareholders by a
plurality of the votes cast at the meeting by the holders of shares represented
in person or by proxy. Votes may be cast for, or withheld from, each nominee.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE FOREGOING
PERSONS.
REPORTS REQUIRED BY SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
ten percent (10%) of the Corporation's Common Shares, to file with the
Securities and Exchange Commission and any exchange on which the Corporation's
Common Shares are traded reports of ownership and changes in ownership of the
Corporation's Common Shares. Based solely on its review of the copies of Forms
3, 4 and 5 received by the Corporation, or written representations from certain
reporting persons that no Form 5's were required for such persons, the
Corporation believes that, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and 10%
shareholders were complied with.
BOARD MEETINGS AND COMMITTEES
The Corporation maintains standing Executive, Executive
Compensation/Pension, Audit and Nominating Committees.
The Executive Committee, whose members include Peter O. Lawson-Johnston,
John Donovan, William J. vanden Heuvel and Richard L. Lister, met seven times
during 1997. The purpose of the Executive Committee is to act on behalf of the
Board and to authorize and approve capital expenditures, which are subsequently
ratified by the full Board.
The Executive Compensation/Pension Committee, whose members include Paul A.
Carroll, Peter O. Lawson-Johnston and John M. Donovan, met once during 1997. The
Executive Compensation/Pension Committee sets policies and guidelines with
respect to compensation and pensions.
The Audit Committee met once during 1997. Its members include Patrick H.
O'Neill, Thomas B. Evans, Jr., and John M. Donovan. The Audit Committee reviews
the financial reporting process of the Corporation on behalf of the Board. In
fulfilling its responsibility, the Audit Committee recommended to the Board,
subject to shareholder approval, the selection of Deloitte & Touche as the
Corporation's independent
3
<PAGE> 7
auditors. During 1997, the Audit Committee met with the Corporation's management
and with representatives of Deloitte & Touche without the Corporation's
management being present.
The Nominating Committee met one time in 1997. Its members include Peter O.
Lawson-Johnston, Thomas B. Evans, Jr. and Richard L. Lister. The Nominating
Committee advises the Board on prospective nominees for election to the Board.
It considers possible director nominees recommended by shareholders, who may
submit their recommendations by writing to the Nominating Committee at the
Corporation's principal executive office.
The Board met eight times during 1997. No director attended fewer than 75%
of the meetings of the Board and its committees held during the period in 1997
except for one.
Outside directors received $10,000 annually plus $600 for each meeting of
the Board or any of its committees attended through December 31, 1997. In
addition, the directors are eligible for option grants (see Note 5 to the
Principal Shareholders and Security Ownership of Management table on page 5).
Executives who are directors receive no cash compensation as directors.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 1, 1998, information concerning
the Common Shares beneficially owned by each person who, to the knowledge of the
Corporation, is the holder of 5% or more of the Common Shares of the
Corporation, each director, and each Named Officer (as defined on page 9
Executive Compensation) who was an executive officer as of that date, and all
executive officers and directors of the Corporation as a group. Except as
otherwise noted, each beneficial owner has sole investment and voting power with
respect to the listed shares.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
NAME OF BENEFICIAL OWNER(1)(2) BENEFICIALLY OWNED(3) BENEFICIALLY OWNED
- ------------------------------ --------------------- ------------------
<S> <C> <C>
Dundee Bancorp International Inc........... 2,897,233 34.3%
Scotia Plaza, 55th Floor
40 King Street West
Toronto, Ontario, Canada M5H 4A9
Paul A. Carroll............................ 30,411(5)(6) *
Morton A. Cohen............................ 313,125(5)(6)(7) 3.7%
John M. Donovan............................ 30,412(5)(6) *
Thomas B. Evans, Jr........................ 40,590(5)(6) *
Ned Goodman................................ 2,907,645(5)(6)(8) 34.3%
Scotia Plaza, 55th Floor
40 King Street West
Toronto, Ontario, Canada M5H 4A9
Peter O. Lawson-Johnston................... 96,268(5)(6)(9) 1.1%
Richard L. Lister.......................... 794,983(6)(10)(11)(12)(14) 9.2%
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
Toronto, Ontario, Canada M5J 2S1
Patrick H. O'Neill......................... 35,170(5)(6) *
William J. vanden Heuvel................... 42,840(5)(6) *
Allen J. Palmiere.......................... 80,412(6)(11) *
Peter J. Goodwin........................... 72,478(11)(14) *
Terrance J. Hogan.......................... 77,006(11)(13)(14) *
George E. Gillespie........................ 13,152(11)(14) *
All Directors and Named Officers........... 4,534,492(5)(6)(7)(8)(9)(10) 50.1%
as a group (13 persons) (11)(12)(13)(14)
</TABLE>
- ---------------
* Denotes less than 1% of Common Shares outstanding
4
<PAGE> 8
(1) A Schedule 13G, prepared on behalf of Merrill Lynch & Co., Inc. and various
of its subsidiaries, was filed with the Securities and Exchange Commission
indicating that it could be construed to be a beneficial owner of 898,177
common shares. However, Merrill Lynch & Co., Inc. disclaims any beneficial
ownership of the common shares because they were held in proprietary
trading accounts.
(2) Zesiger Capital Group LLC has filed a Schedule 13G with the Securities and
Exchange Commission indicating that it could be deemed to be a beneficial
owner of 935,815 Common Shares. However, Zesiger Capital Group LLC
disclaims any beneficial ownership of the Common Shares because they were
purchased for customer accounts.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 438,572 common shares of
Zemex Corporation as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(4) Computed in accordance with Rule 13d-3(d)(1) of the Securities Exchange Act
of 1934, as amended.
(5) These directors were each granted options for 15,000 Common Shares at $5.50
per share exercisable in two installments of 7,500 each beginning on May
26, 1994 and May 26, 1995, respectively. These options expire on May 26,
1999. On February 8, 1995, these directors were each granted options for an
additional 5,000 Common Shares at $9.125 per share exercisable in two
installments of 2,500 each beginning on February 8, 1996 and February 8,
1997, respectively, and extending for a period ending on February 8, 2001.
Additionally, on April 21, 1997, each of these directors was granted
options for 10,000 Common Shares at $7.00 per share exercisable in two
installments of 5,000 each beginning on April 21, 1998 and April 21, 1999,
respectively. Shares shown in the table include the 25,000 currently
exercisable options for each director, respectively.
(6) Each of these directors and members of management purchased 5,000 Common
Shares from G.E. Wood, former President and Chief Executive Officer, as
part of an assignment of the Corporation's settlement agreement with Mr.
Wood dated August 10, 1993.
(7) Includes 282,393 Common Shares owned by Clarion Capital Corporation, a
company which Mr. Cohen may be deemed to be the beneficial owner.
(8) Includes 2,897,233 Common Shares owned by Dundee Bancorp International
Inc., a wholly-owned subsidiary of Dundee Bancorp Inc., of which Mr.
Goodman is Chairman of the Board and over which he may be deemed to have
voting and investment power.
(9) Includes 18,366 Common Shares beneficially owned by Elgerbar Corporation.
Mr. Lawson-Johnston is President and a director of Elgerbar Corporation and
has shared voting and investment power with respect to the Common Shares
held by it.
(10) In 1991, Richard L. Lister, President and Chief Executive Officer of the
Corporation, acquired 357,000 Common Shares under the Corporation's Key
Executive Stock Purchase Plan for an aggregate purchase price of $1,749,300
($4.90 per share). The Corporation loaned Mr. Lister the full amount of the
purchase price. This non-interest bearing loan, which was originally
scheduled to mature in 1997, was extended for one year by approval of the
Board. The loan is evidenced by a promissory note secured by a pledge of
the Common Shares. If Mr. Lister leaves the employ of the Corporation at
any time prior to full payment of the loan, the principal amount will be
due in full 30 days after the date his employment terminates. Any balance
remaining unpaid on the loan after it is due will bear interest at the
prime rate plus 1.0%. So long as the loan is outstanding, Mr. Lister is
required to vote the 357,000 Common Shares in a manner consistent with the
recommendation of the Board.
(11) Includes Common Shares issuable upon exercise of vested options as follows:
Mr. Lister, 220,000 Common Shares; Mr. Palmiere, 75,000 Common Shares; Mr.
Goodwin, 55,000 Common Shares; Mr. Hogan, 39,500 Common Shares; Mr.
Gillespie, 12,500 Common Shares; and all Named Officers and directors as a
group, 602,000 Common Shares.
5
<PAGE> 9
(12) During 1997, the Corporation agreed to guarantee a personal loan in the
amount $600,000 drawn down by Mr. Lister. The proceeds of the loan were
used to acquire 85,700 Common Shares on the open market. The shares
acquired are held by the Corporation as security for the loan guarantee.
(13) As part of the Corporation's purchase of Alumitech, Inc., in May 1995 Mr.
Hogan was issued 28,558 Common Shares and options for an additional 22,000
Common Shares at $9.75 per share exercisable in two installments of 11,000
Common Shares each beginning on May 12, 1996 and May 12, 1997,
respectively, in exchange for his interest in Alumitech, Inc. The options
expire on May 12, 2001.
(14) Includes Common Shares purchased in 1995, 1996, 1997, plus any applicable
stock dividends, in accordance with the terms and conditions of the
Corporation's employee stock purchase plan as follows: Mr. Lister, 16,220
Common Shares; Mr. Goodwin, 9,452 Common Shares; Mr. Hogan 5,866 Common
Shares; and Mr. Gillespie, 652 Common Shares.
REPORT OF THE
EXECUTIVE COMPENSATION/PENSION COMMITTEE
The Corporation applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Corporation result from the coordinated efforts of
all individuals working toward common objectives. The Corporation strives to
achieve those objectives through teamwork that is focused on meeting the
expectations of customers and shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Corporation to attract,
retain and reward executive officers who contribute to the long term success of
the Corporation. The Corporation's compensation program for executive officers,
including the Chief Executive Officer (CEO), is based on the same five
principles applicable to compensation decisions for all employees of the
Corporation:
1. The Corporation pays competitively. The Corporation is committed to
providing a pay program that helps attract and retain the best people in
the industry. To ensure that pay is competitive, the Corporation regularly
compares its pay practices with those of other leading companies and sets
its pay parameters based on this review.
2. The Corporation pays for relative sustained performance. Executive officers
are rewarded based upon corporate performance, business unit performance
and individual performance. Corporate performance and business unit
performance are evaluated by reviewing the extent to which strategic and
business plan goals are met, including such factors as operating profit,
performance relative to competitors and timely new product introductions.
Individual performance is evaluated by reviewing organizational and
management development progress against set objectives and the degree to
which teamwork and Corporation values are fostered.
3. The Corporation strives for fairness in the administration of pay.
4. The Corporation strives to achieve a balance of the compensation paid to a
particular individual and the compensation paid to other executives both
inside the Corporation and at comparable companies.
5. The Corporation believes that employees should understand how the
performance evaluation and pay administration process works.
The process of assessing performance is as follows:
- At the beginning of the performance cycle, the evaluating manager sets
objectives and key goals.
- The evaluating manager gives the employee ongoing feedback on
performance.
6
<PAGE> 10
- At the end of the performance cycle, the manager evaluates the
accomplishments of objectives/key goals.
- The manager compares the results to the results of peers within the
operating unit.
- The evaluating manager communicates the comparative results to the
employee.
- The comparative result affects decisions on salary, bonuses and stock
options.
COMPENSATION VEHICLES
The Corporation has had a history of using a simple total compensation
program that consists of cash and, since 1990, equity-based compensation. Having
a compensation program that allows the Corporation to successfully attract and
retain key employees permits it to provide useful products and services to
customers, enhance shareholder value, motivate technological innovation, foster
teamwork, and adequately reward employees. The vehicles are:
CASH-BASED COMPENSATION
Salary: The Corporation sets base salary for employees by reviewing the
aggregate of base salary and annual bonus for competitive positions in the
market.
EQUITY-BASED COMPENSATION
Stock Option Program: The purpose of this program is to provide additional
incentives to employees to work to maximize shareholder value. The option
program also utilizes vesting periods to encourage key employees to continue in
the employ of the Corporation.
BONUS PROGRAM
The Corporation maintains a bonus program for certain key employees. The
plan is specifically designed to grant greater compensation to those key
employees to recognize their performance in the plan year.
1997 PERFORMANCE
At the beginning of fiscal 1997, the Executive Compensation/Pension
Committee reviewed performance objectives for the Corporation. Performance
relative to these objectives was the basis for determining the 1997 bonus of the
President and CEO.
Similarly, 1997 performance goals for the other Named Officers were
approved by the President and CEO at the beginning of the year. Performance
measures and goals were similar to those of the President and CEO. Their
performance for 1997 was evaluated by the President and CEO and bonuses awarded
based on this evaluation.
EXECUTIVE COMPENSATION/PENSION
COMMITTEE
PAUL A. CARROLL
JOHN M. DONOVAN
PETER O. LAWSON-JOHNSTON
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation,
attributable to all service in the fiscal years 1997, 1996 and 1995, paid to
those persons who were at the end of the 1997 fiscal year (i) the chief
executive officer; and (ii) the other four most highly paid executive officers
of the Corporation (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1) COMPENSATION (2)
- --------------------------- ---- -------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
RICHARD L. LISTER............... 1997 $265,380 $150,000 -- $40,595
President and 1996 $267,537 $ 0 -- $39,994
Chief Executive Officer 1995 $265,911 $ 75,000 100,000 $37,225
PETER J. GOODWIN................ 1997 $166,666 $ 83,000 10,000(3) $23,393
Vice President, Zemex 1996 $144,530 $ 0 25,000 $20,230
President, Industrial Minerals 1995 $132,667 $ 17,500 25,000 $15,120
ALLEN J. PALMIERE............... 1997 $150,619 $ 68,607 -- $17,972
Vice President, Chief Financial 1996 $139,368 $ 0 -- $15,788
Officer and Assistant Secretary 1995 $119,629 $ 24,000 15,000 $ 6,364
TERRANCE J. HOGAN............... 1997 $146,667 $ 45,000 15,000 $ 9,218
President, Alumitech, Inc. 1996 $136,667 $ 0 -- $14,816
1995 $120,192 $ 36,000 32,000 $ 3,395
GEORGE E. GILLESPIE............. 1997 $119,318 $ 25,000 25,000 $10,703
President, Metal Powders
</TABLE>
- ---------------
(1) On February 8, 1995, Mr. Lister, Mr. Palmiere, Mr. Goodwin and Mr. Hogan
were granted options for 100,000, 15,000, 25,000 and 10,000 Common Shares,
respectively, at an exercise price of $9.125. On May 12, 1995, Mr. Hogan was
issued options for 22,000 Common Shares at $9.75 per share in exchange for
his interest in Alumitech, Inc. (see Note 13 Principal Shareholders and
Security Ownership of Management). Additionally, on February 18, 1997, Mr.
Goodwin and Mr. Hogan were granted options for 10,000 and 15,000 Common
Shares, respectively, at an exercise price of $7.25. On April 21, 1997, Mr.
Gillespie was granted options for 25,000 Common Shares at an exercise price
of $7.00.
(2) Constitutes premiums for term life insurance exceeding amounts eligible to
most employees, automobile benefits, and employer matched contributions to a
group registered retirement plan and an employee stock purchase plan. In
1995, the Corporation adopted an employee stock purchase plan whereby
employees may elect to invest up to 10% of their earnings and the
Corporation matches funding for the purchase of the Corporation's Common
Shares. Common Shares purchased under this plan are held for a one-year
vesting period. In connection with the plan, amounts shown for Mr. Lister
include $25,200 in each of 1997, 1996 and 1995 with respect to benefits
derived from participation in the plan. Amounts shown for Mr. Goodwin
include plan benefits of $16,248, $14,200 and $9,450, in 1997, 1996 and
1995, respectively. Amounts shown for Mr. Hogan include plan benefits of
$13,000 for each of 1997 and 1996, respectively. Amounts shown for Mr.
Gillespie include plan benefits of $3,150 in 1997. Amounts shown for Mr.
Lister do not include imputed interest of $65,596, $100,453 and $130,585 in
1997, 1996, and 1995, respectively, on a loan Mr. Lister received under the
Corporation's Key Executive Stock Purchase Plan. The Corporation does not
reimburse Mr. Lister for any tax consequences arising from this loan. (See
Note 10 Principal Shareholders and Security Ownership of Management.)
(3) On July 14, 1994, Mr. Goodwin was granted options for 25,000 Common Shares
at $11.50 per share. On July 18, 1996, these options were repriced to
$9.125.
8
<PAGE> 12
OPTION EXERCISE AND YEAR-END VALUES TABLE
With respect to the Named Officers, the following table sets forth the
number of options exercised and the value realized upon exercise and the value
of outstanding options at December 31, 1997, using $8.75, the December 31, 1997
closing price of the Corporation's Common Shares on the New York Stock Exchange.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT YEAR-END YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAMED OFFICER EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
------------- ----------- -------- ------------------- ----------------
<S> <C> <C> <C> <C>
Richard L. Lister....................... -- -- 220,000/0 $390,000/$0
Allen J. Palmiere....................... -- -- 75,000/0 $97,500/$0
Peter J. Goodwin........................ -- -- 50,000/10,000 $0/$15,000
Terrance J. Hogan....................... -- -- 32,000/15,000 $0/$22,500
George E. Gillespie..................... -- -- 0/50,000 $0/$65,625
</TABLE>
PENSION PLAN
Pursuant to the Corporation's pension plan, employees are entitled to
pension benefits after five years of service with the Corporation. The amount of
such benefits depends upon salary and length of service as shown in the table
below. The service factor is 1 1/2% per year. There is a Social Security offset.
As of January 1, 1998, the number of credited years of service and the
compensation covered by the pension plan for the Named Officers are: Richard L.
Lister, 6.5 and $265,380; Peter J. Goodwin, 3.5 and $166,666; and George E.
Gillespie 0.8 and $119,318.
<TABLE>
<CAPTION>
CREDITED SERVICE AS OF NORMAL RETIREMENT DATE
AVERAGE FINAL COMPENSATION -----------------------------------------------
AS OF NORMAL RETIREMENT DATE 15 20 25 30 35
- ---------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,448 $11,265 $14,081 $16,897 $19,713
75,000 $14,073 $18,765 $23,456 $28,147 $32,838
100,000 $19,698 $26,265 $32,831 $39,397 $45,963
125,000 $25,323 $33,765 $42,206 $50,647 $59,088
150,000 $30,948 $41,265 $51,581 $61,897 $72,213
175,000 $31,848 $42,465 $53,081 $63,697 $74,313
200,000 $31,848 $42,465 $53,081 $63,697 $74,313
225,000 $31,848 $42,465 $53,081 $63,697 $74,313
</TABLE>
- ---------------
Note: All benefits shown were estimated using the 1998 Social Security Law
and assume the employee terminates employment during 1998 on his Normal
Retirement Date (age 65). The benefits shown are payable at Normal Retirement
Date as a Five Year Certain and Life Annuity, the normal form for an unmarried
participant. All amounts are annual.
9
<PAGE> 13
PERFORMANCE GRAPH
The performance graph on the next page shows total shareholder returns in
the Corporation's Common Shares, the Dow Jones Industrial Average Index, and the
Dow Jones Basic Materials Average Index over the past five-year period. The
graph assumes that the value of the investment in the Corporation's Common
Shares and each index was $100 at December 31, 1992 and that all dividends were
reinvested. As a diversified producer of industrial minerals and metal products,
many of the companies with which the Corporation competes are private and peer
group comparative data is not available.
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Zemex Total Return.............................. 100 128 166 195 142 178
Dow Jones Industrial Average.................... 100 116 123 168 217 270
Dow Jones Basic Materials Average............... 100 114 120 149 173 192
</TABLE>
PROPOSAL II
AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Deloitte & Touche as independent auditors of the accounts of the Corporation and
its subsidiaries for the fiscal year ending December 31, 1998. A proposal will
be presented at the Annual Meeting of Shareholders to ratify the appointment of
Deloitte & Touche as the Corporation's independent auditors. Representatives of
Deloitte & Touche will be present at the Annual Meeting of Shareholders and will
be available to respond to questions and may make a statement if they so desire.
VOTE REQUIRED FOR RATIFICATION OF AUDITORS
Approval of the appointment of auditors requires the affirmative vote of a
majority of the votes present in person or by proxy.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1998.
10
<PAGE> 14
PROPOSAL III
NEW CLASS OF SPECIAL VOTING STOCK
APPROVAL OF NEW CLASS OF SPECIAL VOTING STOCK
Management has for some time believed it may be desirable for Zemex to
access the Canadian capital markets at a time and in a manner that would be
advantageous for the Corporation. In connection therewith, Management has
considered a transaction structure that would involve the issuance of
exchangeable shares (the "Exchangeable Shares") of a wholly-owned Canadian
subsidiary of Zemex ("Zemex Canada"). Management believes that these
Exchangeable Shares would be more attractive to Canadian investors than Zemex
Common Shares as they would qualify as "qualified property" that is not "foreign
property" for Canadian Registered Retirement Savings Plan purposes. Therefore,
Canadian pension and retirement funds would have greater flexibility to invest
in the Exchangeable Shares than in the Zemex Common Shares, which management
believes would positively affect the market for Zemex equity securities in
Canada. The basic terms of the Exchangeable Shares are generally described
below.
THE CORPORATION IS NOT CURRENTLY ENGAGED IN AN OFFERING OF EXCHANGEABLE
SHARES, AND ANY OFFERING WILL BE MADE ONLY IN COMPLIANCE WITH OR PURSUANT TO AN
EXEMPTION FROM APPLICABLE SECURITIES LAWS, INCLUDING THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
As more fully described below, it is contemplated that holders of
Exchangeable Shares would have economic and voting rights in the Corporation as
if their shares had been exchanged for Common Shares. These voting rights would
be effected by issuance to a trustee (the "Trustee") of a single share of
special voting stock of Zemex (the "Special Voting Stock"). The share of Special
Voting Stock (the "Voting Share") would entitle the Trustee to a number of votes
on all matters on which holders of Common Shares are entitled to vote equal to
the number of Exchangeable Shares outstanding from time to time that are not
held by Zemex or its subsidiaries. To facilitate this, the Corporation is asking
for shareholder approval to amend its Amended and Restated Certificate of
Incorporation to authorize the creation of a class of shares of Special Voting
Stock, with the intention that the Special Share be deposited with the Trustee
upon consummation of the initial offering of Exchangeable Shares. The rights and
obligations of the Corporation, Zemex Canada and the Trustee in respect of an
issuance of Exchangeable Shares will be set forth in a voting, support and
exchange trust agreement (the "Voting, Support and Exchange Trust Agreement")
and in the terms of the Exchangeable Shares, substantially in the forms attached
hereto as Exhibits "A" and "B".
It is the current intention of the Corporation to offer the Exchangeable
Shares solely to Canadian investors either pursuant to Regulation S or in a
registered transaction under the 1933 Act, and to list any such shares on a
Canadian stock exchange. It is not contemplated that the Exchangeable Shares
will be listed on any U.S. securities exchange or quoted in any U.S.
inter-dealer quotation system. The Corporation intends to maintain the listing
of the Zemex Common Shares on the New York Stock Exchange (the "NYSE").
Voting Rights
The Trustee, as the holder of record of the Voting Share, would be entitled
to all of the voting rights attached in the Voting Share (the "Voting Rights"),
including the right to consent to or to vote in person or by proxy the Voting
Share, on any matter that may come before holders of Zemex Common Shares. The
Voting Rights shall be and remain vested in and exercised by the Trustee,
however, the Trustee shall exercise the Voting Rights only on the basis of an
instruction received from holders of Exchangeable Shares other than Zemex and
its subsidiaries ("Non-Affiliated Holders") entitled to instruct the Trustee
with respect to the voting thereof. Each Non-Affiliated Holder shall be entitled
to instruct the Trustee to cast and exercise, in the manner instructed, one vote
for each Exchangeable Share owned of record by such Non-Affiliated Holder on the
record date. Each Exchangeable Share certificate shall be legended notifying the
Non-Affiliated Holders of their right to instruct the Trustee with respect to
the exercise of Voting Rights and exchange rights (the "Exchange Right").
11
<PAGE> 15
Mailings and Stockholder Information
The Corporation will deliver to the Trustee copies of all mailings and
shareholder communications sent to holders of Zemex Common Shares. The Trustee
will mail or distribute in the same manner that Zemex utilizes in communications
to its holders of Common Shares copies of all such materials to each Non-
Affiliated Holder at the expense of Zemex.
Exchangeable Shares
The rights associated with the Exchangeable Shares are intended to have
characteristics essentially equivalent in economic effect to rights associated
with the Zemex Common Shares. Holders of the Exchangeable Shares will be
entitled at any time to retract (i.e., require Zemex Canada to redeem) any or
all such Exchangeable Shares owned by them and to receive an equivalent number
of Zemex Common Shares, plus an additional amount equivalent to the full amount
of all declared and unpaid dividends on such Exchangeable Shares, subject to the
Retraction Call Rights described below. Holders of the Exchangeable Shares may
effect such retraction by presenting a certificate or certificates to Zemex
Canada or its transfer agent representing the number of Exchangeable Shares the
holder desires to retract, together with a duly executed statement in the form
of Schedule A to the Exchangeable Share Provisions or in such other form as may
be acceptable to Zemex Canada (the "Retraction Request") specifying the number
of Exchangeable Shares the holder wishes to retract and such other documents as
may be required to effect the retraction of the Exchangeable Shares. The
retraction will become effective five business days after the request is
received by Zemex Canada (the "Retraction Date").
Upon receipt of the certificate for Exchangeable Shares, the Retraction
Request and other required documentation from the holder thereof, Zemex Canada
is required to immediately notify Zemex and an indirect wholly-owned subsidiary
of Zemex ("Zemex Sub") of such Retraction Request. Zemex or Zemex Sub will
thereafter have two business days in which to exercise its Retraction Call Right
to purchase all of the Exchangeable Shares submitted by the holder thereof by
the delivery of an equivalent number of Zemex Common Shares, plus an additional
amount equivalent to the full amount of all declared and unpaid dividends on the
Exchangeable Shares, to the transfer agent for delivery to such holder on the
Retraction Date. In the event neither Zemex nor Zemex Sub determines to exercise
its Retraction Call Right and provided that the Retraction Request is not
revoked in accordance with the Exchangeable Share Provisions, Zemex Canada is
obligated to deliver to the holder the number of Zemex Common Shares equal to
the number of Exchangeable Shares submitted by the holder for retraction, plus
an additional amount equivalent to the full amount of all declared and unpaid
dividends on such Exchangeable Shares.
Subject to applicable law and the Redemption Call Right of Zemex and Zemex
Sub described below, on any Optional Redemption Date, Zemex Canada may redeem
all of the then outstanding Exchangeable Shares in exchange for an equal number
of Zemex Common Shares, plus an additional amount equivalent to the full amount
of all declared and unpaid dividends on such Exchangeable Shares.
Notwithstanding any proposed redemption of the Exchangeable Shares by Zemex
Canada, Zemex and Zemex Sub will have the overriding right to purchase on the
Optional Redemption Date all of the outstanding Exchangeable Shares (other than
Exchangeable Shares held by Zemex, Zemex Sub and Canada Holdco) in exchange for
one share of Zemex Common Stock for each such Exchangeable Share, plus an
additional amount equivalent to the full amount of all declared and unpaid
dividends on such Exchangeable Share. In exercising the Redemption Call Right,
neither Zemex nor Zemex Sub will be required to purchase Exchangeable Shares
from itself, the other or Canada Holdco. If either Zemex or Zemex Sub exercises
such Redemption Call Right, Zemex Canada's right to redeem the Exchangeable
Shares on such Optional Redemption Date will terminate. Zemex Canada will, at
least 120 days before any Optional Redemption Date, provide the registered
holders of Exchangeable Shares with written notice of the proposed redemption of
the Exchangeable Shares by Zemex Canada. If the Redemption Call Right is
exercised, Zemex Canada may elect to redeem all then outstanding Exchangeable
Shares on a subsequent Optional Redemption Date.
The Exchangeable Shares are subject to adjustment or modification in the
event of a stock split or other changes to the capital structure of Zemex so as
to maintain the initial one-to-one relationship between the
12
<PAGE> 16
Exchangeable Shares and shares of Zemex Common Shares. Each Exchangeable Share
issued will have an associated right entitling the holder of such Exchangeable
Share to acquire additional Exchangeable Shares in certain circumstances
(including acquisitions of beneficial ownership of Zemex Common Shares or
Exchangeable Shares in excess of specified percentages or certain tender or
exchange offers).
Voting, Support and Exchange Trust Agreement
Concurrent with the issuance of the Voting Share referred to above, Zemex
would enter into a voting, support and exchange trust agreement in substantially
the form attached hereto as Exhibit "A".
Pursuant to the terms of the Voting, Support and Exchange Trust Agreement,
Zemex will on the closing date deposit with the Trustee the Voting Share, which
will entitle the Trustee to a number of votes equal to the number of
Exchangeable Shares outstanding from time to time that are not held by Zemex or
certain subsidiaries of Zemex. With respect to any matter as to which holders of
shares of Zemex Common Shares are entitled to vote, each holder of an
Exchangeable Share will have the right to instruct the Trustee as to the manner
of voting for one of the votes attached to the share of Special Voting Stock for
each Exchangeable Share owned by such holder.
In the event of the liquidation, dissolution or winding up of Zemex or any
other proposed distribution of the assets of Zemex among its shareholders for
the purpose of winding up its affairs, holders of the Exchangeable Shares will
have preferential rights to receive from Zemex one share of Zemex Common Shares
for each Exchangeable Share they hold, plus an additional amount equivalent to
the full amount of any declared and unpaid dividends on each such Exchangeable
Share. Upon the occurrence of such liquidation, dissolution or winding up, Zemex
and Zemex Canada will have the right to purchase all of the outstanding
Exchangeable Shares (other than Exchangeable Shares held by Zemex or Zemex
Canada) from the holders thereof on the effective date of such liquidation,
dissolution or winding up in exchange for one share of Zemex Common Shares for
each such Exchangeable Share, plus an additional amount equivalent to the full
amount of all declared and unpaid dividends on such Exchangeable Share. Upon the
occurrence of a Zemex Insolvency Event, the trustee under the Voting, Support
and Exchange Trust Agreement on behalf of the holders of Exchangeable Shares
will have the right to require Zemex to purchase any Exchangeable Share than
outstanding (other than Exchangeable Shares held by Zemex and certain of its
subsidiaries) in exchange for one share of Zemex Common Shares for each
Exchangeable Share, plus an additional amount equivalent to the full amount of
all declared and unpaid dividends on the Exchangeable Share.
Upon the occurrence of a Zemex Liquidation Event, in order for the holders
of the Exchangeable Shares to participate on a pro rata basis with the holders
of Zemex Common Shares, on the fifth business day prior to the effective date of
the liquidation, dissolution or winding up contemplated by a Zemex Liquidation
Event, Zemex will purchase all Exchangeable Shares (other than Exchangeable
Shares held by Zemex or Zemex Canada) in exchange for an equivalent number of
shares of Zemex Common Shares, plus an additional amount equivalent to the full
amount of all declared and unpaid dividends on such Exchangeable Shares. For a
more detailed description of the Exchange Rights in connection with the
Exchangeable Shares.
Pursuant to the Voting, Support and Exchange Trust Agreement, Zemex will
make the following covenants regarding the Exchangeable Shares:
(i) Zemex will not declare or pay dividends on the Zemex Common Shares
unless it is able to pay and simultaneously pays an equivalent
dividend on the Exchangeable Shares;
(ii) Zemex will advise in advance of the declaration of any dividend on
the Zemex Common Shares and ensure that the declaration date, record
date and payment date for dividends on the Exchangeable Shares are
the same as that for the Zemex Common Shares and that such dates will
correspond with any requirement of the stock exchange on which the
Exchangeable Shares are then listed;
(iii) Zemex will ensure that the record date for any dividend declared on
the Zemex Common Shares is not less than 10 business days after the
declaration date of such dividend or such shorter period within which
applicable law may be complied with;
13
<PAGE> 17
(iv) Zemex will take all actions and do all things necessary to ensure that
it is able to pay to the holders of the Exchangeable Shares the
equivalent number of shares of Zemex Common Shares, plus an additional
amount equivalent to the full amount of all declared and unpaid
dividends on the Exchangeable Shares, in the event of a liquidation,
dissolution or winding up of Zemex, a retraction request by a holder
of Exchangeable Shares or a redemption of Exchangeable Shares by
Zemex;
(v) Zemex will not vote or otherwise take any action or omit to take any
action causing the liquidation, dissolution or winding up of Zemex;
and
(vi) Zemex will maintain a listing for the Exchangeable Shares on a
Canadian stock exchange.
Zemex is required to notify Zemex Canada of the occurrence of certain
events, such as the liquidation, dissolution or winding up of Zemex, and Zemex's
receipt of a Retraction Request from a holder of Exchangeable Shares.
As a result of the amendment to its articles, Zemex's authorized capital
stock would consist of 20,000,000 Common Shares, of which [8,446,606] are
outstanding, 5,000,000 preferred shares, and one Voting Share.
VOTE REQUIRED FOR APPROVAL OF AN AMENDMENT TO THE CORPORATION'S AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE FOR A NEW CLASS OF SHARES
Approval of the amendment to the Corporation's Certificate of Incorporation
to create a new class of Special Voting Shares requires the affirmative vote of
the holders of a majority of the outstanding Common Shares entitled to cast
votes at the meeting.
Dundee and the Corporation's officers and directors have notified the
Corporation that they intend to vote their Zemex Common Shares in favor of
Proposal III. Such shares represent 34.3% of the outstanding Zemex Common
Shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
APPROVAL TO AMEND ITS ARTICLES TO AUTHORIZE THE ISSUANCE OF THE VOTING SHARE.
SHAREHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
In order to be considered for inclusion in the Corporation's proxy
statement for the 1999 Annual Meeting of Shareholders, proposals from
shareholders must be received by the Corporation on or before December 1, 1998.
Such proposals should be addressed to the Corporate Secretary, Zemex
Corporation, Canada Trust Tower, BCE Place, 161 Bay Street, Suite 3750, Toronto,
Ontario, M5J 2S1.
OTHER MATTERS
Management is not aware of any other matters to be considered at the
meeting other than as set forth in this proxy statement. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying form of proxy in their discretion to vote the proxies
in accordance with their best judgment on such matters.
-- , 1998
14
<PAGE> 18
EXHIBIT "A"
VOTING, SUPPORT AND EXCHANGE TRUST AGREEMENT
AGREEMENT made as of the -- day of -- , 199 --
AMONG:
ZEMEX CORPORATION, a corporation existing under the laws of the State of
Delaware (the "Parent"),
-- and --
ZEMEX CANADA CORPORATION, a corporation existing under the laws of the
Province of Ontario (the "Corporation"),
-- and --
-- , a trust company existing under the laws of Canada (the
"Trustee").
WHEREAS the Parent desires to access the Canadian capital markets;
AND WHEREAS in order for the Parent to do so in an efficient manner for Canadian
investors will require the Parent to finance by way of the issue of exchangeable
shares (the "Exchangeable Shares") of the Corporation, a wholly-owned subsidiary
of the Parent;
AND WHEREAS the Parent is to grant to and in favour of Non-Affiliated Holders
(as hereinafter defined) from time to time of Exchangeable Shares the right, in
the circumstances set forth herein, to require the Parent to purchase from each
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holder;
AND WHEREAS the parties desire to make appropriate provision and to establish a
procedure whereby voting rights in the Parent shall be exercisable by
Non-Affiliated Holders from time to time of Exchangeable Shares by and through
the Trustee, which will hold legal title to the Voting Share (as hereinafter
defined) to which voting rights attach for the benefit of Non-Affiliated Holders
and whereby the rights to require the Parent to purchase Exchangeable Shares
from the Non-Affiliated Holders shall be exercisable by Non-Affiliated Holders
from time to time of Exchangeable Shares by and through the Trustee, which will
hold legal title to such rights for the benefit of Non-Affiliated Holders;
AND WHEREAS the parties desire to make appropriate provision and to establish a
procedure whereby the Parent will take certain actions and make certain payments
and deliveries necessary to ensure that the Corporation and Zemex Sub (as
hereinafter defined) will be able to make certain payments and to deliver or
cause to be delivered shares of Parent Common Stock (as hereinafter defined) in
satisfaction of the obligations of the Corporation and/or Zemex Sub under the
Exchangeable Share Provisions (as hereinafter defined) and this trust agreement;
AND WHEREAS these recitals and any statements of fact in this trust agreement
are made by the Parent and the Corporation and not by the Trustee;
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this trust agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
A-1
<PAGE> 19
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this trust agreement, unless something in the subject
matter or content is inconsistent therewith:
"APPLICABLE LAWS" has the meaning set out in section 6.6 hereof.
"ARTICLE 4 SUBSIDIARY" means a Subsidiary of the Parent that, under Section
160 of the Delaware General Corporation Law or any successor provision thereto,
is precluded from voting any shares of Parent Common Stock held by it.
"AUTOMATIC EXCHANGE RIGHTS" means the automatic exchange of shares of
Parent Common Stock for Exchangeable Shares pursuant to Section 5.3 of the
Exchangeable Share Provisions.
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of New York, New York and
Toronto, Ontario.
"CANADA HOLDCO" means a single wholly-owned subsidiary (within the meaning
of the OBCA) of the Parent incorporated under the federal laws of Canada or a
province thereof.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMMON SHARES" means the common shares in the capital of the Corporation
outstanding from time to time.
"CURRENT MARKET PRICE" means, in respect of a share of Parent Common Stock
on any date, the average closing sales price of shares of Parent Common Stock
during a period of 20 consecutive trading days ending not more than five trading
days before such date on the New York Stock Exchange or, if the shares of Parent
Common Stock are not then listed on the New York Stock Exchange, on such other
stock exchange or automated quotation system on which the shares of Parent
Common Stock are listed or quoted, as the case may be, as may be selected by the
Board of Directors for such purpose; provided, however, that if in the opinion
of the Board of Directors the public distribution or trading activity of Parent
Common Stock during such period is inadequate to create a market that reflects
the fair market value of the Parent Common Stock, then the Current Market Price
of a share of the Parent Common Stock shall be determined by the Board of
Directors based upon the advice of such qualified independent financial advisors
as the Board of Directors may deem to be appropriate, and provided further that
any such selection, opinion or determination by the Board of Directors shall be
conclusive and binding on the Parent, the Corporation and the Non-Affiliated
Holders.
"DIVIDEND AMOUNT" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
"EFFECTIVE DATE" means the date upon which the Exchangeable Shares are
first issued.
"EXCHANGE RIGHT" has the meaning set out in section 5.1 hereof.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares.
"EXCHANGEABLE SHARES" has the meaning set out in the recitals hereto.
"INSOLVENCY EVENT" means the institution by the Corporation of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound
up, or the consent of the Corporation to the institution of bankruptcy,
insolvency, dissolution or winding-up proceedings against it, or the filing of a
petition, answers or consent seeking dissolution or winding-up proceedings
against it, or the filing of a petition, answer or consent seeking dissolution
or winding up under any bankruptcy, insolvency or analogous laws, including
without limitation the Companies Creditors' Arrangement Act (Canada) and the
Bankruptcy and Insolvency Act (Canada), and the failure by the Corporation to
contest in good faith any such proceedings commenced in respect of the
Corporation within 15 days of becoming aware thereof, or the consent by the
Corporation to the
A-2
<PAGE> 20
filing of any such petition or to the appointment of a receiver, or the making
by the Corporation of a general assignment for the benefit of creditors, or the
admission in writing by the Corporation of its inability to pay its debts
generally as they become due, or the Corporation not being permitted, pursuant
to solvency requirements or other provisions of applicable law, to redeem any
Retracted Shares pursuant to Section 6.1 of the Exchangeable Share Provisions.
"LIQUIDATION AMOUNT" has the meaning set out in Section 5.1(1) of the
Exchangeable Share Provisions.
"LIQUIDATION CALL RIGHT" has the meaning set out in Section 5.2(1) of the
Exchangeable Share Provisions.
"LIST" has the meaning set out in section 4.6 hereof.
"NON-AFFILIATED HOLDER VOTES" has the meaning set out in section 4.2
hereof.
"NON-AFFILIATED HOLDERS", when used in Article 3 or Article 4 or otherwise
with respect to the right to vote or direct the votes to be cast by the holder
of the Voting Shares, means the registered holders of Exchangeable Shares other
than the Parent and its Article 4 Subsidiaries and, for all other purposes,
means the registered holders of Exchangeable Shares other than the Parent and
its Subsidiaries.
"OFFER" has the meaning set out in section 6.8 hereof.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or the
Corporation, as the case may be, a certificate signed on behalf of the Parent or
the Corporation by any one of the Chairman of the Board, the Vice-Chairman of
the Board, the President, any Vice-President or any other senior officer of the
Parent or the Corporation, as the case may be.
"PARENT BOARD OF DIRECTORS" means the board of directors of the Parent.
"PARENT COMMON STOCK" means the shares of Common Stock of the Parent, par
value U.S.$1.00 per share, having voting rights of one vote per share, and any
other securities into which such shares may be changed or for which each shares
may be exchanged (whether or not the Parent shall be the issuer of such other
securities) or any other consideration which may be received by the holders of
such shares, pursuant to a recapitalization, reconstruction, reorganization or
reclassification of, or amalgamation, merger, liquidation or similar
transaction, affecting such shares.
"PARENT CONSENT" has the meaning set out in section 4.2 hereof.
"PARENT MEETING" has the meaning set out in section 4.2 hereof.
"PARENT SUCCESSOR" has the meaning set out in section 11.1 hereof.
"REDEMPTION CALL RIGHT" has the meaning set out in Section 7.2(1) of the
Exchangeable Share Provisions.
"REDEMPTION PRICE" has the meaning set out in Section 7.1(1) of the
Exchangeable Share Provisions.
"RETRACTED SHARES" has the meaning set out in section 5.7 hereof.
"RETRACTION CALL RIGHT" has the meaning set out in Section 6.2(1) of the
Exchangeable Share Provisions.
"RETRACTION PRICE" has the meaning set out in Section 6.1(1) of the
Exchangeable Share Provisions.
"SUBSIDIARY" of the Parent means any corporation more than 50% of the
outstanding stock of which, by vote or value, is owned, directly or indirectly,
by the Parent, by one or more other Subsidiaries of the Parent or by the Parent
and one or more other Subsidiaries of the Parent.
"TRANSFER AGENT" has the meaning set out in Section 1.1 of the Exchangeable
Share Provisions.
"TRUST" means the trust created by this trust agreement.
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"TRUST ESTATE" means the Voting Share, any other securities, the Exchange
Right and any money of other rights or assets that may be held by the Trustee
from time to time pursuant to this trust agreement.
"TRUSTEE" means -- and, subject to the provisions of Article 10
hereof, includes any successor trustee or permitted assigns.
"VOTING RIGHTS" means the voting rights attached in the Voting Share.
"VOTING SHARE" means the one share of Special Voting Stock of the Parent,
par value U.S.$ -- , issued by the Parent to and deposited with the Trustee,
which entitles the holder of record to a number of votes at meetings of holders
of Parent Common Stock equal to the number of Exchangeable Shares outstanding
from time to time that are held by Non-Affiliated Holders.
"ZEMEX SUB" means Zemex Canada Holdco, Inc. an indirect wholly-owned
Subsidiary of the Parent existing under the laws of the State of Delaware, none
of the stock of which is directly owned by the Parent.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this trust
agreement into articles and sections and the insertion of headings are for
reference purposes only and shall not affect the interpretation of this trust
agreement. Unless otherwise indicated, any reference in this trust agreement to
an article or section refers to the specified article or section of this trust
agreement.
1.3 NUMBER, GENDER AND PERSONS. In this trust agreement, unless the context
otherwise requires, words importing the singular number include the plural and
vice versa, words importing either gender include both genders and words
importing persons include individuals, corporations, partnerships, companies,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to be
taken under this trust agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
1.5 PAYMENTS. All payments to be made hereunder will be made without interest
and less any tax required by law to be deducted and withheld.
ARTICLE 2
TRUST
2.1 ESTABLISHMENT OF TRUST. One of the purposes of this trust agreement is to
create the Trust for the benefit of the Non-Affiliated Holders, as herein
provided. The Trustee will hold the Voting Share in order to enable the Trustee
to exercise the Voting Rights and will hold the Exchange Right in order to
enable the Trustee to exercise such right and will hold the other rights granted
in or resulting from the Trustee being a party to this trust agreement in order
to enable the Trustee to exercise or enforce such rights, in each case as
trustee for and on behalf of the Non-Affiliated Holders as provided in this
trust agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUE AND OWNERSHIP OF THE VOTING SHARE. Simultaneously with the execution
and delivery of this trust agreement, the Parent will issue to and deposit with
the Trustee the Voting Share to be hereafter held of record by the Trustee as
trustee for and on behalf of, and for the use and benefit of, the Non-Affiliated
Holders, in accordance with the provisions of this trust agreement. The Parent
hereby acknowledges receipt from the Trustee as trustee for and on behalf of the
Non-Affiliated Holders of good and valuable consideration (and the adequacy
thereof) for the issuance of the Voting Share by the Parent to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
trust agreement, the Trustee shall possess and be
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vested with full legal ownership of the Voting Share and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Voting
Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee solely
for the use and benefit of the Non-Affiliated Holders in accordance
with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to sell, transfer, vote or otherwise deal in or
with the Voting Share and the Voting Share shall not be used or
disposed of by the Trustee for any purpose other than the purposes for
which the Trust is created pursuant to this trust agreement.
3.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Non-Affiliated Holders of their right to instruct the Trustee with respect to
the exercise of the Voting Rights with respect to the Exchangeable Shares held
by a Non-Affiliated Holder.
3.3 SAFEKEEPING OF CERTIFICATE. The certificate representing the Voting Share
shall at all times be held in safe keeping by the Trustee or its agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Voting Share,
shall be entitled to all of the Voting Rights, including the right to consent to
or to vote in person or by proxy the Voting Share, on any matter, question or
proposition whatsoever that may come before the stockholders of the Parent at a
Parent Meeting or in connection with a Parent Consent. The Voting Rights shall
be and remain vested in and exercised by the Trustee. Subject to section 7.15
hereof, the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Non-Affiliated Holders
entitled to instruct the Trustee as in the voting thereof at the time at which
the Parent Consent is sought or the Parent Meeting is held. To the extent that
no instructions are received from a Non-Affiliated Holder with respect to the
Voting Rights to which such Non-Affiliated Holder is entitled, the Trustee shall
not exercise or permit the exercise of the Voting Rights relating to such
Non-Affiliated Holder's Exchangeable Shares.
4.2 NUMBER OF VOTES. With respect to all meetings of stockholders of the Parent
at which holders of shares of Parent Common Stock are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought from the
holders of shares of Parent Common Stock (a "Parent Consent"), each
Non-Affiliated Holder shall be entitled to instruct the Trustee to cast and
exercise, in the manner instructed, one vote for each Exchangeable Share owned
of record by such Non-Affiliated Holder on the record date established by the
Parent or by applicable law for such Parent Meeting or Parent Consent, as the
case may be (the "Non-Affiliated Holder Votes") in respect of each matter,
question or proposition to be voted on at such Parent Meeting or to be consented
to in connection with such Parent Consent.
4.3 MAILINGS TO SHAREHOLDERS. With respect to each Parent Meeting and Parent
Consent, the Trustee will mail or cause to be mailed (or otherwise communicate
in the same manner that the Parent utilizes in communications to holders of
Parent Common Stock, subject to the Trustee being advised in writing of such
method and its ability to provide this method of communication) to each of the
Non-Affiliated Holders named in the List on the same day as the initial mailing
or notice (or other communication) with respect thereto is given by the Parent
to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders of the
Parent;
(b) a statement that such Non-Affiliated Holder is entitled, subject to
the provisions of section 4.7 hereof, to instruct the Trustee as to
the exercise of the Non-Affiliated Holder Votes with respect to such
Parent Meeting or Parent Consent, as the case may be, or, pursuant and
subject to section 4.7
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hereof, to attend such Parent Meeting and to exercise personally the
Non-Affiliated Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be given
to the Trustee, including an express indication that instructions may
be given to the Trustee to give:
(i) a proxy to such Non-Affiliated Holder or its designee to exercise
personally such holder's Non-Affiliated Holder Votes; or
(ii) a proxy to a designated agent or other representative of the
management of the Parent to exercise such Non-Affiliated Holder
Votes;
(d) a statement that if no such instructions are received from the
Non-Affiliated Holder, the Non-Affiliated Holder Votes to which such
Non-Affiliated Holder is entitled will not be exercised;
(e) a form of direction whereby the Non-Affiliated Holder may so direct
and instruct the Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which in
the case of a Parent Meeting shall not be earlier than the close of
business on the second Business Day prior to such meeting, and (ii)
the method for revoking or amending such instructions.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee. For the
purpose of determining Non-Affiliated Holder Votes to which a Non-Affiliated
Holder is entitled in respect of any such Parent Meeting or Parent Consent, the
number of Exchangeable Shares owned of record by the Non-Affiliated Holder shall
be determined at the close of business on the record date established by the
Parent or by applicable law for purposes of determining stockholders entitled to
vote at such Parent Meeting or to give written consent in connection with such
Parent Consent. The Parent will notify the Trustee in writing of any decision of
the board of directors of the Parent with respect to calling of any such Parent
Meeting or the seeking of any such Parent Consent and shall provide all
necessary information and materials to the Trustee in each case promptly and in
any event in sufficient time to enable the Trustee to perform its obligations
contemplated by this section 4.3.
4.4 COPIES OF STOCKHOLDER INFORMATION. The Parent will deliver to the Trustee
copies of all proxy materials (including notices of Parent Meetings but
excluding proxies to vote shares of Parent Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of Parent Common Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Non-Affiliated Holder at the same time as such materials are
first sent to holders of Parent Common Stock. The Trustee will mail or otherwise
send to each Non-Affiliated Holder, at the expense of the Parent, copies of all
such materials (and all materials specifically directed to the Non-Affiliated
Holders or to the Trustee for the benefit of the Non-Affiliated Holders by the
Parent) received by the Trustee from the Parent at the same time as or as
promptly as practicable after such materials are first sent to holders of Parent
Common Stock. The Trustee will make copies of all such materials available for
inspection by any Non-Affiliated Holder at the Trustee's principal office in the
City of Toronto.
4.5 OTHER MATERIALS. Immediately after receipt by the Parent or any stockholder
of the Parent of any material sent or given generally to the holders of Parent
Common Stock by or on behalf of a third party, including without limitation
dissident proxy and information circulars (and related information and material)
and tender and exchange offer circulars (and related information and material),
the Parent shall use reasonable efforts to obtain and deliver to the Trustee
copies thereof in sufficient quantities so as to enable the Trustee to forward
such material (unless the same has been provided directly to Non-Affiliated
Holders by such third party) to each Non-Affiliated Holder as soon as
practicable thereafter. As soon as practicable after receipt thereof, the
Trustee will mail or otherwise send to each Non-Affiliated Holder, at the
expense of the Parent, copies of all such materials received by the Trustee from
the Parent. The Trustee will also make copies
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of all such materials available for inspection by any Non-Affiliated Holder at
the Trustee's principal office in the City of Toronto.
4.6 LIST OF PERSONS ENTITLED TO VOTE. The Corporation shall, (a) prior to each
Parent Meeting or the seeking of any Parent Consent and (b) forthwith upon each
request made at any time by the Trustee in writing, prepare or cause to be
prepared a list (a "List") of the names and addresses of the Non-Affiliated
Holders arranged in alphabetical order and showing the number of Exchangeable
Shares held of record by each such Non-Affiliated Holder, in each case at the
close of business on the date specified by the Trustee in such request or, in
the case of a List prepared in connection with a Parent Meeting or a Parent
Consent, at the close of business on the record date established by the Parent
or pursuant to applicable law for determining the holders of Parent Common Stock
entitled to receive notice of and/or to vote at such Parent Meeting or to give
consent in connection with such Parent Consent. Each such List shall be
delivered to the Trustee promptly after receipt by the Corporation of such
request or the record date for such meeting or seeking of consent, as the case
may be, and, in any event, within sufficient time as to enable the Trustee to
perform its obligations under this trust agreement. The Parent agrees to give
the Corporation written notice (with a copy to the Trustee) of the calling of
any Parent Meeting or the seeking of any Parent Consent, together with the
record dates therefor, sufficiently prior to the date of the calling of such
meeting or seeking of such consent so as to enable the Corporation to perform
its obligations under this section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES. Any Non-Affiliated Holder named in a List
prepared in connection with any Parent Meeting or any Parent Consent will be
entitled (a) to instruct the Trustee in the manner described in section 4.3
hereof with respect to the exercise of the Non-Affiliated Holder Votes to which
such Non-Affiliated Holder is entitled or (b) to attend such meeting and
personally to exercise thereat (or to exercise with respect to any written
consent), as the proxy of the Trustee, the Non-Affiliated Holder Votes to which
such Non-Affiliated Holder is entitled except, in each case, to the extent that
such Non-Affiliated Holder has transferred the ownership of any Exchangeable
Shares in respect of which such Non-Affiliated Holder is entitled to
Non-Affiliated Holder Votes after the close of business on the record date for
such meeting or seeking of consent.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT MEETING.
(1) In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Non-Affiliated Holder pursuant to section 4.3
hereof, the Non-Affiliated Holder Votes as to which such Non-Affiliated Holder
is entitled to direct the vote (or any lesser number thereof as may be set forth
in the instructions); provided, however, that such written instructions are
received by the Trustee from the Non-Affiliated Holder prior to the time and
date fixed by it for receipt of such instructions in the notice given by the
Trustee to the Non-Affiliated Holder pursuant to section 4.3 hereof.
(2) The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling a
Non-Affiliated Holder to attend such Parent Meeting. Upon submission by a
Non-Affiliated Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Non-Affiliated Holder's request, such
representatives shall sign and deliver to such Non-Affiliated Holder (or its
designee) a proxy to exercise personally the Non-Affiliated Holder Votes as to
which such Non-Affiliated Holder is otherwise entitled hereunder to direct the
vote, if such Non-Affiliated Holder either (i) has not previously given the
Trustee instructions pursuant to section 4.3 hereof in respect of such meeting,
or (ii) submits to the Trustee's representatives written revocation of any such
previous instructions. At such meeting, the Non-Affiliated Holder exercising
such Non-Affiliated Holder Votes shall have the same rights as the Trustee to
speak at the meeting in respect of any matter, question or proposition, to vote
by way of ballot at the meeting in respect of any matter, question or
proposition and to vote at such meeting by way of a show of hands in respect of
any matter, question or proposition.
4.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be distributed
by the Trustee to the Non-Affiliated Holders pursuant to this trust agreement
shall be delivered or sent by mail (or otherwise communicated in the same manner
as the Parent utilizes in communications to holders of Parent Common Stock,
subject to the Trustee being advised in writing of such method of communication
and its ability to
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provide same) to each Non-Affiliated Holder at its address as shown on the books
of the Corporation. The Corporation shall provide or cause to be provided to the
Trustee for this purpose, on a timely basis and without charge or other expense:
(a) current lists of the Non-Affiliated Holders; and
(b) upon the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this trust agreement.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 TERMINATION OF VOTING RIGHTS. All the rights of a Non-Affiliated Holder
with respect to the Non-Affiliated Holder Votes exercisable in respect of the
Exchangeable Shares held by such Non-Affiliated Holder, including the right to
instruct the Trustee as to the voting of or to vote personally such
Non-Affiliated Holder Votes, shall be deemed to be surrendered by the
Non-Affiliated Holder to the Parent and such Non-Affiliated Holder Votes and the
Voting Rights represented thereby shall cease immediately upon the delivery of
such Non-Affiliated Holder to the Trustee of the certificates representing such
Exchangeable Shares in connection with the exercise by the Non-Affiliated Holder
of the Exchange Right or the occurrence of the automatic exchange of
Exchangeable Shares for shares of Parent Common Stock, as specified in Article 5
hereof, or upon the redemption of Exchangeable Shares pursuant to Article 6 or
Article 7 of the Exchangeable Share Provisions, or upon the effective date of
the liquidation, dissolution or winding-up of the Corporation pursuant to
Article 5 of the Exchangeable Share Provisions, or upon the purchase of
Exchangeable Shares from the holder thereof by the Parent or Zemex Sub pursuant
to the exercise by the Parent or Zemex Sub of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right (unless in any case the
Corporation, the Parent or Zemex Sub shall not have delivered the requisite
shares of Parent Common Stock and cheque, if any, deliverable in exchange
therefor to the Transfer Agent or the Trustee for delivery to the Non-Affiliated
Holders).
ARTICLE 5
EXCHANGE RIGHT AND PARENT SUPPORT
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. The Parent hereby grants to the
Trustee as trustee for and on behalf of, and for the use and benefit of, the
Non-Affiliated Holders the right (the "Exchange Right"), upon the occurrence and
during the continuance of an Insolvency Event, to require the Parent to purchase
from each or any Non-Affiliated Holder all or any part of the Exchangeable
Shares held by the Non-Affiliated Holder, all in accordance with the provisions
of this trust agreement. The Parent hereby acknowledges receipt from the
Trustee, as trustee for and on behalf of the Non-Affiliated Holders, of good and
valuable consideration (and the adequacy thereof) for the grant of the Exchange
Right by the Parent to the Trustee. During the term of the Trust and subject to
the terms and conditions of this trust agreement, the Trustee shall possess and
be vested with full legal ownership of the Exchange Right and shall be entitled
to exercise all of the rights and powers of an owner with respect to the
Exchange Right, provided that the Trustee shall:
(a) hold the Exchange Right and the legal title thereto as trustee solely
for the use and benefit of the Non-Affiliated Holders in accordance
with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to exercise or otherwise deal in or with the
Exchange Right, and the Trustee shall not exercise such right for any
purpose other than the purposes for which this Trust is created
pursuant to this trust agreement.
5.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Non-Affiliated Holders of their right to instruct the Trustee with respect to
the exercise of the Exchange Right in respect of the Exchangeable Shares held by
a Non-Affiliated Holder.
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5.3 GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right shall be and remain
vested in and exercisable by the Trustee. Subject to section 7.15 hereof, the
Trustee shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 5 from Non-Affiliated Holders entitled to
instruct the Trustee as to the exercise thereof. To the extent that no
instructions are received from a Non-Affiliated Holder with respect to the
Exchange Right, the Trustee shall not exercise or permit the exercise of the
Exchange Right.
5.4 PURCHASE PRICE. The purchase price payable by the Parent for each
Exchangeable Share to be purchased by the Parent under the Exchange Right shall
be an amount per share equal to (a) the Current Market Price of a share of
Parent Common Stock calculated on the last Business Day prior to the day of
closing of the purchase and sale of such Exchangeable Share under the Exchange
Right, which shall be satisfied in full by causing to be delivered to such
holder one share of Parent Common Stock, plus (b) the Dividend Amount, if any.
The purchase price for each such Exchangeable Share so purchased may be
satisfied only by the Parent delivering or causing to be delivered to the
Trustee, on behalf of the relevant Non-Affiliated Holder, one share of Parent
Common Stock and a cheque for the balance, if any, of the purchase price.
5.5 EXERCISE INSTRUCTIONS. Subject to the terms and conditions herein set
forth, a Non-Affiliated Holder shall be entitled, upon the occurrence and during
the continuance of an Insolvency Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Non-Affiliated Holder on the books of the
Corporation. To cause the exercise of the Exchange Right by the Trustee, the
Non-Affiliated Holder shall deliver to the Trustee, in person or by certified or
registered mail, at its principal office in Toronto, Ontario or at such other
places in Canada as the Trustee may from time to time designate by written
notice to the Non-Affiliated Holders, the certificates representing the
Exchangeable Shares which such Non-Affiliated Holder desires the Parent to
purchase, duly endorsed in blank, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the Business Corporations Act (Ontario) and such additional documents and
instruments as the Trustee or the Corporation may reasonably require together
with (a) a duly completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share certificates,
stating (i) that the Non-Affiliated Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require the Parent to purchase from the
Non-Affiliated Holder the number of Exchangeable Shares specified therein, (ii)
that such Non-Affiliated Holder has good title to and owns all such Exchangeable
Shares to be acquired by the Parent free and clear of all liens, claims and
encumbrances, (iii) the names in which the certificates representing Parent
Common Stock issuable in connection with the exercise of the Exchange Right are
to be issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence satisfactory to
the Trustee, the Corporation and the Parent of payment) of the taxes (if any)
payable as contemplated by section 5.8 of this trust agreement. If only a
portion of the Exchangeable Shares represented by any certificate delivered to
the Trustee are to be purchased by the Parent under the Exchange Right, a new
certificate for the balance of such Exchangeable Shares shall be issued to the
holder at the expense of the Corporation.
5.6 DELIVERY OF PARENT COMMON STOCK; EFFECT OF EXERCISE. Promptly after receipt
of the certificates representing the Exchangeable Shares that a Non-Affiliated
Holder desires the Parent to purchase under the Exchange Right (together with
such documents and instruments of transfer and a duly completed form of notice
of exercise of the Exchange Right and payment of taxes payable as contemplated
by section 5.8, if any, or evidence thereof), duly endorsed for transfer to the
Parent, the Trustee shall notify the Parent and the Corporation of its receipt
of the same, which notice to the Parent and the Corporation shall constitute
exercise of the Exchange Right by the Trustee on behalf of the holder of such
Exchangeable Shares, and the Parent shall immediately thereafter deliver or
cause to be delivered to the Trustee, for delivery to the Non-Affiliated Holder
of such Exchangeable Shares (or to such other persons, if any, properly
designated by such Non-Affiliated Holder), a certificate for the number of
shares of Parent Common Stock deliverable in connection with such exercise of
the Exchange Right (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance,
security interest or adverse claim) and a cheque for the balance, if any, of the
purchase price therefor, provided, however, that no such delivery shall be made
unless and until the Non-Affiliated Holder requesting the same shall have paid
(or provided evidence
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satisfactory to the Trustee, the Corporation and the Parent of the payment of)
the taxes (if any) payable as contemplated by section 5.8 of this trust
agreement. Immediately upon the giving of notice by the Trustee to the Parent
and the Corporation of the exercise of the Exchange Right, as provided in this
section 5.6, the closing of the transaction of purchase and sale contemplated by
the Exchange Right shall be deemed to have occurred, and the Non-Affiliated
Holder of such Exchangeable Shares shall be deemed to have transferred to the
Parent all of its right, title and interest in and to such Exchangeable Shares
and the related interest in the Trust Estate and shall not be entitled to
exercise any of the rights of a holder in respect thereof, other than the right
to receive its proportionate part of the total purchase price therefor, unless
the requisite number of shares of Parent Common Stock (together with a cheque
for the balance, if any, of the total purchase price therefor) is not delivered
by the Parent to the Trustee, for delivery to such Non-Affiliated Holder (or to
such other persons, if any, properly designated by such Non-Affiliated Holder),
within five Business Days of the date of the giving of such notice by the
Trustee; in which case the rights of the Non-Affiliated Holder shall remain
unaffected until such shares of Parent Common Stock are so delivered by the
Parent and any such cheque is so delivered and paid. Concurrently with the
closing of the transaction of purchase and sale contemplated by the Exchange
Right, such Non-Affiliated Holder shall be considered and deemed for all
purposes to be the holder of the shares of Parent Common Stock delivered to it
pursuant to the Exchange Right.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event that a
Non-Affiliated Holder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require the Corporation to redeem any or all of
the Exchangeable Shares held by the Non-Affiliated Holder (the "Retracted
Shares") and is notified by the Corporation pursuant to Section 6.1(4) of the
Exchangeable Share Provisions that the Corporation will not be permitted as a
result of solvency requirements of applicable law to redeem all such Retracted
Shares, subject to receipt by the Trustee of written notice to that effect from
the Corporation and provided that neither the Parent nor Zemex Sub shall have
exercised its Retraction Call Right with respect to the Retracted Shares and
that the Non-Affiliated Holder shall not have revoked the retraction request
delivered by the Non-Affiliated Holder to the Corporation pursuant to Section
6.1 of the Exchangeable Share Provisions, the retraction request will constitute
and will be deemed to constitute notice from the Non-Affiliated Holder to the
Trustee instructing the Trustee to exercise the Exchange Right with respect to
those Retracted Shares that the Corporation is unable to redeem. In any such
event, the Corporation hereby agrees with the Trustee and in favour of the
Non-Affiliated Holder immediately to notify the Trustee of such prohibition
against the Corporation redeeming all of the Retracted Shares and immediately to
forward or cause to be forwarded to the Trustee all relevant materials delivered
by the Non-Affiliated Holder to the Corporation or to the Transfer Agent
(including without limitation a copy of the retraction request delivered
pursuant to Section 6.1(1) of the Exchangeable Share Provisions) in connection
with such proposed redemption of the Retracted Shares and the Trustee will
thereupon exercise the Exchange Right with respect to the Retracted Shares that
the Corporation is not permitted to redeem and will require the Parent to
purchase such shares in accordance with the provisions of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares to the
Parent pursuant to the Exchange Right, the share certificate or certificates
representing the Parent Common Stock to be delivered in connection with the
payment of the total purchase price therefor shall be issued in the name of the
Non-Affiliated Holder of the Exchangeable Shares so sold or in such names as
such Non-Affiliated Holder may otherwise direct in writing without charge to the
holder of the Exchangeable Shares so sold, provided, however, that such
Non-Affiliated Holder (a) shall pay (and neither the Parent, the Corporation nor
the Trustee shall be required to pay) any documentary, stamp, transfer or other
similar taxes that may be payable in respect of any transfer involved in the
issuance or delivery of such shares to a person other than such Non-Affiliated
Holder or (b) shall have a established to the satisfaction of the Trustee, the
Parent and the Corporation that such taxes, if any, have been paid.
5.9 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event that with the giving of notice or the passage of
time or both would be an Insolvency Event, the Corporation and the Parent shall
give written notice thereof to the Trustee. As soon as practicable after
receiving notice from the Corporation or the Parent or from any other person of
the occurrence of an Insolvency Event, the Trustee will mail to each
Non-Affiliated Holder, at the expense of the Parent, a notice of such Insolvency
Event in the
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form provided by the Parent, which notice shall contain a brief statement of the
right of the Non-Affiliated Holders with respect to the Exchange Right.
5.10 PARENT SUPPORT OF ZEMEX SUB. Notwithstanding any of the other provisions
of this trust agreement, so long as any Exchangeable Shares are outstanding,
Zemex Sub shall be an indirect wholly-owned subsidiary of the Parent, and Zemex
Sub, the Parent and Canada Holdco will collectively own all of the Common Shares
outstanding, and the Parent will take all actions and do all such things as are
necessary or desirable to enable and permit Zemex Sub, in accordance with
applicable law, to perform its obligations and exercise its rights with respect
to the satisfaction of the Liquidation Call Right, the Redemption Call Right and
the Retraction Call Right, including without limitation, all such actions and
all such things as are necessary or desirable to enable and permit Zemex Sub to
cause to be delivered Parent Common Stock to the holders of Exchangeable Shares
in accordance with this Agreement and the Exchangeable Share Provisions. In
furtherance of the foregoing obligations, upon notice of any event which
requires Zemex Sub to cause to be delivered shares of Parent Common Stock to any
holder of Exchangeable Shares, the Parent shall, in any manner deemed
appropriate by it, provide such shares or cause such shares to be provided to
Zemex Sub, which shall forthwith deliver the requisite shares of Parent Common
Stock to or to the order of the former holder of the surrendered Exchangeable
Shares. All such shares of Parent Common Stock shall be duly issued as fully
paid, non-assessable, free of pre-emptive rights and shall be free and clear of
any lien, claim, encumbrance, security interest or adverse claim. Without the
prior approval of the Parent Board of Directors, (i) the Corporation shall not
have, and the Parent shall not permit the Corporation to have, any class of
shares outstanding other than the Common Shares and Exchangeable Shares, unless
the Parent and Zemex Sub shall collectively own directly at least 50.1% of the
shares of each such class outstanding, and (ii) the Corporation shall not issue,
purchase, redeem or otherwise acquire (other than in accordance with the terms
of the Exchangeable Shares), and Parent, Zemex Sub and Canada Holdco shall not
transfer, sell or otherwise dispose of, any Exchangeable Shares, unless after
any such actions, the Parent, Zemex Sub and Canada Holdco collectively own at
least 50.1% of the outstanding Exchangeable Shares and (iii) the Parent shall
cause Zemex Sub not to distribute to its immediate parent corporation or to
Parent any Exchangeable Shares received by it pursuant to its exercise of the
Liquidation Call Right, the Redemption Call Right or the Retraction Call Right.
Solely for purposes of this Section 5.10, the term "Zemex Sub" shall include a
wholly-owned Subsidiary of Zemex Sub.
5.11 CALL RIGHTS. The Liquidation Call Right, the Redemption Call Right, the
Retraction Call Right and the Automatic Exchange Right are hereby agreed,
acknowledged and confirmed, and it is agreed and acknowledged that such rights
are granted in part in consideration of the obligations of the Parent under this
trust agreement.
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 COVENANTS OF PARENT REGARDING EXCHANGEABLE SHARES. So long as any
Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Stock unless (i)
the Corporation will have sufficient money or other assets or
authorized but unissued securities available to enable the due
declaration and the due and punctual payment in accordance with
applicable law, of an equivalent dividend on the Exchangeable Shares
and (ii) the Corporation shall simultaneously declare or pay, as the
case may be, an equivalent dividend on the Exchangeable Shares;
(b) advise the Corporation sufficiently in advance of the declaration by
the Parent of any dividend on the Parent Common Stock and take all
such other actions as are necessary, in co-operation with the
Corporation, to ensure that the respective declaration date, record
date and payment date for a dividend on the Exchangeable Shares shall
be the same as the declaration date, record date and payment date for
the corresponding dividend on the Parent Common Stock and that such
dividend on the Exchangeable Shares shall correspond with any
requirements of the stock exchange on which the Exchangeable Shares
are listed;
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(c) ensure that the record date for determining shareholders entitled to
receive any dividend declared on the Parent Common Stock is not less
than 10 Business Days after the declaration date for such dividend or
such shorter period within which applicable law may be complied with;
(d) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Liquidation Amount in respect of
each issued and outstanding Exchangeable Share upon the liquidation,
dissolution or winding up of the Corporation, including without
limitation all such actions and all such things as are necessary or
desirable to enable and permit the Corporation to cause to be
delivered shares of Parent Common Stock to the holders of Exchangeable
Shares in accordance with the provisions of Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Retraction Price and the Redemption
Price, including without limitation all such actions and all such
things as are necessary or desirable to enable and permit the
Corporation to cause to be delivered shares of Parent Common Stock to
the holders of Exchangeable Shares, upon the retraction or redemption
of the Exchangeable Shares in accordance with the provisions of
Article 6 or Article 7 of the Exchangeable Share Provisions, as the
case may be;
(f) use its best efforts to enable the Corporation to obtain and maintain
the listing of the Exchangeable Shares on a stock exchange in Canada
prescribed under the Income Tax Act (Canada); and
(g) not exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding up of the Corporation not take any
action or omit to take any action that is designed to result in the
liquidation, dissolution or winding up of the Corporation.
6.2 SEGREGATION OF FUNDS. The Parent will cause the Corporation to deposit a
sufficient amount of funds in a separate account and segregate a sufficient
amount of such other assets as is necessary to enable the Corporation to pay or
otherwise satisfy the applicable dividends, Liquidation Amount, Retraction Price
or Redemption Price, in each case for the benefit of Non-Affiliated Holders from
time to time of the Exchangeable Shares, and to use such funds and other assets
so segregated exclusively for the payment of dividends and the payment or other
satisfaction of the Liquidation Amount, the Retraction Price or the Redemption
Price, as applicable.
6.3 CERTAIN REPRESENTATIONS. The Parent hereby represents, warrants and
covenants that:
(a) it has irrevocably reserved for issuance and will at all times keep
available, free from pre-emptive and other rights, out of its
authorized and unissued capital stock such number of shares of Parent
Common Stock (or other shares or securities into which the Parent
Common Stock may be reclassified or changed as contemplated by section
6.7 hereof) (i) as is equal to the sum of (x) the number of
Exchangeable Shares issued and outstanding from time to time and (y)
the number of Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time
and (ii) as are now and may hereafter be required to enable and permit
each of the Corporation, the Parent and Zemex Sub to meet its
obligations hereunder, under the Exchangeable Share Provisions and
under any other security or commitment pursuant to which the
Corporation, the Parent or Zemex Sub may now or hereafter be required
to issue and/or deliver shares of Parent Common Stock; and
(b) it is not as of the Effective Date, and has not been at any time
within the last year prior to the Effective Date, a "United States
real property holding corporation" within the meaning of Section 897
of the Code.
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6.4 NOTIFICATION OF CERTAIN EVENTS. In order to assist the Parent to comply
with its obligations hereunder, the Corporation will give the Parent notice of
each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding-up proceedings
with respect to the Corporation or to effect any other distribution of
the assets of the Corporation among its shareholders for the purpose
of winding up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution, winding up or other
distribution;
(b) immediately, upon the earlier of (i) receipt by the Corporation of
notice of, and (ii) the Corporation otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other proceedings
with respect to the involuntary liquidation, dissolution or winding up
of the Corporation or to effect any other distribution of the assets
of the Corporation among its shareholders for the purpose of winding
up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction Request
(as defined in the Exchangeable Share Provisions);
(d) at least 130 days prior to any Optional Redemption Date determined by
the Board of Directors in accordance with the Exchangeable Share
Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
6.5 DELIVERY OF SHARES OF PARENT COMMON STOCK. Upon notice of any event that
requires the Corporation to cause to be delivered shares of Parent Common Stock
to any holder of Exchangeable Shares, the Parent shall, in any manner deemed
appropriate by it, provide such shares or cause such shares to be provided to
the Corporation, which shall forthwith deliver the requisite shares of Parent
Common Stock to or to the order of the former holder of the surrendered
Exchangeable Shares, as the Corporation shall direct. All such shares of Parent
Common Stock shall be duly issued as fully paid, non-assessable, free of
pre-emptive rights and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim.
6.6 QUALIFICATION OF SHARES OF PARENT COMMON STOCK. The Parent covenants that
if any shares of Parent Common Stock (or other shares or securities into which
the Parent Common Stock may be reclassified or changed as contemplated by
section 6.7 hereof) to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions or the Exchange Right,
require registration or 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 order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority of the fulfilment of any other legal
requirement (collectively, the "Applicable Laws") before such shares (or other
shares or securities into which the Parent Common Stock may be reclassified or
changed as contemplated by section 6.7 hereof) may be issued and delivered by
the Parent to the initial holder thereof or in order that such shares may be
freely traded thereafter (other than any restrictions on transfer by reason of a
holder being a "control person" of the Parent for purposes of Canadian federal
or provincial securities law or an "affiliate" of the Parent or, prior to the
Effective Date, of the Corporation for purposes of United States federal or
state securities law), the Parent will in good faith take all such actions and
do all such things as are necessary to cause such shares of Parent Common Stock
(or other shares or securities into which the Parent Common Stock may be
reclassified or changed as contemplated by section 6.7 hereof) to be and remain
duly registered, qualified or approved. The Parent represents, warrants and
undertakes that it will in good faith take all actions and do all things as are
necessary under Applicable Laws as they exist on the Effective Date to cause the
shares of Parent Common Stock (or other shares or securities into which the
Parent Common Stock may be reclassified or changed as contemplated by section
6.6 hereof) to be issued and delivered hereunder, including for greater
certainty, pursuant to this Agreement, the Exchangeable Share Provisions or the
Exchange Right, to be freely tradeable thereafter (other than restrictions on
transfer by reason of a holder being a "control person" of the Parent for the
purposes of Canadian federal and provincial securities law or an "affiliate" of
the Parent or, prior to the
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Effective Date, of the Corporation for the purposes of United States federal or
state securities law). The Parent will in good faith expeditiously take all such
actions and do all such things as are necessary to cause all shares of Parent
Common Stock (or other shares or securities into which the Parent Common Stock
may be reclassified or changed as contemplated by section 6.7 hereof) to be
delivered hereunder, including for greater certainty, pursuant to the
Exchangeable Share Provisions or the Exchange Right, to be listed, quoted or
posted for trading on all stock exchanges and quotation systems on which such
shares are listed, quoted or posted for trading at such time. The Parent will in
good faith expeditiously take all such action and do all such things as are
necessary to cause all Exchangeable Shares to be listed and posted for trading
on a stock exchange in Canada prescribed under the Income Tax Act (Canada).
6.7 ECONOMICAL EQUIVALENCE.
(1) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Section 9.2 of the Exchangeable Share Provisions:
(a) issue or distribute shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
shares of Parent Common Stock) to the holders of all or substantially
all of the then outstanding Parent Common Stock by way of stock
dividend or other distribution, other than an issue of shares of
Parent Common Stock (or securities exchangeable for or convertible
into or carrying rights to acquire shares of Parent Common Stock) to
holders of shares of Parent Common Stock who exercise an option to
receive dividends in Parent Common Stock (or securities exchangeable
for or convertible into or carrying rights to acquire shares of Parent
Common Stock) in lieu of receiving cash dividends;
(b) issue or distribute rights, options or warrants to the holders of all
or substantially all of the then outstanding shares of Parent Common
Stock entitling them to subscribe for or to purchase shares of Parent
Common Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common Stock); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding shares of Parent Common Stock (i) shares or
securities of the Parent of any class other than Parent Common Stock
(other than shares convertible into or exchangeable for or carrying
rights to acquire shares of Parent Common Stock, (ii) rights, options
or warrants other than those referred to in section 6.7(1)(b) above,
(iii) evidences of indebtedness of the Parent or (iv) assets of the
Parent;
unless (x) the Corporation is permitted under applicable law to issue or
distribute the economic equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets to holders of the
Exchangeable Shares and (y) the Corporation shall issue or distribute such
rights, options, securities, shares, evidences or indebtedness or other assets
simultaneously to holders of the Exchangeable Shares.
(2) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Section 9.2 of the Exchangeable Share Provisions:
(a) subdivide, redivide or change the then outstanding shares of Parent
Common Stock into a greater number of shares of Parent Common Stock;
or
(b) reduce, combine or consolidate or change the then outstanding shares
of Parent Common Stock into a lesser number of shares of Parent Common
Stock; or
(c) reclassify or otherwise change the shares of Parent Common Stock or
effect an amalgamation, merger, reorganization or other transaction
affecting the shares of Parent Common Stock;
unless (x) the Corporation is permitted under applicable law to simultaneously
make the same or an economically equivalent change to, or in the rights of
holders of, the Exchangeable Shares and (y) the same or an economically
equivalent change is made to, or in the rights of the holders of, the
Exchangeable Shares.
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(3) The Parent will ensure that the record date for any event referred to
in Section 6.7(1) or 6.7(2) above, or (if no record date is applicable for such
event) the effective date for any such event, is not less than 20 Business Days
after the date on which such event is declared or announced by the Parent (with
simultaneously notice thereof to be given by the Parent to the Corporation).
(4) The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the board may require), economic
equivalence for the purposes of any event referred to in section 6.7(1) or
6.7(2) and each such determination shall be conclusive and binding on the
Parent, the Corporation and the Non-Affiliated Holders. In making each such
determination, the following factors shall, without excluding other factors
determined by the board to be relevant, be considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution payable in
shares of Parent Common Stock, the number of such shares issued in
proportion to the number of shares of Parent Common Stock previously
outstanding;
(b) in the case of the issuance or distribution of any rights, options or
warrants to subscribe for or purchase shares of Parent Common Stock
(or securities exchangeable for or convertible into or carrying rights
to acquire shares of Parent Common Stock), the relationship between
the exercise price of each such right, option or warrant and the
current market value (as determined by the Board of Directors in the
manner above contemplated) of a share of Parent Common Stock;
(c) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of the
Parent of any class other than Parent Common Stock, any rights,
options or warrants other than those referred to in section 6.7(4)(b)
above, any evidence of indebtedness of the Parent or any assets of the
Parent), the relationship between the fair market value (as determined
by the Board of Directors in the manner above contemplated) of such
property to be issued or distributed with respect to each outstanding
share of Parent Common Stock and the current market value (as
determined by the Board of Directors in the manner above contemplated)
of a share of Parent Common Stock;
(d) in the case of any subdivision, redivision or change of the then
outstanding shares of Parent Common Stock into a greater number of
shares of Parent Common Stock or the reduction, combination or
consolidation or change of the then outstanding shares of Parent
Common Stock into a lesser number of shares of Parent Common Stock or
any amalgamation, merger, reorganization or other transaction
affecting the Parent Common Stock, the effect thereof upon the then
outstanding shares of Parent Common Stock; and
(e) in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Shares to the extent that such
consequences may differ from the taxation consequences to holders of
shares of Parent Common Stock as a result of differences between
taxation laws of Canada and the United States (except for any
differing consequences arising as a result of differing marginal
taxation rates and without regard to the individual circumstances of
holders of Exchangeable Shares).
For purposes of the foregoing determinations, the current market value of
any security listed and traded or quoted on a securities exchange shall be the
weighted average of the daily trading prices of such security during a period of
not less than 20 consecutive trading days ending not more than five trading days
before the date of determination on the principal securities exchange on which
such securities are listed and traded or quoted; provided, however, that if in
the opinion of the Board of Directors the public distribution or trading
activity of such securities during such period does not create a market that
reflects the fair market value of such securities, then the current market value
thereof shall be determined by the Board of Directors, in good faith and in its
sole discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the board may require), and provided
further that any such determination by the Board of Directors shall be
conclusive and binding on the Parent, the Corporation and the Non-Affiliated
Holders.
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6.8 TENDER OFFERS, ETC. In the event that a tender offer, share exchange offer,
issuer bid, take-over bid or similar transaction with respect to Parent Common
Stock (each, an "Offer") is proposed by the Parent or is proposed to the Parent
or its shareholders and is recommended by the board of directors of the Parent,
or is otherwise effected or to be effected with the consent or approval of the
board of directors of the Parent, the Parent will use reasonable efforts (to the
extent, in the case of an Offer by a third party, within its control)
expeditiously and in good faith to take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares to participate in such Offer to the same extent and on an economically
equivalent basis as the holders of shares of Parent Common Stock, without
discrimination. Without limiting the generality of the foregoing, the Parent
will use reasonable efforts expeditiously and in good faith to ensure that
holders of Exchangeable Shares may participate in all such Offers without being
required to retract Exchangeable Shares as against the Corporation (or, if so
required, to ensure that any such retraction shall be effective only upon, and
shall be conditional upon, the closing of the Offer and only to the extent
necessary to tender or deposit to the Offer).
6.9 OWNERSHIP OF OUTSTANDING SHARES. Without the prior approval of the
Corporation and the prior approval of the Non-Affiliated Holders given in
accordance with Section 9.2 of the Exchangeable Share Provisions and subject to
the provisions of Section 5.10, the Parent covenants and agrees that, as long as
any outstanding Exchangeable Shares are owned by any person or entity other than
the Parent, Zemex Sub or any of their Subsidiaries, the Parent will be and
remain the direct or indirect beneficial owner of at least 50.1% of all issued
and outstanding securities of the Corporation carrying or otherwise entitled to
voting rights in any circumstances, other than the Exchangeable Shares.
6.10 PARENT NOT TO VOTE EXCHANGEABLE SHARES. The Parent covenants and agrees
that it will appoint and cause to be appointed proxyholders with respect to all
Exchangeable Shares held by the Parent and its Subsidiaries for the sole purpose
of attending each meeting of holders of Exchangeable Shares in order to be
counted as part of the quorum for each such meeting. The Parent further
covenants and agrees that it will not, and will cause its Subsidiaries not to,
exercise any voting rights that may be exercised by holders of Exchangeable
Shares from time to time pursuant to the Exchangeable Share Provisions or
pursuant to the provisions of the Business Corporations Act (Ontario) (or any
successor or other corporate statute by which the Corporation may in the future
be governed) with respect to any Exchangeable Shares held by it or by its direct
or indirect Subsidiaries in respect of any matter considered at any meeting of
holders of Exchangeable Shares.
6.11 DUE PERFORMANCE. On and after the Effective Date, the Parent shall, and
shall cause Zemex Sub to, duly and timely perform all of their obligations
provided for in this Agreement, including any obligations that may arise upon
the exercise of rights by any holder of Exchangeable Shares, and Parent shall be
responsible for the due performance of all of Zemex Sub's obligations hereunder
and under the Exchangeable Share Provisions.
6.12 ISSUE OF ADDITIONAL SHARES. During the term of this trust agreement, the
Parent will not issue any shares of Parent Special Voting Stock in addition to
the Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities of the
Trustee under this trust agreement, in its capacity as trustee of the trust,
shall include:
(a) receipt and deposit of the Voting Share from the Parent as trustee for
and on behalf of the Non-Affiliated Holders in accordance with the
provisions of this trust agreement;
(b) granting proxies and distributing material to Non-Affiliated Holders
as provided in this trust agreement;
(c) voting the Non-Affiliated Holder Votes in accordance with the
provisions of this trust agreement;
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(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from the Parent as trustee for and on behalf of the
Non-Affiliated Holders, in accordance with the provisions of this
trust agreement;
(e) exercising the Exchange Right in accordance with the provisions of
this trust agreement, and in connection therewith receiving from
Non-Affiliated Holders Exchangeable Shares and other requisite
documents and distributing to such Non-Affiliated Holders the shares
of Parent Common Stock and cheques, if any, to which such
Non-Affiliated Holders are entitled upon the exercise of the Exchange
Right;
(f) holding title to the Trust Estate;
(g) investing any money forming, from to time, a part of the Trust Estate
as provided in this trust agreement;
(h) taking action at the discretion of a Non-Affiliated Holder to enforce
the obligations of the Corporation and/or the Parent under this
Agreement and the Exchangeable Share Provisions; and
(i) taking such other actions and doing such other things as are
specifically provided in this trust agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this trust agreement as
the Trustee, acting in good faith and in the reasonable exercise of its
discretion, may deem necessary, appropriate or desirable to effect the purpose
of the Trust. Any exercise of such discretionary rights, powers and authorities
by the Trustee shall be final, conclusive and binding upon all persons. For
greater certainty, the Trustee shall have only those duties as are set out
specifically in this trust agreement. The Trustee in exercising its rights,
powers, duties and authorities hereunder shall act honestly and in good faith
with a view to the best interests of the Non-Affiliated Holders and shall
exercise the care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. The Trustee shall not be bound to give any
notice or do or take any act, action or proceeding by virtue of the powers
conferred on it hereby unless and until it shall be specifically required to do
so under the terms hereof, nor shall the Trustee be required to take any notice
of, or to do or to take any act, action or proceeding as a result of any default
or breach of any provision hereunder, unless and until notified in writing of
such default or breach, which notice shall distinctly specify the default or
breach desired to be brought to the attention of the Trustee and in the absence
of such notice the Trustee may for all purposes of this trust agreement
conclusively assume that no default or breach has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Corporation and the
Parent that at the date of execution and delivery of this trust agreement there
exists no material conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall, within 90 days after it becomes aware that such a material
conflict of interest exists, either eliminate such material conflict of interest
or resign in the manner and with the effect specified in Article 10 hereof. If,
notwithstanding the foregoing provisions of this section 7.2, the Trustee has
such a material conflict of interest, the validity and enforceability of this
trust agreement shall not be affected in any manner whatsoever by reason only of
the existence of such material conflict of interest. If the Trustee contravenes
the foregoing provisions of this section 7.2, any interested party may apply to
the Ontario Court of Justice (General Division) for an order that the Trustee be
replaced as trustee hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. The Corporation and the
Parent irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective registrars
and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and the Parent Common
Stock; and
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(b) requisition, from time to time, from any such registrar or transfer
agent any information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge of its
duties and responsibilities under this trust agreement. The Parent
covenants that it will supply, and will cause Zemex Sub to supply, the
Trustee, or the Transfer Agent, as the case may be, in a timely manner
with duly executed share certificates for the purpose of completing
the exercise from time to time of all rights to acquire Parent Common
Stock hereunder, under the Exchangeable Share Provisions and under any
other security or commitment given to the Non-Affiliated Holders
pursuant thereto, in each case pursuant to the provisions hereof, or
of the Exchangeable Share Provisions or otherwise.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection by the
Parent and the Corporation, at the Trustee's principal office in Toronto,
Ontario, correct and complete books and records of account relating to the
Trustee's actions under this trust agreement, including without limitation all
information relating to mailings and instructions to and from non-Affiliated
Holders and all transactions pursuant to the Voting Rights and the Exchange
Right for the term of this Agreement. On or before November 30, 1998, and on or
before November 30 in every year thereafter, so long as the Voting Share is on
deposit with the Trustee, the Trustee shall transmit to the Parent and the
Corporation a brief report, dated as of the preceding August 31, with respect
to: (a) the property and funds comprising the Trust Estate as of that date; (b)
the number of exercises of the Exchange Right, if any, and the aggregate number
of Exchangeable Shares received by the Trustee on behalf of Non-Affiliated
holders in consideration of the issue and delivery by the Parent of shares of
Parent Common Stock in connection with the Exchange Right, during the calendar
year ended on such date; and (c) all other actions taken by the Trustee in the
performance of its duties under this trust agreement which it had not previously
reported.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the extent necessary,
prepare and file on behalf of the Trust appropriate United States and Canadian
income tax returns and any other returns or reports as may be required by
applicable law or pursuant to the rules and regulations of any securities
exchange or other trading system through which the Exchangeable Shares are
traded and, in connection therewith, may obtain the advice and assistance of
such experts as the Trustee may consider necessary or advisable. If requested by
the Trustee, the Parent shall retain such experts as may be required for the
purposes of providing such advice and assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested in it by
this trust agreement at the request, order or direction of any Non-Affiliated
Holder upon such Non-Affiliated Holder furnishing to the Trustee reasonable
funding, security and indemnity against the costs, expenses and liabilities that
may be incurred by the Trustee therein or thereby, provided that no
Non-Affiliated Holder shall be obligated to furnish to the Trustee any such
funding, security or indemnity in connection with the exercise by the Trustee of
any of its rights, duties, powers and authorities with respect to the Voting
Share pursuant to Article 4 hereof and with respect to the Exchange Right
pursuant to Article 5 hereof, subject to the provisions of section 7.15 hereof.
None of the provisions contained in this trust agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties or authorities unless
funded, given funds, security and indemnified as aforesaid.
7.7 ACTIONS BY NON-AFFILIATED HOLDERS. No Non-Affiliated Holder shall have the
right to institute any action, suit or proceeding or to exercise any other
remedy authorized by this trust agreement for the purpose of enforcing any of
its rights or for the execution of any trust or power hereunder unless the
Non-Affiliated Holder has requested the Trustee to take or institute such
action, suit or proceeding and furnished the Trustee with the funding, security
and indemnity referred to in section 7.6 hereof and the Trustee shall have
failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Non-Affiliated Holder shall be entitled to take proceedings in
any court of competent jurisdiction such as the Trustee might have taken; it
being understood and intended that no one or more Non-Affiliated Holders shall
have any right in any manner whatsoever to affect, disturb or prejudice the
rights hereby created by any such action, or to enforce any right hereunder or
under the Voting Rights or the Exchange Right except subject to the conditions
and in the manner herein provided, and that all powers and trusts hereunder
shall be exercised and all proceedings at law
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<PAGE> 36
shall be instituted, had and maintained by the Trustee, except only as herein
provided, and in any event for the equal benefit of all Non-Affiliated Holders.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be in
contravention of any of its rights, powers, duties and authorities hereunder if,
when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents furnished pursuant to the provisions hereof or required by the
Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder and such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of section 7.9 hereof, if applicable, and with any
other applicable provisions of this trust agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. The Corporation and/or the Parent shall
furnish to the Trustee evidence of compliance with the conditions provided for
in this trust agreement relating to any action or step required or permitted to
be taken by the Corporation and/or the Parent or the Trustee under this trust
agreement or as a result of any obligation imposed under this trust agreement,
including, without limitation, in respect of the Voting Rights or the Exchange
Right and the taking of any other action to be taken by the Trustee at the
request of or on the application of the Corporation and/or the Parent forthwith
if and when:
(a) such evidence is required by any other section of this trust agreement
to be furnished to the Trustee in accordance with the terms of this
section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this trust agreement, gives the Corporation and/or
the Parent written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in such
notice.
Such evidence shall consist of an Officer's Certificate of the Corporation
and/or the Parent or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with or satisfied in accordance with the terms of this trust
agreement. Whenever such evidence relates to a matter other than the Voting
Rights or the Exchange Right and except as otherwise specifically provided
herein, such evidence may consist of a report or opinion of any solicitor,
auditor, accountant, appraiser, valuer, engineer or other expert or any other
person whose qualifications give authority to a statement made by such person,
provide that if such report or opinion is furnished by a director, officer or
employee of the Corporation and/or the Parent it shall be in the form of an
Officer's Certificate or a statutory declaration. Each statutory declaration,
certificate, opinion or report furnished to the Trustee as evidence of
compliance with a condition provided for in this trust agreement shall include a
statement by the person giving the evidence:
(a) declaring that such person has read and understands the provisions of
this trust agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which such person based the statutory declaration, certificate,
statement or opinion; and
(c) declaring that such person has made such examination or investigation
as such person believes is necessary to enable such person to make the
statements or give the opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice of
or information obtained from or prepared by any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by the Corporation and/or the Parent or
otherwise, and may employ such assistants as may be necessary to the
proper determination and discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all
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<PAGE> 37
services performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge of the
trusts hereof and compensation for all disbursements, costs and expenses
made or incurred by it in the determination and discharge of its duties
hereunder and in the management of the Trust.
7.11 INVESTMENT OF MONEY HELD BY TRUSTEE. Unless otherwise provided in this
trust agreement, any money held by or on behalf of the Trustee which under the
terms of this trust agreement may or ought to be invested or which may be on
deposit with the Trustee or which may be in the hands of the Trustee may be
invested and reinvested in the name or under the control of the Trustee in
securities in which, under the laws of the Province of Ontario, trustees are
authorized to invest trust money, provided that such securities are stated to
mature within two years after their purchase by the Trustee, and the Trustee
shall so invest such money on the written direction of the Corporation. Pending
the investment of any money as herein before provided, such money may be
deposited in the name of the Trustee in any chartered bank in Canada or, with
the consent of the Corporation, in the deposit department of the Trustee or any
other loan or trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest than current on similar
deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be required
to give any bond or security in respect of the execution of the trusts, rights,
duties, powers and authorities of this trust agreement or otherwise in respect
of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST. Except as in this trust
agreement otherwise specifically provide, the Trustee shall not be bound to act
in accordance with any direction or request of the Corporation and/or the Parent
or of the directors thereof until a duly authenticated copy of the instrument or
resolution containing such direction or request shall have been delivered to the
Trustee, and the Trustee shall be empowered to act and rely upon any such copy
purporting to be authenticated and believed by the Trustee to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to the Corporation
and the Parent that at the date of execution and delivery by it of this trust
agreement it is authorized to carry on the business of a trust company in the
Province of Ontario but if, notwithstanding the provisions of this section 7.14,
it ceases to be so authorized to carry on business, the validity and
enforceability of this trust agreement and the Voting Rights, the Exchange Right
and the other rights granted in or resulting from the Trustee being a party to
this trust agreement shall not be affected in any manner whatsoever by reason
only of such event but the Trustee shall, within 90 days after ceasing to be
authorized to carry on the business of a trust company in the Province of
Ontario, either become so authorized or resign in the manner and with the effect
specified in Article 10 hereof.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or asserted
with respect to any interest of any Non-Affiliated Holder in any Exchangeable
Shares, including any disagreement between the heirs, representatives,
successors or assigns succeeding to all or any part of the interest of any
Non-Affiliated Holder in any Exchangeable Shares resulting in conflicting claims
or demands being made in connection with such interest, then the Trustee shall
be entitled, at its sole discretion, to refuse to recognize or to comply with
any such claim or demand. In so refusing, the Trustee may elect not to exercise
any Voting Rights, the Exchange Right or other rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting Rights,
Exchange Right or other rights subject to such conflicting claims or
demands have been adjudicated by a final judgment of a court of
competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right of
other rights subject to such conflicting claims or demands have been
conclusively settled by a valid written agreement binding on all such
adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement.
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<PAGE> 38
If the Trustee elects to recognize any claim or comply with any demand made
by any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.
7.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created and
provided for by and in this trust agreement and agrees to perform the same upon
the terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Non-Affiliated Holders, subject to all the terms and
conditions herein set forth.
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent and the Corporation jointly
and severally agree to pay to the Trustee reasonable compensation for all of the
services rendered by it under this trust agreement and will reimburse the
Trustee for all reasonable expenses (including but not limited to taxes,
compensation paid to experts, agents and advisors and travel expenses) and
disbursements, including the cost and expense of any suit or litigation of any
character and any proceedings before any governmental agency reasonably incurred
by the Trustee in connection with its rights and duties under this trust
agreement; provided that the Parent and the Corporation shall have no obligation
to reimburse the Trustee for any expenses or disbursements paid, incurred or
suffered by the Trustee in any suit or litigation in which the Trustee is
determined to have acted in bad faith or with negligence or wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent and the Corporation jointly and
severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, employees and agents appointed and acting in accordance
with this trust agreement (collectively, the "Indemnified Parties") against all
claims, losses, damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal counsel) which, without
fraud, negligence, wilful misconduct or bad faith on the part of such
Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by
reason of or as a result of the Trustee's acceptance or administration of the
Trust, its compliance with its duties set forth in this trust agreement, or any
written or oral instructions delivered to the Trustee by the Parent or the
Corporation pursuant hereto. In no case shall the Parent or the Corporation be
liable under this indemnity for any claim against any of the Indemnified Parties
if such claim is incurred or suffered by reason of or as a result of the fraud,
negligence, wilful misconduct or bad faith of an Indemnified Party and unless
the Parent and the Corporation shall be notified by the Trustee of the written
assertion of a claim or of any action commenced against the Indemnified Parties,
promptly after any of the Indemnified Parties shall have received any such
written assertion of a claim or shall have been served with a summons or other
first legal process giving information as to the nature and basis of the claim.
Subject to (ii), below, the Parent and the Corporation shall be entitled to
participate at their own expense in the defense and, if the Parent or the
Corporation so elect at any time after receipt of such notice, any of the them
may assume the defense of any suit brought to enforce any such claim. The
Trustee shall have the right to employ separate counsel in any such suit and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by the Parent or the Corporation, such authorization
not to be unreasonably withheld; or (ii) the named parties to any such suit
include both the Trustee and the Parent or the Corporation and the Trustee shall
have been advised by counsel acceptable to the Parent or the Corporation that
there may be one or more legal defenses available to the Trustee that are
different from or in addition to those available to the Parent or the
Corporation and that an actual or potential conflict of interest exists (in
which case the Parent and the Corporation shall not have the right to assume the
defense of such suit on
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<PAGE> 39
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee). Such indemnification shall survive the
resignation or removal of the Trustee and the termination of this trust
agreement.
9.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for any loss
which may occur by reason of depreciation of the value of any part of the Trust
Estate or any loss incurred on any investment of funds pursuant to this trust
agreement, except to the extent that such loss is attributable to the fraud,
negligence, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving written notice of such resignation to the Parent and the
Corporation specifying the date on which it desires to resign, provided that
such notice shall never be given less than 60 days before such desired
resignation date unless the Parent and the Corporation otherwise agree and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment by
the successor trustee. Upon receiving such notice of resignation, the Parent and
the Corporation shall promptly appoint a successor trustee by written instrument
in duplicate, one copy of which shall be delivered to the resigning trustee and
one copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the Ontario Court of Justice
(General Division) upon application of one or more of the parties hereto.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be removed
with or without cause, at any time on 60 days' prior notice by written
instrument executed by the Parent and the Corporation, in duplicate, one copy of
which shall be delivered to the trustee so removed and one copy to the successor
trustee.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under this
trust agreement shall execute, acknowledge and deliver to the Parent and the
Corporation and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this trust agreement, with like effect as
if originally named as trustee in this trust agreement. However, on the written
request of the Parent and the Corporation or of the successor trustee, the
trustee ceasing to act shall, upon payment of any amounts then due it pursuant
to the provisions of this trust agreement, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act. Upon the request of any such successor trustee, the Parent
and the Corporation and such predecessor trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a successor
trustee as provided herein, the Parent and the Corporation shall cause to be
mailed notice of the succession of such trustee hereunder to each Non-Affiliated
Holder specified in a List. If the Parent or the Corporation shall fail to cause
such notice to be mailed within 10 days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Parent and the Corporation.
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<PAGE> 40
ARTICLE 11
PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall not
enter into any transaction (whether by way of reconstruction, reorganization,
consolidation, merger, transfer, sale, lease or otherwise) whereby all or
substantially all of its undertaking, property and assets would become the
property of any other person or, in the case of a merger, of the continuing
corporation resulting therefrom unless, but may do so if:
(a) such other person or continuing corporation (the "Parent Successor"),
by operation of law, becomes, without more, bound by the terms and
provisions of this trust agreement or, if not so bound, executes,
prior to or contemporaneously with the consummation of such
transaction a trust agreement supplemental hereto and such other
instruments (if any) as are satisfactory to the Trustee and in the
opinion of legal counsel to the Trustee are necessary or advisable to
evidence the assumption by the Parent Successor of liability for all
money payable and property deliverable hereunder and the covenant of
such Parent Successor of liability for all money payable and property
deliverable hereunder and the covenant of such Parent Successor to pay
and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of the Parent
under this trust agreement; and
(b) such transaction shall, to the satisfaction of the Trustee and in the
opinion of legal counsel to the Trustee, be upon such terms as
substantially to preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the Trustee or of
the Non-Affiliated Holders hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of section 11.1
hereof have been duly observed and performed, if required by section 11.1
hereof, the Trustee, the Parent Successor and the Corporation shall execute and
deliver the supplemental trust agreement provided for in Article 12 hereof and
thereupon the Parent Successor shall possess and from time to time may exercise
each and every right and power of the Parent under this trust agreement in the
name of the Parent or otherwise and any act or proceeding by any provision of
this trust agreement required to be done or performed by the board of directors
of the Parent or any officers of the Parent may be done and performed with like
force and effect by the directors or officers of such Parent Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Except as provided in section 5.10, nothing
herein shall be construed as preventing the amalgamation or merger of any
wholly-owned Subsidiary of the Parent with or into the Parent or the winding up,
liquidation or dissolution of any wholly-owned Subsidiary of the Parent with or
into the Parent or the winding up, liquidation or dissolution of any
wholly-owned Subsidiary of the Parent provided that all of the assets of such
Subsidiary are transferred to the Parent or another wholly-owned Subsidiary of
the Parent, and any such transactions are expressly permitted by this Article
11; provided that any limitation on such amalgamation, merger, winding up,
liquidation or dissolution contained in section 5.10 shall not apply if as a
result of any change in law (including provisions of the Code, Treasury
regulations promulgated thereunder, rulings and other official pronouncements of
the Internal Revenue Service and judicial decisions) after the Effective Time
Zemex Sub would, or there is a substantial possibility that it might recognize
gain under any provision of the Code upon the delivery of Parent Common Stock in
exchange for Exchangeable Shares. Prior to the initiation of any amalgamation,
merger, winding up, liquidation or dissolution that would otherwise be limited
by section 5.10, the Parent shall deliver to the Trustee an Officer's
Certificate to the effect that such transaction may be carried out, in
accordance with the preceding sentence, notwithstanding the limitations that
would otherwise apply under section 5.10. If the Officer's Certificate relies
upon a change in law, as above described, it shall be accompanied by an opinion
of independent legal counsel to the effect that such change in law has occurred
and indicating the legal basis for such determination.
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<PAGE> 41
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This trust agreement may not be amended or
modified except by an agreement in writing executed by the Corporation, the
Parent and the Trustee and approved by the Non-Affiliated Holders in accordance
with Section 9.2 of the Exchangeable Share Provisions.
12.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of section 12.1
hereof, the parties to this trust agreement may in writing, at any time and from
time to time, without the approval of the Non-Affiliated Holders, amend or
modify this trust agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Non-Affiliated Holders hereunder;
(b) making such amendments or modifications not inconsistent with this
trust agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the Board of Directors
and the board of directors of the Parent and in the opinion of the
Trustee and its counsel, having in mind the best interests of the
Non-Affiliated Holders as a whole, it may be expedient to make,
provided that such boards of directors and the Trustee and its counsel
shall be of the opinion that such amendments and modifications will
not be prejudicial to the interests of the Non-Affiliated Holders as a
whole; or
(c) making such changes or corrections which, on the advice of counsel to
the Corporation, the Parent and the Trustee, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or manifest
error, provided that the Trustee and its counsel and the Board of
Directors and the board of directors of the Parent shall be of the
opinion that such changes or corrections will not be prejudicial to
the interests of the Non-Affiliated Holders as a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. The Corporation, at the request of the
Parent, shall call a meeting or meetings of the Non-Affiliated Holders for the
purpose of considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held in
accordance with the by-laws of the Corporation, the Exchangeable Share
Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF PARENT AND THE CORPORATION. At all times after the
occurrence of any event effected pursuant to section 6.7 or section 6.8 of this
trust agreement, as a result of which either the Parent Common Stock or the
Exchangeable Shares or both are in any way changed, this trust agreement shall
forthwith be amended and modified as necessary in order that it shall apply with
full force and effect, mutatis mutandis, to all new securities into which the
Parent Common Stock or the Exchangeable Shares or both are so changed and the
parties hereto shall execute and deliver a supplemental trust agreement giving
effect to and evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS. No amendment to or
modification or waiver of any of the provisions of this trust agreement
otherwise permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the Corporation (when
authorized by a resolution of its Board of Directors), the Parent (when
authorized by a resolution of the Parent Board of Directors) and the Trustee
may, subject to the provisions of these presents, and they shall, when so
directed by these presents, execute and deliver by their proper officers, trust
agreements or other instruments supplemental hereto, which thereafter shall
form part hereof, for any one or more of the following purposes:
(a) evidencing the succession of Parent Successors to the Parent and the
covenants of and obligations assumed by each such Parent Successor in
accordance with the provisions of Article 11 and the successor of any
successor trustee in accordance with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this trust agreement or the Voting Rights or the
Exchange Right which, in the opinion of the Trustee and its counsel,
will not be prejudicial to the interests of the Non-Affiliated Holders
as a whole or are in the opinion of
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<PAGE> 42
counsel to the Trustee necessary or advisable in order to incorporate,
reflect or comply with any legislation the provisions of which apply to
the Parent, the Corporation, the Trustee or this trust agreement; and
(c) for any other purposes not inconsistent with the provisions of this
trust agreement, including without limitation to make or evidence any
amendment or modification to this trust agreement as contemplated
hereby, provided that, in the opinion of the Trustee and its counsel,
the rights of the Trustee and the Non-Affiliated Holders as a whole
will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this trust agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any Non-Affiliated
Holder;
(b) each of the Corporation and the Parent elects in writing to terminate
the Trust and such termination is approved by the Non-Affiliated
Holders of the Exchangeable Shares in accordance with Section 9.2 of
the Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King George VI of the United Kingdom of Great Britain and
Northern Ireland living on the date of the creation of the Trust.
13.2 SURVIVAL OF AGREEMENT. This trust agreement shall survive any termination
of the Trust and shall continue until there are no Exchangeable Shares
outstanding held by any Non-Affiliated Holder; provided, however, that the
provisions of Articles 8 and 9 hereof and the representation contained in
section 6.3(b) hereof shall survive any such termination of this trust
agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY. If any provision of this trust agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this trust agreement shall not in any way be affected or
impaired thereby and this trust agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
14.2 ENUREMENT. This trust agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Non-Affiliated Holders, and with respect to
the representations contained in section 6.3(b), all shareholders of the
Corporation who receive Parent Common Stock through holding Exchangeable Shares.
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<PAGE> 43
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to the Parent at:
ZEMEX CORPORATION
Canada Trust Tower
BCE Place
161 Bay Street
Suite 3750
P.O. Box 703
Toronto, Ontario
M5J 2S1
Attention: President
Telecopy: (416) 365-8084
(b) if to the Corporation at:
ZEMEX CANADA CORPORATION
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
P.O. Box 703
Toronto, Ontario
M5J 2S1
Attention: President
Telecopy: (416) 365-8084
(c) if to the Trustee at:
==
Attention: --
Telecopy: --
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt 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.
14.4 NOTICE OF NON-AFFILIATED HOLDERS. Any and all notices to be given and any
documents to be sent to any Non-Affiliated Holders may be given or sent to the
address of such holder shown on the register of holders of Exchangeable Shares
in any manner permitted by the Business Corporations Act (Ontario) from time to
time in force in respect of notices to shareholders and shall be deemed to be
received (if given or sent in such manner) at the time specified in such Act,
the provisions of which Act shall apply mutatis mutandis to notices or documents
as aforesaid sent to such holders.
14.5 RISK OF PAYMENTS BY POST. Whenever payments are to be made or documents
are to be sent to any Non-Affiliated Holder by the Trustee or by the
Corporation, the Parent or by such Non-Affiliated Holder to the Trustee or to
the Parent or the Corporation, the making of such payment or sending of such
document sent through the post shall be at the risk of the Corporation, in the
case of payments made or documents sent by the Trustee or the Corporation or the
Parent and the Non-Affiliate Holder, in the case of payments made or documents
sent by the Non-Affiliated Holder.
14.6 COUNTERPARTS. This trust agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
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<PAGE> 44
14.7 JURISDICTION. This trust agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
14.8 ATTORNMENT. The Parent agrees that any action or proceeding arising out of
or relating to this trust agreement may be instituted in the courts of Ontario,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of the said courts
in any such action or proceeding, agrees to be bound by any judgment of the said
courts and agrees not to seek, and hereby waives, any review of the merits of
any such judgment by the courts of any other jurisdiction and hereby appoints
the Corporation at its registered office in the Province of Ontario as its
attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this trust agreement to be
duly executed as of the date first above written.
ZEMEX CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
ZEMEX CANADA CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
-- TRUST COMPANY
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
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<PAGE> 45
EXHIBIT "B"
TERMS OF THE EXCHANGEABLE SHARES
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In these Exchangeable Share Provisions, unless something in the subject
matter or context is inconsistent therewith:
"AUTOMATIC EXCHANGE RIGHT" has the meaning set out in Section 5.3(2).
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of New York, New York and
Toronto, Ontario.
"CANADA HOLDCO" means a single wholly-owned subsidiary (within the meaning
of the OBCA) of Zemex incorporated under the federal laws of Canada or a
province thereof.
"COMMON SHARES" means the Common Shares of the Corporation.
"CORPORATION" means Zemex Canada Corporation, a corporation existing under
the laws of the Province of Ontario.
"CURRENT MARKET PRICE" means, in respect of a share of Zemex Common Stock
on any date, of the average closing sales price of a share of Zemex Common Stock
during a period of 20 consecutive trading days ending not more than five days
before such date on the New York Stock Exchange or, if the shares of Zemex
Common Stock are not then listed on the New York Stock Exchange, on such other
stock exchange or automated quotation system on which the shares of Zemex Common
Stock are listed or quoted, as the case may be, as may be selected by the Board
of Directors for such purpose; provided, however, that if in the opinion of the
Board of Directors the public distribution or trading activity of shares of
Zemex Common Stock during such period is inadequate to create a market that
reflects the fair market value of a share of Zemex Common Stock, then the
Current Market Price of a share of Zemex Common Stock shall be determined by the
Board of Directors based upon the advice of such qualified independent financial
advisors as the Board of Directors may deem to be appropriate, and provided
further that any such selection, opinion or determination by the Board of
Directors shall be conclusive and binding on Zemex, the Corporation and each
holder of Exchangeable Shares.
"DIVIDEND AMOUNT" means an amount equal to the full amount of all dividends
and distributions declared and unpaid on each Exchangeable Share and all
dividends and distributions declared on a share of Zemex Stock that have not
been declared on each Exchangeable Share in accordance with Section 3.1, in each
case with a record date prior to the effective date of the exchange of such
Exchangeable Share for a share of Zemex Common Stock hereunder.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions set out in this paragraph 4(9) of these articles of amendment.
"EXCHANGEABLE SHARES" means the Exchangeable Shares of the Corporation to
which are attached the Exchangeable Share Provisions.
"LCR EXERCISING PARTY" has the meaning set out in Section 5.2(1).
"LIQUIDATION AMOUNT" has the meaning set out in Section 5.1(1).
"LIQUIDATION CALL PURCHASE PRICE" has the meaning set out in Section
5.2(1).
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"LIQUIDATION CALL RIGHT" has the meaning set out in Section 5.2(1).
"LIQUIDATION DATE" has the meaning set out in Section 5.1(1).
"OBCA" means the Business Corporations Act (Ontario), as amended.
"OPTIONAL REDEMPTION DATE" means a date, if any, established by the Board
of Directors for the redemption of Exchangeable Shares pursuant to Section 7.1
hereof, provided that such date shall not be earlier than -- unless there are
less than 5,000,000 Exchangeable Shares outstanding (other than Exchangeable
Shares held by Zemex and its Subsidiaries) and as such number of shares may be
adjusted as deemed appropriate by the Board of Directors to give effect to any
subdivision, combination or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable
Shares or securities exchangeable for or convertible into Exchangeable Shares,
any issue or distribution of other securities or rights or evidences of
indebtedness or assets, or any other capital reorganization or other transaction
affecting the Exchangeable Shares.
"REDEMPTION CALL PURCHASE PRICE" has the meaning set out in Section 7.2(1).
"REDEMPTION CALL RIGHT" has the meaning set out in Section 7.2(1).
"REDEMPTION PRICE" has the meaning set out in Section 7.1(1).
"RETRACTED SHARES" has the meaning set out in Section 6.1(1).
"RETRACTION CALL PURCHASE PRICE" has the meaning set out in Section 6.2(1).
"RETRACTION CALL RIGHT" has the meaning set out in Section 6.2(1).
"RETRACTION DATE" has the meaning set out in Section 6.1(1).
"RETRACTION PRICE" has the meaning set out in Section 6.1(1).
"RETRACTION REQUEST" has the meaning set out in Section 6.1(1).
"RCR EXERCISING GROUP" has the meaning set out in Section 6.2.
"SUBSIDIARY" means, when used with reference to Zemex, any corporation more
than 50% of the outstanding stock of which, by vote or value, is owned, directly
or indirectly, by Zemex, by one or more other Subsidiaries of Zemex, or by Zemex
and one or more other Subsidiaries of Zemex.
"TRANSFER AGENT" means The R-M Trust Company, a corporation existing under
the laws of Canada, or such other person as may from time to time be the
registrar and transfer agent for the Exchangeable Shares.
"TRUSTEE" means -- , a corporation existing under the laws of Canada,
and any successor trustee appointed under the Voting, Support and Exchange Trust
Agreement.
"TRUST ESTATE" has the meaning set out in Section 1.1 of the Voting,
Support and Exchange Trust Agreement.
"VOTING, SUPPORT AND EXCHANGE AGREEMENT" means the Voting, Support and
Exchange Trust Agreement between the Corporation, Zemex and the Trustee, made as
of -- .
"ZEMEX" means the Zemex Corporation, a corporation existing under the laws
of the State of Delaware, and any successor corporation.
"ZEMEX CALL NOTICE" has the meaning set out in Section 6.2(2).
"ZEMEX COMMON STOCK" means the shares of Common Stock of the Zemex, par
value US$1.00 per share, having voting rights of one vote per share, and any
other securities into which such shares may be changed or for which such shares
may be exchanged (whether or not Zemex shall be the issuer of such other
securities) or any other consideration which may be received by the holders of
such shares pursuant to a recapitalization, reconstruction, reorganization or
reclassification of, or amalgamation, merger, liquidation or similar transaction
affecting, such shares.
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"ZEMEX DIVIDEND DECLARATION DATE" means the date on which the board of
directors of Zemex declares any dividend on the shares of Zemex Common Stock.
"ZEMEX LIQUIDATION EVENT" has the meaning set out in Section 5.3(1).
"ZEMEX LIQUIDATION EVENT EFFECTIVE DATE" has the meaning set out in Section
5.3(3).
"ZEMEX SUB" means Zemex Canada Holdco, Inc., an indirect wholly-owned
Subsidiary of Zemex existing under the laws of the State of Delaware, none of
the stock of which is owned directly by Zemex.
1.2 SECTIONS AND HEADINGS
The division of these Exchangeable Share Provisions into articles and
sections and the insertion of headings are for reference purposes only and shall
not affect the interpretation of these Exchangeable Share Provisions. Unless
otherwise indicated, any reference in these Exchangeable Share Provisions to an
article or section refers to the specified article or section of these
Exchangeable Share Provisions.
1.3 NUMBER, GENDER AND PERSONS
In these Exchangeable Share Provisions, unless the context otherwise
requires, words importing the singular include the plural and vice versa, words
importing either gender include both genders and words importing persons include
individuals, corporations, partnerships, companies, associations, trusts,
unincorporated organizations, governmental bodies and other legal or business
entities of any kind.
1.4 PAYMENTS
All payments to be made hereunder shall be made without interest and less
any tax required by law to be deducted and withheld.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 RANKING
The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other shares ranking junior to the Exchangeable Shares with
respect to the payment of dividends as and to the extent provided in Article 3
and with respect to the distribution of assets in the event of liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs as and to the extent
provided in Article 5.
ARTICLE 3
DIVIDENDS
3.1 DIVIDENDS
A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Zemex Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend or distribution declared on the shares of the Zemex Common
Stock, in an amount in cash for each Exchangeable Share as is equal to the cash
dividend or distribution declared on each share of Zemex Common Stock, (b) in
the case of a stock dividend or distribution declared on the shares of Zemex
Common Stock to be paid in shares of Zemex Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
shares of Zemex Common Stock to be paid on each share of Zemex Common Stock or
(c) in the case of a dividend or distribution declared on the shares of Zemex
Common Stock, in such type and amount of property for each Exchangeable Share as
is the same as
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or economically equivalent to (to be determined by the Board of Directors as
contemplated by section 6.8 of the Voting, Support and Exchange Trust Agreement)
the type and amount of property declared as a dividend or distribution on each
share of Zemex Common Stock. Such dividends shall be paid out of the assets of
the Corporation properly applicable to the payment of dividends, or out of
authorized but unissued shares or other securities of the Corporation.
3.2 PAYMENT OF DIVIDENDS
Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends or
distributions contemplated by Section 3.1(a) hereof and the sending of such a
cheque to each holder of an Exchangeable Share shall satisfy the cash dividend
represented thereby unless the cheque is not paid on presentation. Certificates
registered in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends or other distribution of
Exchangeable Shares contemplated by Section 3.1(b) hereof and the sending of
such certificate to each holder of an Exchangeable Share shall satisfy the stock
dividend or other distribution of Exchangeable Shares represented thereby. Such
other type and amount of property in respect of any dividends or distributions
contemplated by Section 3.1(c) hereof shall be issued, distributed or
transferred by the Corporation in such manner as it shall determine and the
issuance, distribution or transfer thereof by the Corporation to each holder of
an Exchangeable Share shall satisfy the dividend or distribution represented
thereby. No holder of an Exchangeable Share shall be entitled to recover by
action or other legal process against the Corporation any dividend that is
represented by a cheque that has not been duly presented to the Corporation's
bankers for payment or that otherwise remains unclaimed for a period of six
years from the date on which such dividend or distribution was payable.
3.3 RECORD AND PAYMENT DATES
The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend or
distribution declared on the Exchangeable Shares under Section 3.1 hereof shall
be the same as the record date and payment date, respectively, for the
corresponding dividend or distribution declared on the shares of Zemex Common
Stock.
3.4 PARTIAL PAYMENT
If on any payment date for any dividends or distributions declared on the
Exchangeable Shares under Section 3.1 hereof the dividends or distributions are
not paid in full on all of the Exchangeable Shares then outstanding, any such
dividends or distributions that remain unpaid shall be paid on a subsequent date
or dates determined by the Board of Directors on which the Corporation shall
have sufficient money or other assets properly applicable to the payment of such
dividends or distributions.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 CERTAIN RESTRICTIONS
(1) Except as provided in Section 4.1(2), so long as any of the
Exchangeable Shares are outstanding, the Corporation shall not at any time
without, but may at any time with, the approval of the holders of the
Exchangeable Shares given as specified in Section 9.2 hereof:
(a) pay any dividends on the Common Shares or any other shares ranking
junior to the Exchangeable Shares, other than stock dividends payable
in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
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(c) redeem or purchase any other shares of the Corporation ranking equally
with the Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution; or
(d) issue any shares other than (i) Exchangeable Shares, (ii) Common
Shares, and (iii) any other shares not ranking superior to the
Exchangeable Shares.
(2) The restrictions in Sections 4.1(1)(a), 4.1(1)(b) and 4.1(1)(c) shall
not apply if all dividends and distributions on the outstanding Exchangeable
Shares corresponding to dividends and distributions declared to date on the
Zemex Common Stock shall have been declared on the Exchangeable Shares and paid
in full.
ARTICLE 5
LIQUIDATION
5.1 PARTICIPATION UPON LIQUIDATION, DISSOLUTION OR WINDING UP OF THE CORPORATION
(1) Subject to applicable law and the due exercise by Zemex or Zemex Sub of
a Liquidation Call Right, in the event of the liquidation, dissolution or
winding up of the Corporation or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding up its affairs, a
holder of Exchangeable Shares shall be entitled to receive from the assets of
the Corporation in respect of each Exchangeable Share held by such holder on the
effective date of such liquidation, dissolution or winding up (the "Liquidation
Date"), before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares, the Subordinate Shares or any other
shares ranking junior to the Exchangeable Shares, an amount per share equal to
(a) the Current Market Price of a share of Zemex Common Stock on the last
Business Day prior to the Liquidation Date, which shall be satisfied in full by
the Corporation causing to be delivered to such holder one share of Zemex Common
Stock, plus (b) the Dividend Amount, if any (collectively, the "Liquidation
Amount").
(2) In the case of a distribution on Exchangeable Shares under this Section
5.1, on or promptly after the Liquidation Date, the Corporation shall cause to
be delivered to the holders of the Exchangeable Shares the Liquidation Amount
for each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and such additional documents and instruments
as the Transfer Agent and the Corporation may reasonably require, at the
registered office of the Corporation or at any office of the Transfer Agent as
may be specified by the Corporation by notice to the holders of the Exchangeable
Shares. Payment of the aggregate Liquidation Amount for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation for the Exchangeable Shares or by
holding for pick up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation by
notice to the holders of the Exchangeable Shares, certificates representing the
aggregate number of shares of Zemex Common Stock deliverable by the Corporation
to such holder (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim) and a cheque of the Corporation payable at
par at any branch of the bankers of the Corporation in payment of the remaining
portion, if any, of the aggregate Liquidation Amount payable to such holder. On
or before the Liquidation Date, the Corporation shall deposit or cause to be
deposited the total Liquidation Amount in respect of the Exchangeable Shares in
a custodial account with any chartered bank or trust company in Canada named in
such notice. Upon such deposit being made, the rights of the holders of
Exchangeable Shares as such shall be limited to receiving their proportional
part of the total Liquidation Amount for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions and any interest
allowed on such deposit shall belong to the Corporation. Upon such payment or
deposit of the total Liquidation Amount, the holders of the Exchangeable Shares
shall thereafter be considered and deemed for all purposes to be the holders of
the shares of Zemex Common Stock delivered to them.
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(3) After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the total Liquidation Amount pursuant to this Section
5.1, such holders shall not be entitled to share in any further distribution of
the assets of the Corporation.
5.2 LIQUIDATION CALL RIGHTS
(1) Subject to the limitations set forth in Section 5.2(2), Zemex and Zemex
Sub shall each have the overriding right (a "Liquidation Call Right"), in the
event of and notwithstanding the proposed liquidation, dissolution or winding up
of the Corporation pursuant to Section 5.1 hereof, to purchase from all but not
less than all of the holders of Exchangeable Shares on the Liquidation Date
(other than Zemex, Zemex Sub and Canada Holdco) all but not less than all of the
Exchangeable Shares held by each such holder on payment by whichever of Zemex or
Zemex Sub is exercising such right (the "LCR Exercising Party") of an amount per
share equal to (a) the Current Market Price of a share of Zemex Common Stock on
the last Business Day prior to the Liquidation Date, which shall be satisfied in
full by causing to be delivered to such holder one share of Zemex Common Stock,
plus (b) the Dividend Amount, if any (collectively, the "Liquidation Call
Purchase Price"). In the event of the exercise of a Liquidation Call Right, each
holder of Exchangeable Shares (other than Zemex, Zemex Sub and Canada Holdco)
shall be obligated to sell all the Exchangeable Shares held by such holder to
the LCR Exercising Party on the Liquidation Date on payment by the LCR
Exercising Party to the holder of the Liquidation Call Purchase Price for each
such share.
(2) In order to exercise its Liquidation Call Right, an LCR Exercising
Party must notify in writing the Transfer Agent, as agent for the holders of
Exchangeable Shares, and the Corporation of its intention to exercise such right
at least 55 days before the Liquidation Date in the case of voluntary
liquidation, dissolution or winding up of the Corporation and at least five
Business Days before the Liquidation Date in the case of an involuntary
liquidation, dissolution or winding up of the Corporation. The Transfer Agent
will notify the holders of Exchangeable Shares as to whether or not a
Liquidation Call Right has been exercised (such notice to specify the LCR
Exercising Party) forthwith after the expiry of the date by which the same may
be exercised, such form of notice to be provided by Zemex to the Transfer Agent.
If a LCR Exercising Party duly exercises its Liquidation Call Right in
accordance with this Section 5.2, all obligations of the Corporation under
Section 5.1 shall terminate and on the Liquidation Date such LCR Exercising
Party will purchase and holders of Exchangeable Shares (other than Zemex, Zemex
Sub and Canada Holdco) will sell all of their Exchangeable Shares then
outstanding for a price per share equal to the Liquidation Call Purchase Price.
(3) For the purposes of completing a purchase of the Exchangeable Shares
pursuant to the exercise of a Liquidation Call Right, the LCR Exercising Party
shall deposit with the Transfer Agent, on or before the Liquidation Date,
certificates representing the total number of shares of Zemex Common Stock
deliverable by the LCR Exercising Party (which shares shall be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim) in payment of the total
Liquidation Call Purchase Price and a cheque in the amount of the remaining
portion, if any, of the total Liquidation Call Purchase Price and any interest
allowed on such deposit shall belong to the LCR Exercising Party. Provided that
the total Liquidation Call Purchase Price has been so deposited with the
Transfer Agent, on and after the Liquidation Date the rights of each holder of
Exchangeable Shares (other than Zemex, Zemex Sub and Canada Holdco) will be
limited to receiving such holder's proportionate part of the total Liquidation
Call Purchase Price payable by the LCR Exercising Party, upon presentation and
surrender by the holder of Exchangeable Shares of certificates representing the
Exchangeable Shares held by such holder in accordance with the following
provisions and such holder shall on and after the Liquidation Date be considered
and deemed for all purposes to be the holder of the shares of Zemex Common Stock
delivered to such holder. Upon surrender to the Transfer Agent of a certificate
representing Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and such additional documents and instruments as the Transfer Agent and
the Corporation may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of the LCR Exercising Party shall deliver to such holder, a
certificate representing the shares of Zemex Common Stock to which such holder
is entitled and a cheque in payment of the remaining portion, if any, of the
holder's proportionate part of the total Liquidation Call
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Purchase Price. If neither Zemex nor Zemex Sub exercises its Liquidation Call
Right in the manner described above, on the Liquidation Date the holders of the
Exchangeable Shares shall be entitled to receive in exchange therefor the
liquidation price otherwise payable by the Corporation in connection with the
liquidation, dissolution or winding up of the Corporation pursuant to Section
5.1 hereof.
5.3 AUTOMATIC EXCHANGE ON LIQUIDATION OF ZEMEX
(1) Zemex shall give the Transfer Agent written notice of each of the
following events (each a "Zemex Liquidation Event") at the time set forth below:
(a) in the event of any determination by the board of directors of Zemex
to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to Zemex or to effect any other distribution
of assets of Zemex among its stockholders for the purpose of winding
up its affairs, at least 60 days prior to the proposed effective date
of such liquidation, dissolution, winding up or other distribution;
and
(b) immediately, upon the earlier of (i) receipt by Zemex of notice of and
(ii) Zemex otherwise becoming aware of any threatened or instituted
claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding up of Zemex or to
effect any other distribution of assets of Zemex among its
stockholders for the purpose of winding up its affairs.
(2) Immediately following receipt by the Transfer Agent from Zemex of
notice of any Zemex Liquidation Event contemplated by Section 5.3(1)(a) or
5.3(1)(b), the Transfer Agent will give notice thereof to the holders of
Exchangeable Shares. Such notice shall be provided by Zemex to the Transfer
Agent and shall include a brief description of the automatic exchange of
Exchangeable Shares for shares of Zemex Common Stock provided for in Section
5.3(4) below (the "Automatic Exchange Right").
(3) In order that the holders of Exchangeable Shares (other than Zemex,
Zemex Sub and Canada Holdco) will be able to participate on a pro rata basis
with the holders of Zemex Common Stock in the distribution of assets of Zemex in
connection with a Zemex Liquidation Event, on the fifth Business Day prior to
the effective date (the "Zemex Liquidation Event Effective Date") of a Zemex
Liquidation Event all of the then outstanding Exchangeable Shares (other than
Exchangeable Shares held by Zemex, Zemex Sub or Canada Holdco) shall be
automatically exchanged for shares of Zemex Common Stock. To effect such
automatic exchange, Zemex shall purchase each Exchangeable Share outstanding on
the fifth Business Day prior to the Zemex Liquidation Event Effective Date and
held by a holder of Exchangeable Shares (other than Zemex, Zemex Sub or Canada
Holdco), and each such holder shall sell the Exchangeable Shares held by it at
such time, for a purchase price per share equal to (a) the Current Market Price
of a share of Zemex Common Stock on the fifth Business Day prior to the Zemex
Liquidation Event Effective Date, which shall be satisfied in full by Zemex
delivering to such holder one share of Zemex Common Stock, plus (b) the Dividend
Amount, if any.
(4) On the fifth Business Day prior to the Zemex Liquidation Event
Effective Date, the closing of the transaction of purchase and sale contemplated
by the automatic exchange of Exchangeable Shares for Zemex Common Stock shall be
deemed to have occurred, and each holder of Exchangeable Shares (other than
Zemex, Zemex Sub and Canada Holdco) shall be deemed to have transferred to Zemex
all of such holder's right, title and interest in and to such Exchangeable
Shares and shall cease to be a holder of such Exchangeable Shares and Zemex
shall deliver or cause to be delivered to the Transfer Agent, for delivery to
such holders, the certificates for the number of shares of Zemex Common Stock
deliverable upon the automatic exchange of Exchangeable Shares for Zemex Common
Stock (which shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance, security interest or
adverse claim) and a cheque for the balance, if any, of the total purchase price
for such Exchangeable Shares and any interest on such deposit shall belong to
Zemex. Concurrently with each such holder ceasing to be a holder of Exchangeable
Shares, such holder shall be considered and deemed for all purposes to be the
holder of the shares of Zemex Common Stock delivered to it, or to the Transfer
Agent on its behalf, pursuant to the automatic exchange of Exchangeable Shares
for Zemex Common Stock and the certificates held by such holder previously
representing the Exchangeable Shares exchanged by such holder with Zemex
pursuant to
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such automatic exchange shall thereafter be deemed to represent the shares of
Zemex Common Stock delivered to such holder by Zemex pursuant to such automatic
exchange. Upon the request of any such former holder of Exchangeable Shares and
the surrender by such holder of Exchangeable Share certificates deemed to
represent shares of Zemex Common Stock, duly endorsed in blank and accompanied
by such instruments of transfer as Zemex may reasonably require, the Transfer
Agent shall deliver or cause to be delivered to such holder certificates
representing the shares of Zemex Common Stock of which such holder is the holder
and a cheque in payment of the remaining portion, if any, of the purchase price.
ARTICLE 6
RETRACTION AT OPTION OF HOLDER
6.1 RETRACTION AT OPTION OF HOLDER
(1) Subject to applicable law and the due exercise by either Zemex or Zemex
Sub of a Retraction Call Right, a holder of Exchangeable Shares shall be
entitled at any time to require the Corporation to redeem, on the fifth Business
Day after the date on which the Retraction Request is received by the
Corporation (the "Retraction Date"), any or all of the Exchangeable Shares
registered in the name of such holder for an amount per share equal to (a) the
Current Market Price of a share of Zemex Common Stock on the last Business Day
prior to the Retraction Date, which shall be satisfied in full by the
Corporation causing to be delivered to such holder one share of Zemex Common
Stock for each Exchangeable Share presented and surrendered by the holder, plus
(b) the Dividend Amount, if any (collectively, the "Retraction Price"). To
effect a redemption under this Section 6.1, the holder must present and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the holders
of Exchangeable Shares the certificate representing the Exchangeable Shares that
the holder desires to have the Corporation redeem, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and such additional documents and instruments
as the Transfer Agent and the Corporation may reasonably require, together with
a duly executed statement (the "Retraction Request") in the form of Schedule A
hereto or in such other form as may be acceptable to the Corporation specifying
that the holder desires to have all or any number specified therein of the
Exchangeable Shares represented by such certificate (the "Retracted Shares")
redeemed by the Corporation.
(2) In the case of a redemption of Exchangeable Shares under this Section
6.1, upon receipt by the Corporation or the Transfer Agent in the manner
specified in Section 6.1(1) hereof of a certificate representing the number of
Exchangeable Shares which the hold desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.1(5), the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date, the Corporation shall deliver or cause the Transfer
Agent to deliver to the relevant holder, at the address of the holder recorded
in the securities register of the Corporation for the Exchangeable Shares or at
the address of the holder recorded in the securities register of the Corporation
for the Exchangeable Shares or at the address specified in the holder's
Retraction Request or by holding for pick up by the holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of Exchangeable Shares, a
certificate representing the number of shares of Zemex Common Stock to which
such holder is entitled (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim) registered in the name of the holder or in
such other name as the holder may request in payment of the Retraction Price and
a cheque of the Corporation payable at par at any branch of the bankers of the
Corporation in payment of the remaining portion, if any, of the aggregate
Retraction Price to which such holder is entitled and such delivery of such
certificate and cheque on behalf of the Corporation by the Transfer Agent shall
be deemed to be payment of and shall satisfy and discharge all liability for the
Retraction Price to the extent that the same is represented by such share
certificates and cheque, unless such cheque is not paid on due presentation. If
only a part of the Exchangeable Shares represented by any certificate is
redeemed, a new certificate for the balance of such Exchangeable Shares shall be
issued to the holder at the expense of the Corporation.
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(3) On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive its proportionate part of the aggregate
Retraction Price for such Retracted Shares, unless upon presentation and
surrender of certificates in accordance with the foregoing provisions, payment
of the aggregate Retraction Price payable to such holder shall not be made, in
which case the rights of such holder shall remain unaffected until such
aggregate Retraction Price has been paid in the manner hereinbefore provided. On
and after the close of business on the Retraction Date, provided that
presentation and surrender of certificates and payment of such aggregate
Retraction Price has been made in accordance with the foregoing provisions, the
holder of the Retracted Shares so redeemed by the Corporation shall thereafter
be considered and deemed for all purposes to be a holder of the shares of Zemex
Common Stock delivered to such holder.
(4) Notwithstanding any other provision of this Section 6.1, the
Corporation shall not be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it would
not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and neither Zemex nor Zemex Sub shall have
exercised its Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to solvency requirements or
other provisions of applicable law and more than one holder has delivered a
Retraction Request, the Corporation shall redeem Retracted Shares in accordance
with Section 6.1(2) on a pro rata basis and shall issue to each such holder of
Retracted Shares a new certificate, at the expense of the Corporation,
representing the Retracted Shares not redeemed by the Corporation pursuant to
Section 6.1(2) hereof. If the Retraction Request is not revoked by the holder in
the manner specified in Section 6.1(5) and neither Zemex nor Zemex Sub shall
have exercised its Retraction Call Right in respect of any such Retracted
Shares, an Insolvency Event (as defined in the Voting, Support and Exchange
Trust Agreement) shall, to the extent it has not theretofore occurred, be deemed
thereupon to have occurred and the holder of any such Retracted Shares not
redeemed by the Corporation pursuant to Section 6.1(2) as a result of solvency
requirements or other provisions of applicable law shall be deemed by giving the
Retraction Request to have exercised its Exchange Right (as defined in the
Voting, Support and Exchange Trust Agreement) so as to require Zemex to purchase
the unredeemed Retracted Shares from such holder on the Retraction Date or as
soon as practicable thereafter on payment by Zemex to such holder of the
Purchase Price for each such Retracted Share, all as more specifically provided
in the Voting, Support and Exchange Trust Agreement.
(5) A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request in
which event such Retraction Request shall be null and void.
6.2 RETRACTION CALL RIGHTS
(1) In the event that a holder of Exchangeable Shares delivers a Retraction
Request pursuant to Section 6.1 and subject to the limitations set forth in
Section 6.2(2), Zemex and Zemex Sub shall each have the overriding right (a
"Retraction Call Right"), notwithstanding the proposed redemption of the
Exchangeable Shares by the Corporation pursuant to Section 6.1 hereof, to
purchase from such holder on the Retraction Date all but not less than all of
the Retracted Shares held by such holder on payment by whichever of Zemex or
Zemex Sub is exercising such right (the "RCR Exercising Party") of an amount per
share equal to the Retraction Price (the "Retraction Call Purchase Price"). In
the event of the exercise of a Retraction Call Right, a holder of Exchangeable
Shares who has delivered a Retraction Request shall be obligated to sell all the
Retracted Shares to the RCR Exercising Party on the Retraction Date on payment
by the RCR Exercising Party of an amount per share equal to (a) the Current
Market Price of a share of Zemex Common Stock on
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the last Business Day prior to the Retraction Date, which shall be satisfied in
full by the RCR Exercising Party causing to be delivered to such holder one
share of Zemex Common Stock for each Exchangeable Share presented and
surrendered by the holder, plus (b) the Dividend Amount, if any (collectively,
the "Retraction Call Purchase Price").
(2) Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately notify Zemex and Zemex Sub thereof. For greater
certainty, Zemex Sub shall only be entitled to exercise its Retraction Call
Right with respect to those holders of Exchangeable Shares, if any, in respect
of which Zemex has not exercised its Retraction Call Right. In order to exercise
its Retraction Call Right, the RCR Exercising Party must notify the Corporation
of its determination to do so (a "Zemex Call Notice") within two Business Days
of notification to such RCR Exercising Party by the Corporation of the receipt
by the Corporation of the Retraction Request. If either Zemex or Zemex Sub
notifies the Corporation within such two Business Day period, the Corporation
shall notify the holder as soon as possible thereafter as to the exercise of a
Retraction Call Right (such notice to specify the RCR Exercising Party). If
either Zemex or Zemex Sub delivers a Zemex Call Notice within such two Business
Day period and duly exercises its Retraction Call Right in accordance with this
Section 6.2, the obligation of the Corporation to redeem the Retracted Shares
shall terminate and, provided that the Retraction Request is not revoked by the
holder in the manner specified in Section 6.1(5), the RCR Exercising Party shall
purchase from such holder and such holder shall sell to the RCR Exercising Party
on the Retraction Date the Retracted Shares for the Retraction Call Purchase
Price. For the purposes of completing a purchase pursuant to a Retraction Call
Right, the RCR Exercising Party shall deposit with the Transfer Agent, on or
before the Retraction Date, certificates representing the number of shares of
Zemex Common Stock to which such holder is entitled and a cheque in the amount
of the remaining portion, if any, of the aggregate Retraction Call Purchase
Price to which such holder is entitled. Provided that the aggregate Retraction
Call Purchase Price has been so deposited with the Transfer Agent, the closing
of the purchase and sale of the Retracted Shares pursuant to the Retraction Call
Right shall be deemed to have occurred as at the close of business on the
Retraction Date and, for greater certainty, no redemption by the Corporation of
such Retracted Shares shall take place on the Retraction Date. In the event that
neither Zemex nor Zemex Sub delivers a Zemex Call Notice within such two
Business Day period, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 61(5), the Corporation shall
redeem the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in Section 6.1.
(3) For the purpose of completing a purchase of Exchangeable Shares
pursuant to the exercise of a Retraction Call Right, the RCR Exercising Party
shall deliver or cause the Transfer Agent to deliver to the relevant holder, at
the address of the holder recorded in the securities register of the Corporation
for the Exchangeable Shares or at the address of the holder recorded in the
securities register of the Corporation for the Exchangeable Shares or at the
address specified in the holder's Retraction Request or by holding for pick up
by the holder at the registered office of the Corporation or at any office of
the Transfer Agent as may be specified by the Corporation by notice to the
holders of Exchangeable Shares, a certificate representing the number of shares
of Zemex Common Stock to which such holder is entitled (which shares shall be
duly issued as fully paid and non-assessable and shall be free and clear of any
lien, claim, encumbrance, security interest or adverse claim) registered in the
name of the holder or in such other name as the holder may request in payment of
the Retraction Call Purchase Price and a cheque of the RCR Exercising Party
payable at par and in Canadian dollars at any branch of the bankers of Zemex,
Zemex Sub or of the Corporation in Canada in payment of the remaining portion,
if any, of such aggregate Retraction Call Purchase Price and such delivery of
such certificate and cheque on behalf of the RCR Exercising Party by the
Transfer Agent shall be deemed to be payment of and shall satisfy and discharge
all liability for the Retraction Call Purchase Price to the extent that the same
is represented by such share certificates and cheque, unless such cheque is not
paid on due presentation.
(4) On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive its proportionate
part of the total Retraction Call Purchase Price unless upon presentation and
surrender of certificates in accordance with the foregoing provisions, payment
of the aggregate Retraction Call Purchase
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Price payable to such holder shall not be made, in which case the rights of such
holder shall remain unaffected until such aggregate Retraction Call Purchase
Price has been paid in the manner hereinbefore provided. On and after the close
of business on the Retraction Date, provided that presentation and surrender of
certificates and payment of such aggregate Retraction Call Purchase Price has
been made in accordance with the foregoing provisions, the holder of the
Retracted Shares so purchased by the RCR Exercising Party shall thereafter be
considered and deemed for all purposes to be a holder of the shares of Zemex
Common Stock delivered to such holder.
ARTICLE 7
REDEMPTION BY THE CORPORATION
7.1 REDEMPTION BY THE CORPORATION
(1) Subject to applicable law and the due exercise by either Zemex Sub of a
Redemption Call Right, the Corporation shall on any Optional Redemption Date
redeem all of the then outstanding Exchangeable Shares for an amount per share
equal to (a) the Current Market Price of a share of Zemex Common Stock on the
last Business Day prior to such Optional Redemption Date, which shall be
satisfied in full by the Corporation causing to be delivered to each holder of
Exchangeable Shares one share of Zemex Common Stock for each Exchangeable Share
held by such holder, plus (b) the Dividend Amount, if any (collectively, the
"Redemption Price"). If either Zemex or Zemex Sub exercises a Redemption Call
Right and all of the then outstanding Exchangeable Shares other than the
Exchangeable Shares held by Zemex, Zemex Sub or Canada Holdco are purchased
pursuant to Section 7.2, the remaining outstanding Exchangeable Shares continue
to be redeemable by the Corporation on a subsequent Optional Redemption Date
pursuant to the provisions of this Section 7.1.
(2) In case of a redemption of Exchangeable Shares under this Section 7.1,
the Corporation shall, at least 120 days before any Optional Redemption Date,
send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Corporation or the purchase by Zemex or Zemex
Sub under its Redemption Call Right, as the case may be, of the Exchangeable
Shares held by such holder. Such notice shall set out the formula for
determining the Redemption Price or the Redemption Call Purchase Price, as the
case may be, such Optional Redemption Date and, if applicable, particulars of
the Redemption Call Right.
(3) On or after any Optional Redemption Date and subject to the exercise by
Zemex or Zemex Sub of a Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and such additional documents and instruments
as the Transfer Agent and the Corporation may be reasonable require. Payment of
the aggregate Redemption Price for Exchangeable Shares held by a holder shall be
made by delivery to such holder, at the address of such holder recorded in the
securities register of the Corporation or by holding for pick up by the holder
at the registered office of the Corporation or at any office of the Transfer
Agents as may be specified by the Corporation in such notice, of a certificate
representing the aggregate number of shares of Zemex Common Stock deliverable by
the Corporation to such holder (which shares shall be duly issued as fully paid
and non-assessable and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim) and a cheque of the Corporation payable at
par at any branch of the bankers of Corporation in respect of the remaining
portion, if any, of such aggregate Redemption Price. On and after Optional
Redemption date, the holders of the Exchangeable Shares called for redemption
shall not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the total
Redemption Price, unless payment of the aggregate Redemption Price deliverable
to a holder for Exchangeable Shares shall not be made upon presentation and
surrender of share certificate in accordance with the foregoing provisions, in
which case the rights of the holder shall remain
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unaffected until the aggregate Redemption Price deliverable to such holder has
been paid in the manner hereinbefore provided. The Corporation shall have the
right at any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited the total
Redemption Price of the Exchangeable Shares so called for redemption, or of such
of the said Exchangeable Shares represented by certificates that have not at the
date of such deposit been surrendered by the holders thereof in connection with
such redemption, in a custodial account with any chartered bank or trust company
in Canada named in such notice and any interest allowed on such deposit shall
belong to the Corporation. Provided that such total Redemption Price has been so
deposited prior to any Optional Redemption Date, on and after such Optional
Redemption Date, the Exchangeable Shares shall be redeemed and the rights of the
holders thereof after such Optional Redemption Date shall be limited to
receiving their proportionate part of the total Redemption Price for such
Exchangeable Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of the total Redemption Price, the
holders of the Exchangeable Shares shall thereafter be considered and deemed for
all purposes to be holders of the shares of Zemex Common Stock delivered to
them.
7.2 REDEMPTION CALL RIGHTS.
(1) Subject to the limitations set forth in Section 7.2(2), Zemex and Zemex
Sub shall each have the overriding right (a "Redemption Call Right"),
notwithstanding the proposed redemption of the Exchangeable Shares by the
Corporation pursuant to Section 7.1 hereof, to purchase from all but not less
than all of the holders of Exchangeable Shares (other than Zemex, Zemex Sub and
Canada Holdco) on the last Business Day prior to the Optional Redemption Date in
respect of which the Redemption Call Right is exercised all but not less than
all of the Exchangeable Shares held by each such holder on payment by whichever
of Zemex or Zemex Sub is exercising such right (the "RCR Exercising Party") of
an amount per share equal to (a) the Current Market Price of a share of Zemex
Common Stock on the last Business Day prior to such Optional Redemption Date,
which shall be satisfied in full by causing to be delivered to such holder one
share of Zemex Common Stock plus (b) the Dividend Amount, if any (collectively,
the "Redemption Call Purchase Price"). In the event of exercise of a Redemption
Call Right, each holder of Exchangeable Shares (other than Zemex, Zemex Sub and
Canada Holdco) shall be obligated to sell all the Exchangeable Shares held by
such holder to the RCR Exercising Party on the last Business Day Prior to such
Optional Redemption Date on payment by the RCR Exercising Party to such holder
of the Redemption Call Purchase Price for each such share.
(2) For greater certainty, Zemex Sub shall only be entitled to exercise its
Redemption Call Right with respect to those holders of Exchangeable Shares, if
any, in respect of which Zemex has not exercised its Redemption Call Right. In
order to exercise its Redemption Call Right, an RCR Exercising Party must notify
in writing the Transfer Agent, as agent for the holders of Exchangeable Shares,
and the Corporation of its intention to exercise such right at least 125 days
before an Optional Redemption Date. The Transfer Agent will notify the holders
of Exchangeable Shares as to whether or not a Redemption Call Right has been
exercised (such notice to specify the RCR Exercising Party) forthwith after the
expiry of the date by which the same may be exercised, such form of notice to be
provided by Zemex to the Transfer Agent. If an RCR Exercising Party duly
exercises its Redemption Call Right in accordance with this Section 7.2, the
right of the Corporation to redeem any Exchangeable Shares pursuant to Section
7.1 on such Optional Redemption Date shall terminate at such time and on the
last Business Day prior to such Optional Redemption Date such RCR Exercising
Party will purchase and the holders of Exchangeable Shares then outstanding for
a price per share equal to the Redemption Call Purchase Price.
(3) For the purposes of completing a purchase of the Exchangeable Shares
pursuant to the exercise of a Redemption Call Right, the RCR Exercising Party
shall deposit with the Transfer Agent, on or before the last Business Day prior
to the Optional Redemption Date, certificates representing the total number of
shares of Zemex Common Stock deliverable by the RCR Exercising Party (which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim, encumbrance, security interest or adverse claim)
in payment of the total Redemption Call Purchase Price and a cheque in the
amount of the remaining portion, if any, of the total Redemption Call Purchase
Price and any interest allowed on such
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deposit shall belong to the RCR Exercising Party. Provided that the total
Redemption Call Purchase Price has been so deposited with the Transfer Agent, on
and after the last Business Day prior to such Optional Redemption Date the
rights of each holder of Exchangeable Shares (other than Zemex, Zemex Sub and
Canada Holdco) will be limited to receiving such holder's proportionate part of
the total Redemption Call Purchase Price payable by the RCR Exercising Party
upon presentation and surrender by such holder of certificates representing the
Exchangeable Shares held by such holder in accordance with the following
provisions and such holder shall on and after the last Business Day prior to
such Optional Redemption Date be considered and deemed for all purposes to be
the holder of the shares of Zemex Common Stock delivered to such holder. Upon
surrender to the Transfer Agent of a certificate representing Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the OBCA and such additional
documents and instruments as the Transfer Agent and the corporation may
reasonably require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor, and the Transfer Agent on behalf of the RCR
Exercising Party shall deliver to such holder, a certificate representing the
shares of Zemex Common Stock to which such holder is entitled and a cheque in
payment of the remaining portion, if any, of the holder's proportionate part of
the total Redemption Call Purchase Price. If neither Zemex nor Zemex Sub
exercises the Redemption Call Right in the manner described above, on the
Optional Redemption Date a holder of Exchangeable Shares shall be entitled to
receive in exchange therefor the redemption price otherwise payable by the
Corporation in connection with the redemption of the Exchangeable Shares
pursuant to Section 7.1 hereof.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions of Sections 9.2,
10.1 and 11.2, the holders of the Exchangeable Shares shall not be entitled as
such to receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting. The holders of the Exchangeable
Shares shall, however, be entitled to notice of meetings of the shareholders
called for the purpose of authorizing the dissolution of the Corporation or the
sale, lease or exchange of all or substantially all the property of the
Corporation other than in the ordinary course of business of the Corporation.
ARTICLE 9
AMENDMENT AND APPROVAL
9.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed only with the approval
of the holders of the Exchangeable Shares given as hereinafter specified.
9.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restrictions or condition attaching to
the Exchangeable Shares or any other matter requiring the approval or consent of
the holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares at that time are present or represented by proxy;
provided that such approval must be given also by the affirmative vote of
holders of more than two-thirds of the Exchangeable Shares represented in person
by proxy at the meeting excluding Exchangeable Shares beneficially owned by
Zemex or any of its Subsidiaries. If at any such meeting the holders of at least
50% of the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting then the meeting shall be adjourned to such date not less than 10 days
thereafter and to such time and place as may be designated by the chairman of
such meeting. At such adjourned meeting the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the affirmative
vote
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of not less than two-thirds of the votes cast on such resolution at such meeting
shall constitute the approval or consent of the holders of the Exchangeable
Shares.
ARTICLE 10
RECIPROCAL CHANGES, ETC.
IN RESPECT OF ZEMEX COMMON STOCK
10.1(1) Each holder of an Exchangeable Share acknowledges that the Voting,
Support and Exchange Trust Agreement provides, in part, that Zemex will not,
except as provided in the Voting, Support and Exchange Trust Agreement, without
the prior approval of the Corporation and the prior approval of the holders of
the Exchangeable Shares given in accordance with Section 9.2 hereof:
(a) issue or distribute shares of Zemex Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
Zemex Common Stock) to the holders of all or substantially all of the
then outstanding shares of Zemex Common Stock by way of stock dividend
or other distribution, other than an issue of shares of Zemex Common
Stock (or securities exchangeable for or convertible into carrying
rights to acquire Zemex Common Stock) to holders of shares of Zemex
Common Stock who exercise an option to receive dividends in shares of
Zemex Common Stock (or securities exchangeable for or convertible into
or carrying rights to acquire shares of Zemex Common Stock) in lieu of
receiving cash dividends;
(b) issue or distribute rights, options or warrants to the holders of all
or substantially all of the then outstanding shares of Zemex Common
Stock entitling them to subscribe for or to purchase shares of Zemex
Common Stock (or securities exchangeable for or convertible into or
carrying rights to acquire Zemex Common Stock); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding shares of Zemex Common Stock (i) shares or securities
of Zemex of any class other than Zemex Common Stock (other than shares
convertible into or exchangeable for or carrying rights to acquire
shares of Zemex Common Stock), (ii) rights, options or warrants other
than those referred to in Section 10.1(1)(b) above, (iii) evidences of
indebtedness of Zemex or (iv) assets of Zemex;
unless the economic equivalent on a per share basis of such rights, options,
securities, shares, evidences of indebtedness or other assets is issued or
distributed simultaneously to holders of the Exchangeable Shares.
(2) Each of the holder of Exchangeable Share acknowledges that the Voting,
Support and Exchange Trust Agreement further provides, in part, that Zemex will
not, except as provided in the Voting, Support and Exchange Trust Agreement,
without the prior approval of the Corporation and the prior approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2 of these
share provisions:
(a) subdivide, redivide or change the then outstanding shares of Zemex
Common Stock into a greater number of shares of Zemex Common Stock; or
(b) reduce, combine or consolidate or change the then outstanding shares of
Zemex Common Stock into a lesser number of shares of Zemex Common
Stock; or
(c) reclassify or otherwise change the shares of Zemex Common Stock or
effect an amalgamation, merger, reorganization or other transaction
affecting the Zemex Common Stock;
unless the same or an economically equivalent change shall simultaneously be
made to, or in the rights of the holders of, the Exchangeable Shares.
The Voting, Support and Exchange Trust Agreement further provides, in part,
that the aforesaid provisions of the Voting, Support and Exchange Trust
Agreement shall not be changed without the approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 hereof.
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ARTICLE 11
ACTIONS BY THE CORPORATION UNDER THE VOTING,
SUPPORT AND EXCHANGE TRUST AGREEMENT
11.1 The Corporation shall take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to ensure
performance and compliance by Zemex with all provisions of the Voting, Support
and Exchange Trust Agreement applicable to the Corporation and Zemex,
respectively, in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall be
necessary or advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the Corporation
under or pursuant to such agreement.
11.2 The Corporation shall not agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Voting, Support and Exchange Trust Agreement without the approval of the holders
of the Exchangeable Shares given in accordance with Section 9.2 hereof other
than such amendments, waivers and/or forgiveness as may be necessary or
advisable for the purposes of:
(a) adding to the covenants of the other party or parties to such agreement
for the protection of the Corporation or the holders of Exchangeable
Shares;
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the opinion of the Board of
Directors, it may be expedient to make, provided that the Board of
Directors shall be of the opinion, after consultation with counsel,
that such provisions and modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which, on the
advice of counsel to the Corporation, are required for the purpose of
curing or correcting an ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the opinion, after
consultation with counsel, that such changes or corrections will not be
prejudicial to the interests of the holders of the Exchangeable Shares.
ARTICLE 12
LEGEND
12.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the provisions of the Voting, Support and Exchange
Trust Agreement (including the provisions with respect to the call rights,
voting rights and exchange rights thereunder).
ARTICLE 13
NOTICES
13.1 Subject to applicable law, any notice, request or other communication to
be given to the Corporation by a holder of Exchangeable Shares shall be in
writing and shall be valid and effective if given by mail (postage prepaid) or
by telecopy or by delivery to the registered office of the Corporation and
addressed to the attention of the President. Any such notice request or other
communication, if given by mail, telecopy or delivery, shall only be deemed to
have been given and received upon actual receipt thereof by the Corporation.
13.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be made
by registered mail (postage prepaid) or by delivery to the registered office of
the Corporation or to such office of the Transfer Agent as may be specified by
the Corporation, in each case addressed to the attention of the
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President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case may
be. Any such presentation and surrender of certificates made by registered mail
shall be at the sole risk of the holder mailing the same.
13.3 Subject to applicable law, any notice, request or other communication to
be given to a holder of Exchangeable Shares by or on behalf of the Corporation
shall be in writing and shall be valid and effective if given by mail (postage
prepaid) or by delivery to the address of the holder recorded in the securities
register of the Corporation or, in the event of the address of any such holder
not being so recorded, then at the last known address of such holder. Any such
notice, request or other communication, if given by mail, shall be deemed to
have been paid given and received on the fifth Business Day following the date
of mailing and, if given by delivery, shall be deemed to have been given and
received on the date of delivery. Accidental failure or omission to give any
notice, request or other communication to one or more holders of Exchangeable
Shares, or any defect in such notice, shall not invalidate or otherwise alter or
effect any action or proceeding to be taken by the Corporation pursuant thereto.
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SCHEDULE A
NOTICE OF RETRACTION
To the Corporation, Zemex and Zemex Sub
c/o The R-M Trust Company
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice that are defined in the
Share Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem on the Retraction Date (being the fifth Business Day after
the date upon which this notice is received by the Corporation) in accordance
with Article 6 of the Share Provisions:
all share(s) represented by this certificate; or
_________ share(s) only.
The undersigned acknowledges the Retraction Call Right of Zemex and, in
certain circumstances, Zemex Sub, to purchase all but not less than all the
Retracted Shares from the undersigned and that this notice shall be deemed to be
a revocable offer by the undersigned to sell the Retracted Shares to Zemex or
Zemex Sub, as the case may be, in accordance with the Retraction Call Right on
the Retraction Date for the Retraction Price and on the other terms and
conditions set out in Section 6.3 of the Share Provisions. If neither Zemex nor
Zemex Sub determines to exercise its Retraction Call Right, the Corporation will
notify the undersigned of such fact as soon as possible. This notice of
retraction, and offer to sell the Retracted Shares to Zemex or Zemex Sub, may be
revoked and withdrawn by the undersigned by notices in writing given to the
Corporation at any time before the close of business on the Business Day
immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency requirements
or other provisions of applicable law, the Corporation is unable to redeem all
Retracted Shares an Insolvency Event (as defined in the Voting, Support and
Exchange Trust Agreement) shall, to the extent it shall not theretofore have
occurred, be deemed thereupon to have occurred, and the undersigned will be
deemed to have exercised the Exchange Right (as defined in the Voting, Support
and Exchange Trust Agreement) so as to require Zemex to purchase the unredeemed
Retracted Shares.
The undersigned hereby represents and warrants to the Corporation, Zemex
and Zemex Sub that the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired by the Corporation, Zemex and
Zemex Sub, as the case may be, free and clear of all liens, claims and
encumbrances.
<TABLE>
<S> <C> <C>
- --------------------- ---------------------------------- ----------------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
</TABLE>
Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder at the principal transfer office of Transfer Agent in Toronto,
failing which the securities and any cheque will be mailed to the last address
of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent and the Corporation may
require, must be deposited with the Transfer Agent at its principal
transfer office in Toronto. The securities and any cheque resulting from
the retraction or purchase of the Retracted Shares will be issued and
registered in, and made payable to, respectively,
B-i
<PAGE> 62
the name of the shareholder as it appears on the register of the Corporation and
the securities and cheque resulting from such retraction or purchase will be
delivered to such shareholder as indicated above, unless the form appearing
immediately below is duly completed, all exigible transfer taxes are
paid and the signature of the registered holder is guaranteed by a
Canadian chartered bank or trust company, member of a recognized stock
exchange in Canada or a member of the Securities Transfer Association
Medallion (STAMP) Program.
<TABLE>
<S> <C>
Date
- -------------------------------------------- --------------------------------------------
Name of Person in Whose Name Securities and
Cheque Are to be Registered, Issued or
Delivered (please print)
- -------------------------------------------- --------------------------------------------
Street Address or P.O. Box Signature of Registered Holder
- -------------------------------------------- --------------------------------------------
City-Province Signature Guaranteed by
</TABLE>
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the remaining
shares of the Corporation will be issued and registered in the name of
the shareholder as it appears on the register of the Corporation, unless
the Share Transfer Power on the share certificate is duly completed in
respect of such shares.
U.S. Residents/Citizens must provide their Taxpayer Identification
Number here:
---------------------------
B-ii
<PAGE> 63
PROXY
ZEMEX CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
The undersigned, as record holder(s) of the shares listed below, hereby
revokes any previous proxies and appoints Richard L. Lister and Allen J.
Palmiere (or each of them, or their assignees) proxies for the undersigned, with
full power of substitution, to represent the undersigned, to act for the
undersigned in the same manner and with the same effect as if the undersigned
were personally present and to vote all of the Common Shares which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Zemex
Corporation (the "Corporation") to be held on June 30, 1998 at 11:00 a.m., and
any adjournment thereof, as follows:
1. Election of directors (nominees: Paul A. Carroll, Morton A. Cohen, John M.
Donovan, Thomas B. Evans, Jr., Ned Goodman, Peter O. Lawson-Johnston,
Richard L. Lister, Patrick H. O'Neill and William J. vanden Heuvel):
____ FOR the directors
____ WITHHOLD AUTHORITY to vote for directors
2. Proposal to ratify the appointment of Deloitte & Touche as independent
public accountants for the Corporation for the fiscal year ending December
31, 1998.
____ FOR
____ AGAINST
____ ABSTAIN
3. Proposal to approve an amendment to the Corporation's Amended and Restated
Certificate of Incorporation to provide for a new class of shares.
____ FOR
____ AGAINST
____ ABSTAIN
4. To vote or otherwise represent the shares on any other business which may
properly come before the Annual Meeting of Shareholders or any adjournments
thereof, according to their decision and in their discretion.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS of the Corporation
and will be voted as directed herein. If no direction is given, this proxy will
be voted FOR all the proposals listed above in the manners described in the
Proxy Statement.
<TABLE>
<S> <C>
DATE: --------------------------------------------------------
SIGNATURE OF SHAREHOLDER
--------------------------------------------------------
SIGNATURE OF SHAREHOLDER
</TABLE>
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK CERTIFICATES. A
corporation is requested to sign its name by its president: administrators,
trustees, etc., are requested to so indicate when signing. If stock is
registered in two names, it is preferred that both sign. please return your
proxy in the envelope provided.
